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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 14D-9
Solicitation/Recommendation Statement Pursuant to Section 14(d)(4)
of the Securities Exchange Act of 1934
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CAREERBUILDER, INC.
(Name of Subject Company)
CAREERBUILDER, INC.
(Name of Person(s) filing Statement)
Common Stock, $.001 par value
(Title of Class of Securities)
141684100
(CUSIP Number of Class of Securities)
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Robert J. McGovern
President and Chief Executive Officer
CareerBuilder, Inc.
10780 Parkridge Blvd., Suite 200
Reston, Virginia 20191
(703) 259-5500
(Name, address and telephone number of person authorized to receive notice and
communications
on behalf of the person(s) filing statement)
With a copy to:
Donald L. Toker, Esq.
Hale and Dorr LLP
1455 Pennsylvania Avenue, N.W.
Washington, DC 20004
(202) 942-8400
[_]Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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Item 1. Subject Company Information
The name of the subject company is CareerBuilder, Inc., a Delaware
corporation (the "Company" or "CareerBuilder"), and the address of the
principal executive offices of the Company is 10780 Parkridge Boulevard, Suite
200, Reston, Virginia 20191. The telephone number of the principal executive
offices of the Company is (703) 259-5500. The title of the class of equity
securities to which this statement relates is the Common Stock, par value
$.001 per share (the "Common Stock"), of the Company. As of June 30, 2000,
there were 23,860,419 shares of Common Stock outstanding.
Item 2. Identity And Background Of Filing Person
(a) Subject Company Information. The name, address and telephone number of
the Company, which is the person filing this statement, are set forth in Item
1 above.
(d) Tender Offer. This statement relates to a tender offer by CB
Acquisition Corp. ("Purchaser"), a Delaware Corporation and a wholly-owned
subsidiary of Career Holdings, Inc., a Delaware corporation ("Career
Holdings"), disclosed in a tender offer statement on Schedule TO (the
"Schedule TO") dated July 25, 2000, to purchase all outstanding shares of
common stock of the Company (the "Shares") at a price of $8.00 per Share, net
to the seller in cash, without interest (the "Offer Price"), upon the terms
and subject to the conditions set forth in the Offer to Purchase dated July
25, 2000 (the "Offer to Purchase") and the related Letter of Transmittal
(which, as may be amended from time to time, together constitute the "Offer").
Copies of the Offer to Purchase and the Letter of Transmittal are filed as
Exhibits (a)(1) and (a)(2) to this Schedule 14D-9 and are hereby incorporated
by reference.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
July 16, 2000 (the "Merger Agreement"), between the Company, Purchaser and
Career Holdings. The Merger Agreement provides that, among other things, as
promptly as practicable after the purchase of Shares pursuant to the Offer and
the satisfaction or waiver, where appropriate, of other conditions set forth
in the Merger Agreement, Purchaser will be merged with and into the Company
(the "Merger"), with the Company continuing as the surviving corporation (the
"Surviving Company"). A copy of the Merger Agreement is filed as Exhibit
(e)(1) to this Schedule 14D-9 and is incorporated by reference herein. The
Schedule TO states that the principal executive offices of Purchaser and
Career Holdings are located at 435 North Michigan Avenue, Chicago, Illinois
60611 and that the telephone number for both Purchaser and Career Holdings is
(312) 222-4303.
Item 3. Past Contacts, Transactions, Negotiations And Agreements
The description of certain contracts, agreements, arrangements or
understandings and any actual or potential conflicts of interests between the
Company or its affiliates and (1) the Company's executive officers, directors
or affiliates, or (2) Purchaser or its respective executive officers,
directors or affiliates, set forth under the captions "Special Factors--
Background of the Offer; Contacts with CareerBuilder" and "Special Factors--
Interests of Certain Persons in the Offer and the Merger" in the Offer to
Purchase, and in the Information Statement attached as Schedule I to this
Schedule 14D-9 is incorporated by reference herein.
The summary of the material provisions of the Merger Agreement set forth
under the caption "Special Factors--The Merger Agreement" in the Offer to
Purchase is incorporated by reference herein. The summary of the Merger
Agreement contained in the Offer to Purchase is qualified in its entirety by
reference to the Merger Agreement, a copy of which is filed as Exhibit (e)(1)
to this Schedule 14D-9 and is incorporated by reference herein.
In connection with the Merger Agreement, Career Holdings, Tribune Company
and KnightRidder.com, Inc. have entered into an Investment Agreement dated as
of July 16, 2000 ("Investment Agreement"). The Company is an express third
party beneficiary of the Investment Agreement. The summary of the material
provisions of the Investment Agreement set forth under the caption "Special
Factors--The Investment Agreement" in the Offer to Purchase is incorporated by
reference herein. The summary of the Investment Agreement contained in the
Offer to Purchase is qualified in its entirety by reference to the Investment
Agreement, a copy of which is filed as Exhibit (e)(2) to this Schedule 14D-9
and is incorporated by reference herein.
Career Holdings has entered into agreements (the "Stockholder Agreements")
with certain stockholders of the Company, including three members of the Board
of Directors, Peter J. Barris, David C. Wetmore and Robert J. McGovern. These
stockholders have agreed to tender an aggregate of 10,596,648 shares of Common
Stock in the Offer, constituting approximately 44.4% of the aggregate number
of shares of Common Stock issued and outstanding as of June 30, 2000. The
stockholders have also agreed that they will not transfer such shares prior to
the expiration of the Stockholder Agreements and that they will vote such
shares of Common Stock in favor of the Merger and against certain competing
transactions. The information set forth under the caption "Special Factors--
The Stockholder Agreements" in the Offer to Purchase is incorporated by
reference herein. The summary of the Stockholders Agreements contained in the
Offer to Purchase is qualified in its entirety by reference to the Stockholder
Agreements, a copy of the Form of Stockholder Agreement is filed as Exhibit
(e)(5) to this Schedule 14D-9.
Pursuant to the Employment Agreements dated as of July 16, 2000
("Employment Agreements") entered into with Career Holdings, effective upon
consummation of the Merger, Robert J. McGovern, Chairman, Chief Executive
Officer and President of the Company, and James A. Winchester, a Senior Vice
President of the Company, have certain rights and obligations, including a
commitment to make a substantial investment in Career Holdings. For a further
description, see "Special Factors--The Employment Agreements" in the Offer to
Purchase, which is incorporated by reference herein. The summary of the
Employment Agreements contained in the Offer to Purchase is qualified in its
entirety by reference to the Employment Agreements, copies of which are filed
as Exhibits (e)(3)(A) and (e)(3)(B) to this Schedule 14D-9 and are
incorporated by reference herein.
The Schedule TO states that on July 16, 2000, Career Holdings and CP
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Career Holdings ("CP Acquisition"), entered into an agreement and plan of
merger with CareerPath.com, Inc., a Delaware corporation ("CareerPath"),
providing for the merger (the "CareerPath Merger") of CP Acquisition with and
into CareerPath, and that, after the consummation of the Merger and the
CareerPath Merger, CareerPath and CareerBuilder are expected to be merged
together. The Offer is not conditioned upon consummation of the CareerPath
Merger.
The Company's Amended and Restated Certificate of Incorporation (the
"Restated Certificate of Incorporation") provides that no director of the
Company shall be personally liable for any monetary damages for any breach of
fiduciary duty as a director, except to the extent that the Delaware General
Corporation Law prohibits the elimination or limitation of liability of
directors for breach of fiduciary duty.
The Restated Certificate of Incorporation also provides that a director or
officer of the Company (a) shall be indemnified by the Company against all
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement incurred in connection with any litigation or other legal
proceeding (other than an action by or in the right of the Company) brought
against him by virtue of his position as a director or officer of the Company
if he acted in good faith and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful and (b) shall be indemnified by the Company against all expenses
(including attorneys' fees) and amounts paid in settlement incurred in
connection with any action by or in the right of the Company brought against
him by virtue of his position as a director or officer of the Company if he
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Company, except that no indemnification
shall be made with respect to any matter as to which such person shall have
been adjudged to be liable to the Company, unless a court determines that,
despite such adjudication but in view of all of the circumstances, he is
entitled to indemnification of such expenses. Notwithstanding the foregoing,
to the extent that a director or officer has been successful, on the merits or
otherwise, including, without limitation, the dismissal of an action without
prejudice, he is required to be indemnified by the Company against all
expenses (including attorneys' fees) incurred in connection therewith.
Expenses shall be advanced to a director or officer at his request, provided
that he undertakes to repay the amount advanced if it is ultimately determined
that he is not entitled to indemnification for such expenses.
2
The Restated Certificate of Incorporation further provides that the
indemnification provided therein is not exclusive, and provides that in the
event that the Delaware General Corporation Law is amended to expand the
indemnification permitted to directors or officers, then the Company must
indemnify those persons to the fullest extent permitted by such law as so
amended.
Section 145 of the Delaware General Corporation Law provides that a
corporation has the power to indemnify a director, officer, employee or agent
of the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred
in connection with an action or proceeding to which he is or is threatened to
be made a party by reason of such position, if such person shall have acted in
good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, in any criminal proceeding, if
such person had no reasonable cause to believe his conduct was unlawful;
provided that, in the case of actions brought by or in the right of the
corporation, no indemnification shall be made with respect to any matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the adjudicating court determines that such
indemnification is proper under the circumstances.
In addition, the Merger Agreement contains certain provisions regarding the
indemnification and insurance of directors of the Company that are described
under the caption "Special Factors--The Merger Agreement--Indemnification" in
the Offer to Purchase and that description is incorporated by reference
herein.
Item 4. The Solicitation or Recommendation
(a) Recommendation Of The Board Of Directors. At a meeting held on July 16,
2000, the Company's Board of Directors, after receiving the unanimous
recommendation of a special committee of the Board of Directors comprised of
two non-employee directors (the "Independent Committee"), determined that the
Merger is advisable, fair and in the best interests of the Company and its
stockholders and approved the Merger, the Offer, the Merger Agreement and the
other transaction contemplated thereby.
The Company's Board of Directors recommends that the stockholders accept
the Offer and tender their Shares pursuant to the Offer. A letter to the
stockholders communicating the Board of Directors' recommendation and a press
release announcing the Offer and the Merger are filed herewith as Exhibit
(a)(3) and (a)(4), respectively, and are incorporated by reference herein.
(b) Reasons. The reasons for the recommendation stated in paragraph (a) of
this Item 4 are set forth under the captions: "Special Factors--Background of
the Offer; Contacts with CareerBuilder" and "--Recommendation of the
Independent Committee and Board of Directors; Fairness of the Transactions" in
the Offer to Purchase, and that information is incorporated by reference
herein. Credit Suisse First Boston Corporation, financial advisor to the
Independent Committee ("CSFB"), has delivered to the Independent Committee its
opinion, dated as of July 16, 2000, to the effect that, as of such date and
based upon and subject to certain assumptions and matters stated therein, the
Offer Price of $8.00 per share in cash is fair, from a financial point of
view, to the stockholders of the Company (other than Career Holdings and its
affiliates and Messrs. McGovern and Winchester). A copy of the CSFB opinion is
attached to the Offer to Purchase as Annex A and is incorporated by reference
herein. The information set forth under "Special Factors--Opinion of Financial
Advisor to the Independent Committee" is incorporated herein by reference.
CareerBuilder stockholders are urged to review the opinion carefully. The
opinion does not constitute a recommendation to any stockholder as to whether
or not such stockholder should tender Shares pursuant to the Offer or as to
how such stockholder should vote or act on any matter relating to the proposed
Merger.
(c) Intent To Tender. To the Company's knowledge after reasonable inquiry,
all of the directors and executive officers of the Company currently intend to
tender their Shares pursuant to the Offer.
Pursuant to the Stockholder Agreements, certain stockholders of the
Company, have agreed to tender an aggregate of 10,596,648 shares of Common
Stock in the Offer, constituting approximately 44.4% of the aggregate number
of shares of Common Stock issued and outstanding as of June 30, 2000. See Item
3 of this Schedule 14D-9.
3
Item 5. Person/Asset, Retained, Employed, Compensated Or Used
Pursuant to the terms of an engagement letter, dated as of June 27, 2000,
the Independent Committee engaged CSFB to provide an opinion in connection
with the Merger Agreement. On July 16, 2000, CSFB delivered the opinion to the
Independent Committee referred to in Item 4(b) of this Schedule 14D-9. The
engagement letter provides for payment to CSFB of a customary fee by the
Company in connection with the delivery of CSFB's opinion. The Company has
also agreed to reimburse CSFB for reasonable out-of-pocket expenses,
including, without limitation, the reasonable fees and disbursements of its
legal counsel, and to indemnify CSFB and related parties against certain
liabilities, including liabilities under the federal securities laws arising
out of CSFB's engagement.
Neither the Company nor any person acting on its behalf has employed,
retained or compensated any person or class of persons to make solicitations
or recommendations on its behalf with respect to the Offer.
Item 6. Interest In Securities Of The Subject Company
No transactions in the Shares have been effected during the past 60 days by
the Company or, to the Company's knowledge, by its executive officers,
directors or affiliates, other than those set forth in Schedule II of the
Offer to Purchase, or by Purchaser or its executive officers, directors,
affiliates or subsidiaries. See "Schedule II--Transaction of Certain Persons
in Career Builder Common Stock" to the Offer to Purchase, which is
incorporated herein by reference.
Item 7. Purpose Of The Transaction And Plans Or Proposals
(d)(1)(i) Except as indicated in Items 3 and 4 above, no negotiations are
being undertaken or are underway by the Company in response to the Offer which
relate to a tender offer or other acquisition of the Company's securities by
the Company, any subsidiary of the Company or any other person.
(d)(1)(ii) Except as indicated in Items 3 and 4 above, no negotiations are
being undertaken or are underway by the Company in response to the Offer which
relate to, or would result in, (i) an extraordinary transaction, such as a
merger, reorganization or liquidation, involving the Company or any subsidiary
of the Company, (ii) a purchase, sale or transfer of a material amount of
assets by the Company or any subsidiary of the Company, or (iii) any material
change in the present dividend rate or policy, or indebtedness or
capitalization of the Company.
(d)(2) Except as indicated in Items 3 and 4 above, there are no
transactions, board resolutions, agreements in principle or signed contracts
in response to the Offer that relate to or would result in one or more of the
matters referred to in this Item 7.
Item 8. Additional Information
(a) Information Provided Pursuant To Rule 14f-1 Under The Exchange Act. The
Information Statement attached as Schedule I to this Schedule 14D-9 is being
furnished to the Company's stockholders in connection with the designation by
Purchaser of persons to the Board of Directors of the Company other than at a
meeting of the Company's stockholders, and such information is incorporated by
reference herein.
(b) Certain Litigation. A putative class action lawsuit entitled Caroline
Teitelbaum v. Peter J. Barris, David C. Wetmore, Gary C. Butler, Robert J.
McGovern, James A. Tholen, CareerBuilder, Inc., Knight-Ridder, Inc. and
Tribune Company, has been filed in the Chancery Court in and for New Castle
County, Delaware by plaintiffs seeking to assert claims on behalf of a class
of all stockholders of Company. The complaint names as defendants the Company,
the members of the Company Board, Tribune and Knight-Ridder, Inc., and alleges
that the Company Board breached its fiduciary duties to the Company
stockholders by entering into the Merger Agreement allegedly at an inadequate
price, without conducting an adequate process and without appointing a truly
independent person to negotiate on behalf of the Company stockholders. The
complaint alleges that Tribune and Knight-Ridder, Inc. aided and abetted the
Company Board's alleged breaches. The plaintiff seeks injunctive relief
against the transaction and/or damages. Company and Career Holdings believe
that the Complaint is without merit and intend to defend the claims
vigorously.
4
(c) The information contained in all of the Exhibits referred to in Item 9
below is incorporated by reference herein.
Item 9. Exhibits
(a)(1) Offer to Purchase dated July 25, 2000 (incorporated herein by
reference to Exhibit (a)(1)(A) to the Schedule TO filed by Purchaser with
respect to the Company on July 25, 2000 ("Schedule TO")).
(a)(2) Letter of Transmittal (incorporated herein by reference to Exhibit
(a)(1)(B) to the Schedule TO).
(a)(3) Form of Letter to Stockholders of the Company dated July 25, 2000.
(a)(4) Text of Press Release dated July 17, 2000 (incorporated herein by
reference to Exhibit 99.3 to the Company's Report on Form 8-K filed on July
17, 2000 ("Form 8-K")).
(a)(5) Notice of Guaranteed Delivery (incorporated by reference to Exhibit
(a)(1)(C) to the Schedule TO).
(a)(6) Letter to Broker, Dealers, Commercial Banks, Trust Companies and
other Nominees (incorporated by reference to Exhibit (a)(1)(D) to the Schedule
TO).
(a)(7) Letter to Clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees (incorporated by reference to Exhibit
(a)(1)(E) to the Schedule TO).
(a)(8) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 (incorporated by reference to Exhibit (a)(1)(F) to the
Schedule TO).
(a)(9) Form of Summary Advertisement as published on July 25, 2000
(incorporated by reference to Exhibit (a)(1)(G) to the Schedule TO).
(a)(10) Text of press release issued by Career Holdings dated July 25, 2000
(incorporated herein by reference to Exhibit (a)(1)(I) to the Schedule TO).
(e)(1) Agreement and Plan of Merger, dated as of July 16, 2000, between
CareerBuilder, Inc., Career Holdings, Inc., and CB Acquisition Corp.
(incorporated by reference to Exhibit 2.1 to the Form 8-K).
(e)(2) Investment Agreement dated as of July 16, 2000, among Career
Holdings, Tribune Company and Knight Ridder.com, Inc. (incorporated by
reference to Exhibit 99.1 to the Form 8-K).
(e)(3)(A) Robert J. McGovern Employment Agreement dated July 16, 2000
(incorporated by reference to Exhibit (d)(3)(A) to the Schedule TO).
(e)(3)(B) James A. Winchester Employment Agreement dated July 16, 2000
(incorporated by reference to Exhibit (d)(3)(B) to the Schedule TO).
(e)(4)(A) Opinion of Credit Suisse First Boston Corporation to the
Independent Committee of the Board of Directors of the Company, dated July 16,
2000 (incorporated by reference to Annex A to the Offer to Purchase).
(e)(4)(B) Materials presented by Credit Suisse First Boston Corporation to
the Independent Committee of the Board of Directors of CareerBuilders, Inc.
(incorporated by reference to Exhibit (c)(2) of the Schedule TO).
(e)(5) Form of Stockholder Agreement dated as of July 16, 2000, entered
into among Career Holdings, CB Acquisition Corp. and certain stockholders of
CareerBuilder (including a schedule listing each such stockholder and the
number of shares of common stock of CareerBuilder owned by such stockholder as
set forth in the Stockholder Agreement entered into by such stockholder)
(incorporated by reference to Exhibit (d)(4) to the Schedule TO).
5
(g) Not applicable.
(i) Complaint filed in action entitled Caroline Teitelbaum v. Peter J.
Barris, David C. Wetmore, Gary C. Butler, Robert J. McGovern, James A. Tholen,
CareerBuilder, Inc., Knight-Ridder, Inc. and Tribune Company (Court of Chancery
of New Castle County, Delaware) (incorporated herein by reference to Exhibit
(a)(5)(C) to the Schedule TO).
6
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
CareerBuilder, Inc.
/s/ James A. Tholen
By: _________________________________
Name: James A. Tholen
Title: Senior Vice President and
Chief Financial Officer
Date: July 25, 2000
7
EXHIBIT INDEX
Exhibit
Number
-------
(a)(1) Offer to Purchase dated July 25, 2000 (incorporated herein by
reference to Exhibit (a)(1)(A) to the Schedule TO filed by
Purchaser with respect to the Company on July 25, 2000
("Schedule TO")).
(a)(2) Letter of Transmittal (incorporated herein by reference to
Exhibit (a)(1)(B) to the Schedule TO).
(a)(3) Form of Letter to Stockholders of the Company dated July 25,
2000.
(a)(4) Text of Press Release dated July 17, 2000 (incorporated herein
by reference to Exhibit 99.3 to the Company's Report on Form
8-K filed on July 17, 2000 ("Form 8-K")).
(a)(5) Notice of Guaranteed Delivery (incorporated by reference to
Exhibit (a)(1)(C) to the Schedule TO).
(a)(6) Letter to Broker, Dealers, Commercial Banks, Trust Companies
and other Nominees (incorporated by reference to Exhibit
(a)(1)(D) to the Schedule TO).
(a)(7) Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees (incorporated by
reference to Exhibit (a)(1)(E) to the Schedule TO).
(a)(8) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 (incorporated by reference to Exhibit
(a)(1)(F) to the Schedule TO).
(a)(9) Form of Summary Advertisement as published on July 25, 2000
(incorporated by reference to Exhibit (a)(1)(G) to the
Schedule TO).
(a)(10) Text of press release issued by Career Holdings dated July 25,
2000 (incorporated herein by reference to Exhibit (a)(1)(I) to
the Schedule TO).
(e)(1) Agreement and Plan of Merger, dated as of July 16, 2000,
between CareerBuilder, Inc., Career Holdings, Inc., and CB
Acquisition Corp. (incorporated by reference to Exhibit 2.1 to
the Form 8-K).
(e)(2) Investment Agreement dated as of July 16, 2000, among Career
Holdings, Tribune Company and Knight Ridder.com, Inc.
(incorporated by reference to Exhibit 99.1 to the Form 8-K).
(e)(3)(A) Robert J. McGovern Employment Agreement dated July 16, 2000
(incorporated by reference to Exhibit (d)(3)(A) to the
Schedule TO).
(e)(3)(B) James A. Winchester Employment Agreement dated July 16, 2000
(incorporated by reference to Exhibit (d)(3)(B) to the
Schedule TO).
(e)(4)(A) Opinion of Credit Suisse First Boston Corporation to the
Independent Committee of the Board of Directors of the
Company, dated July 16, 2000 (incorporated by reference to
Annex A to the Offer to Purchase).
(e)(4)(B) Materials presented by Credit Suisse First Boston Corporation
to the Independent Committee of the Board of Directors of
CareerBuilders, Inc. (incorporated by reference to Exhibit
(c)(2) of the Schedule TO).
(e)(5) Form of Stockholder Agreement dated as of July 16, 2000,
entered into among Career Holdings, CB Acquisition Corp. and
certain stockholders of CareerBuilder (including a schedule
listing each such stockholder and the number of shares of
common stock of CareerBuilder owned by such stockholder as set
forth in the Stockholder Agreement entered into by such
stockholder) (incorporated by reference to Exhibit (d)(4) to
the Schedule TO).
(g) Not applicable.
(i) Complaint filed in action entitled Caroline Teitelbaum v.
Peter J. Barris, David C. Wetmore, Gary C. Butler, Robert J.
McGovern, James A. Tholen, CareerBuilder, Inc., Knight-Ridder,
Inc. and Tribune Company (Court of Chancery of New Castle
County, Delaware) (incorporated herein by reference to Exhibit
(a)(5)(C) to the Schedule TO).
8
Schedule I
CAREERBUILDER, INC.
10780 PARKRIDGE BLVD. SUITE 200
RESTON, VIRGINIA 20191
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
General
This information statement (the "Information Statement") is being mailed on
or about July 25, 2000 as part of the Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9") to holders of record of shares of common
stock, par value $0.001 per share, of CareerBuilder, Inc. (the "Company"). You
are receiving this Information Statement in connection with the possible
election of persons designated by CB Acquisition Corp. ("Purchaser") to a
majority of the seats on the Board of Directors of the Company (the "Board" or
the "Board of Directors") other than at a meeting of the stockholders of the
Company. Such election would occur pursuant to the Agreement and Plan of
Merger (the "Merger Agreement"), dated as of July 16, 2000, between Purchaser,
Career Holdings, Inc. and the Company. The Merger Agreement is more fully
described under Items 2 and 3 of the Schedule 14D-9, of which this Schedule I
is a part. Capitalized terms used and not defined in this Schedule I have the
meanings assigned to them in the Schedule 14D-9.
Pursuant to the Merger Agreement, Purchaser commenced a cash tender offer
(the "Offer") for all outstanding shares of common stock of the Company (the
"Shares") at a price of $8.00 per Share, net to the seller in cash, without
interest, on July 25, 2000. The Offer currently is scheduled to expire at
12:00 Midnight, New York City time, on August 21, 2000, at which time, if the
Offer is not extended and all conditions to the Offer have been satisfied or
waived, Purchaser will be obligated to purchase all Shares validly tendered
pursuant to the Offer and not withdrawn.
If the Merger Agreement is terminated or if Purchaser does not accept
Shares tendered for payment, then Purchaser will not have any right to
designate directors for election to the Board of Directors.
This Information Statement is required by Section 14(f) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and Rule 14f-1 promulgated
thereunder. You are urged to read this Information Statement carefully. You
are not, however, required to take any action.
The Purchaser Designees
Effective upon the acceptance for payment pursuant to the Offer of a number
of Shares that satisfies the Minimum Condition (as defined in the Merger
Agreement), Purchaser shall be entitled to designate at its option up to that
number of directors, rounded to the nearest whole number, of the Board of
Directors as will make the percentage of the Company's directors designated by
Purchaser equal to the percentage of the aggregate voting power of shares of
Common Stock held by Career Holdings and its subsidiaries, and the Company
shall, upon written request by Purchaser, promptly, at the Company's election,
either increase the size of the Board or take such other actions as may be
necessary so as to include on, and cause to be elected to the Board, the
individual or individuals designated by Purchaser.
The Company's obligations to appoint Purchaser's designees to the Board of
Directors shall be subject to Section 14(f) of the 1934 Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions, as
Section 14(f) and Rule 14f-1 require, in order to fulfill its obligations
under the Merger Agreement. Purchaser has supplied to the Company in writing
information with respect to itself and its nominees, officers, directors and
affiliates required by Section 14(f) and Rule 14f-1.
I-1
Following the election or appointment of Purchaser's designees pursuant to
the Merger Agreement and prior to the Effective Time, any amendment, or waiver
of any term or condition, of the Merger Agreement or the Company Charter or
the Amended and Restated By-Laws of the Company, any termination of the Merger
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Purchaser or waiver or
assertion of any of the Company's rights hereunder, and any other consent or
action by the Board of Directors of the Company with respect to this
Agreement, will require the concurrence of a majority of the Independent
Directors and no other action by the Company, including any action by any
other director of the Company, shall be required for purposes of the Merger
Agreement.
Pursuant to the provisions of the Merger Agreement described in the
Schedule 14D-9, Purchaser may designate from among the persons identified
below the persons to be elected to the Board of Directors (the "Purchaser
Designees"). It is expected that the Purchaser Designees will assume office
promptly upon the acceptance for payment pursuant to the Offer of a number of
Shares that satisfies the Minimum Condition, and that they will thereafter
constitute at least a majority of the Board of Directors. Purchaser has
informed the Company that each of the Purchaser Designees has consented to act
as a director, if so designated.
Set forth in the table below are the name and principal occupation or
employment and five year employment history for each of the persons who may be
designated by Purchaser as the Purchaser Designees.
Directors Designees of CB Acquisition Corp.
Present Principal Occupation or Employment;
Name Material Positions Held During the Past Five Years
---- --------------------------------------------------
David D. Hiller......... President of Tribune Interactive, Inc., a subsidiary
of Tribune, since May 2000; Senior Vice
President/Development of Tribune until May 2000;
Director of Lightspan, Inc.
Timothy J. Landon....... President of Tribune Classified Services, a
subsidiary of Tribune, since June 2000; Vice
President of Tribune Interactive, a subsidiary of
Tribune from July 1999 until June 2000; Vice
President/General Manager of Sun Sentinel Company, a
subsidiary of Tribune, from August 1998 and July
1999; Vice President/Strategy and Development for
Tribune Publishing Company and acting Chief Executive
Officer of Classified Venture, a partnership between
Tribune and seven leading media companies, from May
1997 to August 1998.
Daniel J. Finnigan...... President of KnightRidder.com and Vice President of
Knight-Ridder, Inc. since July 1999; President and
CEO of SBC Interactive from 1998 to 1999; Various
positions with SBC Communications, Inc., 1995 to
1998; Group manager for product development for ESS
Ventures, LLC, 1994 to 1995.
Ross Jones.............. Vice President and Treasurer of KnightRidder.com;
Senior Vice President and CFO of Knight-Ridder, Inc.
since 1993; Vice President/Finance of Knight-Ridder,
Inc. in 1993; Vice President and Treasurer, Reader's
Digest Association, Inc., 1985 to 1993 and in other
positions there from 1977 to 1985; Manager of Brown
Brothers Harriman & Co. from 1970 to 1977.
CERTAIN INFORMATION CONCERNING THE COMPANY
The Shares constitute the only class of voting securities of the Company.
The holders of common stock are entitled to one vote per Share. As of June 30,
2000, there were 23,860,419 shares of common stock (including restricted
stock) issued and outstanding. Currently, the Board consists of five members.
The Board is divided into three classes and each director serves a term of
three years and until his successor is duly elected and qualified or until his
earlier death, resignation or removal.
I-2
Information Concerning Directors and Executive Officers of the Company
Directors and Executive Officers of the Company
The following table sets forth the name and present principal occupation or
employment, and material occupations, positions, offices or employments for
the past five years, of each director and executive officer of the Company.
Unless otherwise indicated, each such person is a citizen of the United States
and the business address of each such person is c/o CareerBuilder, Inc. 10780
Parkridge Blvd. Suite 200, Reston, VA 20191.
Present Principal Occupation or Employment;
Material Positions Held During the Past Director
Name Age Five Years Since
---- --- ------------------------------------------- --------
Robert J. McGovern 39 Chairman of the Board of Directors, 1995
President and Chief Executive Officer of
the Company since its founding in November
1995. From May 1993 until August 1995, he
served as Vice President and General
Manager of the Availability and Performance
Management Group, a division of Legent
Corporation, a systems software company.
Prior to that time, he served in various
senior positions in sales with Hewlett-
Packard Company, a computer hardware and
software company.
Peter J. Barris 48 General Partner with New Enterprise 1996
Associates L.P., a private investment firm,
since 1992. Prior to that, he served as
President and Chief Operating Officer of
Legent Corporation from 1988 to 1990. Prior
to that, Mr. Barris served as Senior Vice
President and General Manager of UCCEL, a
systems software developer, and held a
variety of marketing and general management
positions with General Electric Company, a
manufacturing company. Mr. Barris serves as
a director of Mobius Management Systems,
Inc. and pcOrder.com, Inc., both of which
are computer software systems and services
companies.
Gary C. Butler 53 President, Chief Operating Officer and a 1998
director of Automatic Data Processing,
Inc., or ADPI, the parent of ADP, since
April 1998. From January 1995 to April
1998, he served as Group President of the
Employer Services Group of ADPI. Prior to
that time, he served as Group President for
the Dealer Services Group of ADPI for more
than five years. Mr. Butler serves as a
director of Convergys Corporation, a
provider of financial and management
services.
James A. Tholen 41 Senior Vice President and Chief Financial 1995
Officer of the Company since September
1998. From April 1997 until September 1998,
he served as Chief Operating Officer and
Chief Financial Officer of FTP Software,
Inc., a software communications company.
From September 1995 to February 1997, he
served as Chief Financial Officer of The
Compucare Company, a healthcare information
systems provider. From August 1993 until
August 1995, he served as Vice President of
Corporate Strategy and Development for
Legent Corporation.
David C. Wetmore 51 Managing Director of Updata Capital, Inc., 1995
a private investment firm, since November
1995. From 1992 to August 1995, Mr. Wetmore
served as Chief Operating Officer and a
director of Legent Corporation. From 1988
to 1992, he served as President, Chief
Operating Officer and a director of Goal
Systems International, Inc., a systems
software company, and served as its Chief
Executive Officer from 1989 to 1992 and its
Chairman from 1991 to 1992. Mr. Wetmore
serves as a director of Walker Interactive
Systems, Inc., a financial and analytical
software developer.
James A. Winchester 48 Senior Vice President of Engineering and N/A
Chief Technology Officer of the Company
since November 1995.
I-3
Board and Committee Meetings
The Board of Directors has a Compensation Committee composed of Messrs.
Barris and Butler, which makes recommendations concerning salaries and
incentive compensation for executive officers and administers and grants stock
options and awards pursuant to the Company's stock option plans (except that
grants to directors and certain officers must be made by the Board of
Directors as a whole). The Compensation Committee met three times during 1999.
The Board of Directors also has an Audit Committee, currently composed of
two independent directors, Messrs. Butler and Wetmore, which reviews the
results and scope of the audit and other services provided by the Company's
independent public accountants. The Audit Committee met four times during
1999.
The Board of Directors met five times during 1999. Each director attended
at least 75% of the aggregate of the number of Board meetings and the number
of meetings held by all committees on which he then served.
Director Compensation
Directors do not receive any cash fees for their services on the Board, but
are reimbursed for expenses incurred in connection with their attendance at
Board and committee meetings. On April 1, 1999, the Company's non-employee
directors were each granted a non-qualified stock option to purchase 5,000
shares of Common Stock at a purchase price of $9.00 per share, vesting on
March 31, 2000. The non-employee directors of the Company are eligible to
receive stock options under the Company's 1999 Non-Employee Director Stock
Option Plan.
Beneficial Ownership of Common Stock
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of June 30, 2000 by (i) each person
or entity who is known by the Company to beneficially own more than 5% of the
outstanding shares of Common Stock, (ii) by each director or nominee for
director, (iii) by each of the executive officers named in the Summary
Compensation Table set forth under the caption "Executive Compensation" below
and (iv) by all directors and executive officers as a group. Unless otherwise
indicated, each person or entity named in the table has sole voting power and
investment power (or shares such power with his or her spouse) with respect to
all shares of capital stock listed as owned by such person or entity.
Number Of Shares Percentage
Name Of Beneficial Owner Beneficially Owned(1) Owned
------------------------ --------------------- ----------
New Enterprise Associates(2)............. 4,022,551 16.9%
1119 St. Paul Street
Baltimore, MD 21202
Microsoft Corporation(3)................. 2,246,351 9.4
One Microsoft Way
Redmond, WA 98052
ADP, Inc.(4)............................. 1,283,569 5.4
1 ADP Boulevard
Roseland, NJ 07068
Robert J. McGovern(5).................... 3,350,540 14.0
Eugene J. Austin......................... 382,477 1.6
James A. Tholen.......................... 89,618 *
James A. Winchester...................... 693,750 2.9
I-4
Number Of Shares Percentage
Name Of Beneficial Owner Beneficially Owned(1) Owned
------------------------ --------------------- ----------
Peter J. Barris(6)...................... 4,042,551 17.0
Gary C. Butler(7)....................... 1,293,569 5.4
David C. Wetmore(8)..................... 594,480 2.5
All executive officers and directors as
a group (7 persons)(9)................. 10,446,985 43.8
- --------
*Less than 1%
(1) The number of shares beneficially owned by each stockholder is determined
under rules promulgated by the Securities and Exchange Commission, and the
information is not necessarily indicative of beneficial ownership for any
other purpose. Under such rules, beneficial ownership includes any shares
as to which the individual or entity has sole or shared voting power or
investment power and any shares as to which the individual or entity has
the right to acquire beneficial ownership within 60 days after March 20,
2000 through the exercise of stock options ("Presently Exercisable
Options"). The inclusion herein of such shares, however, does not
constitute an admission that the named stockholder is a direct or indirect
beneficial owner of such shares.
(2) Consists of 3,930,446 shares of Common Stock held of record by New
Enterprise Associates VI, Limited Partnership, 78,947 shares of Common
Stock held of record by NEA President's Fund, L.P. and 13,158 shares of
Common Stock held of record by NEA Ventures 1996, L.P.
(3) Includes 873,534 shares of Common Stock issuable upon exercise of the
warrant issued to Microsoft in May 1999.
(4) Includes 380,000 shares of Common Stock issuable upon exercise of the
warrant issued to ADP in January 1998.
(5) Includes 250,000 shares of Common Stock held of record by the Robert
McGovern Bypass Trust. Mr. McGovern disclaims beneficial ownership of
shares held of record by such trust.
(6) Includes 3,930,446 shares of Common Stock held of record by New Enterprise
Associates VI, Limited Partnership, 78,947 shares of Common Stock held of
record by NEA President's Fund, L.P. and 13,158 shares of Common Stock
held of record by NEA Ventures 1996, L.P. Mr. Barris disclaims beneficial
ownership of all such shares of Common Stock. Also includes 20,000 shares
subject to Presently Exercisable Options. Excludes 5,000 shares of Common
Stock subject to stock options that are not Presently Exercisable Options
that will vest upon consummation of the Offer.
(7) Consists of 903,569 shares of Common Stock held of record by ADP and
380,000 shares of Common Stock issuable upon exercise of the warrant
issued to ADP in January 1998. Mr. Butler disclaims beneficial ownership
of all such shares of Common Stock. Also includes 10,000 shares subject to
Presently Exercisable Options. Excludes 5,000 shares of Common Stock
subject to stock options that are not Presently Exercisable Options that
will vest upon consummation of the Offer.
(8) Includes 15,000 shares subject to Presently Exercisable Options. Excludes
40,000 shares of Common Stock held of record by adult children of Mr.
Wetmore. Excludes 5,000 shares of Common Stock subject to stock options
that are not Presently Exercisable Options that will vest upon
consummation of the Offer.
(9) See footnotes (1) and (5) through (8) above.
Section 16 Beneficial Ownership Reporting Compliance
Mr. Tholen reported the exercise of certain options to purchase shares of
the Company's Common Stock exercised in October and December 1999 on a Form 5
filed in February 2000. Mr. Tholen had previously not reported these
transactions on Form 4. The Company is not aware of any other instance whereby
its officers, directors and holders of 10% of the Company's Common Stock had
not complied in a timely manner during 1999 with Section 16(a) filing
requirements.
I-5
Executive Compensation
The following table sets forth the total compensation paid or accrued for
the last two years for the Company's Chief Executive Officer and its three
other executive officers (together, the "Named Executive Officers"):
Summary Compensation Table
Long-Term
Annual Compensation
Compensation(1) on Awards
---------------- ------------
Shares
Underlying All Other
Name and Principal Position Year Salary Bonus Options(2) Compensation(3)
- --------------------------- ---- -------- ------- ------------ ---------------
Current Executive Officers
Robert J. McGovern.......... 1999 $171,046 $25,228 -- $2,264
Chairman of the Board, 1998 145,000 2,902 -- 2,125
President and
Chief Executive Officer
James A. Tholen............. 1999 160,004 31,100 70,000 --
Senior Vice President, 1998 40,614 -- 255,000 --
Chief Financial Officer and
Director
James A. Winchester, Jr..... 1999 135,369 25,700 35,000 2,536
Senior Vice President of 1998 115,000 -- -- 2,382
Engineering and
Chief Technology Officer
Former Executive Officer
Eugene J. Austin(4)......... 1999 95,694 4,587 -- 3,000
Senior Vice President of 1998 130,000 5,804 -- 2,809
Sales
- --------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted because such perquisites and other personal benefits
constituted less than the lesser of $50,000 or 10% of the total annual
salary of the Named Executive Officer.
(2) Represents the number of shares covered by options to purchase shares of
Common Stock granted during the applicable year.
(3) These amounts represent executive disability insurance premiums.
(4) Mr. Austin resigned effective August 6, 1999.
Stock Option Grants
The following table sets forth grants of stock options to each of the Named
Executive Officers during the year ended December 31, 1999:
Option Grants in Last Fiscal Year
Individual Grants
--------------------------------------------
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Number of Percent of Exercise Price
Securities Total Options or Base Appreciation For
Underlying Granted to Price Option Term(1)
Options Employees in Per Expiration -----------------
Granted Fiscal Year Share Date 5% 10%
---------- ------------- -------- ---------- -------- --------
Robert J. McGovern...... -- -- -- -- -- --
James A. Tholen......... 70,000 7.9% $6.06 12/8/09 $266,887 $676,344
James A. Winchester,
Jr..................... 35,000 3.9% 6.06 12/8/09 133,444 338,172
Eugene J. Austin........ -- -- -- -- -- --
I-6
- --------
(1) Amounts reported in these columns represent amounts that may be realized
upon exercise of the options immediately prior to the expiration of their
term assuming the specified compound rates of appreciation (5% and 10%) on
the market value of the Common Stock on the date of option grant over the
term of the options. These numbers are calculated based on rules
promulgated by the Securities and Exchange Commission and do not reflect
the Company's estimate of future stock price growth. Actual gains, if any,
on stock option exercises and Common Stock holdings are dependent on the
timing of such exercise and the future performance of the Common Stock.
There can be no assurance that the rates of appreciation assumed in this
table can be achieved or that the amounts reflected will be received by
the individuals.
Option Exercises And Year-End Option Values
The following table sets forth certain information concerning option
exercises by the Named Executive Officers in 1999 and the number and value of
unexercised options held by each of the Named Executive Officers on December
31, 1999:
Aggregate Option Exercises And Fiscal Year-End Option Values
Number of Number of Shares Underlying Value of Unexercised
Shares Unexercised Options at in-the-money Options at
Acquired Fiscal Year End Fiscal Year End(2)
on Value ------------------------------- -------------------------
Name Exercise Realized(1) Exercisable Unexercisable Exercisable Unexercisable
---- --------- ----------- ------------ --------------- ----------- -------------
Robert J. McGovern...... -- -- -- -- -- --
James A. Tholen......... 72,500 $ 438,894 -- 257,500 -- $998,906
James A. Winchester,
Jr..................... -- -- -- -- -- --
Eugene J. Austin........ 199,144 1,595,277 -- 35,000 -- 13,125
- --------
(1) Represents the difference between the exercise price and the fair market
value per share of the Common Stock at the date of exercise. For exercises
prior to the Company's initial public offering, the fair market value was
the value determined from time to time by the Company's Board of
Directors. For exercises after the initial public offering, the fair
market value was the last sale price of the Common Stock on the date of
exercise as reported on the Nasdaq National Market.
(2) Represents the difference between the exercise price and the last sale
price of the Common Stock as reported on the Nasdaq National Market on
December 31, 1999 ($6.44).
Compensation Committee Report On Executive Compensation
This report addresses the compensation policies of the Company applicable
to its officers during fiscal 1999. The Company's executive compensation
program is administered by the Compensation Committee of the Board of
Directors (the "Committee"), which is composed of two non-employee directors.
The Committee is responsible for determining the compensation package of each
executive officer, including the Chief Executive Officer. In fiscal 1999, the
Board of Directors did not modify in any material way or reject any action or
recommendation of the Committee with respect to executive officer
compensation.
Overview And Philosophy
The Company's executive compensation program is designed to promote the
following objectives:
. To provide competitive compensation that will help attract, retain and
reward highly qualified executives who contribute to the long-term
success of the Company.
. To align management's interests with the success of the Company by
placing a portion of the executive's compensation at risk in relation to
the Company's performance.
. To align management's interests with stockholders by including long-term
equity incentives.
I-7
The Committee believes that the Company's executive compensation program
provides an overall level of compensation that is competitive within its
industry and among companies of comparable size and complexity. To ensure that
compensation is competitive, the Company regularly compares its compensation
practices with those of other similar companies and sets its compensation
guidelines based on this review. The Committee also seeks to achieve an
appropriate balance of the compensation paid to a particular individual and
the compensation paid to other executives and attempts to maintain an
appropriate mix of salary and incentive compensation. While compensation data
are useful guides for comparative purposes, the Committee believes that a
successful compensation program also requires the application of judgment and
subjective determinations of individual performance.
Executive Compensation Program
The Company's executive compensation program consists of base salary,
annual incentive compensation in the form of cash bonuses, and long-term
equity incentives in the form of stock options. Executive officers also are
eligible to participate in certain benefit programs which are generally
available to all employees of the Company, such as life insurance benefits and
the Company's 1999 Employee Stock Purchase Plan and 401(k) savings plan.
Base Salary
At the beginning of each year, the Committee establishes an annual salary
plan for the Company's senior executive officers based on recommendations made
by the Company's Chief Executive Officer. The Committee attempts to set base
salary compensation within the range of salaries of executive officers with
comparable qualifications, experience and responsibilities at other companies
in the same or similar businesses, and of comparable size and success. In
setting the annual cash compensation for Company executives, the Committee
reviews compensation for comparable positions by reviewing compensation data
available in a number of publicly available surveys and databases. In addition
to external market data, salary determinations depend both upon the Company's
financial performance and upon the individual's performance as measured by
certain subjective non-financial objectives. These non-financial objectives
include the individual's contribution to the Company as a whole, including his
or her ability to motivate others, develop the skills necessary to grow as the
Company matures, recognize and pursue new business opportunities and initiate
programs to enhance the Company's growth and success.
Annual Incentive Compensation
The Company's bonus program is designed to provide its key employees with
cash incentives to achieve the Company's financial goals. At the beginning of
each year, the Committee establishes target semi-annual bonuses for each
executive officer, which the executive will receive based on the Company
achieving its targeted financial objectives for that time period, as well as
the executive achieving certain management objectives. Cash bonuses are then
paid semi-annually based upon the Company's attainment of these targeted
financial objectives for the year. During 1999, annual cash bonus targets for
the Named Executive Officers, including Mr. McGovern, were 40% of base salary.
Total bonuses of $86,615 were awarded to the Named Executive Officers on the
basis of 1999 performance.
Long-Term Equity Incentives
The Company's stock option program is designed to promote the identity of
long-term interests between the Company's employees and its stockholders and
to assist in the retention of executives. The size of option grants is
generally intended by the Committee to reflect the executive's position with
the Company and his or her contributions to the Company. Stock options
generally vest over a three to five year period in order to encourage key
employees to continue in the employ of the Company. In 1999, all stock options
were granted at an option price equal to the fair market value of the
Company's Common Stock on the date of the grant.
I-8
Benefits
The Company's executive officers are entitled to receive medical and life
insurance benefits and to participate in the Company's 401(k) retirement
savings plan on the same basis as other full-time employees of the Company.
The Company's 1999 Employee Stock Purchase Plan, which is available to
virtually all employees including executive officers, allows participants to
purchase shares at a discount of 15% from the fair market value at the
beginning or end of the applicable purchase period.
The amount of perquisites, as determined in accordance with the rules of
the Securities and Exchange Commission relating to executive compensation, did
not exceed 10% of salary and bonus for 1999 for any of the Named Executive
Officers.
Summary Of Compensation Of Chief Executive Officer
In 1999, Mr. McGovern, the Company's Chief Executive Officer, received a
salary of $171,046. Mr. McGovern's target bonus was 40% of his base salary,
and was based on targeted growth revenue and achievement of certain objectives
as set by the compensation committee.
This report addresses the compensation policies of the Company applicable
to its officers during fiscal 1999. The Company's executive compensation
program is administered by the Compensation Committee of the Board of
Directors (the "Committee"), which is composed of two non-employee directors.
The Committee is responsible for determining the compensation package of each
executive officer, including the Chief Executive Officer. In fiscal 1999, the
Board of Directors did not modify in any material way or reject any action or
recommendation of the Committee with respect to executive officer
compensation.
Compliance With Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation in excess of $1 million paid to
the corporation's Chief Executive Officer and four other most highly paid
executive officers. Qualifying performance-based compensation will not be
subject to the deduction limitation if certain requirements are met. The
Committee has determined that it will make every reasonable effort, consistent
with sound executive compensation principles and the needs of the Company, to
ensure that all amounts paid to the Company's Chief Executive Officer or to
any of the other Named Executive Officers comply with Section 162(m).
Compensation Committee
Peter J. Barris
Gary C. Butler
Compensation Committee Interlocks And Insider Participation
Mr. Barris and Mr. Butler served during 1999 as members of the Compensation
Committee. Neither Mr. Barris nor Mr. Butler was at any time during 1999, or
at any other time, an officer or employee of the Company.
Certain Relationships And Transactions
Transactions With ADP
In January 1998, the Company entered into the ADP joint marketing and sales
representative agreement with ADP, Inc., which was amended in March 1999.
Under the terms of this agreement, ADP agreed to market the Company's services
to ADP's current and prospective clients using, at a minimum, ADP's major
accounts division direct sales force. This sales force is currently comprised
of approximately 500 salespeople and is generally responsible for selling to
companies with between 100 and 1,000 employees. Under the terms of the
I-9
agreement, ADP has the right, but not the obligation, to market the Company's
online recruitment offerings on a worldwide basis. The agreement provides for
ADP to market the Company's online recruitment offerings using a co-branding
strategy, which allows ADP to sell the Company's online recruitment offerings
using materials incorporating ADP's name and logo. As its commission for sales
made to ADP clients and prospects through orders procured by ADP, ADP is
entitled to retain a percentage of total monthly revenue to the Company for
job advertisements on CareerBuilder.com purchased through such ADP orders and
a percentage of total monthly revenue to the Company for job advertisements on
the other sites on the CareerBuilder Network purchased through such ADP
orders. ADP is also entitled to receive a percentage of the Company's revenue
from sales of online banner advertising to ADP customers and prospects whose
orders were procured by ADP, as well as other fees associated with account
installation and support. Based on the Company's current revenues, ADP will
receive commissions from 33 1/3% to 50% of revenue generated from job
advertisements from customers for which ADP served as sales agent. The Company
is also obligated to pay ADP a sales commission of 50% of all revenue received
from sales of banner advertising to customers for whom ADP served as sales
agent. In the year ended December 31, 1999, ADP received sales commissions of
approximately 39% of revenue from customers for which ADP acted as sales
agent. The agreement also generally prohibits ADP's Employer Services
Division, during the term of the agreement, from entering into any new joint
marketing, reseller, distribution or other arrangement with any other provider
of Internet recruitment offerings that offers products or services similar to
TeamBuilder Online in the United States or Canada. However, under the terms of
this agreement, if ADP determines that the CareerBuilder Network or
TeamBuilder Online have material inadequacies that reduce their ability to
perform competitively in relation to other online recruiting products, the
Company must correct the deficiencies specified by ADP or ADP is free to
market alternative online recruitment services, including those of the
Company's competitors, during the term of the agreement. The agreement
generally provides that, during the term of the agreement, the Company will
not enter into any new reseller, distribution or similar agreement with any
provider of human resources information systems offering payroll software or
payroll processing services similar to those offered by ADP to sell the
Company's online recruitment offerings in the United States or Canada, or with
another payroll or benefits administration provider. The ADP agreement
continues until January 23, 2002, and thereafter continues automatically
unless terminated by either of the parties. ADP can terminate the agreement at
any time after January 23, 2002 by giving the Company at least 120 days
written notice. The Company can terminate the agreement at any time after
January 23, 2002, after giving written notice to ADP ranging from one to three
years depending upon the total revenue generated from ADP customers and
prospects whose orders were procured by ADP. Notwithstanding termination of
the ADP agreement for any reason, ADP will be entitled to continue to receive
on an ongoing basis its allocated share of recurring revenue to the Company
derived from an ADP-acquired customer for as long as such customer continues
to receive any of the Company's online recruitment offerings for which orders
were procured by ADP.
In connection with the execution of the joint marketing and sales
representative agreement and its amendment and the sale of shares of capital
stock to ADP, the Company issued a warrant to ADP, which vests in three
installments. The first installment of 380,000 shares vested at the signing of
the amendment. The exercise price of the first installment is $12.00 per
share. Warrants for the second and third installments of up to 380,000 shares
of common stock each will vest based on ADP achieving specified revenue-based
milestones. The revenue-based milestones are measured for a specific time
period, by subtracting from total revenue received from customers for which
ADP has acted as sales agent, sales commissions paid to ADP. In order for the
March 2001 installment of the warrant to vest, revenue minus sales commission
for the period from April 1, 2000 through March 31, 2001 must exceed $10.2
million. In order for the minimum number of shares under the March 2002
installment to vest, the milestone of revenue minus sales commission for the
period from April 1, 2001 through March 31, 2002 must exceed $23.0 million,
with $30.0 million required to the maximum number of shares issuable under the
installment to vest. The exercise price for the second and third installments
is $5.00 per share. The ADP warrant contains antidilution provisions that
increase the number of shares for which the warrant is exercisable if the
Company issues additional equity securities primarily for financing purposes.
Each remaining installment of the warrant may be issuable upon exercise for a
maximum of 516,824 shares based on current antidilution calculations. The
number of shares of common stock issuable upon exercise of the warrant may
increase up to a maximum of 568,506 shares for each of the second and third
installments as a result of
I-10
these provisions. The first, second and third installments are each
exercisable, to the extent vested, during the five-year period following March
4, 1999, March 31, 2001 and March 31, 2002, respectively.
The Company is recognizing expenses under the first installment of the ADP
warrant. The Company may be required to record significant expenses if the
second and third installments of the ADP warrant vest. See Note 14 of Notes to
Financial Statements.
Stock Purchases By Affiliates
In January 1999, the Company issued shares of Class F Convertible Preferred
Stock to entities affiliated with directors of the Company and stockholders of
the Company at a purchase price of $5.45 per share. The number of shares of
Class F Convertible Preferred Stock issued to each entity is set forth below.
Upon completion of the Company's initial public offering, each share of Class
F Convertible Preferred Stock automatically converted into one share of Common
Stock.
Number of Shares of Class F
Name of Investor Convertible Preferred Stock
---------------- ---------------------------
New Enterprise Associates VI, Limited
Partnership................................ 279,792
ADP, Inc.................................... 63,232
Transactions with Microsoft
In May 1999, the Company entered into a service and distribution agreement
with Microsoft Corporation. In September 1999, pursuant to the terms of this
agreement, the Company began operating a career site for the Microsoft
Network. The service and distribution agreement has a term of two years, with
Microsoft able to extend the agreement for an additional two-year term at its
option. The Company is obligated to provide two individuals dedicated solely
to designing, developing and implementing unique Microsoft-specific features.
These Microsoft-specific developments may not be offered to other parties
without Microsoft's permission for six months following implementation. Under
the terms of the agreement, Microsoft is entitled to "most favored nations"
treatment with respect to revenue allocations relating to the sale of job
positions and advertisements that the Company may agree to in future
arrangements with any of its CareerBuilder Network affiliates. If Microsoft
achieves agreed upon website traffic goals based on percentages of projected
site visits, the Company will be obligated to make guaranteed revenue payments
of up to $786,000 in 1999, up to $3.0 million in 2000 and up to $1.8 million
in 2001. The Company has incurred expenses of $293,142 to Microsoft under this
agreement in 1999.
For a payment to the Company of not less than $18.0 million and not more
than $40.0 million, Microsoft may exercise, during the term of the service and
distribution agreement, a right to purchase a perpetual, royalty-free,
irrevocable license to the object code and source code for the software, job
posting databases and other components that make up the career center sites,
including the right to use a TeamBuilder Online product directly associated
with posting to the Microsoft sites. Upon exercise of this option, Microsoft
would be able to offer a job posting service to entities controlled by it.
Microsoft would be prohibited, however, from using the offerings subject to
the license to compete directly with the Company. The amount of the payment
Microsoft is required to make upon exercise of the license option is based on
calculations of revenues earned prior to the option exercise.
Also in May 1999, Microsoft purchased 1,372,817 shares of the Company's
Common Stock for an aggregate purchase price of $17,846,621, or $13.00 per
share. In addition, for no additional cash consideration the Company issued a
warrant to Microsoft representing the right to purchase 873,534 shares of
Common Stock at an exercise price of $13.00 per share. The warrant is
immediately exercisable in full.
Microsoft was not affiliated with the Company at the time the service and
distribution agreement was entered into.
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Other Transactions With Affiliates
The Company has adopted a policy that all transactions between it and its
executive officers, directors and affiliates must (i) be on terms no less
favorable to the Company than could be obtained from unaffiliated third
parties and (ii) be approved by a majority of the members of the Board of
Directors and by a majority of the disinterested members of the Board of
Directors.
Comparative Stock Performance
The following graph compares the cumulative total stockholder return on the
Common Stock of the Company from May 12, 1999 (the first trading date
following the Company's initial public offering) to December 31, 1999 with the
cumulative total return of (i) U.S. companies traded on the Nasdaq Stock
Market (the "Nasdaq Index") and (ii) an index of 5 similar publicly traded
companies (the "Peer Group"). The Peer Group is composed of E-Cruiter.com Inc.
Heqadhunter.Net Inc., HotJobs.com, topjobs.net plc and TMP Worldwide Inc. This
graph assumes the investment of $100.00 on May 12, 1999 in the Company's
Common Stock, the Nasdaq Index and the Peer Index, and assumes any dividends
are reinvested.
CareerBuilder, Inc. Nasdaq Index Peer Group
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May 12, 1999.................... 100 100 100
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December 31, 1999............... 50 157 195
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