Chegg 2014 Annual Report Download - page 62

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by the FTC, the Federal Communications Commission, states and through the availability of statutory damages
and class action lawsuits for violations of the TCPA.
Even if no relevant law or regulation is enacted, we may discontinue use or support of these activities if we become
concerned that students or potential students deem them intrusive or they otherwise adversely affect our goodwill and brand. If
our marketing activities are curtailed, our ability to attract new students may be adversely affected.
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 a decline in our stock price may affect our ability to
retain and motivate key employees, each of whom has been granted stock options, 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 could have a material adverse effect on us.
We have an outstanding $40.0 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 personally identifiable
information from students continues to be a focus of worldwide legislation and regulation. This includes significant regulation
in the European Union and legislation and compliance requirements in various jurisdictions around the world. Within the
United States, several states have enacted legislation that goes beyond any federal requirements relating to the collection and
use of personally identifiable information and other data from students. Examples include statutes adopted by the State of
California and most other States that require online services to report certain breaches of the security of personal data and a
California statute that requires companies to provide choice to California customers about whether their personal data is
disclosed to direct marketers or to report to California customers when their personal data has been disclosed to direct