Chegg 2013 Annual Report Download - page 74

Our business and growth may suffer if we are unable to hire and retain key personnel.
We depend on the continued contributions of our senior management and other key personnel. In particular,
we rely on the contributions of our Chief Executive Officer, Dan Rosensweig. All of our executive officers and
key employees are at-will employees, meaning they may terminate their employment relationship at any time.
We compensate our employees through a combination of salary, benefits and equity compensation. Volatility or
lack of positive performance in our stock price may affect our ability to retain and motivate key employees, each
of whom has been granted stock options, restricted stock units, (RSUs) or both. Competition for qualified
personnel can be intense, and we may not be successful in retaining and motivating such personnel, particularly
to the extent our stock price remains volatile or at a depressed level, as equity compensation plays an important
role in how we compensate our employees. Such individuals may elect to seek employment with other companies
that they believe have better long-term prospects. If we lose the services of one or more members of our senior
management team or other key personnel, or if one or more of them decides to join a competitor or otherwise
compete directly or indirectly with us, we may not be able to successfully manage our business or achieve our
business objectives. Our future success also depends on our ability to identify, attract and retain highly skilled
technical, managerial, finance and media procurement personnel. Qualified individuals are in high demand,
particularly in the San Francisco Bay Area where our executive offices are located, and we may incur significant
costs to attract them. If we are unable to attract or retain the personnel we need to succeed, our business may
suffer.
Our failure to comply with the terms of our revolving credit facility or term loan facility could have a material
adverse effect on us.
We have an outstanding $50.0 million revolving credit facility with an accordion feature subject to certain
financial criteria that would allow us to draw down to $75.0 million in total, with Bank of America as lender and
letter of credit issuer that expires in August 2016. We currently have no amount drawn down under our credit
facility. If we default on our credit obligations, our lenders may, among other things, require immediate
repayment of amounts drawn on our credit facilities, terminate our credit facilities or require us to pay significant
fees, penalties or damages.
The agreements governing our indebtedness contain various covenants, including those that restrict our
ability to, among other things:
• borrow money and guarantee or provide other support for indebtedness of third-parties;
• pay dividends on, redeem or repurchase our capital stock;
• make investments in entities that we do not control, including joint ventures;
• consummate a merger, consolidation or sale of all or substantially all of our assets;
• enter into certain asset sale transactions;
• enter into secured financing arrangements;
• enter into sale and leaseback transactions; and
• enter into unrelated businesses.
These covenants may limit our ability to effectively operate our businesses. Any failure to comply with the
restrictions of any agreement governing our other indebtedness may result in an event of default under those
agreements.
Government regulation of education and student information is evolving, and unfavorable developments could
have an adverse effect on our operating results.
We are subject to regulations and laws specific to the education sector because we offer our products and
services to students and collect data from students. Data privacy and security with respect to the collection of
28