<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ TO ______________
COMMISSION FILE NUMBER: 0-20735
------------------------
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
(Exact name of registrant as specified in its charter)
DELAWARE 04-2935271
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
91 HARTWELL AVENUE 02421
LEXINGTON, MA (zip code)
(Address of principal executive offices)
(781) 869-5000
(Registrant's Telephone Number)
------------------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the Registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer' s classes
of common stock as of the latest practicable date:
TITLE OF EACH CLASS
Common stock, $.01 par value, shares outstanding at August 10, 1999:
10,421,264 shares.
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<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
INDEX
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
Part I -- Financial Information
Item 1. Consolidated Financial Statements Consolidated Balance Sheets at June 30, 1999 and September 30,
1998............................................................................................. 3
Consolidated Statements of Operations for the three and nine months ended June 30, 1999 and June
30, 1998......................................................................................... 4
Consolidated Statements of Cash Flows for the nine months ended June 30, 1999 and June 30,
1998............................................................................................. 5
Notes to Consolidated Financial Statements....................................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations............ 11
Item 3. Quantitative and Qualitative Disclosure About Market Risk........................................ 19
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings................................................................................ 20
Item 2. Changes in Securities and Use of Proceeds........................................................ 20
Item 3. Defaults upon Senior Securities.................................................................. 20
Item 4. Submission of Matters to a Vote of Security Holders.............................................. 20
Item 5. Other Information................................................................................ 20
Item 6. Exhibits and Reports on Form 8-K................................................................. 20
PART III -- Signatures...................................................................................... 21
</TABLE>
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1999 1998
----------- -------------
<S> <C> <C>
(UNAUDITED)
ASSETS
Current Assets:
Cash and cash equivalents.......................................................... $ 2,563 $ 9,772
Short-term investments............................................................. 2,851 6,664
Accounts and installments receivable, less allowance for doubtful accounts of $400
at June 30, 1999 and September 30, 1998.......................................... 5,077 7,282
Other current assets............................................................... 1,890 1,445
Refundable income taxes............................................................ 310 135
Deferred income taxes.............................................................. 1,468 900
----------- -------------
Total current assets........................................................... 14,159 26,198
Long-term installments receivable, net............................................... 480 581
Property and equipment, net.......................................................... 3,374 2,967
Long-term investments................................................................ -- 893
Junglee investment, net.............................................................. 10,845 --
Other assets, net.................................................................... 594 792
----------- -------------
Total Assets................................................................... $ 29,452 $ 31,431
----------- -------------
----------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of capital lease obligations....................................... $ 14 $ 131
Accounts payable................................................................... 1,993 1,799
Accrued expenses................................................................... 2,986 3,272
Deferred revenue................................................................... 5,704 5,481
Accrued income taxes............................................................... 39 211
----------- -------------
Total current liabilities...................................................... 10,736 10,894
----------- -------------
Deferred income taxes................................................................ 19 19
----------- -------------
Deferred rent........................................................................ 212 195
----------- -------------
Stockholders' Equity:
Preferred stock, $.01 par value--Authorized--5,000,000 shares, Issued and
outstanding--none................................................................ -- --
Common stock, $.01 par value--Authorized--30,000,000 shares, Issued-- 10,776,377
shares at June 30, 1999, 9,022,674 shares at September 30, 1998.................. 108 90
Additional paid-in capital........................................................... 28,337 19,502
Treasury stock, at cost.............................................................. (831) (831)
Retained (deficit) earnings.......................................................... (9,129) 1,562
----------- -------------
Total stockholders' equity..................................................... 18,485 20,323
----------- -------------
Total Liabilities and Stockholders' Equity..................................... $ 29,452 $ 31,431
----------- -------------
----------- -------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
3
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
--------------------------- --------------------------
1999 1998 1999 1998
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue:
Product revenue....................................... $ 1,593 $ 4,322 $ 6,129 $ 12,486
Services revenue--Enterprise.......................... 3,111 2,966 9,393 8,836
Services revenue--Internet............................ 1,442 652 3,449 1,390
------------- ------------ ------------ ------------
Total revenue....................................... 6,146 7,940 18,971 22,712
------------- ------------ ------------ ------------
Cost of Revenue:
Product revenue....................................... 221 131 617 435
Services revenue--Enterprise.......................... 1,465 1,577 4,410 4,783
Services revenue--Internet............................ 1,275 778 2,847 1,992
------------- ------------ ------------ ------------
Total cost of revenue............................... 2,961 2,486 7,874 7,210
------------- ------------ ------------ ------------
Gross margin............................................ 3,185 5,454 11,097 15,502
------------- ------------ ------------ ------------
Operating Expenses:
Research and development.............................. 2,152 1,047 5,553 3,514
Sales and marketing................................... 2,561 2,891 8,523 7,926
General and administrative............................ 1,610 824 4,193 3,105
Amortization of Junglee investment.................... 1,914 -- 4,466 --
------------- ------------ ------------ ------------
Total operating expenses............................ 8,237 4,762 22,735 14,545
------------- ------------ ------------ ------------
(Loss) income from operations........................... (5,052) 692 (11,638) 957
Other income, net....................................... 102 153 379 432
------------- ------------ ------------ ------------
(Loss) income before (benefit) provision for income
taxes................................................. (4,950) 845 (11,259) 1,389
(Benefit) provision for income taxes.................... -- 338 (568) 555
------------- ------------ ------------ ------------
Net (loss) income....................................... $ (4,950) $ 507 $ (10,691) $ 834
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
Basic and diluted net (loss) income per common share.... $ (.49) .06 $ (1.10) $ .10
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
Basic weighted average number of common shares
outstanding........................................... 10,075,190 8,298,832 9,743,711 8,254,423
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
Diluted weighted average number of common shares
outstanding........................................... 10,075,190 8,558,121 9,743,711 8,555,022
------------- ------------ ------------ ------------
------------- ------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
--------------------------------
1999 1998
----------- -------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net (loss) income.............................................................. $ (10,691) $ 834
Adjustments to reconcile net (loss) income to net
cash (used in) provided by operating activities--
Depreciation and amortization................................................ 5,945 1315
Deferred income taxes........................................................ (568) --
Deferred rent................................................................ 17 17
Changes in assets and liabilities --
Accounts and installments receivable, net.................................. 2,205 (1,868)
Other current assets....................................................... (445) (596)
Refundable income taxes.................................................... (175) --
Long-term installments receivable.......................................... 101 --
Accounts payable........................................................... 194 184
Accrued expenses........................................................... (286) (247)
Deferred revenue........................................................... 223 1,459
Accrued income taxes....................................................... (172) 273
----------- -------
Net cash (used in) provided by operating
activities........................................................... (3,652) 1,371
----------- -------
Cash Flows from Investing Activities:
Investment in Junglee.......................................................... (6,782) --
Purchases of property and equipment............................................ (1,886) (1,060)
Maturities and purchases of short-term investments, net........................ 3,813 391
Maturities and purchases of long-term investments, net......................... 893 (584)
Change in other assets......................................................... 198 (5)
----------- -------
Net cash used in investing activities.................................. (3,764) (1,258)
----------- -------
Cash Flows from Financing Activities:
Payments of capital lease obligations.......................................... (117) (106)
Proceeds from exercise of common stock options................................. 219 204
Proceeds from employee stock purchase plan stock issuance...................... 105 106
----------- -------
Net cash provided by financing activities.............................. 207 204
----------- -------
Net decrease in Cash and Cash Equivalents........................................ (7,209) 317
----------- -------
Cash and Cash Equivalents, beginning of period................................... 9,772 5,745
----------- -------
Cash and Cash Equivalents, end of period......................................... $ 2,563 $ 6,062
----------- -------
----------- -------
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for
Interest..................................................................... $ 5 $ 16
----------- -------
Income taxes................................................................. $ 331 $ 282
----------- -------
Supplemental Schedule of Noncash Financing Activities
Issuance of Junglee Stock.................................................... $ 8,529 $ --
----------- -------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(1) BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Webhire, Inc. and its wholly-owned subsidiary, Restrac Securities Corporation,
collectively referred to in these Notes to Consolidated Financial Statements as
"Webhire" or "the Company". All intercompany accounts and transactions have been
eliminated in consolidation.
The consolidated financial statements of the Company presented herein,
without audit except for balance sheet information at September 30, 1998, have
been prepared pursuant to the rules of the Securities and Exchange Commission
for quarterly reports on Form 10-Q and do not include all of the information and
footnote disclosures required by generally accepted accounting principles. These
statements should be read in conjunction with the consolidated financial
statements and notes thereto for the year ended September 30, 1998 ("Fiscal
1998") included in the Company's Form 10-K filed with the Securities and
Exchange Commission on December 29, 1998.
The consolidated balance sheet as of June 30, 1999, the consolidated
statements of operations for the three and nine month periods ended June 30,
1999 and 1998, and the consolidated statements of cash flows for the nine month
periods ended June 30, 1999 and 1998, are unaudited but, in the opinion of
management, include all adjustments (consisting solely of normal, recurring
adjustments) necessary for a fair presentation of results for these interim
periods.
The consolidated results of operations for the three and nine month periods
ended June 30, 1999 are not necessarily indicative of the results to be expected
for the fiscal year ending September 30, 1999 ("Fiscal 1999").
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements reflect the application
of certain significant accounting policies described below and elsewhere in the
notes to the Fiscal 1998 consolidated financial statements referenced above.
(A) REVENUE RECOGNITION
Product revenue includes software license fees. Services revenue--Enterprise
includes customer maintenance fees and fees for training, installation and
consulting. Services revenue--Internet includes fees for scanning, job posting
services and Webhire Recruiter, formerly known as Restrac Webhire. The Company
recognizes product and services revenue in accordance with the provisions of
Statement of Position No. 97-2, SOFTWARE REVENUE RECOGNITION.
Product revenue from software license fees is recognized upon delivery
provided there are no significant Company obligations remaining and
collectibility of the revenue is probable. If an acceptance period is allowed,
revenue is recognized upon the earlier of the customer acceptance or the
expiration of the acceptance period, as defined in the applicable software
license agreement.
Installments receivable represent the present value of future payments
related to the financing of noncancelable term license agreements that provide
for payment in installments over a five-year period. A portion of each
installment is recognized as interest income in the accompanying consolidated
statements of operations.
6
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Services revenue from customer maintenance fees for postcontract support is
recognized ratably over the maintenance term, which is typically 12 months. When
customer maintenance fees are included in an initial software license fee, the
Company allocates approximately 15-17% of the software license fee to the first
year's maintenance. The amount allocated to customer maintenance fees for the
first year is comparable to customer maintenance fees charged separately by the
Company. Services revenue from training, installation, consulting, resume
scanning and job posting is recognized as the related services are performed.
Services revenue from Webhire Recruiter is recognized ratably over the service
term.
Deferred revenue represents payments received by the Company in advance of
product delivery or service performance.
(B) NET (LOSS) INCOME PER SHARE
SFAS No. 128, EARNINGS PER SHARE, establishes standards for computing and
presenting earnings per share and applies to entities with publicly held common
stock or potential common stock. In accordance with SFAS No. 128, basic net
(loss) income per share for the three and nine month periods ended June 30, 1999
and June 30, 1998 is calculated by dividing net (loss) income by the weighted
average number of common shares outstanding for those periods.
Diluted earnings per share includes the effect of dilutive securities. As a
net loss is presented for the three and nine month periods ended June 30, 1999,
the loss per share was based only on the weighted average number of common
shares outstanding. Common equivalent shares outstanding during the 1999 period
were not used as their inclusion would have been anti-dilutive.
The following table reconciles the weighted average common shares
outstanding to the shares used in computation of diluted weighted average common
shares outstanding:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ----------------------
<S> <C> <C> <C> <C>
1999 1998 1999 1998
------------ ---------- ---------- ----------
Weighted average common shares
outstanding............................ 10,075,190 8,298,832 9,743,711 8,254,423
Dilutive effect of options............... -- 259,289 -- 300,599
------------ ---------- ---------- ----------
Diluted weighted average common shares
outstanding............................ 10,075,190 8,558,121 9,743,711 8,555,022
</TABLE>
For both the three and nine month periods ended June 30, 1999, all 1,358,453
potential common shares were excluded from the above calculation as their effect
would have been anti-dilutive due to the Company's net loss in those periods.
For the three and nine month periods ended June 30, 1998, 213,500 and 210,500
weighted shares, respectively, have been excluded, as their effect would have
been anti-dilutive.
7
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(C) CASH AND CASH EQUIVALENTS
Cash equivalents are recorded at amortized cost and consist of highly liquid
investments with original maturities of three months or less.
(D) SHORT- AND LONG-TERM INVESTMENTS
Short-term investments consist of investments with original maturities
between three and twelve months. Long-term investments consist of investments
that will mature greater than twelve months from the balance sheet date. The
Company classifies these short- and long-term investments as held-to-maturity,
and accordingly, they are carried at amortized cost, which approximates market.
These investments consist of municipal debt securities.
The Company does not use derivative financial instruments in its investment
portfolio. The Company places its investments in instruments that meet high
quality standards, as specified in the Company's investment policy guidelines;
the policy also limits the amount of credit exposure to any one issue, issuer
and type of investment.
(3) JUNGLEE INVESTMENT
On November 18, 1998, the Company acquired certain assets and assumed
certain obligations of the Junglee Employment Services business of Amazon.com.
In exchange for cash of $6 million and 1,670,273 shares of Webhire common stock
valued at $8.5 million, Webhire received exclusive rights to Junglee's online
recruitment technologies. Webhire also acquired Junglee's Internet production
sites and assumed management and development of the employer and career site
business relationships established by Junglee Corp. ("Junglee"). Webhire did not
retain any Junglee personnel in connection with the transaction. The investment
is being amortized over 2 years.
(4) BUSINESS SEGMENT INFORMATION
Effective for the year ended September 30, 1998, the Company adopted SFAS
131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION, which
requires disclosure of financial and descriptive information about the Company's
reportable operating segments. The operating segments reported below are the
segments for which separate financial information is available and for which
operating profit/loss amounts are evaluated regularly by senior management in
deciding how to allocate resources and in assessing performance.
The Company has two reportable segments: enterprise software solutions and
Internet and transaction-based solutions, the latter of which started to emerge
in fiscal 1997 with the offering of outsourced services (E.G., resume scanning,
acknowledgement letters) and the research and development activities undertaken
for this segment. The Internet and transaction-based solutions segment provides
outsourced management of private candidate pools via Webhire Recruiter,
subscription services to public pools and job-posting sites, the job-posting
services initiated with the Junglee transaction, resume scanning, reference
checking and other fee-based staffing functions. The enterprise software
solutions segment provides perpetual licenses to the Company's software products
and the related maintenance, training, implementation and consulting services in
support of such licenses.
8
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(4) BUSINESS SEGMENT INFORMATION (CONTINUED)
The accounting policies of the segments are the same as those described in
the summary of significant accounting policies. Expenses related to general
corporate functions such as Information Technology, Finance and Human Resources
and general and administrative costs such as depreciation, rent and utilities
are allocated to the reportable segments based on relative headcount as a basis
of relative usage. Income tax provision (benefit) is allocated to the reportable
segments in deriving segment profit (loss) based on each segment's pro rata
income or loss before income tax provision (benefit). The Company has no
intersegment sales and transfers, and does not allocate assets to the operating
segments.
The Company's reportable segments are strategic business units that offer
different solutions tailored to a customer's needs. They are managed separately
because each business requires different technology and sales and marketing
strategies.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1999:
----------------------------------------------------
<S> <C> <C> <C> <C>
INTERNET AND ENTERPRISE
TRANSACTIONS SOFTWARE OTHER CONSOLIDATED
------------ ----------- ----------- ------------
Total Revenue................................. $ 1,442 $ 4,704 $ -- $ 6,146
Research & Development........................ $ 1,139 $ 1,013 $ -- $ 2,152
Depreciation and Amortization................. $ 2,059 $ 342 $ -- $ 2,401
Other Income, Net............................. $ -- $ -- $ 102 $ 102
Segment (Loss) Profit......................... $ (5,034) $ (18) $ 102 $ (4,950)
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1998:
------------------------------------------------------
<S> <C> <C> <C> <C>
INTERNET AND ENTERPRISE
TRANSACTIONS SOFTWARE OTHER CONSOLIDATED
------------- ----------- ----------- -------------
Total Revenue................................. $ 652 $ 7,288 $ -- $ 7,940
Research & Development........................ $ 74 $ 973 $ -- $ 1,047
Depreciation and Amortization................. $ 58 $ 390 $ -- $ 448
Other Income, Net............................. $ -- $ -- $ 153 $ 153
Segment (Loss) Profit......................... $ (373) $ 732 $ 148 $ 507
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30, 1999:
----------------------------------------------------
<S> <C> <C> <C> <C>
INTERNET AND ENTERPRISE
TRANSACTIONS SOFTWARE OTHER CONSOLIDATED
------------ ----------- ----------- ------------
Total Revenue................................. $ 3,449 $ 15,522 $ -- $ 18,971
Research & Development........................ $ 2,545 $ 3,008 $ -- $ 5,553
Depreciation and Amortization................. $ 4,826 $ 1,119 $ -- $ 5,945
Other Income, Net............................. $ -- $ -- $ 379 $ 379
Segment (Loss) Profit......................... $ (10,601) $ (444) $ 354 $ (10,691)
</TABLE>
9
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1999
(4) BUSINESS SEGMENT INFORMATION (CONTINUED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED JUNE 30, 1998:
----------------------------------------------------
<S> <C> <C> <C> <C>
INTERNET AND ENTERPRISE
TRANSACTIONS SOFTWARE OTHER CONSOLIDATED
------------ ----------- ----------- ------------
Total Revenue................................. $ 1,390 $ 21,322 $ -- $ 22,712
Research & Development........................ $ 501 $ 3,013 $ -- $ 3,514
Depreciation and Amortization................. $ 169 $ 1,146 $ -- $ 1,315
Other Income, Net............................. $ -- $ -- $ 432 $ 432
Segment (Loss) Profit......................... $ (1,248) $ 1,718 $ 364 $ 834
</TABLE>
(5) SUBSEQUENT EVENTS
(A) SOFTBANK INVESTMENT
On July 19, 1999, the Company entered into a stock purchase agreement with
Softbank Capital Partners LP and its affiliates (collectively, "Softbank"),
pursuant to which Softbank agreed to purchase in a private placement ( the
"Private Placement") 3,960,396 shares of common stock at a price per share of
$5.05, for an aggregate purchase price of $20,000,000. The purchase price of
$5.05 per share represented the average closing price of the common stock for
the twenty trading days immediately preceding the date the parties entered into
the stock purchase agreement. Consummation of the Private Placement is
conditioned upon, among other things, the approval of the stockholders of the
Company.
Also on July 19, 1999, Softbank entered into a separate stock purchase
agreement with Amazon.com, Inc. ("Amazon") to purchase 1,670,273 shares of the
common stock of Webhire held by Amazon. Assuming the consummation of the Private
Placement and the acquisition of common stock from Amazon, Softbank will own
5,630,669 shares of Webhire common stock, representing approximately 39.2% of
the total outstanding shares.
(B) YAHOO! INVESTMENT AND SERVICE AGREEMENT
On July 29, 1999, Webhire announced that Yahoo! Inc., a Softbank affiliate
("Yahoo!"), will share in the Private Placement with the purchase of at least
$1.5 million of the common stock of Webhire.
Additionally, Webhire and Yahoo! have entered into a service agreement
whereby, among other things, Webhire plans to provide resume management
technology and services to Yahoo! to create an online resume database, called
YAHOO! RESUMES.
(C) HIREWORKS, INC. ACQUISITION
On July 9, 1999, the Company acquired 100% of the outstanding capital stock
of HireWorks, Inc. in exchange for cash and common stock of Webhire valued at
approximately $2 million. HireWorks, Inc. is a developer of an Internet-based
candidate search agent to be called HireFast. The acquisition will be accounted
for as a purchase, and the majority of the purchase price will be allocated to
the technology acquired and will be amortized over two years.
Unaudited pro forma information related to the HireWorks acquisition is not
included as the impact is not material to the Company.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 1999 (CONTINUED)
This report contains forward looking statements that involve risks and
uncertainties. The statements contained in this report that are not purely
historical are forward looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities and
Exchange Act of 1934, as amended. Forward looking statements include, without
limitation, statements containing the words "Anticipates", "Believes",
"Expects", "Intends", "Future", and words of similar import which express
management's belief, expectations or intentions regarding the Company's future
performance. All forward looking statements included in this report are based on
information available to the Company on the date hereof, and the Company has no
obligation to update any such forward looking statements. The Company's actual
results could differ materially from its historical operating results and from
those anticipated in these forward looking statements as a result of certain
factors, including, without limitation, the factors described under "Factors
Affecting Future Operating Results" included at the end of this Item 2. You
should carefully review each of the factors set forth therein, and you should be
aware that there may be other factors that could cause these differences.
CONSOLIDATED RESULTS OF OPERATIONS (IN THOUSANDS)
REVENUE
Total revenue for the three and nine month periods ended June 30, 1999 was
$6,146 and $18,971 compared to $7,940 and $22,712 for the three and nine month
periods ended June 30, 1998, representing decreases of 23% and 16%,
respectively.
PRODUCT REVENUE. Product revenue, which relates to the enterprise software
solutions segment, was $1,593 for the three months ended June 30, 1999 compared
to $4,322 for the three months ended June 30, 1998. For the nine months ended
June 30, 1999, product revenue was $6,129 compared to $12,486 for the comparable
1998 period. Protracted sales cycles resulting from the transition to an
Internet/intranet product line, the introduction in the market of competitive
Internet-based and outsourced solutions, a general stagnation in sales of
client-server software solutions, and Year 2000 and other information technology
constraints were the primary contributors to this reduction. Because the
Company's product revenue consists of a small number of large dollar
transactions, wide fluctuations can be experienced from period to period. Such
fluctuations are not necessarily indicative of future results.
SERVICES REVENUE. Services revenue--Enterprise increased 5% to $3,111 and
6% to $9,393 for the three and nine months ended June 30, 1999, respectively, as
compared to $2,966 and $8,836 for the comparable 1998 periods. Services
revenue--Internet increased 121% to $1,442 and 148% to $3,449 for the three and
nine months ended June 30, 1999, respectively, as compared to $652 and $1,390
for the comparable 1998 periods. Continued growth of the customer base in the
emerging Internet segment accounts for the increases realized. There were 161
Webhire Recruiter customers as of June 30, 1999, compared to 34 the prior year.
11
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 1999 (CONTINUED)
COST OF REVENUE
COST OF PRODUCT REVENUE. Cost of product revenue represented 14% and 10% of
total product revenue for the three and nine months ended June 30, 1999,
respectively, as compared to 3% for both the three and nine months ended June
30,1998. The increase as a percentage of product revenue is due primarily to
increased costs in royalties due under third party licensing arrangements for
the Webhire Enterprise product.
COST OF SERVICES REVENUE.
Cost of Services revenue--Enterprise decreased 7% to $1,465 and 8% to $4,410
for the three and nine months ended June 30, 1999, respectively, as compared to
$1,577 and $4,783 for the comparable 1998 periods. These reductions, which
represent gross margin increases from 46-47% to 53%, are due to management's
cost containment measures.
Cost of Services revenue--Internet increased 64% to $1,275 and 43% to $2,847
for the three and nine months ended June 30, 1999, respectively, as compared to
$778 and $1,992 for the comparable 1998 periods. The increase in absolute
dollars is principally attributable to costs associated with Webhire Recruiter
and the introduction of services in connection with the Junglee transaction. The
decreases in costs as a percentage of revenues for the 1999 periods were
principally due to economies realized in the ramp-up in Internet and
transaction-based revenues during the first nine months of Fiscal 1999.
OPERATING EXPENSES
RESEARCH AND DEVELOPMENT. Research and development expenses were $2,152 or
35% of total revenue for the three months ended June 30, 1999 as compared to
$1,047 or 13% of total revenue for the comparable Fiscal 1998 period. For the
nine month period ended June 30, 1999, research and development expenses were
$5,553 or 29% of total revenue as compared to $3,514 or 15% of total revenue for
the comparable Fiscal 1998 period. This increase is primarily due to increases
in both personnel and consulting expenses in support of the Company's new and
existing product development initiatives. The Internet and transaction-based
solutions segment accounted for 53% and 46% of total research and development
expenses for the three and nine month periods ended June 30, 1999, as compared
to 7% and 14%, respectively, for the comparable Fiscal 1998 periods. All of the
Company's research and development costs have been expensed as incurred.
SALES AND MARKETING. Sales and marketing expenses were $2,561 or 42% of
total revenue and $8,523 or 45% of total revenue for the three and nine month
periods ended June 30, 1999, respectively, as compared to $2,891 or 36% of total
revenue and $7,926 or 35% of total revenue for the comparable Fiscal 1998
periods. The decrease in absolute dollars for the three month period ending June
30, 1999, is due primarily to a reduction of sales expenses (principally
commissions) in the enterprise division. The third fiscal quarter decrease was
partially offset by an expansion of the Webhire Recruiter sales force. The
Internet and transaction-based solutions segment accounted for 47% and 39% of
total sales and marketing expenses for the three and nine month periods ended
June 30, 1999, respectively, as compared to 14% and 13% of total sales and
marketing expenses for the comparable Fiscal 1998 periods. The Company expects
that sales and marketing expenses may vary from quarter to quarter as a
percentage of total revenue.
12
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 1999 (CONTINUED)
GENERAL AND ADMINISTRATIVE. General and administrative expenses were $1,610
or 26% of total revenue and $4,193 or 22% of total revenue for the three and
nine month periods ended June 30, 1999, respectively, as compared to $824 or 10%
of total revenue and $3,105 or 14% of total revenue for the comparable Fiscal
1998 periods. The absolute dollar increase for the three and nine month periods
of Fiscal 1999 as compared to Fiscal 1998 is the result of Information
Technology personnel increases in support of the Company's infrastructure.
OTHER INCOME, NET
Other income decreased to $102 for the three month period ended June 30,
1999 from $153 for the comparable Fiscal 1998 period due to lower investment
balances.
(BENEFIT) PROVISION FOR INCOME TAXES
The Company's effective tax rate was 0% and 5% for the three and nine month
periods ended June 30, 1999, respectively, as compared to 40% for both the three
and nine month periods of Fiscal 1998. The effective tax rate represents the
Company's estimate of the rate expected to be applicable for the full fiscal
year. The change in the effective tax rate resulted from the Company's taking a
benefit in Fiscal 1999 based on the anticipated refund of taxes paid in Fiscal
1998.
LIQUIDITY AND CAPITAL RESOURCES (IN THOUSANDS)
At June 30, 1999, the Company had cash and cash equivalents and short- and
long-term investments of $5,414, a decrease of $11,915 from $17,329 at September
30, 1998. Working capital was $3,423 at June 30, 1999 as compared to $15,304 at
September 30, 1998, a decrease of $11,881. The reductions were due principally
to cash outlays in connection with the Junglee transaction and cash used in
operating activities.
Use of cash in operating activities consisted mainly of the net loss for the
nine month period ended June 30, 1999 of $10,691, the offsetting effects of
depreciation and amortization of $5,945 and the timing of receipts and
disbursements, resulting in prepayment of certain expenses, decreases in
accounts and installments receivable and fluctuations in certain liabilities.
The Company used $3,764 in investing activities during the first nine months
of Fiscal 1999, principally for the investment in Junglee of $6,782 and the
purchase of property and equipment of $1,886 (primarily computer equipment).
To date, the Company has not invested in derivative securities or any other
financial instruments that involve a high level of complexity or risk. Cash has
been, and the Company contemplates that it will continue to be, invested in
interest-bearing, investment grade securities.
From time to time, the Company may evaluate potential acquisitions of
products, businesses and technologies that may complement or expand the
Company's business. The Company currently does not have any understandings,
commitments or agreements with respect to any such acquisitions. Any such
transactions consummated may use a portion of the Company's working capital or
require the issuance of equity or debt.
The Company believes that its current cash and cash equivalent and
short-term investment balances, the anticipated cash from the proposed Softbank
investment and any cash provided by future
13
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 1999 (CONTINUED)
operations will be sufficient to meet its working capital expenditure
requirements for the next twelve months. Although operating activities may
provide cash in certain periods, operating and investing activities may use cash
in other periods. Consequently, any future growth may require the Company to
obtain additional equity or debt financing.
IMPACT OF YEAR 2000 ISSUE
The following paragraphs in this section include "Year 2000 readiness
disclosure" within the meaning of the Year 2000 Information and Readiness
Disclosure Act.
The Year 2000 issue results from computer programs written with two digits
rather than four to define the applicable year. Any computer programs that have
date-sensitive software and are not Year 2000 compliant may recognize a date
using "00" as the year 1900 rather than the year 2000. This could result in a
system failure or miscalculations causing disruptions of operations, including,
among other things, a temporary inability to process transactions, send invoices
or engage in similar normal business activities.
The Company has attempted to make an assessment with regard to whether its
own internal information systems are Year 2000 compliant. In particular, the
Company has upgraded its accounting (excluding payroll) and customer management
systems with systems that are warranted by the vendors to be Year 2000
compliant. In addition, the Company plans to seek assurances from its existing
vendors whose systems are not warranted to be Year 2000 compliant that such
systems are Year 2000 compliant. Currently, the Company does not anticipate
purchasing additional systems. The Company does not separately track the
internal costs incurred for Year 2000 projects. Although the Company does not
believe that any additional Year 2000 compliance-related costs will be
significant, there can be no such assurance. Any failure of third-party
equipment or software comprising any part of the Company's systems to operate
properly with regard to Year 2000 and thereafter could require the Company to
incur unanticipated expenses to address associated problems. The Company has
received assurances that all material embedded systems included in the Company's
products are Year 2000 compliant.
The Company believes, based on an internal assessment, that the current
versions of its software products that are licensed to customers are Year 2000
compliant. Software that is used in the Company's service offerings is expected
to be compliant by the end of Fiscal 1999. The Company limits its contractual
warrantees on Year 2000 compliance to objective performance standards that the
Company has tested, and the Company makes no warrantees for nonconformance if
the Company's software products are combined with other software or data that
are not conducive to accurately calculating, comparing or sequencing date and
time data between the twentieth and twenty-first centuries. The Company has no
plan to ascertain whether the internal systems and products of its customers are
Year 2000 compliant. Although the Company has not been involved in any
litigation or proceeding to date involving its products or services related to
Year 2000 issues, there can be no assurance that the Company will not in the
future be required to defend its products or services or to negotiate
resolutions of claims based on Year 2000 issues.
The Company does not have any specific contingency plans if any Year 2000
problems develop with respect to the Company's embedded systems, systems
acquired from vendors or systems used by third parties with whom the Company has
a mutual relationship. Contingency plans will be developed if
14
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 1999 (CONTINUED)
it appears the Company or its key vendors will not be Year 2000 compliant, and
such non-compliance is expected to have a material adverse impact on the
Company's operations.
Year 2000 issues are affecting the purchasing patterns of customers and
potential customers in a variety of ways. Many companies are expending
significant resources to replace or remedy their current hardware and software
systems for Year 2000 compliance. These expenditures may result in reduced funds
available to purchase software products such as those offered by the Company.
The Company does not believe that there is any practical way to ascertain the
extent of such a reduction in purchasing resources of its customers. Any such
reduction could, however, result in a material adverse effect on the Company's
business, operating results and financial condition. The Year 2000 issue is
pervasive and complex, as virtually every computer operation will be affected in
some way. Consequently, no assurance can be given that Year 2000 compliance can
be achieved without significant additional costs.
FACTORS AFFECTING FUTURE OPERATING RESULTS
The Company operates in a dynamic and rapidly changing environment that
involves risks and uncertainties. The following section lists some, but not all,
of these risks and uncertainties which may have a material adverse effect on the
Company's business, financial condition or results of operations. This section
should be read in conjunction with the Consolidated Financial Statements and
Notes thereto, and Management's Discussions and Analysis of Financial Condition
and Results of Operations for the years ended September 30, 1998, 1997 and 1996
and for the quarters ended June 30, 1999 and 1998.
EMERGING MARKETS
The Company's future success is substantially dependent on broader
recognition of the potential benefits afforded by automated staffing software
and services and the growth in demand for such solutions. It is difficult to
assess the size of the market, the customer demands that will evolve, and the
competition that may emerge. There can be no assurance that the market for
automated staffing software and services will continue to grow or that the
introduction of new technologies or services will not render the Company's
existing software and services obsolete or unmarketable.
The market for automated staffing solutions is undergoing rapid changes
including continuing advances in technology and changes in customer requirements
and preferences. These market dynamics have been amplified by the emergence of
the Internet as a communications medium for staffing solutions. The Company's
future success will depend in significant part on its ability to continually
improve the performance, features and reliability of its software and services
in response to the evolving demands of the marketplace and competitive product
offerings, and there can be no assurance that the Company will be successful in
doing so. In addition, an element of the Company's business strategy is the
advancement of products, functionalities and other staffing solutions that
capitalize on the increasing use of the Internet and corporate intranets. There
can be no assurance that the Company will be successful in developing and
marketing products that will keep pace with technological changes in the market
or new technologies introduced by competitors or that it will satisfy evolving
consumer preferences. Maturation of Internet and intranet-based products,
functionalities and other staffing solutions will also depend on increased
acceptance of the Internet for staffing solutions and the development of the
necessary infrastructure to facilitate commercial
15
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 1999 (CONTINUED)
applications on the Internet. There can be no assurance of such acceptance or
infrastructure development. Failure to develop and introduce new products,
functionalities and other staffing solutions in a timely fashion could have a
material adverse effect on the Company's business, financial condition and
results of operations.
RISK OF NEW PRODUCT INTRODUCTIONS; RISK OF PRODUCT DEFECTS
As the marketplace for staffing solutions continues to evolve, the Company
plans to develop and introduce new products and services to enable it to
effectively address the changing needs of that market. There is no guarantee
that the Company will be able to develop new products or services or that such
solutions will achieve market acceptance or, if market acceptance is achieved
that the Company will be able to maintain such acceptance for a significant
period of time. Any inability of the Company to quickly develop products and
services that address changes in technology or customer demands may require the
Company to substantially increase development expenditures or result in loss of
market share to a competitor.
Products as complex as those offered by the Company may contain undetected
errors when first introduced or when new versions are released. The Company has
in the past discovered software errors in certain of its product offerings after
their introduction. There can be no assurance that, despite testing by the
Company, errors will not occur in new products or releases after commencement of
commercial shipments, resulting in adverse publicity, in loss of or delay in
market acceptance, or in claims by the customer against the Company, which could
have a material adverse effect on the Company's business, financial condition
and results of operations.
COMPETITION
The marketplace for staffing solutions is intensely competitive and is
rapidly changing. The Company encounters direct competition from a number of
companies providing staffing solutions, including (i) other human resource
staffing software companies, (ii) providers of general human resource
information systems, (iii) agencies providing or sourcing full-time, contract
and temporary labor, (iv) information systems departments of potential prospects
that develop custom software, (v) providers of other client/server application
software or document management systems and (vi) Internet-based staffing
solution providers.
Competition may increase from new market entrants or through consolidations
in the software industry and/or cooperative relationships among companies.
Although the Company believes that at the present time its products are
competitively priced, an increase in competition could result in price
reductions and loss of market share. Such competition and any resulting price
reductions could have a material adverse effect on the Company's business,
financial condition, and results of operations.
POTENTIAL FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company's results of operations have been, and may in the future be,
subject to significant quarterly fluctuations, due to a variety of factors,
including the relatively lengthy sales cycle for the Company's enterprise
products, the relatively large size of a typical enterprise product sale, the
timing of contracts, the introduction of new products by the Company or its
competitors, capital spending patterns of customers, the Company's sales
incentive strategy (which is based in part on annual sales
16
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 1999 (CONTINUED)
targets) and general economic conditions. A substantial portion of the Company's
enterprise sales often occurs during the last few weeks of each quarter;
therefore, any delays in orders or shipments are more likely to result in
revenue not being recognized until the following quarter. The Company's current
expense levels are based in part on its expectations of future revenue and, as a
result, net income for a given period could be disproportionately affected by
any reduction in revenue. There can be no assurance that the Company will be
able to achieve significant revenue, that the level of revenue in the future
will not decrease from past levels or that in some future quarter the Company's
revenue or operating results will not be below the expectations of stock market
securities analysts and investors. In such event, the Company's profitability
and price of its Common Stock would likely be materially and adversely effected.
MANAGEMENT OF CHANGE
The evolution of the Company's business and expansion of the Company's
customer base has resulted in substantial growth in the number of its employees
and the scope of its operations, resulting in increased responsibility for
management personnel. The Company's future results of operations will depend on
the ability of its officers and other key employees to continue to implement its
operational, customer support, and financial control systems and to expand,
train, and manage its employee base. There can be no assurance that the Company
will be able to manage any future expansion successfully, and any inability to
do so would have a material adverse effect on the Company's business, financial
condition and results of operations.
DEPENDENCE ON PRINCIPAL PRODUCT
The Company currently derives most of its revenue from its Webhire
Enterprise product (formerly Restrac Hire). As a result, any factor adversely
affecting sales of this product could have a material adverse effect on the
Company.
DEPENDENCE ON KEY PERSONNEL
The Company's future success depends to a significant extent on its senior
management and other key employees. The Company also believes that its future
success will depend in large part on its ability to attract and retain
additional key employees. Competition for such personnel in the computer
software industry is intense, and there can be no assurance that the Company
will be successful in attracting and training such personnel.
DEPENDENCE ON THIRD PARTIES
A key element of the Company's business strategy is to develop relationships
with leading industry organizations in order to increase the Company's market
presence, expand distribution channels and broaden the Company's product line.
The Company believes that its continued success depends in large part on its
ability to maintain such relationships and cultivate additional relationships.
There can be no assurance that the Company's existing strategic partners or
future strategic partners will not develop and market products in direct
competition with the Company or otherwise discontinue their relationships with
the Company, or that the Company will be able to successfully develop additional
strategic relationships.
17
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 1999 (CONTINUED)
In addition, certain technology incorporated in the Company's software is
licensed from third parties on a nonexclusive basis. The termination of any of
such licenses, or the failure of the third party licensers to adequately
maintain or update their products, could result in delay in the Company's
ability to ship certain of its products while it seeks to implement technology
offered by alternative sources. In addition, any required replacement licenses
could prove more costly than the Company's current license relationships and
might not provide technology as powerful and functional as the third-party
technology currently licensed by the Company. Also, any such delay, to the
extent it becomes extended or occurs at or near the end of a fiscal quarter,
could have a material adverse effect on the Company's results of operations for
that quarter. While it may be necessary or desirable in the future to obtain
other licenses relating to one or more of the Company's products or relating to
current or future technologies, there can be no assurance that the Company will
be able to do so on commercially reasonable terms or at all.
RELIANCE ON SINGLE CLIENT INTERFACE AND SINGLE SERVER PLATFORM
At the present time, the Company supports client (workstation) platforms
utilizing Microsoft's Windows family of software products, including Windows 95,
Windows 98 and Windows NT. If Microsoft were to fundamentally change the
architecture of its software product such that users of the Company's software
applications experienced significant performance degradation or were rendered
incompatible with future versions of Microsoft's Windows Operating System, the
Company's business, financial condition and results of operations could be
materially adversely effected. If a new client platform or other interface were
to gain broad acceptance in the marketplace, there can be no assurance that the
Company's architecture would be compatible with such an interface.
Certain of the Company's products exclusively operate on Microsoft's NT
Server and Internet Information Server (IIS) platforms. If Microsoft were to
fundamentally change the architecture of its server product such that users of
the Company's software applications experienced significant performance
degradation or were rendered incompatible with future versions of Microsoft's NT
Server or IIS, the Company's business, financial condition and results of
operations could be materially adversely effected. If a new type of server were
to gain broad acceptance in the marketplace, there can be no assurance that the
Company's architecture would be compatible with such a server.
LIMITED PROTECTION OF INTELLECTUAL PROPERTY AND DEPENDENCE ON PROPRIETARY
RIGHTS; RISK OF LITIGATION
The Company relies on a combination of copyright and trade secret laws,
employee and third party non-disclosure agreements and other methods to protect
its proprietary rights. There can be no assurance that the measures taken by the
Company to protect its proprietary rights will be adequate to prevent
misappropriation of its technology or independent development by others of
similar technology. The Company's inability to protect its proprietary rights
would have a material adverse effect on the Company's business, financial
condition and results of operations.
As the number of human resource application software products and services
in the industry increases and the functionality of these solutions further
overlaps, software developers and publishers may increasingly become subject to
infringement claims. There can be no assurance that third parties will not
assert infringement claims against the Company in the future with respect to
current or future products. Although the Company is not currently the subject of
any intellectual property litigation, there has been substantial litigation
regarding copyright, patent and other intellectual property rights
18
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE AND NINE MONTH PERIODS ENDED JUNE 30, 1999 (CONTINUED)
involving computer software companies. Any claims or litigation, with or without
merit, could be costly and could result in a diversion of management's
attention, which could have a material adverse effect on the Company's business,
financial condition and results of operations. Adverse determinations in such
claims or litigation may require the Company to obtain a license and/or pay
damages, which could also have a material adverse effect on the Company's
business, financial condition and results of operations.
PRODUCT LIABILITY
Although the Company has not experienced any product liability claims to
date, the sale and support of products by the Company and the incorporation of
products from other companies may entail the risk of product liability claims.
The Company's license agreements with its customers typically contain provisions
intended to limit the Company's exposure to such claims, but such provisions may
not be effective in limiting the Company's exposure. A successful product
liability action brought against the Company could adversely effect the
Company's business, financial condition and results of operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Information relating to quantitative and qualitative disclosure about market
risk is set forth under the caption "Short- and Long-Term Investments" in Note
2(d) of the Notes to Consolidated Financial Statements. The Company does not
have material foreign currency risks.
19
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
PART II--OTHER INFORMATION:
ITEM 1. LEGAL PROCEEDINGS
The Company is not involved in any pending legal proceedings other than
those arising in the ordinary course of the Company's business. Management
believes that the resolution of these matters will not materially affect the
Company's business or the financial condition of the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On June 3, 1999, the Company issued a warrant (the "Warrant") to purchase
114,659 shares of its common stock to Yahoo! in partial consideration for
Yahoo!'s agreement to enter into the Yahoo!, Inc. and Webhire, Inc. Services
Agreement. No registration under the Securities Act of 1933, as amended (the
"Securities Act"), was required in connection with the issuance of the Warrant
because the issuance was a transaction not involving a public offering (Section
4(2) of the Securites Act).
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits furnished as Exhibits hereto:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of June 9, 1999, by and among Webhire, Inc., HWK Acquisition
Corp., HireWorks, Inc. and the stockholders of HireWorks, Inc
10.1 Stock Purchase Agreement dated July 19, 1999, between Webhire, Inc. and Softbank Capital Partners, LP
10.2* Yahoo! Inc. and Webhire, Inc. Services Agreement dated as of June 3, 1999, by and between Yahoo! Inc.
and Webhire, Inc.
10.3* Amendment No. 1 to Yahoo! Inc. and Webhire, Inc. Services Agreement dated July 27, 1999, by and
between Yahoo! Inc. and Webhire, Inc.
27.1 Financial Data Schedule Pursuant to Regulation S-X
</TABLE>
- ------------------------
* Certain portions of this document have been omitted pursuant to a
confidential treatment request filed with the Securities and Exchange
Commission (the "Commission"). The omitted portions have been filed
separately with the Commission.
(b) No reports on Form 8-K were filed by the Company during the quarter ended
June 30, 1999.
20
<PAGE>
WEBHIRE, INC.
(FORMERLY RESTRAC, INC.)
PART III--SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
<TABLE>
<S> <C> <C>
WEBHIRE, INC.
/s/ MARTIN J. FAHEY
-----------------------------------------
Martin J. Fahey
Date: August 16, 1999 Chief Executive Officer
/s/ CYNTHIA G. EADES
-----------------------------------------
Cynthia G. Eades
Chief Financial Officer
</TABLE>
21
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
WEBHIRE, INC.,
HWK ACQUISITION CORP.,
HIREWORKS, INC.
AND
THE STOCKHOLDERS OF
HIREWORKS, INC.
Dated as of July 9, 1999
<PAGE>
AGREEMENT AND PLAN OF MERGER
INDEX
<TABLE>
<CAPTION>
<S> <C>
SECTION 1. THE MERGER......................................................................................1
1.1 The Merger......................................................................................1
1.2 Closing.........................................................................................2
1.3 Effective Time..................................................................................2
1.4 Effect of the Merger............................................................................2
1.5 Conversion of Securities........................................................................2
1.6 Cash and Stock Consideration....................................................................3
1.7 Conversion of Stock Options.....................................................................4
1.8 Cancellation of Stock Options...................................................................6
1.9 Principal Stockholder Approval and Waiver.......................................................6
1.10 Kelley Exercise, Termination and Severance......................................................6
1.11 Hamill Exercise.................................................................................6
1.12 Withholding Taxes...............................................................................6
1.13 Escrow Arrangements.............................................................................7
1.14 Release.........................................................................................7
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL STOCKHOLDERS....................8
2.1 Making of Representations and Warranties........................................................8
2.2 Organization and Qualifications of the Company; Residence.......................................8
2.3 Capital Stock of the Company; Beneficial Ownership..............................................9
2.4 Subsidiaries....................................................................................9
2.5 Authority of the Company and the Principal Stockholders.........................................9
2.6 Real and Personal Property.....................................................................11
2.7 Financial Statements...........................................................................11
2.8 Taxes..........................................................................................12
2.9 Collectibility of Accounts Receivable..........................................................13
2.10 Absence of Certain Changes.....................................................................14
2.11 Ordinary Course................................................................................15
2.12 Banking Relations..............................................................................15
2.13 Intellectual Property..........................................................................16
2.14 Contracts......................................................................................18
2.15 Litigation.....................................................................................20
2.16 Compliance with Laws...........................................................................20
2.17 Insurance......................................................................................20
2.18 Warranty or Other Claims.......................................................................20
2.19 Powers of Attorney.............................................................................20
2.20 Finder's Fee...................................................................................21
2.21 Permits; Burdensome Agreements.................................................................21
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
2.22 Corporate Records; Copies of Documents.........................................................21
2.23 Transactions with Interested Persons...........................................................21
2.24 Employee Benefit Programs......................................................................22
2.25 Environmental Matters..........................................................................22
2.26 List of Directors and Officers.................................................................22
2.27 Disclosure.....................................................................................22
2.28 Employees; Labor Matters.......................................................................23
2.29 Customers and Distributors.....................................................................23
SECTION 3. INVESTMENT REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS........................24
SECTION 4. REPRESENTATIONS AND WARRANTIES OF WEBHIRE AND ACQUISITION CORP.................................25
4.1 Making of Representations and Warranties.......................................................25
4.2 Organization...................................................................................25
4.3 Capital Stock of Webhire.......................................................................25
4.4 Authority......................................................................................26
4.5 SEC Reports....................................................................................26
4.6 Finder's Fee...................................................................................27
4.7 Disclosure.....................................................................................27
4.8 Tax-Free Reorganization........................................................................27
SECTION 5. CONDITIONS.....................................................................................27
5.1 Conditions to the Obligations of Webhire and the Acquisition Corp..............................27
5.2 Conditions to Obligations of the Company and the Principal Stockholders........................30
SECTION 6. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING...................................................31
6.1 Survival of Representations, Etc...............................................................31
6.2 Kelley Severance Payment.......................................................................31
6.3 Option Cancellation Payments...................................................................31
6.4 Confidentiality; Trading in Webhire Stock......................................................31
SECTION 7. INDEMNIFICATION......................................................................................32
7.1 Indemnification by the Principal Stockholders..................................................32
7.2 Limitations on Indemnification by the Principal Stockholder....................................32
7.3 Notice; Defense of Claims......................................................................33
7.4 Fair Market Value..............................................................................34
7.5 Indemnification by Webhire.....................................................................34
7.6 Limitation on Indemnification by Webhire.......................................................34
7.7 Stockholder Representative.....................................................................35
SECTION 8. MISCELLANEOUS........................................................................................35
8.1 Fees and Expenses..............................................................................35
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
8.2 Governing Law..................................................................................36
8.3 Notices........................................................................................36
8.4 Entire Agreement...............................................................................37
8.5 Assignability; Binding Effect..................................................................37
8.6 Captions and Gender............................................................................38
8.7 Execution in Counterparts......................................................................38
8.8 Amendments.....................................................................................38
8.9 Severability...................................................................................38
8.10 Publicity and Disclosures......................................................................38
8.11 Arbitration....................................................................................38
8.12 Consent to Jurisdiction........................................................................39
8.13 Specific Performance...........................................................................40
</TABLE>
(iii)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 9, 1999 (the
"Agreement"), by and among WEBHIRE, INC., a Delaware corporation
("Webhire"), HWK ACQUISITION CORP., a Delaware corporation
(the "Acquisition Corp"), HIREWORKS, INC., a Delaware corporation (the
"Company"), and Henry M. Margolis ("Margolis"), Deborah Hamill ("Hamill")
and Brian K. Kelley ("Kelley" and, collectively with Margolis and Hamill, the
"Principal Stockholders").
WHEREAS, upon the terms and subject to the conditions of this Agreement
and in accordance with the General Corporation Law of the State of Delaware
("Delaware Law"), Webhire, the Acquisition Corp and the Company desire to
enter into a business combination transaction pursuant to which the Acquisition
Corp will merge with and into the Company (the "Merger");
WHEREAS, the Board of Directors of the Company has adopted a resolution
approving this Agreement pursuant to Section 251(b) of Delaware Law;
WHEREAS, the Board of Directors of the Acquisition Corp has adopted a
resolution approving this Agreement pursuant to Section 251(b) of Delaware Law;
WHEREAS, each of Webhire, the sole stockholder of the Acquisition Corp,
and the Principal Stockholders, the sole stockholders of the Company, has
adopted this Agreement in accordance with Section 251(c) of Delaware Law; and
WHEREAS, the parties intend that the Merger shall qualify as a tax-free
reorganization under Section 368(a)(1)(A) of the Internal Revenue Code of 1986,
as amended (the "Code") by reason of Section 368(a)(2)(E) of the Code.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Webhire, the Acquisition Corp, the Company, and the Principal
Stockholders hereby agree as follows:
SECTION 1. THE MERGER.
1.1 THE MERGER. Upon the terms and subject to the conditions set forth
in this Agreement, and in accordance with the relevant provisions of Delaware
Law, at the Effective Time (as defined in Section 1.3), the Acquisition Corp
shall be merged with and into the Company. As a result of the Merger, the
separate corporate existence of the Acquisition Corp shall cease and the Company
shall continue as the surviving corporation of the Merger (the "Surviving
Corporation").
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1.2 CLOSING. The closing of the Merger (the "Closing") will be held on
the date hereof at the offices of Goodwin, Procter & Hoar LLP, Exchange Place,
Boston, Massachusetts (or such other place and date as the parties may agree)
or, if all of the conditions to the obligations of the parties hereto have not
been satisfied or waived by such date, on such mutually agreeable later date as
soon as practicable after the satisfaction or waiver of all conditions to the
obligations of the parties hereto (the "Closing Date").
1.3 EFFECTIVE TIME. As of the Closing, the parties hereto shall cause
the Merger to be consummated by filing a certificate of merger (the "Certificate
of Merger") with the Secretary of State for the State of Delaware in such form
as required by, and executed in accordance with, the relevant provisions of,
Delaware Law (the date and time of such filing being the "Effective Time").
1.4 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in Section 259 of Delaware Law. Without limiting the
generality of the foregoing, and subject to Section 259 of Delaware Law, at the
Effective Time, except as otherwise provided herein, all of the property,
rights, privileges, powers and franchises of the Company and the Acquisition
Corp shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and the Acquisition Corp shall become the debts,
liabilities and duties of the Surviving Corporation. At the Effective Time, the
Certificate of Incorporation of the Acquisition Corp as in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation and the By-Laws of the Acquisition Corp as in effect
immediately prior to the Effective Time shall become the By-Laws of the
Surviving Corporation. At the Effective Time, the sole director of the Surviving
Corporation shall be Cynthia G. Eades. The initial officers of the Surviving
Corporation shall be as specified in a resolution of the Board of Directors
adopted after the Effective Time.
1.5 CONVERSION OF SECURITIES. At the Effective Time and without any
action on the part of Webhire, the Acquisition Corp, the Company, the Principal
Stockholders or any other holders of any of the securities of any of those
corporations:
(a) each share of the Company's common stock, par value $.01
per share (the ACompany Stock"), issued and outstanding immediately prior to the
Effective Time shall be converted into the right to receive the following
consideration without interest thereon and only upon the surrender of the
certificate formerly representing such share of Company Stock: (i) the Per Share
Cash Payment (as defined in Section 1.6(a) below) and (ii) the Per Share Stock
Payment (as defined in Section 1.6(b) below);
(b) each share of Company Stock held in the treasury of the
Company immediately prior to the Effective Time shall automatically be canceled
and extinguished without any conversion thereof and no payment shall be made
with respect thereto;
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(c) each share of common stock of Acquisition Corp issued and
outstanding immediately prior to the Effective Time shall be converted into and
exchangeable for one validly issued, fully paid and nonassessable share of the
common stock of the Surviving Corporation; and
(d) the stock transfer books of the Company shall be closed,
and there shall be no further registration of transfers of shares of Company
Stock thereafter on the records of the Company.
1.6 CASH AND STOCK CONSIDERATION.
(a) CASH PURCHASE PRICE AT CLOSING. The aggregate cash
consideration payable by Webhire to the stockholders of the Company for their
Company Stock (the "Aggregate Cash Purchase Price") shall be the product
obtained by multiplying (i) the Number of Outstanding Company Shares by (ii) the
Per Share Cash Payment. For purposes of this Agreement, the following terms
shall have the following meanings: (A) the "Number of Outstanding Company
Shares" shall mean the total number of shares of Company Stock outstanding
immediately prior to the Effective Time; (B) the "Per Share Cash Payment" shall
mean the product obtained by multiplying (i) the Per Share Fully-Diluted Share
Value by (ii) ten percent (10%); (C) the "Per Share Fully-Diluted Share Value"
shall mean the quotient obtained by dividing (i) the Fully-Diluted Share Value
by (ii) the Number of Fully-Diluted Company Shares; (D) the "Number of
Fully-Diluted Company Shares" shall mean the total number of shares of Company
Stock outstanding immediately prior to the Closing assuming the exercise at such
time of all outstanding options to purchase shares of Company Stock, including
the Canceled Options (as defined in Section 1.8 below) (the "Company Options");
(E) the "Fully-Diluted Share Value" shall mean $1,997,500 less the Company
Deficit; and (F) the "Company Deficit" shall mean the greater of (i) the amount
by which the Company's total liabilities through and including the Closing
(other than the Company's legal expenses to be paid by Webhire pursuant to
Section 8.1 hereof, the Kelley Severance Payment (defined in Section 1.10 hereof
and the Hamill Option Payment (defined in Section 1.8 hereof)) exceed the
Company's total current assets as reflected on the balance sheet of the Company
as of the close of business on the Closing Date and (ii) $0.00. Such Closing
Date balance sheet shall be prepared on a pro forma basis (the "Closing Date
Balance Sheet") and shall be delivered by the Company two business days prior to
the Closing Date. SCHEDULE 1.6(a) sets forth the allocation of the Aggregate
Cash Purchase Price among the Principal Stockholders, such Schedule having been
prepared in reliance upon the certificate of the President of the Company and
the Principal Stockholders delivered to Webhire pursuant to Section 5.1(l) of
this Agreement.
(b) STOCK CONSIDERATION. The aggregate number of shares of
Webhire common stock, par value $.01 per share ("Webhire Common Stock"),
issuable by Webhire to the stockholders of the Company for their Company Stock
shall be the product obtained by multiplying (a) the Number of Outstanding
Company Shares by (b) the Per Share Stock
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Payment (the "Webhire Stock"). The "Per Share Stock Payment" shall mean the
product obtained by multiplying (i) the Exchange Ratio by (ii) ninety percent
(90%). The "Exchange Ratio" shall be equal to the quotient obtained by dividing
(i) the Per Share Fully-Diluted Share Value by (ii) the Webhire Per Share Market
Value. For purposes of the forgoing, the "Webhire Per Share Market Value" shall
be the arithmetic average of the per share closing sales prices of Webhire
Common Stock as reported on the Nasdaq National Market ("NASDAQ") on the twenty
(20) trading days ending on and including the trading day which is two (2)
trading days immediately prior to the Closing Date. No fractional shares of
Webhire Common Stock shall be issued pursuant to this Agreement. In lieu of the
issuance of any fractional shares of Webhire Common Stock pursuant to this
Agreement, each holder of Company Stock shall be paid an amount in cash (without
interest), rounded to the nearest cent, determined by multiplying (i) the
Webhire Per Share Market Value by (ii) the fractional amount of a share of
Webhire Company Stock which such holder would otherwise be entitled to receive
under this Section 1.6(b) after aggregating all shares of Webhire Common Stock
into which the shares of Company Stock held by such holder shall be converted.
SCHEDULE 1.6(b) sets forth the allocation of the Webhire Common Stock among the
Principal Stockholders, such Schedule having been prepared in reliance upon the
certificate of the President of the Company and the Principal Stockholders
delivered to Webhire pursuant to Section 5.1(l) of this Agreement and the
certificate of the Chief Financial Officer of Webhire delivered to the Company
pursuant to Section 5.2(g) of this Agreement.
1.7 CONVERSION OF STOCK OPTIONS.
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(a) At the Effective Time, options to purchase an aggregate of
315,000 shares of Company Stock held by Hamill immediately prior to the
Effective Time (the "Assumed Options") shall cease to represent a right to
acquire shares of Company Stock and shall be converted automatically into
options to acquire, under the same terms and conditions as were applicable to
such Assumed Options immediately prior to the Effective Time (e.g., among other
things, such Assumed Options shall be fully vested), shares of Webhire Common
Stock, and Webhire shall assume the Assumed Options and the option agreements
pursuant to which the Assumed Options were granted; PROVIDED, HOWEVER, that from
and after the Effective Time, (i) the number of shares of Webhire Common Stock
purchasable upon exercise of each Assumed Option shall be equal to the number of
shares of Company Stock that were purchasable under such Assumed Option
immediately prior to the Effective Time multiplied by the Exchange Ratio
rounding to the nearest whole share, (ii) the per share exercise price under
each such Assumed Option shall be adjusted by dividing the per share exercise
price of each such Assumed Option by the Exchange Ratio, rounding to the nearest
cent, (iii) Section 14 of the option agreements pursuant to which such Assumed
Options were granted, and all references thereto in the option agreements, shall
no longer apply to such Assumed Options, and (iv) Section 17 of the Company's
1998 Stock Option/Stock Issuance Plan shall no longer apply to such agreements.
The terms of each Assumed Option shall, in accordance with its terms, be subject
to further adjustment as appropriate to reflect any stock split, stock dividend,
recapitalization or other similar transaction with respect to Webhire Common
Stock on or subsequent to the Effective Time. Notwithstanding the foregoing, the
number of shares and the per share exercise price of each Assumed Option which
is intended to be an "incentive stock option" (as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code")) shall be adjusted in
accordance with the requirements of Section 424 of the Code. Accordingly, with
respect to any incentive stock options, fractional shares shall be rounded down
to the nearest whole number of shares and where necessary the per share exercise
price shall be rounded up to the nearest cent. SCHEDULE 1.7(A) sets forth the
aggregate number of shares of Webhire Common Stock purchasable upon exercise of
the Assumed Options as well as the exercise price per share.
(b) As soon as practicable after the Effective Time, Webhire
shall deliver to Hamill an appropriate notice setting forth Hamill's rights
pursuant thereto, and such Assumed Options shall continue in effect on the same
terms and conditions except as provided in Section 1.7(a) hereof or as set forth
in such notice.
(c) At or prior to the Effective Time, Webhire shall reserve
for issuance the number of shares of Webhire Common Stock necessary to satisfy
Webhire's obligations under Section 1.7(a). At or prior to the Effective Time,
Webhire shall file with the Securities and Exchange Commission ("SEC") a
registration statement on Form S-8 (to the extent such form is available) under
the Securities Act of 1933, as amended (the "Securities Act"), with respect to
the shares of Webhire Common Stock subject to Assumed Options assumed pursuant
to Section 1.7(a) hereof, and shall use its reasonable best efforts to maintain
the current status of
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the prospectus contained therein, as well as comply with any applicable state
securities or "blue sky" laws, for so long as such Assumed Options remain
outstanding.
1.8 CANCELLATION OF STOCK OPTIONS. Options to purchase an aggregate of
35,000 shares of Company Stock held by Hamill immediately prior to the Effective
Time shall, immediately prior to the Effective Time, be canceled by the Company
(the "Canceled Options") and Hamill shall be entitled to receive from Webhire,
on the Closing Date and in consideration of the cancellation of the Canceled
Options, cash consideration equal to the aggregate Per Share Fully-Diluted Share
Value of the Canceled Options less the aggregate per share exercise price of the
Canceled Options (the "Hamill Option Payment"). The Company shall take all
actions necessary to ensure that all Canceled Options shall terminate and be
canceled as of the Effective Time and thereafter shall be of no further force or
effect. SCHEDULE 1.8 sets forth the aggregate cash consideration Hamill is to
receive in consideration for the cancellation of her Canceled Options, such
Schedule having been prepared in reliance upon the certificate of the President
of the Company and the Principal Stockholders delivered to Webhire pursuant to
Section 5.1(l) of this Agreement.
1.9 PRINCIPAL STOCKHOLDER APPROVAL AND WAIVER. Each of the Principal
Stockholders agrees that his or her execution and delivery of this Agreement
shall constitute his or her vote for adoption of this Agreement in accordance
with, and his or her written waiver of any notice required by or appraisal
rights with respect to the transactions contemplated hereby arising under,
Delaware Law.
1.10 KELLEY EXERCISE, TERMINATION AND SEVERANCE. Prior to the Closing,
Kelley: (i) shall exercise all of his options to purchase Company Stock (the
"Kelley Options") in accordance with their terms, and (ii) shall terminate his
employment and resign all of his offices with the Company and accept a
salary/bonus payment of $37,500 (which amount shall be paid by the Company prior
to the Closing) (the "Kelley Salary/Bonus Payment") and a severance payment of
$45,000 (which amount shall be paid by Webhire on the Closing Date) (the "Kelley
Severance Payment") in satisfaction in full of the obligations of the Company to
him with respect to such employment.
1.11 HAMILL EXERCISE. Prior to the Closing, Hamill shall exercise
options to purchase 150,000 shares of Company Stock in accordance with their
terms and, after such exercise and prior to the option conversions and
cancellations referred to in Sections 1.7 and 1.8 hereof, Hamill shall have
outstanding options to purchase an aggregate of 350,000 shares of Company Stock.
1.12 WITHHOLDING TAXES. All payments pursuant to this Agreement will be
net of applicable withholding taxes which are required to be paid, and the
parties hereto will cooperate in ensuring that the proper amounts are withheld
and paid over to the appropriate authorities and that all applicable forms which
Webhire reasonably determines need to be filed are so filed with the appropriate
authorities.
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1.13 ESCROW ARRANGEMENTS. Webhire shall place twenty-five percent (25%)
of the cash to be paid to the Principal Stockholders pursuant to Section 1.6(a),
allocated pro rata among the Principal Stockholders in proportion to the
relative cash proceeds each receives pursuant to Section 1.6(a) as set forth on
SCHEDULE 1.6(a), and twenty-five percent (25%) of the Hamill Option Payment,
allocated entirely to Hamill as set forth on SCHEDULE 1.8 (collectively, the
"Escrowed Cash"), in escrow pursuant to the terms of the Escrow Agreement, to be
dated as of the date of the Closing, substantially in the form attached as
EXHIBIT A hereto (the "Escrow Agreement"). Furthermore, pursuant to the Escrow
Agreement, Webhire shall place twenty-five percent (25%) of the shares of
Webhire Stock to be issued to the Principal Stockholders pursuant to Section
1.6(b) as set forth on SCHEDULE 1.6(b) and twenty-five percent (25%) of the
Assumed Options to purchase shares of Webhire Common Stocks to be received by
Hamill pursuant to Section 1.7 as set forth on SCHEDULE 1.13, allocated pro rata
among the Principal Stockholders in proportion to the number of shares of
Webhire Stock and the number of Assumed Options each receives pursuant to
Sections 1.6(b) and 1.7, respectively (collectively, the "Escrowed Stock" and,
with the Escrowed Cash, the "Escrowed Amount") in escrow pursuant to the terms
of the Escrow Agreement. The Escrowed Amount shall serve as partial security for
the faithful performance of the indemnity obligations of the Principal
Stockholders to the Buyer Indemnified Parties (as defined in Section 7.1 below)
under Section 7 hereof and will be subject to transfer to the Buyer Indemnified
Parties in satisfaction of the indemnification obligations of the Principal
Stockholders as provided in this Agreement and the Escrow Agreement. Subject to
the terms of Section 7 of this Agreement and the terms of the Escrow Agreement,
the Escrowed Amount, less (a) any amount which shall be transferred to the Buyer
Indemnified Parties pursuant to the terms of this Agreement and the Escrow
Agreement and (b) any Reserved Amount (as defined in the Escrow Agreement),
shall be released to the Principal Stockholders on July 9, 2000.
1.14 RELEASE. Each Principal Stockholder releases and forever
discharges Webhire, Acquisition Corp and the Company, each of the present and
former shareholders, directors, officers, employees, agents, affiliates and
representatives of the foregoing and their respective successors and assigns
(each a "Released Party") of and from any and all commitments, covenants,
agreements, indebtedness, suits, demands, obligations and liabilities,
contingent or otherwise, of every kind and nature, whether known or unknown,
related to such Stockholder's relationship with the Company, including claims
(including but not limited to any claims which relate to or arise out of such
Principal Stockholder's prior relationship with the Company or stock ownership
in the Company or extension of credit to the Company) and causes of action both
at law and in equity, which such Stockholder and/or his heirs, executors,
administrators or assigns ever had, now has or, to the extent arising from or in
connection with any act, omission or state of facts taken or existing on or
prior to the Effective Time, may have after the date hereof, against any
Released Party, whether asserted, unasserted, absolute, contingent, known or
unknown, other than claims or causes of action arising from or related to this
Agreement or any agreement or instrument executed and delivered pursuant to
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this Agreement. In addition, such Principal Stockholder (i) has not assigned any
claim or possible claim against any Released Party, (ii) has made an informed
and knowledgeable decision with regard to entering into this Agreement, fully
intends to be legally bound by the terms of this Agreement (including this
Section 1.14) and to release all claims against the Released Parties including,
without limitation, known, unknown and contingent claims, and (iii) has had an
opportunity to review this Section 1.14 with counsel and understands the
consequences hereof.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
PRINCIPAL STOCKHOLDERS.
2.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement
to Webhire and the Acquisition Corp to enter into this Agreement and consummate
the transactions contemplated hereby, the Company and each of the Principal
Stockholders jointly and severally make to Webhire and the Acquisition Corp the
representations and warranties contained in this Section 2; provided, however,
that (i) no Principal Stockholder or other person or entity shall have any right
of indemnity or contribution from the Company or the Surviving Corporation with
respect to any breach of representation or warranty hereunder, (ii) the
warranties in Sections 2.3(b) and 2.5(b) are only made severally by each
Principal Stockholder with respect to his own Company Stock, options to purchase
Company Stock ("Company Options") and/or other securities of the Company, and
(iii) the representations and warranties are subject to the disclosure schedules
attached hereto, the section numbers of which shall correspond to the section
numbers of this Agreement. Whenever any representation or warranty is made to
the knowledge of the Company or to the best knowledge of the Company, such
knowledge means and is limited to the knowledge which is actually known or, in
the exercise of their respective responsibilities for the Company, reasonably
should have been known, by any of the Principal Stockholders.
2.2 ORGANIZATION AND QUALIFICATIONS OF THE COMPANY; RESIDENCE. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of Delaware with full corporate power and authority to own or
lease its properties and to conduct its business in the manner and in the places
where such properties are owned or leased or such business is currently
conducted or proposed to be conducted. The copies of the Company's Certificate
of Incorporation as amended to date, certified by the Delaware Secretary of
State, and of the Company's By-laws as amended to date, certified by the
Company's Secretary, and heretofore delivered to Webhire's counsel, are complete
and correct, and no amendments thereto are pending. The Company is not in
violation of any term of its Certificate of Incorporation or By-laws. The
Company is not required to be licensed or qualified to conduct its business or
own its property in any jurisdiction other than Delaware or Massachusetts. None
of the Principal Stockholders is, or has been since the date such Stockholder
became a stockholder of the Company, and none of the former holders of the
Common Stock at the time
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they owned such Common Stock was, a nonresident alien (as referenced in Section
1361(b)(C) of the Code).
2.3 CAPITAL STOCK OF THE COMPANY; BENEFICIAL OWNERSHIP.
(a) The authorized capital stock of the Company consists of
5,000,000 shares of Company Stock, $.01 per share, of which 1,700,000 shares are
duly and validly issued, outstanding, fully paid and non-assessable and of which
3,300,000 shares are authorized but unissued. Except for options granted to
Hamill to purchase up to 350,000 shares of Company Stock at an exercise price of
$.10 per share, there are no outstanding options, warrants, rights, commitments,
preemptive rights or agreements of any kind for the issuance or sale of, or
outstanding securities convertible into, any additional shares of capital stock
of any class of the Company. None of the Company's capital stock has been issued
in violation of any federal or state law. There are no voting trusts, voting
agreements, proxies or other agreements, instruments or undertakings with
respect to the voting of the Company Stock to which the Company or any of the
Principal Stockholders is a party.
(b) Each of the Principal Stockholders owns beneficially and
of record the number of shares of Company Stock and/or Company Options set forth
opposite such Principal Stockholder's name on SCHEDULE 2.3(b) hereto, free and
clear of any liens, restrictions, encumbrances or other adverse claims.
2.4 SUBSIDIARIES. The Company has no subsidiaries or investments in, or
loans to, any other corporation, business organization or entity.
2.5 AUTHORITY OF THE COMPANY AND THE PRINCIPAL STOCKHOLDERS.
(a) The Company has full right, authority and power to enter
into this Agreement and each agreement, document and instrument to be executed
and delivered by the Company pursuant to this Agreement and to carry out the
transactions contemplated hereby. The execution, delivery and performance by the
Company of this Agreement and each such other agreement, document and instrument
have been duly authorized by all necessary action of the Company and no other
action on the part of the Company or the Principal Stockholders is required in
connection therewith.
This Agreement and each agreement, document and instrument executed and
delivered by the Company pursuant to this Agreement constitutes, or when
executed and delivered will constitute, valid and binding obligations of the
Company enforceable in accordance with their terms. The execution, delivery and
performance by the Company of this Agreement and each such agreement, document
and instrument:
(i) do not and will not violate any provision of
the Certificate of Incorporation or By-laws of the Company;
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(ii) do not and will not violate any laws of the
United States, or any state or other jurisdiction applicable to the
Company or require the Company to obtain any approval, consent or
waiver of, or make any filing with, any person or entity (governmental
or otherwise) (including, without limitation, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act")) that has not been
obtained or made; and
(iii) do not and will not result in a breach of,
constitute a default under, require any consent under, accelerate any
obligation under, or give rise to a right of termination of any
indenture or loan or credit agreement or any other agreement, contract,
instrument, mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award to
which the Company is a party or by which the property of the Company is
bound or affected, or result in the creation or imposition of any
mortgage, pledge, lien, security interest or other charge or
encumbrance on any of the Company's assets or its Company Stock, except
as specifically identified on SCHEDULE 2.5(a).
(b) Each of the Principal Stockholders has full right,
authority, power and capacity to enter into this Agreement and each agreement,
document and instrument to be executed and delivered by or on behalf of him or
her pursuant to or contemplated by this Agreement and to carry out the
transactions contemplated hereby and thereby. This Agreement and each agreement,
document and instrument executed and delivered by each of the Principal
Stockholders pursuant to or contemplated by this Agreement constitute, or when
executed and delivered will constitute, valid and binding obligations of such
Principal Stockholder enforceable in accordance with their respective terms,
except as the same may be limited by bankruptcy, insolvency or reorganization
laws, or other laws relating to or affecting the availability of the remedy of
specific performance or equitable principles of general application. The
execution, delivery and performance by each of the Principal Stockholders of
this Agreement and each such agreement, document and instrument:
(i) do not and will not violate any laws of the
United States or any state or other jurisdiction applicable to such
Principal Stockholder or require such Principal Stockholder to obtain
any approval, consent or waiver of, or make any filing with, any person
or entity (governmental or otherwise) (including, without limitation,
the HSR Act) that has not been obtained or made; and
(ii) do not and will not result in a breach of,
constitute a default under, accelerate any obligation under or give
rise to a right of termination of any indenture or loan or credit
agreement or any other agreement, contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ, judgment, injunction,
decree, determination or arbitration award to which such Principal
Stockholder is a party or by which the property of such Principal
Stockholder is bound or affected, or result in the
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creation or imposition of any mortgage, pledge, lien, security
interest or other charge or encumbrance on any of the Company, its
Company Stock or the Company Options.
2.6 REAL AND PERSONAL PROPERTY.
(a) REAL PROPERTY. The Company does not own, and has never
owned, any real property. The Company does not currently lease any real
property, nor does the Company have any outstanding obligations with respect to
any previously leased real property.
(b) PERSONAL PROPERTY. A complete description of the personal
property of the Company is contained in SCHEDULE 2.6(b) hereto. Except as
specifically disclosed in said Schedule or in the Base Balance Sheet (as
hereinafter defined), the Company has good and marketable title to all of its
personal property. Except as specified on SCHEDULE 2.6(b): all such personal
property is in the custody and control of the Company; and all such personal
property is located at the Company's offices at the Leased Real Property. None
of such personal property or assets is subject to any mortgage, pledge, lien,
conditional sale agreement, security title, encumbrance or other charge except
as specifically disclosed in said Schedule or in the Base Balance Sheet other
than Permitted Encumbrances (as defined below). The Base Balance Sheet reflects
all personal property of the Company and such personal property is sufficient
for the Company to continue and carry on its business as presently conducted. To
the best knowledge of the Company and the Principal Stockholders, except as
otherwise specified in SCHEDULE 2.6(b) hereto, all leasehold improvements,
furnishings, machinery and equipment of the Company are in good repair, have
been well maintained, and substantially comply with all applicable laws,
ordinances and regulations, and such machinery and equipment is in good working
order. Neither the Company nor any of the Principal Stockholders knows of any
pending or threatened change of any such law, ordinance or regulation which
could adversely affect the Company or any of its business. For purposes hereof,
Permitted Encumbrances means any lien, mortgage, security interest or other
encumbrance that results from any of the following: (i) liens for taxes and
assessments not delinquent or actively being contested in good faith by the
Company; (ii) deposits or pledges for goods or services made in the ordinary
course of the Company's business; and (iii) customary liens in favor of
mechanics, materialmen and landlords which arise by operation of law and not by
the Company's agreement and which are incurred in the ordinary course of the
Company's business.
2.7 FINANCIAL STATEMENTS.
(a) The Company has delivered to Webhire the following
financial statements, copies of which are attached hereto as SCHEDULE 2.7:
(i) A balance sheet of the Company for its fiscal
year ended December 31, 1998 (the "Base Balance Sheet"), and statements
of operations, stockholder's equity and cash flows for the year then
ended; and
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(ii) The Closing Date Balance Sheet certified by
the Company's President.
Said financial statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied consistently during
the periods covered thereby, are complete and correct in all material respects
and present fairly in all material respects the financial condition of the
Company at the dates of said statements and the results of its operations for
the periods covered thereby.
(b) As of the date of the Base Balance Sheet, the Company had
no liabilities of any nature, whether accrued, absolute, contingent or
otherwise, asserted or unasserted, known or unknown (including without
limitation, liabilities as guarantor or otherwise with respect to obligations of
others, liabilities for Taxes (as defined in Section 2.8) due or then accrued or
to become due, or contingent or potential liabilities relating to activities of
the Company or the conduct of its business prior to the date of the Base Balance
Sheet regardless of whether claims in respect thereof had been asserted as of
such date) which, under generally accepted accounting principles, are required
to be reflected on the Base Balance Sheet, except liabilities stated or
adequately reserved against on the Base Balance Sheet or the notes thereto as
required by GAAP, or reflected in Schedules furnished to Webhire hereunder as of
the date hereof.
(c) As of the date hereof and as of the Closing, the Company
has not had and will not have any liabilities of any nature, whether accrued,
absolute, contingent or otherwise, asserted or unasserted, known or unknown
(including without limitation, liabilities as guarantor or otherwise with
respect to obligations of others, or liabilities for Taxes due or then accrued
or to become due or contingent or potential liabilities relating to activities
of the Company or the conduct of its business prior to the date hereof or the
Closing, as the case may be, regardless of whether claims in respect thereof had
been asserted as of such date), except liabilities (i) stated or adequately
reserved against on the Closing Date Balance Sheet or the notes thereto as
required by GAAP or (ii) reflected in Schedules furnished to Webhire hereunder
on the date hereof.
2.8 TAXES. The Company has timely and properly filed or received timely
and proper extensions for the filing of all declarations, reports, claims for
refund or information return or statement relating to any Taxes (as defined
below), including any schedule or attachment thereto or any amendment thereof
(collectively, "Tax Returns"), required to be filed by it, and all such Tax
Returns were correct and complete in all material respects. The Company has paid
all federal, state, local, and foreign: income, gross receipts, capital stock,
franchise, profits, windfall profits, withholding, payroll, social security (or
similar), unemployment, disability, real property, personal property, excise,
occupation, sales, use, transfer, value added, alternative minimum,
environmental, customs, duties, estimated or other tax, including any interest,
penalty or addition thereto and whether disputed or not
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(collectively, "Taxes") owed by it (whether or not shown on any Tax Return),
except Taxes which have not yet accrued or otherwise become due. All Taxes
and other assessments and levies which the Company was or is required to
withhold or collect from customers, vendors, resellers, or employees have
been withheld and collected and have been paid over or will be paid over when
due to the proper government authorities. Except as set forth in SCHEDULE
2.8: (a) the Company has never received notice of any audit or of any
proposed deficiencies from the Internal Revenue Service ("IRS") or any other
taxing authority (other than routine audits undertaken in the ordinary course
and which have been resolved on or prior to the date hereof without material
adverse effect on the Company or its financial condition); (b) there are in
effect no waivers of applicable statutes of limitations or extensions of time
for the assessment or payment with respect to any Taxes owed by the Company
for any year; (c) neither the IRS nor any other taxing authority is now
asserting or, to the best knowledge of the Company, threatening to assert
against the Company any deficiency or claim for additional Taxes or interest
thereon or penalties in connection therewith in respect of the Company; and
(d) the Company has never been a member of an affiliated group of
corporations filing a combined federal income Tax Return, nor does the
Company have any liability for Taxes of any other Person under Treasury
Regulation Section 1.1502-6 (or any similar provision of foreign, state or
local law) or otherwise; and (e) the Company has never made an election under
Section 341(f) of the Code. No claim has ever been made by an authority in a
jurisdiction where the Company does not file reports and returns that the
Company is or may be subject to taxation by that jurisdiction. There are no
security interests on any of the assets of the Company or its Common Stock
that arose in connection with any failure (or alleged failure) to pay any
Taxes. The Company has never entered into a closing agreement pursuant to
Section 7121 of the Code. Except as set forth in SCHEDULE 2.8, no extension
of time with respect to any date on which a tax return was or is to be filed
by the Company is in force. None of the Principal Stockholders is a "foreign
person" within the meaning of Section 1445 of the Code or the regulations
promulgated thereunder. The Company is not a party to any Tax allocation or
sharing arrangement. The Company has, at all times since March 31, 1998,
qualified and currently qualifies as an entity properly taxable as an S
corporation (as defined in Section 1361 of the Code). The consummation of the
transactions contemplated by this Agreement will not give rise to any federal
or state income tax liability of the Company. For purposes of this Agreement,
all references to Sections of the Code shall include any predecessor
provisions to such Sections and any similar provisions of federal, state,
local or foreign law.
2.9 COLLECTIBILITY OF ACCOUNTS RECEIVABLE. All of the accounts
receivable of the Company shown or reflected on the Closing Date Balance Sheet
(less the reserve for returns set forth on the Closing Date Balance Sheet) will
be at the Closing valid and enforceable claims, fully collectible in the
ordinary course and subject to no set off or counterclaim, and all such accounts
receivables will represent valid accounts incurred in the ordinary course of
business consistent with past practice. The Company does not have any accounts
or loans receivable from any person, firm or corporation which is affiliated
with the Company or the Principal Stockholders or from any director, officer or
employee of the Company, except as
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disclosed on SCHEDULE 2.9 hereto, and all accounts and loans receivable from any
such person, firm or corporation shall be paid in cash prior to the Closing.
2.10 ABSENCE OF CERTAIN CHANGES. Except as disclosed in SCHEDULE 2.10
attached hereto, since the date of the Base Balance Sheet there has not been:
(a) any change in the financial condition, properties, assets,
liabilities, business or operations of the Company, which change by itself or in
conjunction with all other such changes, whether or not arising in the ordinary
course of business, has been materially adverse with respect to the Company;
(b) any contingent liability incurred by the Company as
guarantor or otherwise with respect to the obligations of others or any
cancellation of any material debt or claim owing to, or waiver of any material
right of, the Company;
(c) any mortgage, encumbrance or lien placed on any of the
properties of the Company which remains in existence on the date hereof or will
remain on the Closing Date;
(d) any obligation or liability of any nature, whether
accrued, absolute, contingent or otherwise, asserted or unasserted, known or
unknown (including without limitation liabilities for Taxes due or to become due
or contingent or potential liabilities relating to products or services provided
by the Company or the conduct of the business of the Company since the date of
the Base Balance Sheet regardless of whether claims in respect thereof have been
asserted), incurred by the Company other than obligations and liabilities
incurred in the ordinary course of business consistent with the terms of this
Agreement;
(e) any purchase, sale or other disposition, or any agreement
or other arrangement for the purchase, sale or other disposition, of any of the
properties or assets of the Company other than in the ordinary course of
business;
(f) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, assets or business
of the Company;
(g) any declaration, setting aside or payment of any dividend
by the Company, or the making of any other distribution in respect of the
capital stock of the Company, or any direct or indirect redemption, purchase or
other acquisition by the Company of its own capital stock;
(h) any labor trouble or claim of unfair labor practices
involving the Company; any change in the compensation payable or to become
payable by the Company to any of its officers, employees, agents or independent
contractors other than normal merit increases in accordance with its usual
practices; or any bonus payment or arrangement made to
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or with any of such officers, employees, agents or independent contractors
except as contemplated by Section 1.10 hereof;
(i) any change or proposed change with respect to the officers
or management of the Company except as contemplated by Section 1.10 hereof;
(j) any payment or discharge of a material lien or liability
of the Company which was not shown on the Base Balance Sheet or incurred in the
ordinary course of business thereafter;
(k) any obligation or liability incurred by the Company to any
of its officers, directors, stockholders or employees, or any loans or advances
made by the Company to any of its officers, directors, stockholders or
employees, except normal compensation and expense allowances payable to officers
or employees and except as contemplated by Section 1.10 hereof;
(l) any change in accounting methods or practices, credit
practices or collection policies used by the Company;
(m) any other transaction entered into by the Company other
than transactions in the ordinary course of business and consistent with past
practice; or
(n) any agreement or understanding whether in writing or
otherwise, for the Company to take any of the actions specified in paragraphs
(a) through (m) above.
2.11 ORDINARY COURSE. Since the date of the Base Balance Sheet, the
Company has conducted its business only in the ordinary course and consistently
with its prior practices.
2.12 BANKING RELATIONS. All of the arrangements which the Company has
with any banking institution are completely and accurately described in SCHEDULE
2.12 attached hereto, indicating with respect to each of such arrangements the
type of arrangement maintained (such as checking account, borrowing
arrangements, safe deposit box, etc.) and the person or persons authorized in
respect thereof.
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2.13 INTELLECTUAL PROPERTY.
(a) Except as described in SCHEDULE 2.13 and except for
"Off-the-Shelf Software" (as defined below), the Company has exclusive ownership
of, or exclusive license to use, all patent, copyright, trade secret, trademark,
or other proprietary rights (collectively, "Intellectual Property") used in the
business of the Company as presently conducted, or has obtained any licenses,
releases or assignments reasonably necessary to use all third parties'
Intellectual Property rights in works embodied in its Proprietary Products (as
defined in paragraph (g) below). Except as described in SCHEDULE 2.13, all of
the rights of the Company in such Intellectual Property are freely transferable.
There are no claims or demands of any other person pertaining to any of such
Intellectual Property and no proceedings have been instituted, or are pending
or, to the knowledge of the Company, threatened, which challenge the rights of
the Company in respect thereof except as disclosed in SCHEDULE 2.13. Except as
described in SCHEDULE 2.13, the Company has the right to use, free and clear of
claims or rights of other persons, all customer lists, designs, manufacturing or
other processes, computer software, systems, data compilations, research results
and other information required for or incident to its products or its business
as presently conducted or contemplated. For purposes of this Agreement, the term
"Off-the-Shelf Software" shall mean software utilized in the internal operations
of the Company which is generally commercially available to the public at
retail, provided, however, that such software is not used in the development of,
or embodied in (i.e., all or part of the code comprising such software is
included in any Proprietary Product), any of the Company's Proprietary Products.
(b) All patents, patent applications, trademarks, trademark
applications and registrations and registered copyrights which are owned by or
licensed to the Company or used or to be used by the Company in its business as
presently conducted, and all other items of Intellectual Property which are
material to the business or operations of the Company, are listed in SCHEDULE
2.13.
(c) All licenses or other agreements under which the Company
is granted rights in Intellectual Property, other than licenses of Off-the-Shelf
Software, are listed in SCHEDULE 2.13. All said licenses or other agreements are
in full force and effect, there is no material default by any party thereto, and
except as set forth on SCHEDULE 2.13, all of the rights of the Company
thereunder are freely assignable. To the knowledge of the Company and the
Principal Stockholders, the licensors under said licenses and other agreements
have and had all requisite power and authority to grant the rights purported to
be conferred thereby. Webhire has been provided access to true and complete
copies of all such licenses or other agreements, and any amendments thereto.
(d) All licenses or other agreements under which the Company
has granted rights to others in Intellectual Property owned or licensed by the
Company (other than standard shrink-wrapped user licenses) are listed in
SCHEDULE 2.13. All of said licenses or other agreements are in full force and
effect, there is no material default by any party thereto,
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and, except as set forth on SCHEDULE 2.13, all of the rights of the Company
thereunder are freely assignable. Webhire has been provided with true and
complete copies of all such licenses or other agreements, and any amendments
thereto.
(e) The Company has taken all steps required in accordance
with sound business practice to establish and preserve its ownership of all
Intellectual Property rights with respect to its products, services and
technology. The Company has affixed appropriate copyright and trademark notices
on all of its products and any related documentation. The Company has required
all of its professional and technical employees, all other employees having
access to valuable non-public information of the Company, and all consultants
and independent contractors involved in the development of any of the
Intellectual Property to execute agreements under which such persons are
required to convey to the Company ownership of all inventions and developments
conceived or created by them in the course of their employment with the Company
or while they are providing services to the Company and to maintain the
confidentiality of all such information of the Company. The Company and the
Principal Stockholders have not made any such information available to any
person other than employees of Company except pursuant to written agreements
requiring the recipients to maintain the confidentiality of such information and
appropriately restricting the use thereof. The Company and the Principal
Stockholders have no knowledge of any infringement by others of any Intellectual
Property rights of the Company.
(f) The present business, activities and products of the
Company do not infringe any Intellectual Property of any other person. No
proceeding charging the Company with infringement of any adversely held
Intellectual Property has been filed or, to the knowledge of the Company, is
threatened to be filed. To the best knowledge of the Company and the Principal
Stockholders, there exists no unexpired patent or patent application which
includes claims that would be infringed by or otherwise adversely affect the
products, activities or business of the Company. The Company is not making
unauthorized use of any confidential information or trade secrets of any person,
including without limitation, any former employer of any past or present
employee, consultant or independent contractor of Company. Except as set forth
in SCHEDULE 2.13, neither the Company nor, to the knowledge of the Company and
the Principal Stockholders, any of the Company's employees, consultants or
independent contractors have any agreements or arrangements with any persons
other than the Company related to confidential information or trade secrets of
such persons or restricting any such person's ability to engage in business
activities of any nature. The activities of the Company's present and former
employees, consultants and independent contractors on behalf of the Company do
not violate any such agreements or arrangements known to the Company.
(g) SCHEDULE 2.13 sets forth a true and complete list of all
components of all computer software products which are proprietary to the
Company (the "Proprietary Products"), and each author of each component of the
Proprietary Products. Except as set forth in SCHEDULE 2.13, each author of each
component of the Proprietary Products has assigned ownership of all proprietary
rights in and to the Proprietary Products (including
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without limitation rights of copyright, patent and trade secret) to the Company.
The Company has clear and exclusive title to the Proprietary Products and all
proprietary rights therein and there are no facts upon which any third party
could assert a valid claim of ownership with respect to any Proprietary
Products. Any and all third party software used in the creation of each
component of the Proprietary Products is listed in SCHEDULE 2.13 with reference
to the component in question, and was used in accordance with a duly granted
software license also listed in SCHEDULE 2.13. The Company's rights in the
Proprietary Products (including source code) constitute Intellectual Property
subject to all of the representations and warranties set forth in the foregoing
provisions of this Section 2.13. Except as set forth in SCHEDULE 2.13, the
software and designs of the Proprietary Products have been developed and
implemented in a professional manner and are documented in accordance with
normal professional standards so as to enable a qualified software engineer, to
maintain and modify the Proprietary Products conveniently and effectively on the
basis of such documentation. The Company has conducted a regular program of
maintaining and updating the Proprietary Products in response to defects, and
has in effect reliable procedures for version control with respect to the
Proprietary Products. Except as set forth on SCHEDULE 2.13, there are no
material software or design defects in any of the Proprietary Products and the
Proprietary Products conform in all material respects to the respective
specifications and documentation.
(h) Except as set forth on SCHEDULE 2.13, all computer
software products that are owned by the Company, exclusively licensed to the
Company, licensed, sold or otherwise distributed to others by the Company or are
otherwise required for the conduct of its business, except for Off-the-Shelf
Software products and third-party software products used in the development of
the Company's Proprietary Products, ("Software") are Year 2000 Compliant. As
used herein, "Year 2000 Compliant" shall mean the ability of the Software to
provide the following date related functions:
(i) consistently handle date information before,
during and after January 1, 2000, including but not limited to
accepting date input, providing date output and performing calculations
on dates or portions of dates;
(ii) function accurately in accordance with the
documentation relating to the applicable Software and without
interruption before, during and after January 1, 2000, without any
change in operations associated with the advent of the new century;
(iii) respond to two-digit date input in a way that
resolves any ambiguity as to the century in a disclosed, defined and
predetermined manner; and
(iv) store and provide output of date information in
ways that are unambiguous as to century.
2.14 CONTRACTS. Except for contracts, commitments, plans, agreements
and licenses described in SCHEDULE 2.14 or listed in another Schedule to this
Agreement (true and complete copies of which have been provided to Webhire), the
Company is not a party to or subject to:
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(a) any plan or contract providing for bonuses, pensions,
options, stock purchases, deferred compensation, retirement payments, profit
sharing, collective bargaining or the like, or any contract or agreement with
any labor union;
(b) any employment contract or contract for services;
(c) any contract or agreement for the purchase of any
commodity, material or equipment;
(d) any contract or agreement for the sale or lease of
its products not made in the ordinary course of business;
(e) any contract with any sales agent or distributor of
products of the Company;
(f) any contract containing covenants limiting the
freedom of the Company to compete in any line of business or with any person or
entity;
(g) any contract or agreement for the purchase of any
fixed asset whether or not such purchase is in the ordinary course of business;
(h) any license agreement (as licensor or licensee),
other than licenses of Off-the-Shelf Software utilized in the internal
operations of the Company which are generally commercially available to the
public at retail;
(i) any indenture, mortgage, promissory note, loan
agreement, guaranty or other agreement or commitment for the borrowing of money;
or
(j) any contract or agreement with any officer, employee,
director or stockholder of the Company or with any persons or organizations
controlled by or affiliated with any of them; or
(k) any other contracts or agreements creating any
obligations of the Company, including, without limitation, any obligations to
provide maintenance or other services to any third party.
Except as set forth in SCHEDULE 2.14, all contracts, agreements, leases
and instruments to which the Company is a party or by which the Company is
obligated are valid and are in full force and effect and constitute legal, valid
and binding obligations of the Company and, to the best knowledge of the Company
and the Principal Stockholders, the other parties thereto, enforceable in
accordance with their respective terms. Except as set forth in SCHEDULE 2.14,
the Company is not in default under any such contracts, commitments, plans,
agreements or
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licenses described in said Schedule nor has it any knowledge of conditions or
facts which with notice or passage of time, or both, would constitute a default.
2.15 LITIGATION. SCHEDULE 2.15 hereto lists all currently pending
litigation and governmental or administrative proceedings or investigations to
which the Company is a party. Except for matters described in SCHEDULE 2.15,
there is no litigation or governmental or administrative proceeding or
investigation pending or, to the knowledge of the Company and the Principal
Stockholders, threatened against the Company or its affiliates which could
reasonably be anticipated to have a material adverse effect on the properties,
assets, prospects, financial condition or business of the Company or which would
prevent or hinder the consummation of the transactions contemplated by this
Agreement. With respect to each matter set forth therein, SCHEDULE 2.15 sets
forth a description of the matter, the forum (if any) in which it is being
conducted, the parties thereto and the type and amount of relief sought.
2.16 COMPLIANCE WITH LAWS. Except as set forth in SCHEDULE 2.16 hereto,
the Company is in compliance with all applicable statutes, ordinances, orders,
judgements, decrees, rules and regulations promulgated by any federal, state,
municipal entity, agency, court or other governmental authority which apply to
the Company or to the conduct of its business, and neither the Company nor any
of the Principal Stockholders has received notice of a violation or alleged
violation of any such statute, ordinance, order, rule or regulation.
2.17 INSURANCE. The physical properties and assets of the Company are
insured to the extent disclosed in SCHEDULE 2.17 attached hereto and all such
insurance policies and arrangements are disclosed in said Schedule. SCHEDULE
2.17 also sets forth all of the Company's insurance policies covering product
liability. Said insurance policies and arrangements are in full force and
effect, all premiums with respect thereto are currently paid, and the Company is
in compliance with the terms thereof. Said insurance is sufficient for
compliance by the Company with all requirements of law and all agreements and
leases to which the Company is a party.
2.18 WARRANTY OR OTHER CLAIMS. There are no existing or, to the
knowledge of the Company, threatened product liability, warranty or other
similar claims, or any facts upon which a material claim of such nature could be
based, against the Company for products or services which are defective or fail
to meet any product or service warranties except as disclosed in SCHEDULE 2.18
hereto. There is no outstanding claim against the Company for renegotiation or
price redetermination of any business transaction, and there are no facts upon
which any such claim could be based.
2.19 POWERS OF ATTORNEY. Neither the Company nor any of the Principal
Stockholders has any outstanding power of attorney relating to the business of
the Company, except for the powers of attorney set forth in the Company's form
of Incentive Stock Option Agreement and form of Invention Confidentiality and
Noncompete Agreement.
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2.20 FINDER'S FEE. Neither the Company nor any of the Principal
Stockholders has incurred or become liable for any broker's commission or
finder's fee relating to or in connection with the transactions contemplated by
this Agreement.
2.21 PERMITS; BURDENSOME AGREEMENTS. SCHEDULE 2.21 lists all permits,
registrations, licenses, franchises, certifications and other approvals other
than qualifications to transact business as a foreign corporation (collectively,
the "Approvals") required from federal, state or local authorities in order for
the Company to conduct its business. The Company has obtained all such
Approvals, which are valid and in full force and effect, and is operating in
compliance therewith. Such Approvals include, but are not limited to, those
required under federal, state or local statutes, ordinances, orders,
requirements, rules, regulations, or laws pertaining to environmental
protection, public health and safety, worker health and safety, buildings,
highways or zoning. Except as disclosed in SCHEDULE 2.21, the Company is not
subject to or bound by any judgment, decree or order which may materially and
adversely affect its business or prospects, its condition, financial or
otherwise, or any of its assets or properties.
2.22 CORPORATE RECORDS; COPIES OF DOCUMENTS. The corporate record books
of the Company accurately record all corporate action taken by its stockholders
and board of directors and committees. The copies of the corporate records of
the Company, as provided to Webhire for review, are true and complete copies of
the originals of such documents. The Company has made available for inspection
and copying by Webhire and its counsel true and correct copies of all documents
referred to in this Section or in the Schedules delivered to Webhire pursuant to
this Agreement.
2.23 TRANSACTIONS WITH INTERESTED PERSONS. Except as set forth in
SCHEDULE 2.23 hereto, none of the Company, the Principal Stockholders, or any
officer or director of the Company or any of their respective spouses or family
members, owns directly or indirectly on an individual or joint basis any
material interest in, or serves as an officer or director or in another similar
capacity of, any competitor or supplier of Company, or any organization which
has a material contract or arrangement with the Company.
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2.24 EMPLOYEE BENEFIT PROGRAMS. Except as set forth in SCHEDULE 2.24,
the Company does not maintain and has never maintained an employee benefit plan
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). The Company has no liabilities or obligations
under ERISA. Except as set forth in SCHEDULE 2.24, the Company has no other
stock option plans, bonus or incentive award plans, severance pay policies or
agreements, deferred compensation agreements, supplemental income arrangements,
vacation plans, or other employee benefit plans, agreements, or arrangements.
True and correct copies of all plans and arrangements set forth on SCHEDULE 2.24
have been provided to Webhire. For purposes of the Section 2.24, an entity
"maintains" an employee benefit plan if such entity sponsors, contributes to, or
provides (or has promised to provide) benefits under such employee benefit plan,
or has any obligation (by agreement or under applicable law) to contribute to or
provide benefits under such employee benefit plan, or if such employee program
provides benefits to or otherwise covers employees of such entity, or their
spouses, dependents or beneficiaries.
2.25 ENVIRONMENTAL MATTERS. No Hazardous Materials (as hereinafter
defined) have been generated, transported, used, disposed, stored or treated by
the Company and, to the knowledge of the Company, no Hazardous Materials have
been released, discharged, disposed, placed or otherwise caused to enter the
soil or water within any real property owned, leased or operated by the Company.
Except as set forth in SCHEDULE 2.25 attached hereto, to the Company's
knowledge, no site owned, operated or leased by the Company contains any
asbestos or asbestos-containing material, any polychlorinated biphenyls (PCBs)
or equipment containing PCBs, or any urea formaldehyde foam insulation. For
purposes of this Section 2.25, (i) "Hazardous Material" shall mean and include
any hazardous waste, hazardous material, hazardous substance, petroleum product,
oil, toxic substance, pollutant, contaminant, or other substance which may pose
a threat to the environment or to human health or safety, as defined or
regulated under any Environmental Law; (ii) "Environmental Law" shall mean any
environmental or health and safety-related law, regulation, rule, ordinance, or
by-law at the foreign, federal, state, or local level, whether existing as of
the date hereof, previously enforced, or subsequently enacted; and (iii)
"Company" shall mean and include the Company and all other entities for whose
conduct the Company is or may be held responsible under any Environmental Law.
2.26 LIST OF DIRECTORS AND OFFICERS. SCHEDULE 2.26 hereto contains a
true and complete list of all current directors and officers of the Company. In
addition, SCHEDULE 2.26 hereto contains a list of all managers, employees,
consultants and independent contractors of the Company and the aggregate
compensation they have received from the Company as of the date hereof. In each
case, such Schedule also includes the current job title and aggregate
anticipated annual compensation of each such individual.
2.27 DISCLOSURE. The representations and warranties of the Company and
the Principal Stockholders contained in this Agreement and in the certificates,
exhibits and schedules delivered by the Company and the Principal Stockholders
pursuant to this
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Agreement to Webhire and/or the Acquisition Corp do not contain any untrue
statement of a material fact, and, when taken together, do not omit to state a
material fact required to be stated therein or necessary in order to make such
representations or warranties not misleading in light of the circumstances under
which they were made. There are no facts actually known to the Company or any of
the Principal Stockholders which presently can reasonably be anticipated in the
future to have a material adverse affect on the business, properties, prospects,
operations or condition of the Company which have not been specifically
disclosed herein or in a Schedule furnished herewith, other than general
economic conditions affecting the industry in which the Company operates.
2.28 EMPLOYEES; LABOR MATTERS. The Company employs a total of three (3)
full-time employees and no part-time employees. Except as disclosed in SCHEDULE
2.28, the Company is not delinquent in payments to any of its employees for any
wages, salaries, commissions, bonuses or other direct compensation for any
services performed for it to the date hereof or for amounts required to be
reimbursed to such employees. Upon termination of the employment of any of said
employees at or prior to the Closing, none of the Company, the Surviving
Corporation, the Acquisition Corp or Webhire will, by reason of the transactions
contemplated under this Agreement or anything done prior to the Closing, be
liable to any of said employees for so-called "severance pay" or any other
payments, except as contemplated by Section 1.10 hereto. The Company has no
policy, practice, plan or program of paying severance pay or any form of
severance compensation in connection with the termination of employment. Except
as disclosed in SCHEDULE 2.28, the Company is in compliance in all material
respects with all applicable laws and regulations respecting labor, employment,
fair employment practices, work place safety and health, terms and conditions of
employment, and wages and hours. There are no charges of employment
discrimination or unfair labor practices existing, pending or, to the knowledge
of the Company, threatened against or involving the Company. No question
concerning representation exists with respect to any employees of the Company.
There are no grievances, complaints or charges that have been filed against the
Company under any dispute resolution procedure (including, but not limited to,
any proceedings under any dispute resolution procedure under any collective
bargaining agreement) that might have an adverse effect on the Company or the
conduct of its business, and there is no arbitration or similar proceeding
pending and no claim therefor has been asserted. No collective bargaining
agreement is in effect or is currently being or is about to be negotiated by the
Company. The Company has not received any information indicating that any of its
employment policies or practices is currently being audited or investigated by
any federal, state or local government agency.
2.29 CUSTOMERS AND DISTRIBUTORS. SCHEDULE 2.29 sets forth each
customer, sales representative or distributor (whether pursuant to a commission,
royalty or other arrangement) which accounted for more than 5% of the sales of
the Company for the twelve months ended May 31, 1999.
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SECTION 3. INVESTMENT REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL
STOCKHOLDERS.
As a material inducement to Webhire and the Acquisition Corp to enter
into this Agreement and consummate the transactions contemplated hereby, each of
the Principal Stockholders hereby makes to Webhire and the Acquisition Corp
individually, and not jointly, each of the representations and warranties set
forth in this Section 3. The Principal Stockholders shall have no right of
indemnity or contribution from the Company with respect to the breach of any
representation or warranty under this Section 3.
Each Principal Stockholder hereby represents and warrants individually,
and not jointly, to Webhire and Acquisition Corp that with respect to his
receipt of Webhire Stock hereunder:
Such Principal Stockholder is acquiring the Webhire Stock for his or
her own account, for investment, and not with a view to any "distribution"
thereof within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"). The jurisdiction of residence of such Principal Stockholder
is The Commonwealth of Massachusetts and the offer and sale of the Webhire Stock
to such Principal Stockholder will take place in such jurisdiction. Such
Principal Stockholder has received and reviewed copies of the SEC Disclosure
Documents (as defined in Section 4.5 hereof). In addition, such Principal
Stockholder is knowledgeable and experienced in the making of investments of the
type involved in the acquisition of the Webhire Stock pursuant to this
Agreement, is able to bear the economic risk of loss of its investment in
Webhire, has been granted the opportunity to investigate the affairs of Webhire
and to ask questions of its officers and employees, and has availed itself of
such opportunity either directly or through its authorized representative.
Such Principal Stockholder understands that because the Webhire Stock
has not been registered under the Securities Act or securities or "blue sky"
laws of any jurisdiction, such Principal Stockholder cannot dispose of any or
all of the shares of the Webhire Stock unless such shares of Webhire Stock are
subsequently registered under the Securities Act or exemptions from such
registration are available. Such Principal Stockholder acknowledges and
understands that, except as provided in the Registration Rights Agreement (as
defined in Section 5.1(j) hereto), it has no independent right to require
Webhire to register the Webhire Stock. Such Principal Stockholder is aware that
Webhire may not accomplish a public offering of the Webhire Stock. Such
Principal Stockholder further understands that Webhire may, as a condition to
the transfer of any of the Webhire Stock, require that the request for transfer
by accompanied by an opinion of counsel as described below. Such Principal
Stockholder understands that each certificate representing the Webhire Stock
will bear a legend in substantially the form provided below (in addition to any
legend required under applicable state securities laws).
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THE SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED BY THE HOLDER
NAMED HEREON FOR HIS OWN ACCOUNT FOR INVESTMENT; AND SUCH
SECURITIES MAY NOT BE PLEDGED, SOLD OR IN ANY OTHER WAY
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF
1933, AS IN EFFECT AT THAT TIME, OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF WEBHIRE AND ACQUISITION CORP.
4.1 MAKING OF REPRESENTATIONS AND WARRANTIES. As a material inducement
to the Company and the Principal Stockholders to enter into this Agreement and
consummate the transactions contemplated hereby, each of Webhire and the
Acquisition Corp, jointly and severally, hereby makes the representations and
warranties to the Company and the Principal Stockholders contained in this
Section 4.
4.2 ORGANIZATION. Each of Webhire and the Acquisition Corp is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware with full corporate power to own or lease its properties and to
conduct its business in the manner and in the places where such properties are
owned or leased or such business is conducted by it.
4.3 CAPITAL STOCK OF WEBHIRE.
(ai The authorized capital stock of Webhire consists of (i)
30,000,000 shares of common stock, $.01 per share, of which 10,089,477 shares
were duly and validly issued, outstanding, fully paid and non-assessable as of
June 25, 1999; and (ii) 5,000,000 shares of preferred stock, $.01 per share, of
which no shares are issued and outstanding. Except for options to purchase up to
1,367,516 shares of Webhire Common Stock which were granted under Webhire's 1994
Stock Option Plan and its 1996 Stock Option and Grant Plan and remain
outstanding and unexercised as of June 25, 1999 and a Warrant to purchase up to
114,659 shares of Webhire Common Stock, there are no outstanding options,
warrants, rights, commitments, preemptive rights or agreements of any kind for
the issuance or sale of, or outstanding securities convertible into, any
additional shares of capital stock of any class of Webhire, except as disclosed
in SCHEDULE 4.3 attached hereto. None of Webhire's capital stock has been issued
in violation of any federal or state law.
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4.4 AUTHORITY. Each of Webhire and the Acquisition Corp has full right,
authority and power to enter into this Agreement and each agreement, document
and instrument to be executed and delivered by it pursuant to this Agreement and
to carry out the transactions contemplated hereby. The execution, delivery and
performance by Webhire and the Acquisition Corp of this Agreement and each such
other agreement, document and instrument have been duly authorized by all
necessary corporate action and no other action on its part is required in
connection therewith.
This Agreement and each other agreement, document and instrument
executed and delivered by each of Webhire and the Acquisition Corp pursuant to
this Agreement constitute, or when executed and delivered will constitute, valid
and binding obligations of Webhire and Acquisition Corp enforceable in
accordance with their terms. The execution, delivery and performance by each of
Webhire and the Acquisition Corp of this Agreement and each such agreement,
document and instrument:
(i0 do not and will not violate any provision of
the Certificate of Incorporation or By-laws of Webhire or the
Acquisition Corp;
(ii0 do not and will not violate any laws of the
United States, or any state or other jurisdiction applicable to Webhire
or the Acquisition Corp or require the Company to obtain any approval,
consent or waiver of, or make any filing with, any person or entity
(governmental or otherwise) (including, without limitation, the HSR
Act) that has not been obtained or made; and
(iii0 do not and will not result in a breach of,
constitute a default under, accelerate any obligation under, or give
rise to a right of termination of any indenture or loan or credit
agreement or any other agreement, contract, instrument, mortgage, lien,
lease, permit, authorization, order, writ, judgment, injunction,
decree, determination or arbitration award to which Webhire or the
Acquisition Corp is a party or by which the property of Webhire of the
Acquisition Corp is bound or affected, or result in the creation or
imposition of any mortgage, pledge, lien, security interest or other
charge or encumbrance on any of their assets or common stock.
4.5 SEC REPORTS. Webhire's Annual Report on Form 10-K for the period
ended September 30, 1998 (the "Form 10-K") and all other forms, reports and
documents filed with the Securities and Exchange Commission (the "SEC") since
the filing of such Form 10-K (collectively, the "SEC Reports") have been
prepared in accordance with the applicable requirements of the Securities Act
and the Securities Exchange Act of 1934, as amended. The balance sheets
(including the related notes) included in the SEC Reports are complete and
correct in all material respects and fairly present the financial position of
Webhire as of the respective dates thereof, and the other related statements
(including the related notes) included therein and complete and correct in all
material respects fairly present the results of operations and cash flows of
Webhire for the respective fiscal periods set forth therein in accordance with
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GAAP applied on a consistent basis, except in the case of interim financial
statements for normal recurring and certain non-recurring audit adjustments
necessary for a fair presentation of the financial position and operating
results of Webhire for the interim periods which will not be materially adverse
and for the omission of footnotes to said interim financial statements that
would be required by GAAP. Copies of the Form 10-K, Webhire's Quarterly Reports
on Form 10-Q for the quarters ended December 31, 1998 and March 31, 1999 and
Webhire's 1998 Annual Report to Stockholders have been provided to each of the
Principal Stockholders (the "SEC Disclosure Documents"). Except as set forth on
SCHEDULE 4.5, since March 31, 1999, the business of Webhire has been conducted
in the ordinary course and consistent with past practice. Since March 31, 1999,
there has been no change, event or effect that is, or is reasonably expected to
be, materially adverse to the business, operation, assets, liabilities,
financial condition or results of operations of Webhire.
4.6 FINDER'S FEE. No person is entitled to the payment of any broker's
commission or finder's fee relating to or in connection with the transactions
contemplated by this Agreement as the result of any actions taken by Webhire or
Acquisition Corp.
4.7 DISCLOSURE. The representations and warranties of Webhire and the
Acquisition Corp contained in this Agreement and in the certificates, exhibits
and schedules delivered by Webhire and the Acquisition Corp pursuant to this
Agreement to the Company and the Principal Stockholders do not contain any
untrue statement of a material fact, and, when taken together, do not omit to
state a material fact required to be stated therein or necessary in order to
make such representations or warranties not misleading in light of the
circumstances under which they were made.
4.8 TAX-FREE REORGANIZATION. Neither Webhire nor any of its
subsidiaries has taken or will take any action which has caused or will cause
the Merger to fail to qualify as a tax-free reorganization under the provisions
of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code. Neither Webhire nor any
of its subsidiaries has failed to take or will fail to take any action which
would have caused or will cause the Merger to fail to qualify as a tax-free
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
SECTION 5. CONDITIONS.
5.1 CONDITIONS TO THE OBLIGATIONS OF WEBHIRE AND THE ACQUISITION CORP.
The obligations of Webhire and the Acquisition Corp to consummate this Agreement
and the transactions contemplated hereby are subject to the fulfillment, prior
to or at the Closing, of the following conditions precedent:
(a REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the
representations and warranties of the Company and the Principal Stockholders
contained in Sections 2 and 3 shall be true and correct in all material respects
as of the date of this Agreement and as of the
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date of the Closing as though made on and as of the Closing; and the Company and
each of the Principal Stockholders shall, on or before the Closing, have
performed all of their obligations hereunder which by the terms hereof are to be
performed on or before the Closing.
(b NO MATERIAL CHANGE. There shall have been no material
adverse change in the financial condition, prospects, properties, assets,
liabilities, business or operations of the Company since the date of the Base
Balance Sheet, whether or not in the ordinary course of business.
(c CERTIFICATE REGARDING REPRESENTATIONS, WARRANTIES,
COVENANTS AND CHANGES. The Company shall have delivered to Webhire a certificate
of the Company's President and the Principal Stockholders dated as of the
Closing to the effect that the statements set forth in paragraph (a) and (b)
above in this Section 5.1 are true and correct.
(d APPROVAL OF WEBHIRE'S COUNSEL. All actions, proceedings,
instruments and documents required to carry out this Agreement and the
transactions contemplated hereby and all related legal matters contemplated by
this Agreement shall have been approved by Goodwin, Procter & Hoar LLP, counsel
for Webhire, and such counsel shall have received on behalf of Webhire such
other certificates, opinions, and documents in form satisfactory to such
counsel, as Webhire may reasonably require from the Company and the Principal
Stockholders to evidence compliance with the terms and conditions hereof as of
the Closing and the correctness as of the Closing of the representations and
warranties of the Principal Stockholders and the Company and the fulfillment of
their respective covenants.
(e OPINION OF COUNSEL. On the Closing Date, Webhire shall
have received from Lucash, Gesmer & Updegrove, LLP, counsel for the Company and
the Principal Stockholders, its opinion as of said date, in the form attached as
EXHIBIT B hereto.
(f NO LITIGATION. There shall have been no determination by
Webhire, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become inadvisable or impracticable by reason
of the institution or threat by any person or any federal, state or other
governmental authority of litigation, proceedings or other action against
Webhire, the Acquisition Corp, the Company or any of the Principal Stockholders
or any material adverse change in the laws or regulations applicable to the
Company.
(g CONSENTS. The Company and the Principal Stockholders shall
have made all filings with and notifications of governmental authorities,
regulatory agencies and other persons and entities required to be made by them
in connection with the execution and delivery of this Agreement, the performance
of the transactions contemplated hereby and the continued operation of the
business of the Company subsequent to the Closing; and the Company and the
Principal Stockholders shall have received all authorizations, waivers, consents
and permits, in form and substance reasonably satisfactory to Webhire, from all
third parties, including,
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without limitation, applicable governmental authorities, regulatory agencies,
lessors, lenders and contract parties, required to permit the continuation of
the business of the Company and the consummation of the transactions
contemplated by this Agreement, and to avoid a breach, default, termination,
acceleration or modification of any material indenture, loan or credit agreement
or any other material agreement, contract, instrument, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award as a result of, or in connection with, the execution and
performance of this Agreement.
(h EMPLOYMENT ARRANGEMENTS. Webhire or the Surviving
Corporation shall have entered into an Employment Agreement with each of
Margolis and Hamill in substantially the form of EXHIBIT C attached hereto. The
Company shall have provided written evidence to Webhire that all employees of
the Company shall have terminated any existing employment agreements with the
Company, and the Company shall have terminated the employment of Kelley. The
Company shall have paid to its employees all bonus amounts or other compensation
for which the Company shall be obligated at the Closing other than the Kelley
Severance Payment.
(i S CORPORATION. Webhire shall be satisfied, in its sole
discretion, with the evidence provided by the Company regarding the Company's
status as an entity properly taxable as an S corporation.
(j REGISTRATION RIGHTS AGREEMENT. Each Principal
Stockholder shall have executed and delivered to Webhire a Registration Rights
Agreement in substantially the form of EXHIBIT D attached hereto (the
"Registration Rights Agreement").
(k ESCROW AGREEMENT. The Escrow Agreement shall have
been executed by the parties thereto.
(l CERTIFICATE REGARDING CERTAIN DEFINITIONS. The Company
shall have delivered to Webhire a certificate of the Company's President and the
Principal Stockholders, dated as of the Closing, certifying as to the amount
attributable to certain terms defined in Section 1.6(a) hereto, such certificate
to be substantially in the form of EXHIBIT E attached hereto.
(m OPTION EXERCISES. Kelley shall have exercised all of his
Company Options pursuant to their terms and Hamill shall have executed Options
to purchase 150,000 shares of Company Stock pursuant to their terms.
(n RESIGNATIONS. The Company shall have delivered to
Webhire the resignations of all of the Directors and officers of the Company,
such resignations to be effective at the Closing.
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5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY AND THE PRINCIPAL
STOCKHOLDERS. The obligation of the Company and the Principal Stockholders to
consummate this Agreement and the transactions contemplated hereby is subject to
the fulfillment, prior to or at the Closing, of the following conditions
precedent:
(a REPRESENTATIONS; WARRANTIES; COVENANTS. Each of the
representations and warranties of Webhire and Acquisition Corp contained in
Section 4 shall be true and correct in all material respects as though made on
and as of the Closing; Webhire and Acquisition Corp shall, on or before the
Closing, have performed all of their respective obligations hereunder which by
the terms hereof are to be performed on or before the Closing; and Webhire shall
have delivered to the Company and the Principal Stockholders a certificate of
the President of Webhire dated on the Closing to such effect.
(b APPROVAL OF THE COMPANY'S COUNSEL. All actions,
proceedings, instruments and documents required to carry out this Agreement and
the transactions contemplated hereby and all related legal matters contemplated
by this agreement shall have been approved by Lucash, Gesmer & Updegrove, LLP as
counsel for the Company and the Principal Stockholders, and such counsel shall
have received on behalf of the Company and the Principal Stockholders such other
certificates, opinions and documents in form satisfactory to such counsel as the
Company may reasonably require from Webhire to evidence compliance with the
terms and conditions hereof as of the Closing and the correctness as of the
Closing of the representations and warranties of Webhire and the fulfillment of
its covenants.
(c NO LITIGATION. There shall have been no determination by
the Company, acting in good faith, that the consummation of the transactions
contemplated by this Agreement has become inadvisable or impracticable by reason
of the institution or threat by any person or any federal, state or other
governmental authority of material litigation, proceedings or other action
against Webhire, the Acquisition Corp, the Company or any Principal Stockholder.
(d OPINION OF COUNSEL. On the Closing Date, the Company and
the Principal Stockholders shall have received from Goodwin, Procter & Hoar LLP
counsel for Webhire and Acquisition Corp, an opinion as of said date, in
substantially the form attached hereto as EXHIBIT F.
(e EMPLOYMENT ARRANGEMENTS. Webhire or the Surviving
Corporation shall have entered into an Employment Agreement with each of
Margolis and Hamill in substantially the form of EXHIBIT C attached hereto.
(f REGISTRATION RIGHTS AGREEMENT. Webhire shall have
executed and delivered to the Principal Stockholders a Registration Rights
Agreement in substantially the form of EXHIBIT D attached hereto.
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(g CERTIFICATE REGARDING WEBHIRE PER SHARE MARKET VALUE.
Webhire shall have delivered to the Company a certificate of Webhire's Chief
Financial Officer, dated as of the Closing, certifying as to the Webhire Per
Share Market Value, as defined in Section 1.6(b) hereto, such certificate to be
substantially in the form of EXHIBIT G attached hereto.
(i CONSENTS. Webhire and the Acquisition Corp, shall have
made all filings with and notifications of governmental authorities, regulatory
agencies and other persons and entities required to be made by them in
connection with the execution and delivery of this Agreement and the performance
of the transactions contemplated hereby, and all permits, approvals and other
authorizations required from such governmental entities and other persons
required to permit the consummation of the transactions contemplated by this
Agreement shall have been received.
SECTION 6. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
6.1 SURVIVAL OF REPRESENTATIONS, ETC. Each of the representations,
warranties, agreements, covenants and obligations herein or in any schedule,
exhibit, certificate or financial statement delivered by any party to the other
party incident to the transactions contemplated hereby are material, shall be
deemed to have been relied upon by the other party and shall survive the Closing
regardless of any investigation and shall not merge in the performance of any
obligation by either party hereto; PROVIDED, HOWEVER, that such representations
and warranties shall expire on the same dates as and to the extent that the
rights to indemnification with respect thereto under Section 7 shall expire.
6.2 KELLEY SEVERANCE PAYMENT. Webhire will pay to Kelley the Kelley
Severance Payment upon termination of his employment with the Company at the
Effective Time.
6.3 OPTION CANCELLATION PAYMENTS. Webhire will pay to Hamill the
Hamill Option Payment at the
Effective Time.
6.4 CONFIDENTIALITY; TRADING IN WEBHIRE STOCK. The Principal
Stockholders acknowledge and agree that during the negotiation of this
Agreement, the Principal Stockholders received confidential, inside and
proprietary information concerning Webhire. Each of the Principal Stockholders
agrees that it and its representatives will hold in strict confidence and will
not use any confidential, inside or proprietary information it obtained with
respect to the business or financial condition of Webhire. In addition, in light
of the fact that the Principal Stockholders have received inside information
concerning Webhire during the negotiations of this Agreement, each agrees not to
trade, directly or indirectly, in Webhire Common Stock until Webhire determines
in good faith that such trading would not violate Section 10(b) of the
Securities and Exchange Act of 1934, as amended, or Rule 10b-5 promulgated
thereunder.
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SECTION 7. INDEMNIFICATION.
7.1 INDEMNIFICATION BY THE PRINCIPAL STOCKHOLDERS. The Principal
Stockholders jointly and severally agree subsequent to the Closing to indemnify
and hold the Company, the Surviving Corporation, Acquisition Corp and Webhire
and their respective subsidiaries and affiliates and persons serving as
officers, directors, partners or employees thereof (individually a "Buyer
Indemnified Party" and collectively the "Buyer Indemnified Parties") harmless
from and against any damages, liabilities, losses, taxes, fines, penalties,
costs, and expenses (including, without limitation, reasonable fees of counsel)
of any kind or nature whatsoever (whether or not arising out of third-party
claims and including all amounts paid in investigation, defense or settlement of
the foregoing) which may be sustained or suffered by any of them arising out of
or based upon any of the following matters:
(a fraud, intentional misrepresentation or a deliberate or
wilful breach by the Company or any Principal Stockholder of any of their
representations, warranties or covenants under this Agreement or in any
certificate, schedule or exhibit delivered pursuant hereto or a breach of any
representation or warranty contained in Section 2.3 or Section 2.13 hereof;
(b except as provided in Section 7.1(a) above, any breach of
any representation, warranty or covenant of the Company or any Principal
Stockholder under this Agreement or in any certificate, schedule or exhibit
delivered pursuant hereto, or by reason of any claim, action or proceeding
asserted or instituted growing out of any matter or thing constituting a breach
of such representations, warranties or covenants;
(c any liability of the Company for Taxes arising from an
event or transaction prior to the Closing or as a result of the Closing which
have not been paid or provided for or reserved against by the Company, including
without limitation, any increase in Taxes due to the unavailability of any loss
or deduction claimed by the Company.
7.2 LIMITATIONS ON INDEMNIFICATION BY THE PRINCIPAL STOCKHOLDER.
Notwithstanding the foregoing, the right of Buyer Indemnified Parties to
indemnification under Section 7.1 shall be subject to the following provisions:
(a No indemnification shall be payable to a Buyer Indemnified
Party with respect to claims asserted pursuant to Section 7.1(b) after July 9,
2000;
(b No indemnification shall be payable to a Buyer Indemnified
Party with respect to claims asserted pursuant to Section 7.1(a) or (c) after
July 9, 2002.
(c No indemnification shall be payable pursuant to Sections
7.1(b) and 7.1(c) above to any Buyer Indemnified Party, except to the extent the
total of all claims for
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indemnification pursuant to Sections 7.1(b) and (c) shall exceed $10,000 in the
aggregate, whereupon the full amount of such claims, up to an aggregate amount
of $1,997,500, shall be recoverable subject to, and in accordance with, the
terms hereof;
(di Notwithstanding any other provision of this Agreement, in
no event shall the aggregate indemnity obligations of the Principal Stockholders
pursuant to this Section 7 exceed $1,997,500;
(ei To the extent all or any portion of the Escrow Amount
continues to be held in escrow pursuant to the terms of the Escrow Agreement,
the Buyer Indemnified Parties shall be required to seek indemnification or
reimbursement with respect to claims asserted pursuant to Section 7.1 from the
Escrow Amount prior to seeking reimbursement by any other means. Subject to
Section 7.3, to the extent a Buyer Indemnified Party seeks indemnification or
reimbursement from the Escrow Amount, such Buyer Indemnified Party shall give
prompt direction to the Escrow Agent in accordance with the terms of the Escrow
Agreement.
7.3 NOTICE; DEFENSE OF CLAIMS. An indemnified party may make claims for
indemnification hereunder by giving written notice thereof to the indemnifying
party within the period in which indemnification claims can be made hereunder.
If indemnification is sought for a claim or liability asserted by a third party,
the indemnified party shall also give written notice thereof to the indemnifying
party promptly after it receives notice of the claim or liability being
asserted, but the failure to do so shall not relieve the indemnifying party from
any liability except to the extent that it is prejudiced by the failure or delay
in giving such notice. Such notice shall summarize the bases for the claim for
indemnification and any claim or liability being asserted by a third party.
Within twenty (20) days after receiving such notice the indemnifying party shall
give written notice to the indemnified party stating whether it disputes the
claim for indemnification and whether it will defend against any third party
claim or liability at its own cost and expense. If the indemnifying party fails
to give notice that it disputes an indemnification claim within twenty (20) days
after receipt of notice thereof, it shall be deemed to have accepted and agreed
to the claim, which shall become immediately due and payable. If the
indemnifying party notifies the indemnified party that it disputes such claim as
provided above, and the disputed claim is not resolved or compromised within
thirty (30) days after the indemnifying party sends notice of dispute of the
same, or in the event of a third-party claim or suit within fifteen (15) days
after its resolution or compromise, said claim shall be referred to
JAMS/Endispute, Inc. or its successor, to be settled by arbitration in
accordance with Section 8.12 hereto. The indemnifying party shall be entitled to
direct the defense against a third party claim or liability with counsel
selected by it (subject to the consent of the indemnified party, which consent
shall not be unreasonably withheld) as long as the indemnifying party is
conducting a good faith and diligent defense. The indemnified party shall at all
times have the right to fully participate in the defense of a third party claim
or liability at its own expense directly or through counsel; PROVIDED, HOWEVER,
that if the named parties to the action or proceeding include both the
indemnifying party and the indemnified party and the indemnified party is
advised that representation of both parties by the same
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counsel would be inappropriate under applicable standards of professional
conduct, the indemnified party may engage separate counsel at the expense of the
indemnifying party. If no such notice of intent to dispute and defend a third
party claim or liability is given by the indemnifying party, or if such good
faith and diligent defense is not being or ceases to be conducted by the
indemnifying party, the indemnified party shall have the right, at the expense
of the indemnifying party, to undertake the defense of such claim or liability
(with counsel selected by the indemnified party), and to compromise or settle
it, exercising reasonable business judgment. The indemnified party shall make
available such information and assistance as the indemnifying party may
reasonably request and shall cooperate with the indemnifying party in such
defense, at the expense of the indemnifying party.
7.4 FAIR MARKET VALUE. The "Fair Market Value" of a share of the
Escrowed Stock shall mean, as of a given day, the arithmetic average for each of
the five (5) business days ending on such given day of (i) the last sale price
reported on the principal national securities exchange on which the Webhire
Common Stock is traded, if the Webhire Common Stock is then traded on a national
securities exchange; or (ii) the last sale price reported on NASDAQ, if the
Webhire Common Stock is then traded on NASDAQ; or (iii) closing bid price (or
average of the bid prices) last quoted by an established quotation service for
over-the-counter securities, if the Webhire Common Stock is not reported on
NASDAQ, or (iv) to the extent none of the aforementioned valuations are
applicable, the AFair Market Value" shall be determined by an independent
investment banking firm mutually acceptable by Webhire and the Stockholder
Representative (as defined in Section 7.7); provided, however, that to the
extent such Escrowed Stock is an Assumed Option, the Fair Market Value shall be
reduced by the per share exercise price of such Assumed Option.
7.5 INDEMNIFICATION BY WEBHIRE. Webhire agrees to indemnify and hold
each of the Principal Stockholders harmless from and against any damages,
liabilities, losses, taxes, fines, penalties, costs and expenses (including,
without limitation, reasonable fees of counsel) of any kind or nature whatsoever
(whether or not arising out of third-party claims and including all amounts paid
in investigation, defense or settlement of the foregoing) which may be sustained
or suffered by him or her arising out of or based upon fraud, intentional
misrepresentation or a willful breach of any representation, warranty or
covenant made by Webhire or the Acquisition Corp. in this Agreement or in any
certificate, schedule or exhibit delivered by Webhire or the Acquisition Corp.
hereunder (collectively an "Intentional Wrongdoing") or any other breach of any
representation, warranty or covenant made by Webhire or the Acquisition Corp. in
this Agreement or in any certificate, schedule or exhibit delivered by Webhire
or the Acquisition Corp. hereunder, or by reason of any claim, action or
proceeding asserted or instituted growing out of any matter or thing
constituting such a breach.
7.6 LIMITATION ON INDEMNIFICATION BY WEBHIRE. Notwithstanding the
foregoing, the right of Principal Stockholders to indemnification under Section
7.5 shall be subject to the following provisions:
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(a No indemnification shall be payable to the Principal
Stockholders with respect to claims asserted pursuant to Section 7.5 (other than
claims based upon an Intentional Wrongdoing) after July 9, 2000;
(b No indemnification shall be payable to the Principal
Stockholders with respect to claims asserted pursuant to Section 7.5 that are
based upon an Intentional Wrongdoing after July 9, 2002;
(c No indemnification shall be payable with respect to claims
asserted pursuant to Section 7.5 (other than claims based upon an Intentional
Wrongdoing), except to the extent the total of all claims for indemnification
pursuant to Section 7.5 shall exceed $10,000 in the aggregate, whereupon the
full amount of such claims, up to an aggregate amount of $1,997,500, shall be
recoverable subject to, and in accordance with, the terms hereof; and
(d Notwithstanding any other provision of this Agreement, in
no event shall the aggregate indemnity obligations of Webhire pursuant to this
Section 7 exceed $1,997,500.
7.7 STOCKHOLDER REPRESENTATIVE. In any dealings with the Principal
Stockholders regarding indemnification obligations under this Section 7,
including disputes as to the existence or amount of any indemnification
obligation or regarding the Escrow Agreement, Webhire shall be entitled to rely
on its communications with Margolis (the "Stockholder Representative") on behalf
of all applicable Principal Stockholders; and any notice required to be given by
Webhire in connection with any indemnification obligations under this Section 7
shall be deemed given to all of the Principal Stockholders if given to the
Stockholder Representative.
The Stockholder Representative shall take, and the Principal
Stockholders agree that the Stockholder Representative shall take, any and all
actions which he believes are necessary or appropriate under this Agreement for
and on behalf of the Principal Stockholders, including without limitation
defending indemnity claims, consenting to, compromising or settling all
indemnity claims, conducting negotiations with Webhire and its representatives
regarding such claims, dealing with Webhire and the Escrow Agent under the
Escrow Agreement with respect to all matters arising under the Escrow Agreement,
taking any and all other actions specified in or contemplated by this Agreement
and engaging counsel, accountants or other representatives in connection with
the foregoing matters.
SECTION 8. MISCELLANEOUS.
8.1 FEES AND EXPENSES. Except as provided in this Section 8.1, each of
the parties will bear its own expenses in connection with the negotiation and
the consummation of the transactions contemplated by this Agreement, and no
expenses of the Company or the
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Principal Stockholders relating in any way to the purchase and sale of the
Company Stock or the Company Options hereunder and the transactions contemplated
hereby, including without limitation, investment banking, brokerage, legal,
accounting or other professional expenses and income taxes of the Company or the
Principal Stockholders, shall be charged to or paid by the Company after the
Closing, the Surviving Corporation, Acquisition Corp or Webhire, except that
Webhire shall pay at the Closing the Company's outstanding legal fees, subject
to a maximum of $15,000.
8.2 GOVERNING LAW. This Agreement shall be construed under and governed
by the internal laws of the Commonwealth of Massachusetts without regard to its
conflict of laws provisions.
8.3 NOTICES. Any notice, request, demand or other communication
required or permitted hereunder shall be in writing and shall be deemed to have
been given if delivered or sent by facsimile transmission, upon receipt, if sent
by overnight delivery providing receipt of delivery, two business days after
being sent, or if sent by registered or certified mail, upon the sooner of the
date on which receipt is acknowledged or the expiration of three days after
deposit in United States post office facilities properly addressed with postage
prepaid. All notices to a party will be sent to the addresses set forth below or
to such other address or person as such party may designate by notice to each
other party hereunder:
TO WEBHIRE, ACQUISITION
CORP. OR THE SURVIVING
CORPORATION: WEBHIRE, INC.
91 Hartwell Avenue
Lexington, MA 02421
Attention: Lars Perkins
Tel: (781) 869-5000
Fax: (781) 869-5060
With a copy to: Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109
Attention: John J. Egan III, Esq.
Tel: (617) 570-1514
Fax: (617) 523-1231
TO COMPANY: HIREWORKS, INC.
P.O. Box 58
Marlborough, MA 01752
Attention: Henry M. Margolis
Tel: (508) 485-2205
Fax: (508) 460-0311
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With a copy to: Lucash, Gesmer & Updegrove, LLP
40 Broad Street
Boston, MA 02109
Attention: Sarah Curtis, Esq.
Tel: (617) 350-6800
Fax: (617) 350-6878
TO THE PRINCIPAL
STOCKHOLDERS: Henry M. Margolis
256 Stearns Road
Marlborough, MA 01752
Tel: (508) 485-5069
Deborah Hamill
27 Ashland Street
Arlington, MA 02174
Tel: (781) 646-5685
Brian K. Kelley
20 Sartell Road
Grafton, MA 01519
Tel: (508) 839-1366
With a copy to: Lucash, Gesmer & Updegrove, LLP
40 Broad Street
Boston, MA 02109
Attention: Sarah Curtis, Esq.
Tel: (617) 350-6800
Fax: (617) 350-6878
Any notice given hereunder may be given on behalf of any party by his counsel or
other authorized representatives.
8.4 ENTIRE AGREEMENT. This Agreement, including the Schedules and
Exhibits referred to herein and the other writings specifically identified
herein or contemplated hereby, is complete, reflects the entire agreement of the
parties with respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings with respect to its subject
matter.
8.5 ASSIGNABILITY; BINDING EFFECT. This Agreement may not be assigned
by the Principal Stockholders or the Company without the prior written consent
of Webhire. This Agreement shall be binding upon and enforceable by, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns.
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8.6 CAPTIONS AND GENDER. The captions in this Agreement are for
convenience only and shall not affect the construction or interpretation of any
term or provision hereof. The use in this Agreement of the masculine pronoun in
reference to a party hereto shall be deemed to include the feminine or neuter,
as the context may require.
8.7 EXECUTION IN COUNTERPARTS. For the convenience of the parties and
to facilitate execution, this Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same document.
8.8 AMENDMENTS. This Agreement may not be amended or modified, nor may
compliance with any condition or covenant set forth herein be waived, except by
a writing duly and validly executed by Webhire and the Stockholder
Representative, or in the case of a waiver, the party waiving compliance.
8.9 SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be deemed
prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such
prohibition or invalidity shall not invalidate the remainder of such provision
or the other provisions of this Agreement.
8.10 PUBLICITY AND DISCLOSURES. Except as required by law, no press
releases or public disclosure, either written or oral, of the transactions
contemplated by this Agreement, shall be made by a party to this Agreement
without, in the case of releases and disclosures by the Company or the Principal
Stockholders, the prior written consent of Webhire and, in the case of releases
and disclosures by Webhire or the Acquisition Corp, prior consultation with
Henry Margolis.
8.11 ARBITRATION. All disputes, claims, or controversies arising out of
or relating to this Agreement or the negotiation, validity or performance hereof
that are not resolved by mutual agreement shall be resolved solely and
exclusively by binding arbitration to be conducted before JAMS/Endispute, Inc.
or its successor. The arbitration shall be held in Boston, Massachusetts before
a single arbitrator and shall be conducted in accordance with the rules and
regulations promulgated by JAMS/Endispute, Inc. unless specifically modified
herein.
The parties covenant and agree that the arbitration shall commence
within sixty (60) days of the date on which a written demand for arbitration is
filed by any party hereto. In connection with the arbitration proceeding, the
arbitrator shall have the power to order the production of documents by each
party and any third-party witnesses; however, the arbitrator shall not have the
power to order the taking of depositions, the answering of interrogatories or
the response to requests for admission. In connection with any arbitration, each
party shall provide to the other, no later than seven (7) business days before
the date of the arbitration,
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the identity of all persons that may testify at the arbitration and a copy of
all documents that may be introduced at the arbitration or considered or used by
a party's witness or expert. The arbitrator's decision and award shall be made
and delivered within six (6) months of the selection of the arbitrator. The
arbitrator's decision shall set forth a reasoned basis for any award of damages
or finding of liability. The arbitrator shall not have power to award damages in
excess of actual compensatory damages and shall not multiply actual damages or
award punitive damages or any other damages that are specifically excluded under
this Agreement, and each party hereby irrevocably waives any claim to such
damages.
The parties covenant and agree that they will participate in the
arbitration in good faith and that they will share equally its costs, except as
otherwise provided herein. The arbitrator may in his or her discretion assess
costs and expenses (including the reasonable legal fees and expenses of the
prevailing party) against any party to a proceeding. Any party unsuccessfully
refusing to comply with an order of the arbitrators shall be liable for costs
and expenses, including attorneys' fees, incurred by the other party in
enforcing the award. This Section 8.11 applies equally to requests for
temporary, preliminary or permanent injunctive relief, except that in the case
of temporary or preliminary injunctive relief any party may proceed in court
without prior arbitration for the limited purpose of avoiding immediate and
irreparable harm. The provisions of this Section 8.11 shall be enforceable in
any court of competent jurisdiction.
8.12 CONSENT TO JURISDICTION. Each of the parties hereto irrevocably
and unconditionally consents to the exclusive jurisdiction of JAMS/Endispute,
Inc. to resolve all disputes, claims or controversies arising out of or relating
to this Agreement or the negotiation, validity or performance hereof, and
further consents to the jurisdiction of any Federal or state court sitting in
The Commonwealth of Massachusetts for the purposes of enforcing the arbitration
provisions of Section 8.11 of this Agreement. Each party further irrevocably
waives any objection to proceeding before JAMS/Endispute based upon lack of
personal jurisdiction or to the laying of venue and further irrevocably and
unconditionally waives and agrees not to make a claim in any court that
arbitration before JAMS/Endispute, Inc. has been brought in an inconvenient
forum. Each of the parties hereto hereby consents to service of process by
registered mail at the address to which notices are to be given. Each of the
parties hereto agrees that its or his submission to jurisdiction and its or his
consent to service of process by mail is made for the express benefit of the
other parties hereto.
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8.13 SPECIFIC PERFORMANCE. Notwithstanding Section 8.11, it is
specifically understood and agreed that any breach of the provisions of this
Agreement by any person subject hereto will result in irreparable injury to the
other parties hereto, that the remedy at law alone will be an inadequate remedy
for such breach, and that, in addition to any other remedies which they may
have, such other parties may enforce their respective rights by actions for
specific performance (to the extent permitted by law).
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed as of the date set forth above by their duly authorized
representatives.
WEBHIRE, INC.
By:
Name:
Title:
HWK ACQUISITION CORP.
By:
Name:
Title:
HIREWORKS, INC.
By:
Name:
Title:
PRINCIPAL STOCKHOLDERS:
Henry M. Margolis
-----------------
Deborah Hamill
-----------------
Brian K. Kelley
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EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated July 19, 1999, between
Webhire, Inc., a Delaware corporation (formerly Restrac, Inc., the "Company"),
and SOFTBANK Capital Partners LP, a Delaware limited partnership, and fund
affiliates ("SOFTBANK").
1. PURCHASE AND SALE
(a) Upon the terms and subject to the conditions of this
Agreement, SOFTBANK will purchase, and the Company will issue and sell to
SOFTBANK, 3,960,396 shares of Common Stock, par value $.01 per share, of the
Company (the "Shares") for purchase price of $5.05 per share on the third
business day following the date on which the conditions under Sections 4(c) and
5(c) have been satisfied, or such other date as the parties may mutually agree
(the "Closing Date").
(b) On the Closing Date, the Company shall deliver to SOFTBANK
stock certificates representing the Shares against payment to the Company by
wire transfer of the aggregate purchase price of $20 million to an account
designated by the Company.
2. REPRESENTATIONS AND COVENANTS OF THE COMPANY
The Company represents and warrants to, and covenants and
agrees with, SOFTBANK as follows:
(a) ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with full power and authority to carry on its business as presently conducted.
The Company is duly qualified in good standing to do business in Massachusetts,
and there is no other jurisdiction in which the failure to so qualify would have
a material adverse effect on its business or operations.
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(b) CAPITALIZATION. As of the date hereof, the Company has an
authorized capital stock consisting of 30,000,000 shares of Common Stock and
5,000,000 shares of preferred stock, par value $.01 per share. As of July 16,
1999, there were 10,401,549 shares of Common Stock, options for 1,562,777 shares
of Common Stock, a warrant for 114,659 shares of Common Stock and no shares of
preferred stock outstanding. Except as set forth on Schedule 2(b), there are no
options, warrants or commitments of any kind relating to the capital stock of
the Company, including any preemptive or other rights to purchase the Shares.
(c) THE SHARES. When issued and delivered in accordance with
the terms of this Agreement, the Shares will be duly and validly authorized and
issued, fully paid and non-assessable.
(d) EXCHANGE ACT REPORTS. The Company's reports on Form 10-K
for the year ended September 30, 1998, Forms 10-Q for the quarters ended
December 31, 1998 and March 31, 1999, and proxy statement for the stockholders
meeting on March 17, 1999, complied with the requirements of the Securities
Exchange Act of 1934 and did not contain any untrue statement of a material
fact, or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(e) FINANCIAL STATEMENTS. The audited consolidated balance
sheets of the Company as of September 30, 1997 and 1998, and the unaudited
consolidated balance sheet as of March 31, 1999, and the related statements of
earnings for each of the fiscal periods then ended, fairly present the financial
position of the Company as of such dates and the results of its operations for
the periods then ended in accordance with U.S. generally accepted accounting
principles applied on a consistent basis, subject in the case of the interim
financial statements to normal year-end adjustments and the absence of
footnotes. Since March 31, 1999, there has not been any material adverse change
in the financial position or the earnings or operations of the Company that has
not been publicly disclosed.
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(f) INTELLECTUAL PROPERTY. Schedule 2(f) contains a list of
all material patents, trademarks, trade names and copyrights used by the Company
in the conduct of its business. To the best of the Company's knowledge, the
Company has the valid and enforceable right to use each of such patents,
trademarks, trade names and copyrights and such use in the conduct of its
business does not conflict with valid rights of others.
(g) YEAR 2000. The Company has taken all actions necessary
and adequate to ensure that all computer software and data processing devices
(i) used by the Company in its management information systems, or (ii) utilized
in or by any Company products or services, including any Company products sold
and/or installed prior to the date hereof, are presently or will become "Year
2000 Compliant" and the Company will not incur costs associated with ensuring
such Year 2000 Compliance in an amount that would reasonably likely be more than
$250,000. "Year 2000 Compliant" means that the computer software or data
processing devices accurately process and store date/time data (including, but
not limited to calculating, comparing, displaying, recording and sequencing
operations involving date/time data) during the twenty-first century and the
years 1999 and 2000, including correct processing of leap year data; PROVIDED,
HOWEVER, that the Company makes no representations regarding any hardware or
operating systems on which its products operate, any third party products that
may operate within the Company's products or any public or common carrier
networks.
(h) COMPLIANCE. To the best of the Company's knowledge, the
Company (i) has complied in all material respects with all federal, state, local
and foreign laws, regulations and orders applicable to its business, and (ii)
has obtained all federal, state, local and foreign governmental licenses,
registrations and permits necessary for the conduct of its business, and such
licenses, registrations and permits are in full force and effect.
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(i) NO CONFLICT. The execution and delivery of this Agreement
and the performance of the Company's obligations hereunder will not (i) violate
or be in conflict with provisions of any law, rule or regulation, any order,
judgment or award of any court or other agency of government or arbitrator, or
any provision of the Certificate of Incorporation or By-Laws of the Company,
(ii) violate, be in conflict with, result in a breach of, or constitute (with or
without notice or lapse of time or both) a default under any indenture,
agreement, lease or other instrument to which the Company is a party or by which
it or any of its properties is bound, or (iii) result in the creation or
imposition of any lien, charge or encumbrance upon any of its properties or
assets.
(j) NO CONSENTS. Assuming the accuracy of SOFTBANK's
representations and warranties in Section 3(d), no consent, approval or
authorization of or declaration or filing with any governmental authority or
other person or entity on the part of the Company is required in connection with
the execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) the filing required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the expiration or early termination of the applicable waiting period
under the HSR Act; and (ii) obtaining shareholder approval.
(k) LITIGATION. There is no litigation or proceeding pending
or, to the best of the Company's knowledge, threatened against the Company or
its properties or business, which is likely to have a material adverse effect on
the financial condition, business or operations of the Company, or which seeks
to prevent the consummation of the transactions contemplated by this Agreement.
(l) FINDERS. There is no investment banker, broker, finder,
consultant or other intermediary that has been retained by, or is authorized to
act on behalf of, the Company who is entitled to any fee or commission upon
consummation of the transactions contemplated by this Agreement other than fees
which may be due to Bank of
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America Securities and Adams, Harkness & Hill, which will be paid by the
Company.
3. REPRESENTATIONS OF SOFTBANK
SOFTBANK represents and warrants to the Company as follows:
(a) ORGANIZATION. SOFTBANK is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full power and authority to enter into and perform this
Agreement.
(b) NO CONSENTS. No consent, approval or authorization of or
declaration or filing with any governmental authority or other person or entity
on the part of SOFTBANK is required in connection with the execution or delivery
of this Agreement or the consummation of the transactions contemplated hereby,
except for the filing required by the HSR Act, and the expiration or early
termination of the applicable waiting period under the HSR Act.
(c) FINDERS. There is no investment banker, broker, finder,
consultant or other intermediary that has been retained by, or is authorized to
act on behalf of, SOFTBANK who is entitled to any fee or commission upon
consummation of the transactions contemplated by this Agreement.
(d) INVESTMENT. SOFTBANK is an "accredited investor" within
the meaning of Regulation D under the Securities Act of 1933 (the "1933 Act"),
and is acquiring the Shares for its own account for investment and not with a
view to resale or distribution.
(e) ACCESS TO INFORMATION. SOFTBANK has received all the
information it requested from the Company in determining whether to purchase the
Shares. It has had an opportunity to ask questions and receive answers from the
Company regarding the terms and conditions of the sale of
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the Shares and the business, properties, prospects and final condition of the
Company.
4. CONDITIONS TO OBLIGATIONS OF SOFTBANK
The obligations of SOFTBANK to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Closing Date of the following conditions:
(a) No preliminary or permanent injunction or other binding
order, decree or ruling issued by a court or governmental agency shall be in
effect which shall have the effect of preventing the consummation of the
transactions contemplated by this Agreement.
(b) All representations and warranties of the Company
contained in this Agreement shall be true in all material respects at and as of
the Closing Date as though made at such time, and the Company shall have
performed and complied in all material respects with all covenants and
conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date.
(c) The waiting period under the HSR Act applicable to the
sale of the Shares shall have expired or been terminated and the Company shall
have obtained shareholder approval.
(d) SOFTBANK shall have received from Goodwin, Procter & Hoar,
LLP, counsel to the Company, an opinion, dated as of the Closing Date, addressed
to SOFTBANK with respect to such matters as SOFTBANK shall have reasonably
requested.
(e) All corporate and other proceedings required to carry out
the transactions contemplated by this Agreement, and all instruments and other
documents relating to such transactions, shall be reasonably satisfactory in
form and substance to Sullivan & Cromwell, counsel to SOFTBANK, and SOFTBANK
shall have been furnished with such instruments
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and documents as such counsel shall have reasonably requested.
5. CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the transactions
contemplated by this Agreement are subject to the satisfaction at or prior to
the Closing Date of the following conditions:
(a) No preliminary or permanent injunction or other binding
order, decree or ruling issued by a court or governmental agency shall be in
effect which shall have the effect of preventing the consummation of the
transactions contemplated by this Agreement.
(b) All representations and warranties of SOFTBANK contained
in this Agreement shall be true in all material respects at and as of the
Closing Date as though made at such time, and SOFTBANK shall have performed and
complied in all material respects with all covenants and conditions required by
this Agreement to be performed or complied with by it prior to or on the Closing
Date.
(c) The waiting period under the HSR Act applicable to the
sale of the Shares shall have expired or been terminated and the Company shall
have obtained shareholder approval.
6. BOARD OF DIRECTORS
SOFTBANK shall be entitled to appoint two members of the
Company's Board of Directors on the Closing Date. For so long as it owns at
least 10% of the Company's outstanding Common Stock, SOFTBANK shall be entitled
to nominate one director each time a class of directors in which one of its
representatives serves is subject to election. One of the SOFTBANK directors
shall be entitled to serve as a member of the audit and compensation committees
of the Board and both shall have access to any information available to any
other director. The Company shall reimburse all reasonable expenses incurred by
the
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SOFTBANK directors relating to attendance at Board and Board committee meetings
and other activities on behalf of the Company.
7. TRANSFER
(a) TRANSFER RESTRICTIONS. SOFTBANK will not make any
disposition of any of the Shares unless and until the transferee has agreed in
writing for the benefit of the Company to be bound by this Section 7(a), and:
(i) There is then in effect a registration statement under the
1933 Act hereof covering such proposed disposition and such disposition
is made in accordance with such registration statement; or
(ii) (A) SOFTBANK shall have notified the Company of the
proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed
disposition, and (B) if reasonably requested by the Company, SOFTBANK
shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company that such disposition will not require
registration under the 1933 Act;
PROVIDED, HOWEVER, the conditions in clause (i) and (ii) of this Section 7(a)
shall not apply to any transfer by SOFTBANK to any entity that controls, is
controlled by, or under common control with, SOFTBANK and is not an operating
company.
(b) LEGEND. SOFTBANK understands that the certificates
evidencing the Shares may bear the following legend:
"These securities have not been registered under the Securities Act of
1933, as amended. Except as otherwise provided in the Stock Purchase
Agreement, dated July 19, 1999, they may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in
effect with respect to the securities under such Act or an opinion of
counsel
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satisfactory to the Company that such registration is not
required."
8. REGISTRATION RIGHTS
(a) DEMAND REGISTRATION. Commencing one year after the Closing
Date, SOFTBANK may make up to two requests, in writing, that the Company use its
best efforts to effect, as expeditiously as possible, the registration of any or
all of the Shares then held by SOFTBANK on a registration statement on Form S-3
(or any successor form); PROVIDED, HOWEVER, that the Company shall only be
obligated to effect two such registrations under this Section 8(a). The Company
may postpone for up to 180 days the filing or the effectiveness of a
registration statement for a registration pursuant to this Section 8(a) if the
Company's board of directors determines that such registration could reasonably
be expected to have a material adverse effect on any proposal or plan by the
Company or any of its subsidiaries to engage in any acquisition of assets (other
than in the ordinary course of business) or any merger, consolidation, tender
offer, reorganization or similar transaction. The Company shall not be obligated
to effect any registration under this Section 8(a) within 90 days after the
completion of any underwritten public offering of its stock.
(b) "PIGGY-BACK" REGISTRATION. If the Company prepares to file
a registration statement under the 1933 Act in connection with the public
offering of the Company's common equity securities (including any registration
for other shareholders) the Company shall so notify SOFTBANK and SOFTBANK may
have any or all of its Shares so included in such registration. Notwithstanding
any other provision of this Section 8(b), if the representative of the
underwriters managing such offering advises the Company in writing that the
number of shares of Common Stock proposed to be sold in any such offering or
sale is greater than the number of shares which the representative believes
feasible to sell at that time at the price and upon the terms approved by the
Company, there shall be included in such registration and underwriting (i)
first, the number of securities proposed to
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be sold by the Company and (ii) second, the number of shares to be included in
the registration and underwriting by selling stockholders on a pro rata basis
based upon the number of shares that each of such stockholders desires to
register.
(c) EXPENSES OF REGISTRATION. Except for underwriting
discounts and commissions applicable to SOFTBANK's Shares, the Company shall be
responsible for all expenses in connection with any registration of Shares
hereunder, including, without limitation, all registration, filing,
qualification, printers and accounting expenses, and fees and disbursements of
both counsel for the Company and counsel for SOFTBANK.
(d) INDEMNIFICATION. With respect to any registration pursuant
to this Section 8, the Company will provide customary indemnification for
SOFTBANK and any underwriter of Shares sold by SOFTBANK (and any of their
directors, officers and controlling persons) and SOFTBANK's right to participate
in any underwritten offering will be subject to its execution of a customary
underwriting agreement.
(e) ASSIGNMENT OF REGISTRATION RIGHTS. The rights pursuant to
this Section 8 may be assigned by SOFTBANK together with any transfer of Shares,
provided the transfer complies with the applicable terms of this Agreement. As
used in this Section 8, the term SOFTBANK includes any such assignee.
(f) RESTRICTION ON SALES. During the period beginning 10 days
prior to and ending 180 days after the effective date of a registration
statement of the Company filed under the 1933 Act and relating to an
underwritten offering by the Company, SOFTBANK shall not, to the extent
requested by the Company and any managing underwriter of such offering, directly
or indirectly, sell, offer or contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of (other than to its affiliates or pursuant to gifts to donees who agree to be
similarly bound) any Shares
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at any time during such period except Shares covered by such registration
statement.
9. PREEMPTIVE RIGHTS
For so long as SOFTBANK holds 10% or more of the Company's
outstanding common stock, the Company will give SOFTBANK notice each time the
Company proposes to offer any shares of, or securities convertible into or
exercisable for any shares of, any class of its capital stock (other than in a
transaction exempt from this Section 9 in the following paragraph). Within 30
days of receiving such notice, SOFTBANK may agree to purchase or obtain, at the
same price and on the same terms as such offer, up to that portion of such
securities which equals the proportion that the number of shares of Common Stock
issued and held, or issuable upon conversion and exercise of all convertible or
exercisable securities then held, by SOFTBANK bears to the total number of
shares of Common Stock then outstanding (assuming full conversion and exercise
of all convertible or exercisable securities then outstanding).
The preemptive rights in this Section 9 shall not be
applicable (i) to the issuance or sale of Common Stock (or options therefor) to
employees, consultants and directors, pursuant to a stock option or grant plan
or similar benefit program or arrangement approved by the Board of Directors,
(ii) to the issuance of securities in connection with a bona fide business
acquisition of or by the Company, whether by merger, consolidation, sale of
assets, sale or exchange of stock or otherwise, (iii) to the issuance of
securities pursuant to the conversion or exercise of convertible or exercisable
securities outstanding on the date hereof, or as a result of any
reclassification, stock split or stock dividend on Shares outstanding on the
date hereof, or (iv) to the issuance of securities to a strategic partner, a
lender in connection with credit arrangements, financing or similar transactions
or in connection with an underwritten offering.
10. BUSINESS VENTURES
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<PAGE>
In the event the Company proposes to enter into (a) a joint
venture for operations in the United Kingdom, Continental Europe or Japan, or
(b) a business transaction with any competitor of SOFTBANK's affiliate ZDNet, in
each case it will so notify SOFTBANK and afford SOFTBANK or one of its
affiliates the opportunity to itself participate in the venture or transaction
on terms and conditions mutually acceptable to both parties.
11. STANDSTILL AGREEMENT
SOFTBANK and its affiliates shall not, directly or indirectly,
(a) acquire beneficial ownership of any Common Stock of the Company or
securities convertible into or exchangeable for Common Stock (except, in any
case, by way of stock dividends or other distributions or offerings made
available to holders generally), or (b) authorize or make a tender, exchange or
other offer that would result in such an acquisition, if the effect of such
acquisition would be to increase SOFTBANK's ownership to a level above 40% of
the outstanding Common Stock. SOFTBANK further agrees that: (a) except by virtue
of its representation on the Board of Directors of the Company, it will not act,
alone or in concert with others, to seek to affect or influence the Board of
Directors or the control of the management of the Company or the businesses,
operations, affairs, financial matters or policies of the Company, (b) it will
not initiate or propose any stockholder proposal or action or make, or in any
way participate in or encourage, directly or indirectly, any "solicitation" of
"proxies" to vote or written consents, or seek to influence any person or entity
with respect to the voting of or consenting with respect any of the Company's
voting securities, or become a "participant" in a "solicitation" (as such terms
are defined in Regulation 14A under the Securities Exchange Act of 1934, as in
effect on the date hereof) in any election contest with respect to the election
or removal of any of the Company's directors or in opposition to the
recommendation of the majority of the directors of the Company with respect to
any other matter; or (c) join a partnership, limited partnership, syndicate or
other group, or otherwise act in concert with any other person, for the purpose
of acquiring, holding, voting or
-12-
<PAGE>
disposing of the Company's voting securities, or, otherwise become a "person"
within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934.
12. CONFIDENTIALITY
SOFTBANK will treat and hold as confidential any and all
information relating to the business and affairs of the Company furnished to it
pursuant to this Agreement and not generally known or available to the public
(other than as a result of breach of this Agreement) and shall refrain from
using any of such information or trading in the Company's securities on the
basis thereof except in connection with this Agreement or as compelled by
judicial or administrative process or by requirement of law. SOFTBANK
acknowledges that the Company would be irreparably damaged if such confidential
information were disclosed to or utilized by or on behalf of persons other than
SOFTBANK, the Company or their respective affiliates.
13. MISCELLANEOUS
(a) FEES AND EXPENSES. Each party shall pay its own expenses
incurred in connection with its execution, delivery and performance of this
Agreement, except that if the Closing is effected, the Company shall reimburse
SOFTBANK for the reasonable fees and expenses of SOFTBANK's counsel.
(b) SURVIVAL AND TERMINATION. All representations and
warranties made herein shall survive for two years after the Closing Date and
shall continue in full force and effect after delivery of and payment for the
Shares. All covenants and agreements herein shall survive until the earlier of
five years after the Closing Date or when SOFTBANK ceases to hold at least 10%
of the Company's outstanding Common Stock; PROVIDED, HOWEVER, the covenants in
Sections 6, 9 and 10 shall terminate upon the sale of all or substantially all
of the assets or outstanding capital stock of the Company or any merger or
reorganization including the Company and as a result of which the holders of the
Company's outstanding Common Stock immediately prior
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<PAGE>
to such transaction do not hold at least a majority of the outstanding voting
securities in the entity surviving such transaction.
(c) MODIFICATION AND WAIVER. No amendment or modification of
the terms or provisions of this Agreement shall be binding unless the same shall
be in writing and duly executed by the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed to or shall constitute a waiver of
any other provision hereof. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof.
(d) ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter hereof. Any
previous agreement or understandings between the parties regarding such subject
matter are merged into and superseded by this Agreement.
(e) SEVERABILITY. In case any provision in this Agreement
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
(f) NOTICES. All notices, consents or other communications
hereunder shall be in writing, and shall be deemed to have been duly given and
delivered when delivered by hand, or when mailed by registered or certified
mail, return receipt requested, postage prepaid, or when received via telecopy
or other electronic transmission, in all cases addressed to the party for whom
intended at its address set forth below:
If to SOFTBANK:
SOFTBANK Capital Partners LP
10 Langley Road, Suite 403
Newton Center, MA 02159
Attention: Ron Fisher
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<PAGE>
Telephone: (617) 558-6705
Facsimile: (617) 928-9301
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Stephen A. Grant, Esq.
Telephone: (212) 558-3504
Facsimile: (212) 558-3588
If to the Company:
Webhire, Inc.
91 Hartwell Avenue, Applied Drive
Lexington, Massachusetts 02421
Attention: Lars Perkins
Telephone: (781) 869-5000
Facsimile: (781) 869-5060
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02104
Attention: John J. Egan, P.C.
Telephone: (617) 570-1514
Facsimile: (617) 523-1231
or such other address as either party shall have designated by notice in writing
to the other party given in the manner provided by this Section.
(g) PUBLICITY. Until six months following the Closing Date,
SOFTBANK and the Company shall consult with
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<PAGE>
each other before issuing any press release or otherwise making any public
statement with respect to the transactions contemplated hereby, and shall not
issue any such press release or make any such public statement prior to approval
by the other party, which will not be unreasonably withheld except as may be
required by law.
(h) NO IMPLIED RIGHTS. Nothing herein express or implied, is
intended to or shall be construed to confer upon or give to any person, firm,
corporation or legal entity, other than the parties hereto and their affiliates,
any interests, rights, remedies or other benefits with respect to or in
connection with any agreement or provision contained herein or contemplated
hereby.
(i) ASSIGNMENT. This Agreement may not be assigned by either
party without the prior written consent of the other party except by SOFTBANK to
an affiliate provided the assignee agrees to be bound by the terms of this
Agreement as though named as an original party hereto.
(j) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
(k) COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
WEBHIRE, INC.
By:
-------------------------
SOFTBANK CAPITAL PARTNERS LP
By: SOFTBANK CAPITAL PARTNERS LLC,
General Partner
By:
-------------------------
<PAGE>
SCHEDULE 2(b)
Pursuant to the terms of the Yahoo! Inc. and Webhire, Inc. Services
Agreement, dated as of June 3, 1999, by and between Yahoo! Inc. and the Company
(the "Yahoo Agreement"), in the event the Yahoo Agreement is renewed on its
first anniversary for an additional year, the Company has agreed to issue to
Yahoo, on June 3, 2000, a warrant to purchase an aggregate of up to one percent
(1%) of the total number of outstanding shares of the Company's Common Stock as
of June 3, 2000 at an exercise price equal to the average closing price of the
Company's Common Stock for the thirty (30) trading days prior to June 3, 2000.
<PAGE>
SCHEDULE 2(f)
The Company has the following registered trademark: Restrac.
The Company has applied for the following trademark: Webhire.
The Company has neither applied for nor been granted any patents. In
addition, the Company does not have any registered copyrights though its
software is subject to common law copyright protection.
<PAGE>
Exhibit 10.2
Portions of this Exhibit have been omitted pursuant to a confidential treatment
request filed with the Securities and Exchange Commission. An asterisk (*)
identifies where such confidential treatment has been requested and information
has been omitted. The omitted portions have been filed separately with the
Securities and Exchange Commission.
YAHOO! INC. AND WEBHIRE, INC.
SERVICES AGREEMENT
This Agreement (the "AGREEMENT") is made this 3rd day of June 1999 (the
"EFFECTIVE DATE") between Yahoo! Inc., a Delaware corporation, with offices at
3420 Central Expressway, Santa Clara, CA 95051, ("YAHOO") and Webhire, Inc., a
Delaware corporation, with offices at 91 Hartwell Avenue, Lexington, MA 02421
("WEBHIRE").
RECITALS
WHEREAS, Yahoo operates a search engine and World Wide Web directory
under the brand "Yahoo!" from its primary World Wide Web site, currently located
at HTTP://WWW.YAHOO.COM (together with any and all other sites serving in the
future as Yahoo's primary World Wide Web site referred to as the "Yahoo Main
Site"); and
WHEREAS, Webhire designs, develops, markets and supports a family of
cross-industry human resource recruitment solutions and related services; and
WHEREAS, Yahoo and Webhire contemplate executing one or more agreements
pursuant to which Yahoo will be granted warrants in Webhire under terms
substantially similar to those set forth in EXHIBIT M; and
WHEREAS, Yahoo and Webhire desire to enter into this Agreement under
the terms and conditions set forth herein.
NOW THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, the parties hereto agree as follows:
SECTION 1: DEFINITIONS.
(a) "EMPLOYERS" means corporations or other entities that have a need to
find candidates to fill open positions.
(b) "EMPLOYER DATA" means all data provided by or generated from
Employers.
(c) "LAUNCH DATE" means the date on which Yahoo Recruiter, Yahoo Resumes
and Webhire JobPost to Yahoo Classifieds are first commercially
available to the public.
(d) "PERSONAL AND OTHER DATA" means all data, other than Employer Data,
generated under this Agreement, including but not limited to data
provided by or generated from users of Yahoo Resumes, and includes,
without limitation, the user's Yahoo id, password, name, address,
contact information, resume contents and resulting metrics for reach,
registered members, user preferences, and user minutes.
(e) "REVENUE" means the gross revenue received from the sale of Yahoo
Recruiter, Yahoo Resumes and Yahoo Premium Services (excluding
applicable taxes).
(f) "TERM" means the term of this Agreement determined in accordance with
Section 9 below.
<PAGE>
(g) "WEBHIRE BRAND FEATURES" means those trademarks, service marks, logos
and other distinctive brand features of Webhire that are described in
EXHIBIT J, and shall include a descriptive phrase mutually agreed upon
by the parties; provided that such phrase shall not be a "call to
action."
(h) "WEBHIRE COMPETITORS" shall mean the following entities: Interactive
Search, Inc.; CareerBuilder, Inc.; Resumix, Inc.; Personic, Inc.;
CareerCast, Inc.; Alexus, Inc.; HireSystems, Inc; provided that,
Webhire may add additional third parties to such list upon giving
sixty (60) days written notice to Yahoo; provided further that, Yahoo
shall be permitted to fulfill any contractual obligation to such party
that exists as of the date of such notice
(i) "WEBHIRE ENTERPRISE CUSTOMERS" means customers of Webhire's Webhire
Hire client/server or Intranet enterprise employment automation
software products. Customers of Webhire's Webhire service are
specifically excluded from this definition unless they are also
customers of Webhire's Webhire Hire products.
(j) "WEBHIRE SERVICES" means all services and support that Webhire is to
provide under this Agreement, including but not limited to, providing
to Yahoo and supporting Yahoo Recruiter, Yahoo Resumes and Webhire
JobPost.
(k) "WEBHIRE SITE" means the following World Wide Web site: and
http://www.webhire.com.
(l) "WEBHIRE TECHNOLOGY" means the technology necessary for Webhire to
accomplish its obligations under this Agreement, and includes, without
limitation, all applicable technical equipment, infrastructure
(including, without limitation, servers, routers and related
equipment) and all related technology and software (including, without
limitation, all technology and software whether owned or licensed by
Webhire).
(m) "WEBHIRE CUSTOMERS" means Employers that are Webhire customers and use
the Webhire JobPost or Webhire Recruiter services, including, but not
limited to, Webhire Enterprise Customers that use Webhire to access
services provided through the Webhire Network or Webhire Premium
Services.
(n) "WEBHIRE JOBPOST" means the service, described in detail in EXHIBIT A,
that automatically collects job listings from an Employer's web site
for distribution to Internet job posting sites.
(o) "WEBHIRE RECRUITER" means the service, described in detail on
EXHIBIT B, that provides an integrated, web-based environment that
allows Employers to enter information about their open jobs, post
those jobs to Internet job posting sites, receive and track
information about candidates who apply for jobs, and maintain a
private pool of their candidates.
(p) "WEBHIRE PREMIUM SERVICES" means those additional services offered to
[Webhire subscribers] (including paper resume processing,
pre-employment screening services, third party resume pool searching,
and job postings to Internet sites which may or may not be part of the
Webhire Network), described in detail in EXHIBIT C.
(q) "WEBHIRE NETWORK" means the network of staffing service providers set
forth in EXHIBIT N that have entered into agreements with Webhire to
make their services available to Webhire customers.
2
<PAGE>
(r) "YAHOO BRAND FEATURES" means all trademarks, service marks, logos and
other distinctive brand features of Yahoo that are used in or relate
to its business, including, without limitation, the trademarks,
service marks and logos described in EXHIBIT J.
(s) "YAHOO CLASSIFIEDS" means that portion of the Yahoo Main Site
currently located at http://classifieds.yahoo.com/employment.html, in
which advertisers place classified advertisements, including the
placement of job postings by Employers.
(t) "YAHOO COMPETITORS" shall mean the following *************************
**********************************************************************
**********************************************************************
**********************************************************************
****************************.
(u) "YAHOO EMPLOYMENT" means the portion of the Yahoo Main Site, currently
located at HTTP://EMPLOYMENT.YAHOO.COM/, containing, among other
things, various resources for job seekers, including job search,
resume posting to an on-line database, and career advice.
(v) "YAHOO PROPERTIES" means any Yahoo branded or co-branded media
properties, including, without limitation, Internet guides, that are
developed in whole or in part by Yahoo.
(w) "YAHOO RECRUITER" means the customized version of Webhire Recruiter as
described in detail in EXHIBIT D. The Yahoo Recruiter shall include,
among other features, those features currently available in the
Webhire Recruiter that will allow Yahoo users to
**********************************************************************
***************. Yahoo Recruiter will be consistent with the look and
feel and user experience of the Yahoo Properties. Yahoo will have sole
control over the appearance, design, layout and content of Yahoo
Recruiter as they relate to look and feel and user experience (it
being understood that Yahoo Recruiter's functionality will be
*********************************************************************
***********************.
(x) "YAHOO RECRUITER CUSTOMER" shall mean those individuals or
entities that purchase Yahoo Recruiter services.
(y) "YAHOO RECRUITER PAGES" shall mean those pages on which Yahoo
Recruiter is implemented.
(z) "YAHOO PREMIUM SERVICES" means additional services that are described
in EXHIBIT C.
(aa) "YAHOO'S PRIVACY POLICY" shall mean that privacy policy currently
located at http://docs.yahoo.com/info/privacy/ (as may be amended by
Yahoo from time to time).
(bb) "YAHOO REGISTRATION FUNCTIONALITY" means that functionality
implemented as part of Yahoo's standard registration process that
allows Yahoo to collect from Yahoo users information, including, but
not limited to, such user's personal Yahoo ID and password, e-mail
address, gender, date of birth, occupation, zip code and interests.
(cc) "YAHOO RESUMES" means a database comprised of resumes submitted by
Yahoo Properties' users.
3
<PAGE>
(dd) YAHOO SEARCH FUNCTIONALITY" means that functionality implemented
throughout the Yahoo Properties that allows Yahoo users to search for
information within the Yahoo Properties and on the World Wide Web.
SECTION 2: RESPONSIBILITIES OF WEBHIRE.
Webhire will have the following responsibilities.
2.1 Within *********** from the commercial release of Yahoo Resumes (except
as provided in clause (iv) below), Webhire will develop and provide to
Yahoo, Yahoo Recruiter. Yahoo Recruiter shall (i) be installed and
maintained ***************** (ii) *************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
**************************************************************; and (v)
maintain the Yahoo look and feel as determined by Yahoo. At Yahoo's
direction, Webhire will conduct a series of beta tests of Yahoo
Recruiter and will correct all problems (as determined by Yahoo) that
are revealed through such beta tests (or otherwise). Yahoo Recruiter
shall be publicly launched only upon Yahoo's approval of the beta test
results, which shall be at Yahoo's sole discretion. Following Yahoo
Recruiter's launch, Webhire will continue to make engineers available
as requested by Yahoo to work through bugs and to collaborate on Yahoo
Recruiter enhancements and functional adjustments. Webhire shall
provide all support for Yahoo Recruiter Customers in accordance with
those specifications set forth on EXHIBIT K.
2.2 Within thirty (30) days from the Effective Date (except as provided in
clause (iv) below), Webhire will complete development and installation
of the Yahoo Resumes database service. Yahoo Resumes shall be
prominently branded with Yahoo Brand Features and Webhire Brand
Features (which will be prominent but secondary to Yahoo's) and shall
contain: (i) persistent links to various Yahoo Properties designated by
Yahoo; (ii)************************************; (iii) enable hypertext
links to be established that will allow Yahoo to integrate Yahoo
Resumes with Yahoo Employment; (iv) have the capacity to serve
advertising (e.g., banners) pursuant to Yahoo's advertising standards
and specifications, provided that, this feature's development and
installation shall be completed by Webhire, with Yahoo's cooperation,
as soon as reasonably practicable but in no case later than sixty (60)
days after the date on which Yahoo has provided Webhire those materials
and information required from Yahoo and necessary for Webhire to
complete this task; and (v) maintain the Yahoo look and feel as
determined by Yahoo. Webhire shall provide second line support to Yahoo
for all issues relating to Yahoo Resumes.
2.3 During the Term, Yahoo will have the right to require modifications and
additions of new features to Yahoo Recruiter and Yahoo Resumes;
provided that, substantial modifications or additions of new features
to Yahoo Recruiter and Yahoo Resumes **********************************
***********************************************************************
**********************.
2.4 Within*********** from the Effective Date, Webhire will complete
development of ********************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
4
<PAGE>
***********************************************************************
*******************.
2.5 Within thirty (30) days from the Effective Date, Webhire will begin
delivery of a data feed (updated twice per week), in a format
determined by Yahoo, of all job listings from Webhire Customers, and
Yahoo Recruiter Customers, (the "Webhire Job Listings"), provided that,
job listings from Webhire Customers and Yahoo Recruiter Customers that
specifically request in writing that their job listings not be posted
to Yahoo Classifieds shall be excluded from such data feed. Under no
circumstances shall Webhire *****************************************
**************** pursuant to this Section 2.5; provided that Webhire
will be entitled to charge fees for its Webhire JobPost service.
2.6 Webhire represents and warrants that at no time during the Term, shall
the number of unique job listings delivered pursuant to Section 2.5
above, be less than *******.
2.7 Webhire shall provide Yahoo written reports containing any other
information requested by Yahoo that Webhire collects relating to Yahoo
Recruiter, Yahoo Resumes and Webhire JobPost (as it pertains to Yahoo
job postings) (the "Webhire Reports"). The Webhire Reports shall be
provided as frequently as possible but no less frequently than weekly.
2.8 To the extent that Webhire develops enhanced versions of any of the
products offered to Yahoo as part of Yahoo Recruiter, Yahoo Resumes and
Webhire JobPost ("Enhancements"), upon Yahoo's approval, Webhire shall
make the same available to Yahoo and/or Yahoo users simultaneously with
each version's availability. Webhire will commit reasonable engineering
resources, as well as provide Yahoo with release notes detailing what
has changed with any Enhancement or new release to ensure that Yahoo
and Webhire together will successfully integrate into the Yahoo
Recruiter, Yahoo Resumes and Webhire JobPost all such enhancements and
upgrades.
2.9 ***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************
**********************************************************************.
2.10 Webhire shall acquire and maintain, at its own cost, servers and other
equipment adequate to support Webhire's obligations under this
Agreement. Webhire shall also ensure that at all times the Webhire
Technology will be able to support the demand generated by Yahoo
Recruiter, Yahoo Resumes and Webhire JobPost users and can be scaled
to support future growth as reasonably determined by Yahoo.
2.11 Webhire grants to Yahoo a non-exclusive, non-transferable, worldwide,
fully paid license to use, reproduce and display Webhire Brand
Features in connection with the promotion of Yahoo Recruiter, Yahoo
Resumes and Webhire JobPost under this Agreement, subject to the terms
set forth herein. Yahoo shall at no time adopt or use, without
Webhire's prior written consent, any
5
<PAGE>
variation of any Webhire Brand Feature, or any element likely to be
similar to or confused with any Webhire Brand Feature. Any and all
goodwill arising from Yahoo's use of the Webhire Brand Features shall
inure solely to the benefit of Webhire. Yahoo agrees to comply with
the guidelines regarding usage of the Webhire Brand Features attached
hereto as EXHIBIT J, as may be modified or supplemented by Webhire
from time to time.
2.12 Webhire has designated individuals to contact for various matters on
EXHIBIT O.
2.13 In the event that Webhire enters into any bona fide discussions with
any third party with respect to a Control Transaction (as defined
below), Webhire will immediately ********************.*****************
**************************************************Webhire will *******
**************************************************Webhire's entering
into a binding no-shop agreement or definitive purchase agreement with
respect to a Control Transaction. ************************************
***********************. As used herein, a "Control Transaction"
shall mean any transaction or series of transactions in which (1)
voting control of Webhire is transferred or agreed to be transferred
by way of a merger, consolidation or the sale of equity securities
of Webhire, (2) all or substantially all of the assets of Webhire or
a material asset of Webhire are to be transferred, or Webhire is
liquidated. *********************************************************
*********************************************************************
********************************************************************.
2.14 Webhire shall **********************, within one (1) business day of
***************************************************************
***********.
SECTION 3: RESPONSIBILITIES OF YAHOO.
3.1 Yahoo agrees to expeditiously review Yahoo Resumes, the Webhire
Marketing Site, and Yahoo Recruiter for compliance with Yahoo's "look
and feel" standards, and for compliance with Yahoo's accessibility,
security, and performance standards.
3.2 Within ****************** from the date of completion of development by
Webhire of Yahoo Resumes, Yahoo will integrate Yahoo Resumes into Yahoo
Employment through various hypertext links, and implement the plan for
promotion of Yahoo Resumes according to the schedule described in
EXHIBIT G.
3.3 Contemporaneously with the integration of Yahoo Resumes as described in
Section 3.2 above, Yahoo will implement the links to promote the******.
3.4 During the Term, subject to the provisions of Section 3.7 below, Yahoo
shall within ****************** of receipt of Webhire Job Listings
from Webhire, post these listings to the Yahoo Classifieds jobs
database. The said listings shall conform to Yahoo specifications as
determined by Yahoo.
3.5 Within ***************** from the date that Webhire makes Yahoo
Recruiter, Yahoo Resumes and JobPost commercially available, Yahoo will
implement the plan for promotion of Yahoo Recruiter according to the
schedule described in EXHIBIT G.
3.6 Yahoo grants Webhire a non-exclusive, non-transferable, worldwide,
fully paid license to use, reproduce and display Yahoo Brand Features
in connection with the promotion of Yahoo Recruiter, Yahoo Resumes and
Webhire JobPost under this Agreement, subject to the terms set forth
herein; provided that, Yahoo may, in its sole discretion, revoke such
license during any
6
<PAGE>
period in which Webhire fails to comply with the guidelines for usage
of the Yahoo Brand Features attached as EXHIBIT J. Webhire shall at no
time adopt or use, without Yahoo's prior written consent, any
variation of any Yahoo Brand Feature, or any element likely to be
similar to or confused with any Yahoo Brand Feature. Any and all
goodwill arising from Webhire's use of the Yahoo Brand Features shall
inure solely to the benefit of Yahoo. Webhire agrees to comply with
the guidelines regarding usage of the Yahoo Brand Features attached
hereto as EXHIBIT J, as may be modified or supplemented by Yahoo from
time to time.
3.7 In the event that Yahoo becomes aware of*******************************
********** *****************, Yahoo will, consistent with any
confidentiality obligations with such**********************************
********; provided however, that in the event that Yahoo***************
******************************, the parties shall mutually agree on
which, if any, *******************.
3.8 Notwithstanding anything else to the contrary in this Agreement, in no
event shall Yahoo be under any obligation, express or implied, to link
to any website, or post or otherwise include any content or service
(including the Yahoo Recruiter, Yahoo Resumes, or Webhire Job Listings)
in any Yahoo Property in the event that Yahoo, in good faith and in its
sole discretion, determines that to do so would violate in any manner,
any Yahoo policy or procedure, or any law or regulation, or is
inconsistent with the terms of this Agreement.
SECTION 4: SALES METHODOLOGY.
4.1 Employers may elect to purchase ******* Webhire JobPost, Yahoo
Recruiter or Yahoo Resumes ***************************. Yahoo Premium
Services, as detailed in EXHIBIT F, **********************************
*****.
4.2 During the Term, Yahoo and Webhire will each have the right to *******
***********************************************************************
***********************************************************************
**********************.
4.3 **********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
*********************************************************************.
4.4 Pricing for Yahoo Recruiter, Yahoo Resumes and Yahoo Premium Services
will be established by mutual agreement of Yahoo and Webhire. The
prices initially in effect will be those set forth in EXHIBIT D hereto.
Revenues will be shared by Yahoo, Webhire and any appropriate
third-parties as set forth in EXHIBIT I.
4.5 Each party will be responsible for the billing and collection of fees
for Yahoo Sales made by it, and for making payments due the other party
as described in EXHIBIT I. Within ************ after the end of each
calendar quarter, each party will provide the other with a statement
showing the calculation of the amount (if any) payable hereunder,
together with payment of the amount due. Each party will maintain
records sufficient to determine the amounts payable hereunder.
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4.6 To ensure compliance with the terms of this Agreement, each party shall
have the right, at its own expense, to direct an independent certified
public accounting firm to inspect and audit all of the accounting and
sales books and records of the other party which are relevant to the
payments described in Section 4.5; provided, however, that: (i) the
party seeking the audit provides thirty (30) days notice prior to such
audit; (ii) any such inspection and audit shall be conducted during
regular business hours in such a manner as not to interfere with normal
business activities; (iii) in no event shall audits be made more
frequently than once per calendar year; and (iv) in the event that any
audit shall reveal an underpayment of more than ten percent (10%) of
the amounts due for any calendar quarter, the audited party will
reimburse the other party for the reasonable cost of such audit. If any
audit shall reveal an overpayment of the amounts due the other party,
the audited party shall be entitled to credit such amounts against
further payments, and if no further payments are due, the party seeking
the audit shall promptly refund such amount.
SECTION 5: PROMOTION.
5.1 Yahoo agrees to ********* promote Webhire JobPost and Yahoo Recruiter
as ********* means of posting job openings through Yahoo Classifieds.
In addition, Yahoo will promote Yahoo Recruiter and Yahoo Resumes
through marketing initiatives within the Yahoo Main Site as described
in EXHIBIT G, and through marketing initiatives outside of the Yahoo
Main Site as described in EXHIBIT G.
5.2 Webhire agrees to aggressively promote Yahoo Recruiter and Yahoo
Resumes to Employer prospects as its premier Internet-based job posting
and candidate sourcing solution. Specifically, Webhire will, among
other things, market Yahoo Recruiter and Yahoo Resumes to current
Webhire customers and Webhire Enterprise Customers as an enhancement
that allows posting to Yahoo Employment and searching of Yahoo Resumes,
and through marketing initiatives as described in EXHIBIT H. In
addition, Webhire will refer to Yahoo all customer leads for other
services offered by Yahoo or Yahoo affiliates.
SECTION 6: EXCLUSIVITY.
6.1 During the Term, subject to Section 2.9, Yahoo will not:
******************************************************************
******************************************************************
***************************************** For clarity, Webhire
acknowledges that under no circumstances shall the foregoing
limited exclusivity provision of this Section 6.1 be deemed to
restrict Yahoo from, among other things, promoting or placing
banners, buttons or any other advertising or promotion of any
entity on any Yahoo Property.
6.2 During the Term, Webhire will not, without Yahoo's consent:
(i)***************************************************************
********************************************************; provided
that, Webhire may, without Yahoo's consent,
*************************************************************;
or
(ii) enter into any agreement with a third party to
******************************************************************
*************************************; provided, that Webhire will
not be restricted by this provision from: (x) making its standard
product and service offerings directly to Webhire end-user
customers; or (y)*************************
8
<PAGE>
*****************************************************************
***************************.
SECTION 7: ADVERTISING.
7.1 Yahoo will ************* to sell, serve, and retain any proceeds from,
any and all advertising and sponsorships in connection with Yahoo
Recruiter, Yahoo Premium Services and Yahoo Resumes. For clarity,
except as may be provided under a separate agency agreement (which
Yahoo is under no obligation to enter into) Webhire *************** to
any such advertising revenue. The parties acknowledge that this Section
7.1 shall not be deemed to restrict Webhire's ability to sell the
services as contemplated under this Agreement.
SECTION 8: WARRANTS.
8.1 Immediately upon execution of this Agreement, Webhire shall issue to
Yahoo a Warrant to purchase one hundred fourteen thousand six hundred
fifty nine (114,659) shares of Webhire's Common Stock in the form of
EXHIBIT M attached hereto. Webhire represents and warrants that such
number of shares of Common Stock is equal to 1.0% of Webhire's total
number of outstanding shares of capital stock (on a fully-diluted basis,
assuming conversion of outstanding options, warrants, and other.
8.2 On the first anniversary of the Effective Date, if this Agreement has
been renewed for an additional year beyond the Initial Term, Webhire
shall issue to Yahoo an additional Warrant to shares representing 1.0% of
Webhire's Common Stock (on a fully diluted basis, assuming conversion of
outstanding options, warrants, and other) substantially in the form of
EXHIBIT M attached hereto; PROVIDED, that the Vesting Date of such
Warrant (as defined therein) shall be the second anniversary of the
Effective Date, the Exercise Price (as defined therein) shall be equal to
the average closing price of the Webhire Common Stock for the thirty (30)
trading days prior to the first anniversary of the Effective Date, and
the Expiration Date (as defined therein) shall be the sixth anniversary
of the Effective Date.
SECTION 9: TERM AND TERMINATION.
9.1 TERM AND RENEWALS. The initial Term of this Agreement shall commence on the
Effective Date and continue for a period of *********** from the Launch
Date (the "Initial Term"). Upon expiration of the Initial Term, provided
that Webhire has delivered no less than ***************************
********** in Revenues to Yahoo during the Initial Term, either party may
renew this Agreement for an additional term of ********* (a "Renewal
Term"). In the event that either party elects to renew this Agreement as
set forth in this Section 9.1, such party shall give the other party
written notice of such intent no less than ********** prior to the Initial
Term's expiration. After the expiration of the Renewal Term (if any), this
Agreement will be automatically renewed for successive **********, unless
either party provides the other with notice of non-renewal at least ******
prior to the renewal date.
9.2 TERMINATION FOR CAUSE BY EITHER PARTY. This Agreement may be terminated by
either party immediately upon notice if the other party: (i) becomes
insolvent; (ii) files a petition in bankruptcy; (iii) makes an assignment
for the benefit of its creditors; or (iv) materially breaches any of its
obligations under this Agreement, which breach is not remedied within
thirty (30) days following written notice to such party.
9
<PAGE>
9.3 TERMINATION BY YAHOO. This Agreement may be terminated by Yahoo (i)
immediately upon Webhire's breach of any obligation under Section 8; and
(ii) upon thirty (30) days written notice to Webhire if
******************************.
9.4 EFFECT OF TERMINATION. Any termination pursuant to this Section 9 will be
without any liability or obligation of the terminating party, other than
with respect to any breach of this Agreement by such party prior to
termination. The rights afforded the parties under this Section 9 will not
be deemed to be exclusive, but shall be in addition to any rights or
remedies provided by law. Sections 1, 9 and 11 through 15 shall survive
termination or expiration of this Agreement. Upon failure to renew or
notice of termination for any reason and as soon as is commercially
practical in either case (but no later than fifteen (15) days before the
expiration or termination of this Agreement), Webhire shall transfer all
archived Personal and Other Data and copies of all Employer Data, to Yahoo,
and in addition shall transfer all stored and contemporaneously generated
Personal and Other Data and copies of all Employer Data, to Yahoo through
the end of the Term so that Yahoo has all Personal and Other Data and
copies of all Employer Data, in its possession upon termination or
expiration.
9.5 RIGHTS OF WEBHIRE POST-TERMINATION. Upon the expiration or termination of
this Agreement (other than a termination by Yahoo under Section 9.2),
Webhire will have the right to continue to provide its customers with the
ability to post jobs to Yahoo Classifieds and access to Yahoo Resumes for a
period of ********* after such expiration or termination, and this Agreement
shall continue in effect for such purpose.
SECTION 10: WEBHIRE QUALITY COMMITMENTS, WARRANTIES AND YEAR 2000 COMPLIANCE.
10.1 WEBHIRE COMMITMENTS FOR WEBHIRE SERVICES. Webhire understands and
acknowledges that Yahoo is relying on the Webhire Services and that the
quality and consistency of these services will affect the quality of
Yahoo's brand. Accordingly, Webhire agrees to meet all of the
specifications set forth in this Agreement regarding Webhire Services.
Without limitation, failure by Webhire to substantially meet the
criteria for any of these responsibilities will constitute a material
breach of this Agreement.
10.2 WEBHIRE COMMITMENT TO PROVIDE WEBHIRE SERVICES THAT ARE AT LEAST EQUAL
TO SERVICES AT ITS OWN WEB SITE ******************. To the extent that
Webhire provides services for its own ************ that are similar to
any of the Webhire Services called for under this Agreement, Webhire
agrees to provide a level of service for Yahoo that is of the same or
better quality as the service it provides in support of its own web
site *****. If Webhire's services for its own ******** improve beyond
the minimum levels described in this Agreement, Webhire will provide
the same or a better level of service for Yahoo. Without limitation,
failure by Webhire to substantially comply with this obligation will
constitute a material breach of this Agreement.
10.3 WEBHIRE GENERAL WARRANTY. Webhire represents and warrants that:
(i) There are no pending or threatened claims, suits, actions or
charges against Webhire alleging any violation of licenses,
laws, rules and regulations.
(ii) The Webhire Services and Webhire Technology shall be free from
material errors.
10.4 YEAR 2000 COMPLIANCE. Webhire represents and warrants that its ability
to perform its obligations under this Agreement will not be materially
impaired by difficulties within Webhire's systems or operations in
managing and processing data dependent information during the Term.
10
<PAGE>
In addition, Webhire will analyze both its internal operations and
systems and its relations with its suppliers and no later than June 1,
1999 and will (a) make available to Yahoo information concerning how
Webhire has analyzed the ability of its systems, operations, and
suppliers to manage date-dependent data after December 31, 1999, and
(b) confirm Webhire's ability to perform in accordance with its Year
2000 warranty in this Agreement. If Webhire does not timely provide
both a report and confirmation as set forth above, Yahoo may terminate
this Agreement on thirty (30) days' notice. In addition, at any time
after June 1, 1999, Yahoo may direct a third party that is reasonably
acceptable to Webhire (such as but not limited to a nationally known
accounting or consulting firm) to analyze and audit Webhire for Year
2000 preparedness. If the third party concludes that Webhire cannot
demonstrate Year 2000 preparedness concerning its own systems and its
relationships with suppliers (but excluding factors that are fully
outside of Webhire's or its suppliers' control), Yahoo may terminate
this Agreement on thirty (30) days' written notice.
SECTION 11: CONFIDENTIALITY AND USER DATA.
11.1 TERMS AND CONDITIONS. The terms and conditions of this Agreement
constitute confidential information. Yahoo and Webhire acknowledge and
agree that the terms of the Mutual Nondisclosure Agreement between the
parties and attached as EXHIBIT P, shall be incorporated by reference
and made a part of this Agreement, and shall govern the use and
disclosure of confidential information and all discussions pertaining
to or leading to this Agreement
11.2 PUBLICITY. Any and all publicity relating to this Agreement, the
parties' relationship hereunder and any subsequent transactions between
Yahoo and Webhire, and the method of its release shall be approved in
writing, in advance by both parties.
11.3 USER DATA. As between Yahoo and Webhire, all Personal and Other Data
shall be the ***********************************************. Webhire
agrees to do nothing inconsistent with such ownership, including but
not limited to, any distribution of the Personal and Other Data and any
use of the Personal and Other Data other than as expressly permitted in
this Agreement. Webhire also agrees to maintain all Personal and Other
Data as confidential information and in confidence during the Term. All
Employer Data shall be the confidential information of, and shall be
**************************************** provided that Webhire agrees
***********************************************************************
***********************************************************************
***********************************************************************
*************************************. Notwithstanding anything to the
contrary in this Agreement, all uses of Personal and Other Data and
Employer Data shall be in accordance with Yahoo's Privacy Policy.
SECTION 12: LIMITATION OF LIABILITY.
EXCEPT FOR WEBHIRE'S OBLIGATIONS UNDER SECTION 13 BELOW, UNDER NO
CIRCUMSTANCES SHALL EITHER PARTY BE LIABLE TO ANOTHER PARTY FOR
INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL OR EXEMPLARY DAMAGES
ARISING FROM THIS AGREEMENT, EVEN IF THAT PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, SUCH AS, BUT NOT LIMITED TO, LOSS OF
REVENUE OR ANTICIPATED PROFITS OR LOST BUSINESS.
11
<PAGE>
SECTION 13: INDEMNIFICATION AND INSURANCE.
13.1 INDEMNIFICATION BY WEBHIRE. Webhire, at its own expense, will
indemnify, defend and hold harmless Yahoo, its employees,
representatives, agents and affiliates against any claim, suit, action
or proceeding brought by a third party to the extent that it is based
on or arises from a claim:
(a) that any Webhire Technology, Webhire Service or Webhire Brand
Feature (to the extent provided by Webhire) violates or
infringes on the trademark, trade secret, copyright, patent or
other rights of any third party, or any applicable law or
regulation;
(b) that, if true, would constitute a breach of this Agreement by
Webhire;
PROVIDED THAT; (i) Yahoo gives Webhire prompt notice of any indemnified
claim, (ii) Webhire will have the right to assume and control the
defense of the action, with counsel chosen by Webhire (who must be
reasonably acceptable to Yahoo), and (iii) Webhire does not enter into
any settlement or compromise of any indemnified claim without Yahoo's
prior written approval, such approval not to be unreasonably withheld
or delayed. Webhire will pay any and all license fees, royalties,
costs, damages, and expenses, including, but not limited to, reasonable
attorneys fees and costs awarded against or otherwise payable by Yahoo
as incurred in connection with or arising from any such claim, suit or
proceeding.
13.2 INSURANCE. Webhire agrees that it will maintain insurance with a
carrier that is reasonably acceptable by Yahoo and with coverage for
commercial general liability and errors and omissions of at least
**************** per occurrence. Webhire will name Yahoo as an
additional insured on such insurance and will provide evidence of such
insurance to Yahoo within ten (10) days of the Effective Date. Such
insurance policy shall not be cancelled or modified without Yahoo's
prior written consent which shall not be unreasonably withheld.
SECTION 14: OWNERSHIP.
14.1 YAHOO OWNERSHIP. Webhire acknowledges and agrees that, as between
Webhire on the one hand, and Yahoo on the other, Yahoo owns all right,
title and interest in all Yahoo Properties, all Yahoo Brand Features,
all Personal User Data and that, except as expressly set forth in this
Agreement, nothing in this Agreement will confer in Webhire any license
or right of ownership in such property. Webhire assigns to Yahoo any
interest it may have or acquire in all Personal User Data and further
agrees not to reproduce, distribute, or make any use of Personal User
Data except as expressly provided for in this Agreement.
14.2 WEBHIRE OWNERSHIP. Yahoo acknowledges and agrees that as between Yahoo
on the one hand, and Webhire on the other, Webhire is the owner of all
right, title and interest in the Webhire Technology and Webhire Brand
Features, and that, except as expressly set forth in this Agreement,
nothing in this Agreement will confer in Yahoo any license or right of
ownership in such property. Yahoo acknowledges that any information
collected by Webhire on the Webhire Site independent of Yahoo
Recruiter, from users that may also be Yahoo Recruiter users, shall be
owned solely by Webhire.
SECTION 15: NOTICE; MISCELLANEOUS PROVISIONS.
15.1 NOTICES. All notices, requests and other communications called for by
this Agreement will be deemed to have been given immediately if made by
telecopy or electronic mail (confirmed by concurrent written notice
sent first class U.S. mail, postage prepaid), if to Yahoo at 3420
Central Expressway, Santa Clara, CA 95051, Fax: (408) 731-3301
Attention: Vice President Business Development (e-mail:
[email protected]), with a copy to its General Counsel (e-mail:
12
<PAGE>
[email protected]), and if to Webhire to 91 Hartwell Ave.,
Lexington, MA 02421, Fax: 781-869-5090 Attention: Vice President
Business Development (e-mail:[email protected]) with a copy to its
counsel (e-mail: [email protected]), or to such other addresses as
either party will specify to the other. Notice by any other means
will be deemed made when actually received by the party to which
notice is provided.
15.2 ASSIGNMENT. This Agreement will bind and inure to the benefit of each
party's permitted successors and assigns. Neither party may assign this
Agreement, in whole or in part, without the other party's written
consent, PROVIDED HOWEVER, that either party may assign this Agreement
without such consent in connection with any merger, consolidation, any
sale of all or substantially all of such party's assets or any other
transaction in which more than fifty percent (50%) of such party's
voting securities are transferred; provided further that, under no
circumstances shall Webhire assign this Agreement to a Yahoo
Competitor. Any attempt to assign this Agreement other than in
accordance with this provision will be null and void.
15.3 SEVERABILITY. If any provision of this Agreement is found invalid or
unenforceable, that provision will be enforced to the maximum extent
permissible, and the other provisions of this Agreement will remain in
force.
15.4 HEADINGS. The section headings used in this Agreement are for
convenience only. They are not to be used in interpreting this
Agreement.
15.5 DISPUTE RESOLUTION. The parties agree that before the filing of any
lawsuits (other than for claims seeking equitable relief), officers of
both companies at the level of Vice President or higher will
communicate with one another and attempt to resolve any disputes
between the companies.
15.6 ATTORNEYS' FEES. In any litigation or arbitration between the parties
where one party seeks to enforce this Agreement or a declaration of
rights under this Agreement, the prevailing party for those claims will
be entitled to reimbursement of its reasonable costs, attorneys fees
and expenses to resolve the claims and to enforce any award or
judgment, including but not limited to reasonable costs, expenses, and
attorneys fees for legal work preceding the filing of any claims,
litigation, appeals, and collection.
15.7 NO WAIVER. No failure of either party to exercise or enforce any of its
rights under this Agreement will act as a waiver of such rights.
15.8 INDEPENDENT CONTRACTOR. Webhire's relationship with Yahoo shall be that
of an independent contractor not that of an agency or employee. Except
as expressly provided in this Agreement, Webhire shall have no
authority to enter into contracts or agreements which bind Yahoo or
create obligations on the part of Yahoo without prior written
authorization of Yahoo.
15.9 GOVERNING LAW. This Agreement is governed, controlled, interpreted and
defined by and under the laws of the State of California and the United
States, without regard to the conflicts of laws provisions thereof. Any
litigation arising under this Agreement will be brought in the federal
or state courts of the Northern District of California. In any
litigation or arbitration between the parties where one party seeks to
enforce this Agreement or a declaration of rights under this Agreement,
the prevailing party for those claims will be entitled to reimbursement
of its reasonable costs, attorneys fees and expenses to resolve the
claims and to enforce any award or judgment, including but not limited
costs, expenses, and attorneys fees for legal work preceding the filing
of any claims, litigation, appeals, and collection.
15.10 INTEGRATION CLAUSE. This Agreement is the complete and exclusive
agreement between the parties with respect to the Agreement's subject
matter. The Agreement supersedes and replaces
13
<PAGE>
any and all prior agreements, communications, and understandings, both
written and oral, about this subject matter.
15.11 EXECUTION OF COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which taken together will constitute a single
instrument. Execution and delivery of this Agreement may be evidenced
by facsimile transmission.
[SIGNATURE PAGE FOLLOWS]
14
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the Effective
Date.
Yahoo! Inc. Webhire, Inc.
By: /s/ Ellen F. Siminoff By: /s/ T. McManus
------------------------- -------------------
Name: Ellen F. Siminoff Name: T. McManus
----------------------- -----------------
Title: Vice President Title: VP Business Dev.
----------------------- -----------------
Date: 6/2/99 Date: 6/3/99
----------------------- -----------------
15
<PAGE>
EXHIBIT A - DESCRIPTION OF WEBHIRE JOBPOST
1. General
a) Webhire JobPost is a Webhire service that automatically collects job
listings from an Employer's corporate web site on a periodic basis
and publishes those job listings to Internet job posting sites.
b) Webhire will develop and maintain a version of Webhire JobPost that
collects job listings from Webhire Customers and/or Webhire
Enterprise Customers and publishes those job listings to Yahoo!
Classifieds, in the format specified by Yahoo.
c) Yahoo! Classifieds will be the default Internet job posting
destination for all Webhire JobPost Customers.
d) Webhire will publish job listings to Yahoo! Classifieds as part of
its regular Webhire JobPost production schedule.
<PAGE>
EXHIBIT B - DESCRIPTION OF WEBHIRE RECRUITER
1. Webhire Recruiter contains the following four major categories of
functionality:
a) Search
<TABLE>
<CAPTION>
- -------------------------------------------------------------
Webhire Recruiter Service Features
SEARCH
- -------------------------------------------------------------
- -------------------------------------------------------------
<S> <C>
1. Searching for Candidates
2. Build A Search (all search features)
3. Auto Search (all search features)
4. Search by Name (all search features)
5. Viewing Search Results
6. Viewing Resumes
7. Refining a Search (all search features)
8. Adding Candidates to My Candidates
9. Viewing the Status of a Candidate
10. Viewing the Recruiter's Notes on a Candidate
11. Sending Email to a Candidate
12. Emailing the Text of a Resume
13. Editing Candidate Information
14. Exporting the Mailing Addresses of Candidates
15. Printing the Resume of a Candidate
16. Deleting Resumes
17. Saving Searches
- -------------------------------------------------------------
</TABLE>
b) Candidates and Jobs
<TABLE>
<CAPTION>
- -------------------------------------------------------------
Webhire Recruiter Service Features
CANDIDATES & JOBS
- -------------------------------------------------------------
- -------------------------------------------------------------
<S> <C>
1. Candidates & Jobs Views
2. My Candidates Screen
3. Matching Candidates to a Job
4. Emailing a Candidate's Resume
5. Exporting the Mailing Addresses of Candidates
6. Removing a Candidate
7. Changing the Status of a Candidate
8. Adding Remarks on a Candidate
9. Adding Comments on a Candidate
10. My Jobs Screen
11. Editing Job Notes
12. All Open Jobs Screen
13. Matching Candidates to Jobs
14. Auto-matching Candidates to Jobs
15. All Closed Jobs Screen
- -------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT B - DESCRIPTION OF WEBHIRE RECRUITER (CONTINUED)
c) Saved Searches
<TABLE>
<CAPTION>
- -------------------------------------------------------------
Webhire Recruiter Service Features
SAVED SEARCHES
- -------------------------------------------------------------
- -------------------------------------------------------------
<S> <C>
1. Saved Searches
2. Saving Public and Private Searches
3. Running Saved Searches
4. Deleting Saved Searches
- -------------------------------------------------------------
</TABLE>
d) Administration
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Webhire Recruiter Service Features
ADMINISTRATION
- -----------------------------------------------------------
- -----------------------------------------------------------
<S> <C>
1. Managing Jobs
2. Maintaining Jobs
3. Posting Jobs on Internet Job Sites
4. Maintaining Divisions and Locations
5. Maintaining Departments
6. Maintaining Company Information
7. On-Line input of Resumes
8. Maintaining Candidate Sources
9. Adding Candidates to Your Pool
10. Generating Source Effectiveness Reports
11. Creating EEO Compliance Reports
12. Maintaining Your Company Pool
13. Checking for Duplicate Resumes
14. Deleting Candidates
15. Restoring Deleted Candidates
16. Administering Accounts
17. Maintaining User Seats
18. Changing Messages to Recruiters and Applicants
19. Viewing Saved Searches
20. Maintaining Status Categories
21. Creating a Company Candidate Pool
22. Acknowledgment Notices (EMAIL only)
23. Collecting Resumes by Electronic Mail
24. Collecting Resumes on the Web
25. Tracking Specific Sources
26. Specific Source Examples
27. Soliciting Applicant Response
28. Tracking Candidate Status
29. Creating Notes on Candidates
- -----------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT C - DESCRIPTION OF WEBHIRE PREMIUM SERVICES
1. Processing of paper resumes
a) Generation of batch cover pages for paper resume batches
b) Processing of faxed resumes
c) Reviewing unscannable resumes
d) Enhanced reporting by source (paper, fax, etc.)
e) Acknowledgement notices for applicants who apply with a paper or faxed
resume
2. Posting of jobs to premium job boards
a) A-la-carte ("one-off")
b) Subscription
3. Access to premium resume pools on the Webhire Network
a) Subscription
4. Pre-employment screening services
a) Avert, Inc. First Check
b) Subscription to other Avert, Inc. services
5. Unless prohibited by prior agreements between Webhire and its Webhire Network
service providers, all Webhire Premium Services will be available for seamless
integration into the Yahoo Recruiter service offering at Webhire's standard
commercial prices.
<PAGE>
EXHIBIT D - ****************
----------------------------
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
<PAGE>
EXHIBIT E - DESCRIPTION OF YAHOO RESUMES
1. Description of Services ("Yahoo Resumes for use by job seekers"). The
features offered to job seekers ("Users") will include but will not be
limited to the following:
a) Resume Submission Services
(i) Users will copy and paste their resume into a text
entry box, answer a few additional questions about
their background and career objectives, and submit
their resumes. Users may also choose to submit their
resumes in a series of text entry boxes that are used
to describe the various resume sections.
(ii) Users may choose to submit their resume under three
levels of privacy:
1. Open: the User's resume, including contact
info, will be available to all Employers
authorized to search Yahoo Resumes;
2. Confidential: Employers that are Yahoo
Recruiter Customers shall be able to view
the User's entire resume with the exception
of contact information. Employers shall be
able to blindly email the User to determine
mutual interest. If the User is interested,
contact information would then be released;
3. Private: no part of the User's resume will
be viewable.
(iii) All resumes will be considered "private" ninety (90)
days after their initial submission; Users will have
the option to "renew" their resume for additional
ninety (90) day periods.
(iv) Within sixty (60) days of the initial release of
Yahoo Resumes, an individual User will be able to
submit up to three unique resumes under a single
login and password.
(b) Resume posting services
(i) Users may send a copy of their resume and an
additional text message to any email address.
(ii) Users searching for jobs in Yahoo! Classifieds will
be able to select jobs of interest and elect to
forward their stored resume to any Employer that has
submitted an email address as a form of contact.
Users will do this by clicking a link that prompts
them to verify their name and password and allows for
additional text entry in an "email style" form. The
additional text along with the resume will then be
sent to the Employer's email address. A record of
what companies/jobs the User has applied to will be
kept for review by the User.
(c) Resume Maintenance Features
<PAGE>
EXHIBIT E - DESCRIPTION OF YAHOO RESUMES (CONTINUED)
(i) Users may login, using their My Yahoo login and password at any
time to edit, delete or change the privacy level of their resumes.
(ii) Users may review their resume statistics which will include, but
not be limited to:
1. number of times the resume has been retrieved in a
search;
2. number of times the resume has been viewed;
3. number of jobs applied to through Yahoo! Classifieds.
2. Pricing: there will be no charge to Users for their use of Yahoo
Resumes.
<PAGE>
EXHIBIT F - DESCRIPTION OF
YAHOO PREMIUM SERVICES
1. Description
a) In addition to those standard services offered as a part of Yahoo
Recruiter, the following services may be made available to Yahoo
Recruiter Customers:
i) **********************************************
ii) ***********************************************
iii) ***********************************************
iv) ************************************************
v) ************************************************
2. Pricing for the above services shall be mutually determined by the parties.
<PAGE>
EXHIBIT G - YAHOO PROMOTIONAL PLAN
1. Yahoo Properties Promotion
a) ************************************************ during the
Initial Term and each subsequent year that this Agreement is
in effect, for advertising and promotion of Yahoo Recruiter
and Yahoo Resumes on the Yahoo Properties.
b) Webhire's graphic brand, in a mutually agreed upon format,
will be displayed in a top-line co-branded format on all pages
comprising ******************************* Yahoo Resumes.
i) The Webhire graphic brand will adhere to the
following format constraints.
1. maximum height: 40 pixels
2. maximum width: 170 pixels
3. transparent for grey & white - only aliased
shadows.
4. maximum file size: 2k
5. no animation
c) Yahoo's graphic brand will be displayed in a top-line
co-branded format on all pages comprising Yahoo Recruiter and
Yahoo Resumes.
d) Promotion of Yahoo Resumes:
i) Yahoo shall place links to Yahoo Resumes from
within the Yahoo Properties;
ii) Yahoo shall display banner ads for Yahoo Resumes
within the Yahoo Properties.
e) Promotion of Yahoo Recruiter:
i)
*****************************************************
ii)
*****************************************************
<PAGE>
EXHIBIT G - YAHOO PROMOTIONAL PLAN (CONTINUED)
f) Promotion of Webhire Site
i) Links
<TABLE>
<CAPTION>
LOCATION OF LINK LINK TO WHERE SPECIFICS OF LINK
- ---------------- ------------- -----------------
<S> <C> <C>
Yahoo/Webhire co-branded web pages Webhire home page Link from Webhire Logo
Yahoo/Webhire co-branded web pages Webhire home page Text Link in or around copyright
notice.
</TABLE>
2. Yahoo Promotional Plan Outside the Yahoo Properties
a) ******************************************************* during
the Initial Term and each subsequent year that this Agreement
is in effect for advertising and promotion of Yahoo Resumes
and Yahoo Recruiter outside the Yahoo Properties.
<PAGE>
EXHIBIT H - WEBHIRE PROMOTIONAL PLAN
1. Webhire Off-Line Promotional Plan
a) To be determined upon mutual agreement of the parties.
2. WEBHIRE ON-LINE PROMOTIONAL PLAN
a)
<TABLE>
<CAPTION>
LOCATION OF LINK LINK TO WHERE SPECIFICS OF LINK
<S> <C> <C>
The Webhire partner/alliances page Yahoo! home page Link from Yahoo Logo
on the Webhire web site
</TABLE>
b) Additional On-Line promotions to be determined upon mutual agreement
of the parties.
<PAGE>
EXHIBIT I - REVENUE SHARING
1. Revenue for monthly or annual subscriptions to Yahoo Recruiter, featuring
an unlimited number of job postings per Employer and priced according to
the schedule set forth in Exhibit B ****************
*******************************************.
2. Revenue for "a la carte" premium job posting services on Yahoo Employment
************************************.
3. Revenue for subscriptions to Webhire Premium Services described in
Exhibit C ************************************************************.
The parties acknowledge, however, that Webhire shall be permitted to
maintain any pre-existing revenue sharing arrangement for such Webhire
Premium Services with applicable Webhire Network Providers; provided
that, in no event shall such agreements cause******************************
************************ **********************.
4. ***************************************************************************
****************************************.
5. Revenue for subscriptions for Webhire JobPost subscriptions **************
*****************************. The parties acknowledge, however, that
Webhire shall be permitted to maintain any pre-existing revenue sharing
arrangement for such Webhire JobPost subscriptions with applicable Webhire
Network Providers; provided that, in no event shall such agreements
***********************************************************************
********************.
6. Revenues for the following Yahoo Premium Services: (i) resume pool
searching by agencies, and (ii) contract labor providers;
*********************************************************************.
7. Revenue for the following Yahoo Premium Services: add-on/premier services
(e.g. WetFeet company profiles)*******************************************.
<PAGE>
EXHIBIT J - TRADEMARKS / BRAND FEATURES AND YAHOO GUIDELINES
I. Webhire Brand Features:
Webhire LOGO AND STYLIZED TYPE
Webhire LOGO AND STYLIZED TYPE
Webhire LOGO AND STYLIZED TYPE
Powered by Webhire LOGO AND STYLIZED TYPE
Webhire Recruiter
Webhire JobPost
Webhire Network
Webhire PartnerPools
Webhire: The Power of Internet Recruiting
Webhire Enterprise
II. Yahoo Brand Features:
"YAHOO" IN STYLIZED TYPE
YAHOO "Y GUY" LOGO
DO YOU YAHOO?
III. Yahoo Brand Feature Guidelines:
YAHOO TRADEMARK USAGE GUIDELINES
1. GENERAL. All Yahoo trademarks, logos, service marks, trade dress,
slogans, etc, or other brand features (collectively the "Brand Features") will
be used only as explicitly licensed by Yahoo, and only under the terms and
conditions and for the purposes described in such license. The other party to
such license shall herein be referred to as the "Licensee". All such uses shall
be in a manner consistent with proper usage of the Yahoo Brand Features.
2. APPEARANCE OF LOGOS. The Licensee shall ensure that the presentation
of the Yahoo Brand Features shall be consistent with Yahoo's own use of the
Yahoo Brand Features in comparable media.
3. NOTICES. All trademarks and service marks included in the Yahoo
Brand Features shall be designated with "SM", "TM" or
"(-Registered Trademark-)", in the manner directed by Yahoo.
4. APPEARANCE. From time to time during the term of the license, Yahoo
may provide the Licensee with written guidelines for the size, typeface, colors
and other graphic characteristics of the Yahoo Brand Features, which upon
delivery to the Licensee shall be deemed to be incorporated into these "Yahoo
Trademark Usage Guidelines".
5. RESTRICTIONS UPON USE. The Yahoo Brand Features shall not be
presented or used:
A. in a manner that could be reasonably interpreted to suggest
editorial content has been authored by, or represents the views or opinions of,
Yahoo or any Yahoo personnel;
B. in a manner that is misleading, defamatory, libelous,
obscene or otherwise objectionable, in Yahoo's reasonable opinion;
<PAGE>
C. in a way that infringes, derogates, dilutes or impairs the
rights of Yahoo in the Yahoo Brand Features;
E. as part of a name of a product or service of a company
other than Yahoo, except as expressly provided in a written agreement by Yahoo.
6. NONEXCLUSIVE REMEDY. The Licensee will make any changes to its use
of the Yahoo Brand Features as requested by Yahoo. The foregoing remedy shall be
in addition to any other legal and equitable rights that Yahoo may possess
relating to Licensee's use of the Yahoo Brand Features.
7. REVISIONS. These Guidelines may be modified at any time by Yahoo
upon written notice to the Licensee.
IV. Webhire Brand Feature Guidelines:
WEBHIRE TRADEMARK USAGE GUIDELINES
1. GENERAL. All Yahoo trademarks, logos, service marks, trade dress,
slogans, etc, or other brand features (collectively the "Brand Features") will
be used only as explicitly licensed by Webhire, and only under the terms and
conditions and for the purposes described in such license. The other party to
such license shall herein be referred to as the "Licensee". All such uses shall
be in a manner consistent with proper usage of the Webhire Brand Features.
2. APPEARANCE OF LOGOS. The Licensee shall ensure that the presentation
of the Webhire Brand Features shall be consistent with Webhire's own use of
the Webhire Brand Features in comparable media.
3. NOTICES. All trademarks and service marks included in the Webhire
Brand Features shall be designated with "SM", "TM" or
"(-Registered Trademark-)", in the manner directed by Webhire.
4. APPEARANCE. From time to time during the term of the license,
Webhire may provide the Licensee with written guidelines for the size, typeface,
colors and other graphic characteristics of the Webhire Brand Features, which
upon delivery to the Licensee shall be deemed to be incorporated into these
"Webhire Trademark Usage Guidelines".
5. RESTRICTIONS UPON USE. The Webhire Brand Features shall not be
presented or used:
A. in a manner that could be reasonably interpreted to suggest
editorial content has been authored by, or represents the views or opinions of,
Webhire or any Webhire personnel;
B. in a manner that is misleading, defamatory, libelous,
obscene or otherwise objectionable, in Webhire's reasonable opinion;
C. in a way that infringes, derogates, dilutes or impairs the
rights of Webhire in the Webhire Brand Features;
E. as part of a name of a product or service of a company
other than Webhire, except as expressly provided in a written agreement by
Webhire.
6. NONEXCLUSIVE REMEDY. The Licensee will make any changes to its use
of the Webhire Brand Features as requested by Webhire. The foregoing remedy
shall be in addition to any other legal and equitable rights that Webhire may
possess relating to Licensee's use of the Webhire Brand Features.
<PAGE>
7. REVISIONS. These Guidelines may be modified at any time by Webhire
upon written notice to the Licensee.
<PAGE>
EXHIBIT K - CUSTOMER SERVICE METRICS
The following list of customer service metrics is not exclusive and is not
intended by either party to fully describe all tasks and responsibilities
included within Webhire's responsibilities. Additional tasks and
responsibilities shall be added, upon the mutual agreement of the parties,
as such tasks and responsibilities are identified.
1. E-mail:
a) Each Webhire hosted page for Yahoo Resumes shall have an
e-mail link to Yahoo customer service.
b) Webhire shall develop and provide necessary e-mail links with
Yahoo Recruiter which link to Webhire customer service.
c) All e-mail questions/comments will receive e-mail responses
within ******************* of receipt.
2. Telephone Service for Yahoo Recruiter:
a) Webhire shall provide telephone access to customer service to
resolve any usage issues, which number shall be prominently
displayed on a customer service page linked to each page
within Yahoo Recruiter. Such telephone number shall be staffed
on regular business days from 8:00 a.m. until 8:00 p.m.
(Eastern Time)
b) The time to answer customer service telephone calls, through
either human or mechanical means, shall not be greater than
***************.
c) The per-call average hold time, measured from when a Yahoo
user selects a customer service option to when a human
operator answers the call, shall be less than or equal to
***************** for at least *************** of all
customers, measured on a daily basis.
d) Webhire shall provide 7x24 pager support for Yahoo
production/engineering.
<PAGE>
EXHIBIT L - PERFORMANCE AND SECURITY SPECIFICATIONS
The following list of performance and security specifications is not
exclusive and is not intended by either party to fully describe performance
and security specifications included within Webhire's responsibilities.
Additional performance and security specifications shall be added, upon the
mutual agreement of the parties, as such performance and security
specifications are identified.
1. Downtime:
a. While linked to the Yahoo Main Site, the Webhire service must
be functional at least **************************************
of each calendar month, excluding downtime scheduled by
Webhire for routine maintenance purposes as well as scheduled
or unscheduled downtime by Webhire's Internet Service
Provider; provided that, Webhire shall provide Yahoo no less
than ************* prior written notice of any such routine
maintenance that shall cause the Webhire service to be
inoperable for greater than *************** on any one
occasion.
b. If Webhire's services are offsite, Webhire will have physical
access to the offsite within **** ******* and will have remote
access within ******* of any outage.
2. System:
a. Webhire will store its database(s) on RAID5 storage systems;
b. Make daily copies of incremental database changes onto a hot
backup RAID5 storage system;
c. Daily incremental back up of the database onto tape; a full
week of backups stored offsite;
d. Supply built-in redundancy box for the database(s); e.
Maintain an additional backup machine for swapping with other
critical system servers;
f. Attend to Webhire's server room, located at the facilities of
Webhire's Internet Service Provider, twenty-four (24) hours a
day, seven days a week;
g. Maintain 1/2 hour complete battery backup for Webhire's Site
in the event of power failure.
3. Latency:
a. Average response time for pages within Yahoo Resumes and Yahoo
Recruiter shall not exceed *********. Average response time
shall be defined from the time that a request enters Webhire's
system of switches and hubs until the time the page is
completed and the socket closed.
4. Additional Technical Items:
a. For authentication of users, Yahoo shall provide a unique ID
which is different than such user's standard registered Yahoo
ID and password. This new ID shall be maintained in a separate
database and will be used to identify users and provide
authentication for the Webhire service.
b. Cookie acceptances messages will be limited to two per page.
c. Webhire will provide real time updates to Yahoo when resumes
are retrieved in a search, viewed, or the users has applied
for a job in Yahoo Classifieds
<PAGE>
EXHIBIT M - WEBHIRE WARRANT DOCUMENT
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE, TRANSFER
OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (i)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL
FOR THE HOLDER IN FORM REASONABLY ACCEPTABLE TO THE COMPANY'S COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED OR (iii) RECEIPT OF A NO ACTION LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT
IS NOT REQUIRED.
Number of Shares Issuable Upon Exercise: 114,659 Shares of Common Stock
WARRANT TO PURCHASE SHARES OF COMMON STOCK
Expires: June 3rd, 2004
THIS CERTIFIES THAT, for value received, Yahoo! Inc., a Delaware corporation, is
entitled to subscribe for and purchase 114,659 shares (as adjusted pursuant to
the provisions hereof, the "Shares") of the Common Stock of Webhire, Inc., a
Delaware corporation (the "Company"), at a price per share of $4.95 (as adjusted
pursuant to the provisions hereof, the "Exercise Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth in this
warrant ("Warrant"). As used herein, the term "Common Stock" shall mean the
Company's presently authorized Common Stock, $.01 par value per share, and any
stock into or for which such Common Stock may hereafter be converted or
exchanged, and the term "Grant Date" shall mean June 3rd, 1999.
This Warrant is issued pursuant to Section 8 of that certain Yahoo! Inc. and
Webhire, Inc. Services Agreement by and among the Company and Yahoo! Inc., dated
as of June 3rd, 1999 (the "Agreement").
1. TERM. This Warrant shall become exercisable, in whole or in part, at any time
and from time to time from and after June 3rd, 2000 (the "Vesting Date"),
provided that the Agreement is in effect on the Vesting Date. Notwithstanding
the foregoing, the exercisability of this Warrant shall be accelerated, and this
Warrant shall become exercisable, in whole or in part, upon the earliest to
occur, prior to the Vesting Date, of (i) the termination of the Agreement by the
Company at the Company's election, other than a rightful termination of the
Agreement by the Company due to an uncured breach of the Agreement by Yahoo!
Inc. or the holder of this Warrant, pursuant to Section 9.2 of the Agreement,
(ii) the rightful termination of the Agreement by the holder of this Warrant due
to an uncured breach of the Agreement by the Company pursuant to Sections 9.2,
9.3 of the Agreement, (iii) a Warrant Expiration Sale Event (as defined in
Section 4(a) hereof), or (iv) the date upon which the Company determines in its
sole discretion that this Warrant shall become fully exercisable, as
communicated in writing to the holder of this Warrant. This Warrant shall expire
and no longer be exercisable at 5:00 p.m. Eastern Standard Time on June 3rd,
2004; provided, however, that this Warrant shall sooner expire upon the
termination of the Agreement prior to the Vesting Date (other than a termination
described in subsections (i) and (ii) of this Section 1) or the occurrence of a
Warrant Expiration Sale Event.
<PAGE>
2. METHOD OF EXERCISE; NET ISSUE EXERCISE.
(a) METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT. Subject to the
provisions of Section 1 hereof, this Warrant may be exercised by the holder
hereof, in whole or in part and from time to time, by the surrender of this
Warrant (with the Notice of Exercise form attached hereto as EXHIBIT M duly
executed) at the principal office of the Company and the payment to the Company,
by cash, bank check payable to the order of the Company or wire transfer of
immediately available funds to the account of the Company, of an amount equal to
the Exercise Price per share multiplied by the number of Shares then being
purchased. The person or persons in whose name(s) any certificates representing
Shares shall be issuable upon exercise of this Warrant shall be deemed to have
become the holder(s) of record of, and shall be treated for all purposes as the
record holder(s) of, the Shares represented thereby (and such Shares shall be
deemed to have been issued) immediately prior to the close of business on the
date or dates upon which this Warrant is exercised. In the event of any exercise
of this Warrant, certificates for the Shares so purchased shall be delivered to
the holder hereof as soon as possible and in any event within thirty (30) days
of receipt of such notice and, unless this Warrant has been fully exercised or
expired, a new Warrant representing the portion of the Shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
issued to the holder hereof as soon as possible thereafter.
(b) RIGHT TO CONVERT WARRANT INTO STOCK; NET ISSUANCE.
(i) In addition to and without limiting the rights of the holder under the terms
of this Warrant, the holder may elect to convert this Warrant or any portion
thereof (the "Conversion Right") into shares of Common Stock, the aggregate
value of which shares shall be equal to the value of this Warrant or the portion
thereof being converted. The Conversion Right may be exercised by the holder by
surrender of this Warrant at the principal office of the Company together with
notice of the holder's intention to exercise the Conversion Right, in which
event the Company shall issue to the holder a number of shares of the Company's
Common Stock computed using the following formula:
X= Y(A-B)
------
A
Where:
X The number of shares of Common Stock to be issued to the
holder.
Y The number of shares of Common Stock representing the portion
of this Warrant that is being converted.
A The fair market value of one share of the Company's Common
Stock.
B The Exercise Price (as adjusted to the date of such
calculations).
(ii) For purposes of this Section 2(b), the "fair market value" per share of the
Company's Common Stock shall mean, the average daily Market Price (as defined
below) during the period of the most recent 20 days, ending on the last business
day before the effective date of exercise of the Conversion Right, on which the
national securities exchanges were open for trading, except that if no class of
the Common Stock is then listed or admitted to trading on any national
securities exchange or quoted in the over-counter market, the fair market value
shall be the Market Price on the last business day before the effective date of
exercise of the Conversion Right. If the Common Stock is traded on a national
securities exchange or admitted to unlisted trading privileges on such an
exchange, or is listed on the National Market System (the "National Market
System") of the National Association of Securities Dealers Automated Quotations
System (the "NASDAQ"), the Market Price as of a specified day shall be the last
reported sale price of the Common Stock on such exchange or on the National
Market System on such date or if no such sale is made on such day, the mean of
the closing bid and asked prices for such day on such exchange or on the
National Market System. If the Common Stock is not so listed or admitted to
unlisted trading privileges, the Market Price as of a specified day shall be the
mean of the last bid and asked prices reported on such date (x) by the
<PAGE>
NASDAQ or (y) if reports are unavailable under clause (x) above by the National
Quotation Bureau Incorporated. If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and ask prices are not reported, the
Market Price as of a specified day shall be determined in good faith by written
resolution of the Board of Directors of the Company.
(c) AUTOMATIC CONVERSION. In the event of termination of this Warrant
pursuant to Section 1 above, to the extent that this Warrant is then
exercisable and such conversion would result in the issuance of shares to the
holder, this Warrant shall be deemed automatically converted under Section
2(b) above immediately prior to the time at which it would otherwise expire.
3. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares that may be issued upon
the exercise of this Warrant shall, upon issuance, be validly issued, fully paid
and nonassessable, and free from all taxes, liens and charges with respect to
the issue thereof. During the period within which this Warrant may be exercised,
the Company will at all times have duly authorized and reserved, for the purpose
of issuance upon exercise of this Warrant, a sufficient number of shares of
Common Stock.
4. ADJUSTMENTS TO NUMBER OF SHARES AND EXERCISE PRICE. The number and kind of
securities purchasable upon the exercise of this Warrant and the Exercise Price
shall be subject to adjustment from time to time as set forth below upon the
occurrence of certain events described herein.
(a) RECLASSIFICATION OR MERGER. In case of any reclassification, change or
conversion of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), or in
case of any merger of the Company with or into another corporation or entity
(other than a merger with another corporation in which the Company is a
continuing corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
the case of any sale of all or substantially all of the assets of the Company
(each, a "Sale Event"), the Company, or such successor or purchasing corporation
or entity, as the case may be, shall issue and execute a new Warrant providing
that the holder of this Warrant shall have the same rights to exercise such new
Warrant as the holder has with respect to this Warrant and upon such exercise to
receive, in lieu of each share of Common Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change or
merger by a holder of one share of Common Stock of the Company. Such new Warrant
shall provide for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4. The provisions of
this Section 4(a) shall similarly apply to successive reclassifications,
changes, mergers and transfers. Notwithstanding anything to the contrary in this
Section 4(a), if a Sale Event will result in the holders of the Company's Common
Stock receiving only cash, property and/or securities which are not listed on a
national securities exchange or the National Market System (a "Warrant
Expiration Sale Event"), the Warrant shall expire and no longer be exercisable
as of the date of the closing of such Warrant Expiration Sale Event and no new
Warrant shall be issued.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at any time while this
Warrant remains outstanding and unexpired shall subdivide or combine its Common
Stock, the Exercise Price and the number of Shares issuable upon exercise hereof
shall be proportionately adjusted.
(c) STOCK DIVIDENDS. If the Company at any time while this Warrant is
outstanding and unexpired shall pay a dividend payable in shares of Common
Stock, then the Exercise Price shall be adjusted, from and after the date of
determination of shareholders entitled to receive such dividend or
distribution (the "Record Date"), to that price determined by multiplying the
Exercise Price in effect immediately prior to the Record Date by a fraction
(i) the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of Common
Stock outstanding immediately after such dividend or distribution, and the
number of Shares subject to this Warrant shall be adjusted, from and after
the Record Date, to that number determined by multiplying the number of
shares of Common Stock for which this Warrant may be exercised immediately
prior to the Record Date by a fraction (x) the numerator of which shall be
the Exercise Price immediately prior to the Record Date, and (y) the
denominator of which shall be the
<PAGE>
Exercise Price on and immediately after the Record Date, as adjusted in
accordance with the provisions of this Section 4(c).
(d) NOTICE OF ADJUSTMENTS. Whenever the Exercise Price shall be adjusted
pursuant to the provisions hereof, the Company shall within thirty (30) days
of such adjustment deliver a certificate signed by its chief financial
officer to the registered holder(s) hereof setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the Exercise Price after
giving effect to such adjustment.
5. NO IMPAIRMENT. The Company will not, by amendment of its Third Amended and
Restated Certificate of Incorporation (as may be further amended and/or restated
from time to time) or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Company, but
will at all times in good faith assist in the carrying out of all the provisions
of this Warrant and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant against
impairment.
6. FRACTIONAL SHARES. No fractional shares of Common Stock will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor based upon the per share fair
market value of the Common Stock on the date of exercise.
7. COMPLIANCE WITH SECURITIES ACT; DISPOSITION OF WARRANT OR SHARES OF COMMON
STOCK.
(a) COMPLIANCE WITH SECURITIES ACT. The holder of this Warrant, by acceptance
hereof, agrees that this Warrant and the Shares to be issued upon exercise
hereof are being acquired for investment and that such holder will not offer,
sell or otherwise dispose of this Warrant or any Shares to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Securities Act"). This Warrant
and all Shares issued upon exercise of this Warrant (unless registered under the
Securities Act) shall be stamped or imprinted with a legend in substantially the
following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. NO SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT (i) AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR
THE HOLDER IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY'S COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT
IS NOT REQUIRED.
(b) DISPOSITION OF WARRANT AND SHARES. With respect to any offer, sale or
other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant prior to registration thereof, the holder hereof and
each subsequent holder of this Warrant agrees to give written notice to the
Company prior thereto, describing briefly the manner thereof, together with a
written opinion of such holder's counsel in form acceptable to the Company's
counsel, if reasonably requested by the Company, to the effect that such
offer, sale or other disposition may be effected without registration or
qualification (under the Securities Act then in effect or any federal or
state law then in effect) of this Warrant or such Shares and indicating
whether or not under the Securities Act certificates for this Warrant or such
Shares to be sold or otherwise disposed of require any restrictive legend as
to applicable restrictions on transferability in order to insure compliance
with the Securities Act. Each certificate representing this Warrant or the
Shares thus transferred (except a transfer pursuant to Rule 144 under the
Securities Act) shall bear a legend as to the applicable restrictions on
transferability in order to insure compliance with the Securities Act unless,
in the aforesaid opinion of counsel for the holder, such legend is not
required in order to insure compliance with the Securities Act. The Company
may issue stop transfer instructions to its transfer agent in connection with
the foregoing restrictions.
8. NOTICE OF CERTAIN EVENTS. The Company shall provide the holder of this
Warrant with at least thirty (30) days notice (or such greater amount of
notice as Delaware law requires to be given to shareholders having
<PAGE>
the right to vote at a meeting on any Sale Event) prior to (i) any Sale Event,
(ii) any liquidation, dissolution or winding up of the Company or (iii) the
record date for any cash dividend declared on the Company's Common Stock.
9. REPRESENTATIONS AND WARRANTIES. This Warrant is issued and delivered on the
basis of the following:
(a) This Warrant has been duly authorized, executed and delivered by the Company
and constitutes the valid and binding obligation of the Company, enforceable in
accordance with its terms;
(b) The Shares have been duly authorized and reserved for issuance by the
Company and, when issued in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable;
(c) The rights, preferences, privileges and restrictions granted to or imposed
upon the Shares and the holders thereof are as set forth in the Company's Third
Amended and Restated Certificate of Incorporation, a true and complete copy of
which has been delivered to the original holder of this Warrant.
10. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
11. NOTICES. Any notice, request or other document required or permitted to be
given or delivered to the holder hereof or the Company shall be in writing and
shall delivered or sent to each such holder at its address as shown on the books
of the Company or to the Company at its principal executive office and shall be
deemed received (i) if personally delivered or sent by electronic facsimile
transmission, upon actual receipt, or (ii) if sent by reputable overnight
courier service, twenty-four hours after deposit with such courier service, or
(iii) if sent by certified mail (postage prepaid), return receipt requested,
forty-eight hours after deposit in the mail.
12. BINDING EFFECT ON SUCCESSORS; NON-ASSIGNABILITY. Except as provided in
Section 4(a) above, this Warrant shall be binding upon any corporation
succeeding the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets. This Warrant may not be transferred
or assigned (by operation of law or otherwise) by the holder without the prior
written consent of the Company, except to a successor-in-interest of all or
substantially all of the holder's assets or to an affiliate of the holder formed
solely for the purpose of holding securities and other investments.
13. LOST WARRANTS OR STOCK CERTIFICATES. The Company covenants to the holder
hereof that upon receipt of evidence reasonable satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant or any stock
certificate issued upon exercise hereof and, in the case of any such loss, theft
or destruction, upon receipt of an indemnity reasonably satisfactory to the
Company, or in the case of any such mutilation upon surrender and cancellation
of such Warrant or stock certificate, the Company shall make and deliver a new
Warrant or stock certificate, or like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant or stock certificate.
14. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of
this Warrant are inserted for convenience only and do not constitute a part of
this Warrant.
15. EQUITABLE RELIEF. Because legal remedies may be inadequate to enforce the
provisions of this Warrant, equitable relief, including specific performance and
injunctive relief, may be used to enforce the provisions hereof.
16. SAVINGS CLAUSE. If any provisions of this Warrant shall be determined to be
illegal or unenforceable, such determination shall in no manner affect the
legality or enforceability of any other provision hereof.
17. GOVERNING LAW. This Warrant shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of Delaware, without giving effect to its conflicts of laws provisions.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its
officer thereunto duly authorized.
Date: June 3rd, 1999
WEBHIRE, INC.
By:
Name:
Title:
<PAGE>
EXHIBIT M (continued...)
NOTICE OF EXERCISE
To:
1. The undersigned hereby:
_______ elects to purchase _______ shares of Common Stock of the Company
pursuant to the terms of the attached Warrant, and tenders herewith payment of
the purchase price of such shares in full in the form of ____________________;
or
_______ elects to exercise its net issuance rights pursuant to Section 2(b) of
the attached Warrant with respect to shares of Common Stock.
2. Please issue a certificate or certificates representing said ______
shares in the name of the undersigned or in such other name or names as are
specified below:
--------------------------------
(Name)
--------------------------------
(Address)
3. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as
specified below.
Date:
By:
Name:
Title:
<PAGE>
EXHIBIT N - ******************************
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<PAGE>
EXHIBIT O - CONTACTS
Yahoo Inc.
Matt Rowlen
Manager of Business Development
[email protected]
- ---------------------
408-616-3786
Sam Figler
Yahoo Legal
[email protected]
- ---------------------
408-530-5147
Webhire Inc.
Tim McManus
VP, Internet Business Development
[email protected]
781-869-5125
Gaz Crittenden
Webhire Legal
[email protected]
781-869-4400
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EXHIBIT P - MUTUAL NON-DISCLOSURE
<PAGE>
MUTUAL NONDISCLOSURE AGREEMENT
Effective Date: 12/10/98
This Agreement governs the disclosure of information by and between
Yahoo! Inc., a California corporation, and Restrac, Inc. ("Participant").
1. The "Confidential Information" is that confidential, proprietary,
and trade secret information being disclosed by the disclosing party described
as (please be specific):
(a) Yahoo Confidential Information (owned by Yahoo and any of
its affiliates): Resume and Employment Related.
(b) Participant Confidential Information: Resume and
Employment Related.
2. Except as set forth in this Section 2, all Confidential Information
shall be in tangible form and shall be marked as Confidential or proprietary
information of the disclosing party. If the Confidential Information is
disclosed orally or visually, it shall be identified as such at the time of
disclosure and confirmed in a writing to the recipient within thirty (30) days
of such disclosure.
3. Each of the parties agrees that it will not make use of,
disseminate, or in any way disclose any Confidential Information of the other
party to any person, firm or business, except to the extent necessary for
negotiations, discussions and consultations with personnel or authorized
representatives of the other party and any purpose the other party may hereafter
authorize in writing. Each of the parties agrees that it shall disclose
Confidential Information of the other party only to those of its employees who
need to know such information and who have previously agreed, either as a
condition to employment or in order to obtain the Confidential Information, to
be bound by terms and conditions substantially similar to those of this
Agreement.
4. There shall be no liability for disclosure or use of Confidential
Information which is (a) in the public domain through no fault of the receiving
party (b) rightfully received from a third party without any obligation of
confidentiality, (c) rightfully known to the receiving party without any
limitation on use or disclosure prior to its receipt from the disclosing party,
(d) independently developed by the receiving party, (e) generally made available
to third parties without any restriction on disclosure, or (f) communicated in
response to a valid order by a court or other governmental body, as otherwise
required by law, or as necessary to establish the rights of either party under
this Agreement (provided that the party so disclosing has provided the other
party with a reasonable opportunity to seek protective legal treatment for such
Confidential Information).
5. "Residual Information" shall mean any Confidential Information of
the disclosing party which may be retained in intangible form in the minds of
those individuals of the receiving party who have had proper access to such
Confidential Information. Notwithstanding anything else in this Agreement, the
receiving party shall be free to use any Residual Information for any purpose
whatsoever, including, without limitation, the development of its own products,
provided that such party shall not be entitled to disclose Residual Information
to any third parties unless such disclosure is in the course of, or as part of,
any disclosure of its own products or their development.
6. Each of the parties agrees that it shall treat all Confidential
Information of the other party with the same degree of care as it accords to its
own Confidential Information and each of the parties represents that it
exercises reasonable care to protect its own Confidential Information.
7. Each of the parties agrees that it will not modify, reverse
engineer, decompile, create other works from, or disassemble any software
programs contained in the Confidential Information of the other party unless
otherwise specified in writing by the disclosing party.
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8. All materials (including, without limitation, documents, drawings,
models, apparatus, sketches, designs and lists) furnished to one party by the
other, and which are designated in writing to be the property of such party,
shall remain the property of such party and shall be returned to it promptly at
its request, together with any copies thereof.
9. This Agreement shall govern all communications between the parties
that are made during the period from the effective date of this Agreement to the
date on which either party receives from the other written notice that
subsequent communications shall not be so governed, provided, however that each
party's obligations under Sections 2 and 3 with respect to Confidential
Information of the other party which it has previously received shall continue
unless and until such Confidential Information falls within Sections 4 or 5.
10. Neither party shall communicate any information to the other in
violation of the proprietary rights of any third party. Neither party acquires
any licenses under any intellectual property rights of the other party under
this Agreement. This Agreement shall be governed in all respects by the laws of
the United States of America and by the laws of the State of California as such
laws are applied to agreements entered into and to be performed entirely within
California between California residents. This Agreement may only be changed by
mutual agreement of authorized representatives of the parties in writing. All
notices or reports permitted or required under this Agreement shall be in
writing and shall be by personal delivery, telegram, telex, telecopier,
facsimile transmission or by certified or registered mail, return receipt
requested, and shall be deemed given upon personal delivery, five (5) days after
deposit in the mail, or upon acknowledgment of receipt of electronic
transmission. Notices shall be sent to the addresses set forth at the end of
this Agreement or such other address as either party may specify in writing.
IN WITNESS WHEREOF, the parties have executed this Agreement in
duplicate as of the date first written above.
YAHOO! INC.
------------------------------------------
By: /s/ Matt Rowlen By: /s/ M. J. Fahey
------------------------------- ----------------------------------
Printed Name: Matt Rowlen Printed Name: M. J. Fahey
---------------------- --------------------------
Title: Manager of Business Development Title: President
------------------------------- --------------------------------
Address: Yahoo! Address: Lexington, MA
- ------------------------------------ -------------------------------
<PAGE>
Exhibit 10.3
Portions of this Exhibit have been omitted pursuant to a confidential treatment
request filed with the Securities and Exchange Commission. An asterisk (*)
identifies where such confidential treatment has been requested and information
has been omitted. The omitted portions have been filed separately with the
Securities and Exchange Commission.
AMENDMENT NO. 1 TO
YAHOO! INC. AND WEBHIRE, INC.
SERVICES AGREEMENT
This Amendment No. 1 to the Yahoo! Inc. and Webhire, Inc. Services
Agreement (the "Amendment") is entered into as of July 27, 1999 (the "Amendment
Date") between Yahoo! Inc., a Delaware corporation with offices at 3420 Central
Expressway, Santa Clara, CA 95051 ("Yahoo") and Webhire, Inc., a Delaware
corporation with offices at 91 Hartwell Avenue, Lexington, MA 02421 ("Webhire")
and amends the Yahoo! Inc. and Webhire, Inc. Services Agreement entered into
between Yahoo and Webhire dated June 3, 1999 (the "Agreement").
For good and valuable consideration, the receipt of which is hereby
acknowledged, Yahoo and Webhire hereby agree to amend the Agreement as follows:
1. NEW EQUITY. On the date of closing of a financing in which SOFTBANK
Capital Partners LP and/or its affiliates purchase twenty million
dollars ($20,000,000) of Webhire's Common Stock, at least one million
five hundred thousand dollars ($1,500,000) of which is purchased by
Yahoo (the "Softbank Financing"), Webhire shall issue to Yahoo a
Warrant to purchase eighty-four thousand five hundred fifty nine
(84,559) shares of Webhire's Common Stock at a per share purchase price
of $4.95 (the "New Warrant"). The New Warrant shall be issued in the
form of EXHIBIT A to this Amendment. The New Warrant will be issued in
addition to the Warrant to purchase one hundred fourteen
thousand six hundred fifty nine (114,659) shares of Webhire's Common
Stock issued to Yahoo pursuant to Section 8.1 of the Agreement. If the
Softbank Financing is not closed on or before October 29, 1999,
Webhire's obligation to issue a warrant under this section will
terminate and be without force or effect.
2. ADVERTISING ON YAHOO. Webhire will pay Yahoo a non-refundable,
non-creditable slotting fee (the "Slotting Fee") equal to
******************************* in exchange for advertising and
promotion appearing on Yahoo Properties (the "Webhire Advertising")
during the time period beginning on the Amendment Date and ending on
the date the Slotting Fee is exhausted pursuant to this Section 2 (the
"Advertising Term"). The placement of the Webhire Advertising will be
mutually agreed upon by the parties and, in all cases, subject to
inventory availability. The Slotting Fee will be payable as follows:
(i) ************************** within ten (10) days after the date of
the closing of the Softbank Financing (the "Softbank Closing Date"),
(ii) ************************************** no later than December 31,
1999 and (iii) ******************************** no later than March 31,
2000. The first payment of the Slotting Fee will be credited for any
amounts already paid by Webhire to Yahoo for Webhire Advertising
appearing during the Advertising Term. The parties agree that
******************************* of the Slotting Fee shall be
designated as a setup, design and
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implementation (the "Setup Fee"). The parties further agree that they
shall use commercially reasonable efforts to commence the advertising
program during the third calendar quarter of 1999, and to schedule the
remaining advertising and promotion evenly across each of the
subsequent four (4) quarters. Webhire Advertising shall be credited
against the full ********* Slotting Fee (regardless of the amount
designated for the Setup Fee) at a rate that is no more than **********
************ of the price on Yahoo's then current rate card after
giving effect to, to the extent they exist, Yahoo standard volume
and/or early payment discounts (the "Webhire Advertising Price"). The
Webhire Advertising will be subject to the Standard Terms and
Conditions for Yahoo! Advertising set forth in EXHIBIT B to this
Amendment. If the Softbank Financing is not completed on or before
October 29, 1999, then (a) Webhire shall not be required to pay
Yahoo the Slotting Fee, (b) Yahoo shall not be required to place any
advertising and promotion for Webhire on the Yahoo Properties
pursuant to this Section and (c) Yahoo will still be entitled to
payment from Webhire at the Webhire Advertising Price for any
Webhire Advertising that appeared before October 29, 1999 but for
which Yahoo has not yet been paid. In the event of termination of
the Agreement by Webhire pursuant to Section 9.2, Webhire's
obligation to pay any portion of the Slotting Fee due after the date
of such termination shall cease and Webhire shall be entitled to
receive only the amount of Webhire Advertising which could be
obtained at the Webhire Advertising Price for the portion of the
Slotting Fee already paid.
3. RIGHT OF OFFER. Yahoo will **************************** in the event
that Yahoo, at its sole discretion, elects to create a preferred
listing program primarily related to employment or recruiting on a site
solely owned, created and branded by Yahoo (a "Program"). Yahoo shall
***********************************************************************
**********************************************************************.
If Webhire declines to commence good faith negotiations with Yahoo
within ten (10) days after receiving such written notice from Yahoo, or
if the parties fail to reach agreement within ten (10) days following
the commencement of good faith negotiations (or such later date as is
agreed by the parties), Yahoo shall *********************************.
Advertising and promotional opportunities that are in the normal course
of Yahoo's business including, but not limited to, banner ads on
category pages and keyword search results pages and branded listings
shall not be considered a new preferred listing program for the
purposes of this Section 3.
4. ADVERTISING SALES. On a date mutually agreed upon after the Amendment
Date, Yahoo and Webhire will meet to consider options that would allow
Webhire to sell advertising on Yahoo Properties on behalf of Yahoo to
recruiters on an agency basis. This section shall not create any
obligation on either party to enter into such an agency relationship.
5. YAHOO PREMIUM SERVICES. On a date mutually agreed upon by the parties
following the Amendment Date, Yahoo and Webhire will meet and use
reasonable efforts to
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agree upon the specifications for the Yahoo Premium Services. The Yahoo
Premium Services will be launched on a date mutually agreed upon after
the launch of Yahoo Recruiter.
6. OTHER. Except as expressly amended as set forth herein, the Agreement
shall remain in full force and effect in accordance with its terms.
Capitalized terms not otherwise defined in this Amendment shall have
the same meaning as in the Agreement. The section headings appearing in
this Amendment are inserted only as a matter of convenience and in no
way define, limit, construe or describe the scope or extent of such
section or in any way affect such section.
This Amendment has been executed by the duly authorized representatives
of the parties, effective as of the Amendment Date.
YAHOO! INC. WEBHIRE, INC.
By: By:
----------------------------- ------------------------------
Name: Name:
----------------------------- ----------------------------
Title: Title:
-------------------------- ------------------------------
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EXHIBIT A
FORM OF WARRANT
NEITHER THIS WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE, TRANSFER
OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE EFFECTED WITHOUT (i)
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL
FOR THE HOLDER IN FORM REASONABLY ACCEPTABLE TO THE COMPANY'S COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED OR (iii) RECEIPT OF A NO ACTION LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT
IS NOT REQUIRED.
Number of Shares Issuable Upon Exercise: 84,559 Shares of Common Stock
WARRANT TO PURCHASE SHARES OF COMMON STOCK
Expires: June 3, 2004
THIS CERTIFIES THAT, for value received, Yahoo! Inc., a California corporation,
is entitled to subscribe for and purchase 84,559 shares (as adjusted pursuant to
the provisions hereof, the "Shares") of the Common Stock of Webhire, Inc., a
Delaware corporation (the "Company"), at a price per share of $4.95 (as adjusted
pursuant to the provisions hereof, the "Exercise Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth in this
warrant ("Warrant"). As used herein, the term "Common Stock" shall mean the
Company's presently authorized Common Stock, $.01 par value per share, and any
stock into or for which such Common Stock may hereafter be converted or
exchanged.
This Warrant is issued pursuant to the Services Agreement by and among the
Company and Yahoo! Inc., dated as of June 3, 1999, as amended on July 28, 1999
(the "Agreement"). Capitalized terms not otherwise defined in this Warrant shall
have the same meaning as in the Agreement.
1. TERM. This Warrant shall become exercisable, in whole or in part, at any time
and from time to time from and after June 3, 2000 (the "Vesting Date"), provided
that the Agreement is in effect on the Vesting Date. Notwithstanding the
foregoing, the exercisability of this Warrant shall be accelerated, and this
Warrant shall become exercisable, in whole or in part, upon the earliest to
occur, prior to the Vesting Date, of (i) the termination of the Agreement by the
Company at the Company's election, other than a rightful termination of the
Agreement by the Company due to an uncured breach of the Agreement by Yahoo!
Inc. or the holder of this Warrant, pursuant to Section 9.2 of the Agreement,
(ii) the rightful termination of the Agreement by the holder of this Warrant due
to an uncured breach of the Agreement by the Company pursuant to Sections 9.2
and 9.3 of the Agreement, (iii) a Warrant Expiration Sale Event (as defined in
Section 4(a) hereof), or (iv) the date upon which the Company determines in its
sole discretion that this Warrant shall become fully exercisable, as
communicated in writing to the holder of this Warrant. This Warrant shall expire
and no longer be exercisable at 5:00 p.m. Eastern Standard Time on June 3, 2004;
provided, however, that this Warrant shall sooner expire (a) upon the
termination of the Agreement prior to the Vesting Date (other than a termination
described in subsections (i) and (ii) of this Section 1), (b) on October 29,
1999 in the event the Softbank Financing is not completed on or before that date
or (c) upon the occurrence of a Warrant Expiration Sale Event.
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2. METHOD OF EXERCISE; NET ISSUE EXERCISE.
(a) METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT. Subject to the
provisions of Section 1 hereof, this Warrant may be exercised by the holder
hereof, in whole or in part and from time to time, by the surrender of this
Warrant (with the Notice of Exercise form attached hereto as EXHIBIT A duly
executed) at the principal office of the Company and the payment to the Company,
by cash, bank check payable to the order of the Company or wire transfer of
immediately available funds to the account of the Company, of an amount equal to
the Exercise Price per share multiplied by the number of Shares then being
purchased. The person or persons in whose name(s) any certificates representing
Shares shall be issuable upon exercise of this Warrant shall be deemed to have
become the holder(s) of record of, and shall be treated for all purposes as the
record holder(s) of, the Shares represented thereby (and such Shares shall be
deemed to have been issued) immediately prior to the close of business on the
date or dates upon which this Warrant is exercised. In the event of any exercise
of this Warrant, certificates for the Shares so purchased shall be delivered to
the holder hereof as soon as possible and in any event within thirty (30) days
of receipt of such notice and, unless this Warrant has been fully exercised or
expired, a new Warrant representing the portion of the Shares, if any, with
respect to which this Warrant shall not then have been exercised shall also be
issued to the holder hereof as soon as possible thereafter.
(b) RIGHT TO CONVERT WARRANT INTO STOCK; NET ISSUANCE.
(i) In addition to and without limiting the rights of the holder under the terms
of this Warrant, the holder may elect to convert this Warrant or any portion
thereof (the "Conversion Right") into shares of Common Stock, the aggregate
value of which shares shall be equal to the value of this Warrant or the portion
thereof being converted. The Conversion Right may be exercised by the holder by
surrender of this Warrant at the principal office of the Company together with
notice of the holder's intention to exercise the Conversion Right, in which
event the Company shall issue to the holder a number of shares of the Company's
Common Stock computed using the following formula:
X= Y(A-B)
------
A
Where:
X The number of shares of Common Stock to be issued to the
holder.
Y The number of shares of Common Stock representing the portion
of this Warrant that is being converted.
A The fair market value of one share of the Company's Common
Stock.
B The Exercise Price (as adjusted to the date of such
calculations).
(ii) For purposes of this Section 2(b), the "fair market value" per share of the
Company's Common Stock shall mean, the average daily Market Price (as defined
below) during the period of the most recent 20 days, ending on the last business
day before the effective date of exercise of the Conversion Right, on which the
national securities exchanges were open for trading, except that if no class of
the Common Stock is then listed or admitted to trading on any national
securities exchange or quoted in the over-counter market, the fair market value
shall be the Market Price on the last business day before the effective date of
exercise of the Conversion Right. If the Common Stock is traded on a national
securities exchange or admitted to unlisted trading privileges on such an
exchange, or is listed on the National Market System (the "National Market
System") of the National Association of Securities Dealers Automated Quotations
System (the "NASDAQ"), the Market Price as of a specified day shall be the last
reported sale price of the Common Stock on such exchange or on the National
Market System on such date or if no such sale is made on such day, the mean of
the closing bid and asked prices for such day on such exchange or on the
National Market System. If the Common Stock is not so listed or admitted to
unlisted trading privileges, the Market Price as of a specified day shall be the
mean of the last bid and asked prices reported on such date (x) by the NASDAQ or
(y) if
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reports are unavailable under clause (x) above by the National Quotation Bureau
Incorporated. If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and ask prices are not reported, the Market Price as
of a specified day shall be determined in good faith by written resolution of
the Board of Directors of the Company.
(c) AUTOMATIC CONVERSION. In the event of termination of this Warrant
pursuant to Section 1 above, to the extent that this Warrant is then
exercisable and such conversion would result in the issuance of shares to the
holder, this Warrant shall be deemed automatically converted under Section
2(b) above immediately prior to the time at which it would otherwise expire.
3. STOCK FULLY PAID; RESERVATION OF SHARES. All Shares that may be issued upon
the exercise of this Warrant shall, upon issuance, be validly issued, fully paid
and nonassessable, and free from all taxes, liens and charges with respect to
the issue thereof. During the period within which this Warrant may be exercised,
the Company will at all times have duly authorized and reserved, for the purpose
of issuance upon exercise of this Warrant, a sufficient number of shares of
Common Stock.
4. ADJUSTMENTS TO NUMBER OF SHARES AND EXERCISE PRICE. The number and kind of
securities purchasable upon the exercise of this Warrant and the Exercise Price
shall be subject to adjustment from time to time as set forth below upon the
occurrence of certain events described herein.
(a) RECLASSIFICATION OR MERGER. In case of any reclassification, change or
conversion of securities of the class issuable upon exercise of this Warrant
(other than a change in par value, or from par value to no par value, or from no
par value to par value, or as a result of a subdivision or combination), or in
case of any merger of the Company with or into another corporation or entity
(other than a merger with another corporation in which the Company is a
continuing corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
the case of any sale of all or substantially all of the assets of the Company
(each, a "Sale Event"), the Company, or such successor or purchasing corporation
or entity, as the case may be, shall issue and execute a new Warrant providing
that the holder of this Warrant shall have the same rights to exercise such new
Warrant as the holder has with respect to this Warrant and upon such exercise to
receive, in lieu of each share of Common Stock theretofore issuable upon
exercise of this Warrant, the kind and amount of shares of stock, other
securities, money and property receivable upon such reclassification, change or
merger by a holder of one share of Common Stock of the Company. Such new Warrant
shall provide for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4. The provisions of
this Section 4(a) shall similarly apply to successive reclassifications,
changes, mergers and transfers. Notwithstanding anything to the contrary in this
Section 4(a), if a Sale Event will result in the holders of the Company's Common
Stock receiving only cash, property and/or securities which are not listed on a
national securities exchange or the National Market System (a "Warrant
Expiration Sale Event"), the Warrant shall expire and no longer be exercisable
as of the date of the closing of such Warrant Expiration Sale Event and no new
Warrant shall be issued.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at any time while this
Warrant remains outstanding and unexpired shall subdivide or combine its Common
Stock, the Exercise Price and the number of Shares issuable upon exercise hereof
shall be proportionately adjusted.
(c) STOCK DIVIDENDS. If the Company at any time while this Warrant is
outstanding and unexpired shall pay a dividend payable in shares of Common
Stock, then the Exercise Price shall be adjusted, from and after the date of
determination of shareholders entitled to receive such dividend or
distribution (the "Record Date"), to that price determined by multiplying the
Exercise Price in effect immediately prior to the Record Date by a fraction
(i) the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to such dividend or distribution, and
(ii) the denominator of which shall be the total number of shares of Common
Stock outstanding immediately after such dividend or distribution, and the
number of Shares subject to this Warrant shall be adjusted, from and after
the Record Date, to that number determined by multiplying the number of
shares of Common Stock for which this Warrant may be exercised immediately
prior to the Record Date by a fraction (x) the numerator of which shall be
the Exercise Price
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immediately prior to the Record Date, and (y) the denominator of which shall be
the Exercise Price on and immediately after the Record Date, as adjusted in
accordance with the provisions of this Section 4(c).
(d) NOTICE OF ADJUSTMENTS. Whenever the Exercise Price shall be adjusted
pursuant to the provisions hereof, the Company shall within thirty (30) days
of such adjustment deliver a certificate signed by its chief financial
officer to the registered holder(s) hereof setting forth, in reasonable
detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated, and the Exercise Price after
giving effect to such adjustment.
5. NO IMPAIRMENT. The Company will not, by amendment of its Third Amended and
Restated Certificate of Incorporation (as may be further amended and/or restated
from time to time) or through any reorganization, recapitalization, transfer of
assets, consolidation, merger, dissolution, issuance or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be observed or performed hereunder by the Company, but
will at all times in good faith assist in the carrying out of all the provisions
of this Warrant and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the holder of this Warrant against
impairment.
6. FRACTIONAL SHARES. No fractional shares of Common Stock will be issued in
connection with any exercise hereunder, but in lieu of such fractional shares
the Company shall make a cash payment therefor based upon the per share fair
market value of the Common Stock on the date of exercise.
7. COMPLIANCE WITH SECURITIES ACT; DISPOSITION OF WARRANT OR SHARES OF COMMON
STOCK.
(a) COMPLIANCE WITH SECURITIES ACT. The holder of this Warrant, by acceptance
hereof, agrees that this Warrant and the Shares to be issued upon exercise
hereof are being acquired for investment and that such holder will not offer,
sell or otherwise dispose of this Warrant or any Shares to be issued upon
exercise hereof except under circumstances which will not result in a violation
of the Securities Act of 1933, as amended (the "Securities Act"). This Warrant
and all Shares issued upon exercise of this Warrant (unless registered under the
Securities Act) shall be stamped or imprinted with a legend in substantially the
following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. NO SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT (i) AN
EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR
THE HOLDER IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY'S COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION UNDER THE ACT
IS NOT REQUIRED.
(b) DISPOSITION OF WARRANT AND SHARES. With respect to any offer, sale or
other disposition of this Warrant or any Shares acquired pursuant to the
exercise of this Warrant prior to registration thereof, the holder hereof and
each subsequent holder of this Warrant agrees to give written notice to the
Company prior thereto, describing briefly the manner thereof, together with a
written opinion of such holder's counsel in form acceptable to the Company's
counsel, if reasonably requested by the Company, to the effect that such
offer, sale or other disposition may be effected without registration or
qualification (under the Securities Act then in effect or any federal or
state law then in effect) of this Warrant or such Shares and indicating
whether or not under the Securities Act certificates for this Warrant or such
Shares to be sold or otherwise disposed of require any restrictive legend as
to applicable restrictions on transferability in order to insure compliance
with the Securities Act. Each certificate representing this Warrant or the
Shares thus transferred (except a transfer pursuant to Rule 144 under the
Securities Act) shall bear a legend as to the applicable restrictions on
transferability in order to insure compliance with the Securities Act unless,
in the aforesaid opinion of counsel for the holder, such legend is not
required in order to insure compliance with the Securities Act. The Company
may issue stop transfer instructions to its transfer agent in connection with
the foregoing restrictions.
8. NOTICE OF CERTAIN EVENTS. The Company shall provide the holder of this
Warrant with at least thirty (30) days notice (or such greater amount of
notice as Delaware law requires to be given to shareholders having the
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<PAGE>
right to vote at a meeting on any Sale Event) prior to (i) any Sale Event, (ii)
any liquidation, dissolution or winding up of the Company or (iii) the record
date for any cash dividend declared on the Company's Common Stock.
9. REPRESENTATIONS AND WARRANTIES. This Warrant is issued and delivered on the
basis of the following:
(a) This Warrant has been duly authorized, executed and delivered by the Company
and constitutes the valid and binding obligation of the Company, enforceable in
accordance with its terms;
(b) The Shares have been duly authorized and reserved for issuance by the
Company and, when issued in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable;
(c) The rights, preferences, privileges and restrictions granted to or imposed
upon the Shares and the holders thereof are as set forth in the Company's Third
Amended and Restated Certificate of Incorporation, a true and complete copy of
which has been delivered to the original holder of this Warrant.
10. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
11. NOTICES. Any notice, request or other document required or permitted to be
given or delivered to the holder hereof or the Company shall be in writing and
shall delivered or sent to each such holder at its address as shown on the books
of the Company or to the Company at its principal executive office and shall be
deemed received (i) if personally delivered or sent by electronic facsimile
transmission, upon actual receipt, or (ii) if sent by reputable overnight
courier service, twenty-four hours after deposit with such courier service, or
(iii) if sent by certified mail (postage prepaid), return receipt requested,
forty-eight hours after deposit in the mail.
12. BINDING EFFECT ON SUCCESSORS; NON-ASSIGNABILITY. Except as provided in
Section 4(a) above, this Warrant shall be binding upon any corporation
succeeding the Company by merger, consolidation or acquisition of all or
substantially all of the Company's assets. This Warrant may not be transferred
or assigned (by operation of law or otherwise) by the holder without the prior
written consent of the Company, except to a successor-in-interest of all or
substantially all of the holder's assets or to an affiliate of the holder formed
solely for the purpose of holding securities and other investments.
13. LOST WARRANTS OR STOCK CERTIFICATES. The Company covenants to the holder
hereof that upon receipt of evidence reasonable satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant or any stock
certificate issued upon exercise hereof and, in the case of any such loss, theft
or destruction, upon receipt of an indemnity reasonably satisfactory to the
Company, or in the case of any such mutilation upon surrender and cancellation
of such Warrant or stock certificate, the Company shall make and deliver a new
Warrant or stock certificate, or like tenor, in lieu of the lost, stolen,
destroyed or mutilated Warrant or stock certificate.
14. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of
this Warrant are inserted for convenience only and do not constitute a part of
this Warrant.
15. EQUITABLE RELIEF. Because legal remedies may be inadequate to enforce the
provisions of this Warrant, equitable relief, including specific performance and
injunctive relief, may be used to enforce the provisions hereof.
16. SAVINGS CLAUSE. If any provisions of this Warrant shall be determined to be
illegal or unenforceable, such determination shall in no manner affect the
legality or enforceability of any other provision hereof.
17. GOVERNING LAW. This Warrant shall be construed and enforced in accordance
with, and the rights of the parties shall be governed by, the laws of the State
of Delaware, without giving effect to its conflicts of laws provisions.
8
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its officer thereunto duly authorized.
Date: ________________, 1999
WEBHIRE, INC.
By:
Name:
Title:
9
<PAGE>
EXHIBIT B
STANDARD TERMS AND CONDITIONS FOR YAHOO! ADVERTISING
The following terms and conditions (the "Standard Terms") shall be deemed to be
incorporated into the attached insertion order (the "Insertion Order"):
1. TERMS OF PAYMENT. Advertiser must submit completed credit application to
determine terms of payment. If no credit application is submitted or the request
for credit is denied by Yahoo! Inc. ("Yahoo") in its sole discretion, the
Insertion Order must be paid in advance of the advertisement start date. Major
credit cards (VISA, M/C and American Express) are accepted. If Yahoo approves
credit, Advertiser will be invoiced on the first day of the contract period set
forth on the Insertion Order and payment shall be made to Yahoo within thirty
(30) days from the date of invoice ("Due Date"). Amounts paid after the Due Date
shall bear interest at the rate of one percent (1%) per month (or the highest
rate permitted by law, if less). In the event Advertiser fails to make timely
payment, Advertiser will be responsible for all reasonable expenses (including
attorneys' fees) incurred by Yahoo in collecting such amounts. Yahoo reserves
the right to suspend performance of its obligations hereunder (or under any
other agreement with Advertiser) in the event Advertiser fails to make timely
payment hereunder or under any other agreement with Yahoo.
2. POSITIONING. Except as otherwise expressly provided in the Insertion Order,
positioning of advertisements within the Yahoo properties or on any page is at
the sole discretion of Yahoo. Yahoo may, at its sole discretion, remove from the
insertion order (and substitute with similar inventory) any keyword or category
page that it believes to be a trademark, trade name, company name, product name
or brand name belonging to or claimed by a third party.
3. USAGE STATISTICS. Unless specified in the Insertion Order, Yahoo makes no
guarantees with respect to usage statistics or levels of impressions for any
advertisement. Advertiser acknowledges that delivery statistics provided by
Yahoo are the official, definitive measurements of Yahoo's performance on any
delivery obligations provided in the Insertion Order. The processes and
technology used to generate such statistics have been certified and audited by
an independent agency. No other measurements or usage statistics (including
those of Advertiser or a third party ad server) shall be accepted by Yahoo or
have bearing on the Insertion Order.
4. RENEWAL. Except as expressly set forth in the Insertion Order, any renewal of
the Insertion Order and acceptance of any additional advertising order shall be
at Yahoo's sole discretion. Pricing for any renewal period is subject to change
by Yahoo from time to time.
5. NO ASSIGNMENT OR RESALE OF AD SPACE. Advertiser may not resell, assign or
transfer any of its rights hereunder, and any attempt to resell, assign or
transfer such rights shall result in immediate termination of this contract,
without liability to Yahoo.
6. LIMITATION OF LIABILITY. In the event (i) Yahoo fails to publish an
advertisement in accordance with the schedule provided in the Insertion Order,
(ii) Yahoo fails to deliver the number of total page views specified in the
Insertion Order (if any) by the end of the specified period, or (iii) of any
other failure, technical or otherwise, of such advertisement to appear as
provided in the Insertion Order, the sole liability of Yahoo to Advertiser shall
be limited to, at Yahoo's sole discretion, a pro rata refund of the advertising
fee representing undelivered page views, placement of the advertisement at a
later time in a comparable position, or extension of the term of the Insertion
Order until total page views are delivered. In no event shall Yahoo be
responsible for any consequential, special, punitive or other damages,
including, without limitation, lost revenue or profits, in any way arising out
of or related to the Insertion Order/Standard Terms or publication of the
advertisement, even if Yahoo has been advised of the possibility of such
damages. Without limiting the foregoing, Yahoo shall have no liability for any
failure or delay resulting from any governmental action, fire, flood,
insurrection, earthquake, power failure, riot, explosion, embargo, strikes
whether legal or illegal, labor or material shortage, transportation
interruption of any kind, work slowdown or any other condition beyond the
control of Yahoo affecting production or delivery in any manner.
7. ADVERTISERS REPRESENTATIONS; INDEMNIFICATION. Advertisements are accepted
upon the representation that Advertiser has the right to publish the contents of
the advertisement without infringing the rights of any third party and without
violating any law. In consideration of such publication, Advertiser agrees, at
its own expense, to indemnify, defend and hold harmless Yahoo, and its
employees, representatives, agents and affiliates, against any and all expenses
and losses of any kind (including reasonable attorneys' fees and costs) incurred
by Yahoo in connection with any claims, administrative proceedings or criminal
investigations of any kind arising out of publication of the advertisement
and/or any material of Advertiser to which users can link through the
advertisement (including without limitation, any claim of trademark or copyright
infringement, defamation, breach of confidentiality, privacy violation, false or
deceptive advertising or sales practices).
8. PROVISION OF ADVERTISING MATERIALS. Advertiser will provide all materials for
the advertisement in accordance with Yahoo's policies in effect from time to
time, including (without limitation) the manner of transmission to Yahoo and the
lead-time prior to publication of the advertisement. Yahoo shall not be required
to publish any advertisement that is not received in accordance with such
policies and reserves the right to charge Advertiser, at the rate specified in
the Insertion Order, for inventory held by Yahoo pending receipt of acceptable
materials from Advertiser which are past due. Advertiser hereby grants to Yahoo
a non-exclusive, worldwide, fully paid license to use, reproduce and display the
advertisement (and the contents, trademarks and brand features contained
therein) in accordance herewith.
9. RIGHT TO REJECT ADVERTISEMENT. All contents of advertisements are subject to
Yahoo's approval. Yahoo reserves the right to reject or cancel any
advertisement, insertion order, URL link, space reservation or position
commitment, at any time, for any reason whatsoever (including belief by Yahoo
that placement of advertisement, URL link, etc., may subject Yahoo to criminal
or civil liability).
10
<PAGE>
10. CANCELLATIONS. Except as otherwise provided in the Insertion Order, the
Insertion Order is non-cancelable by Advertiser.
11. CONSTRUCTION. No conditions other than those set forth in the Insertion
Order or these Standard Terms shall be binding on Yahoo unless expressly agreed
to in writing by Yahoo. In the event of any inconsistency between the Insertion
Order and the Standard Terms, the Standard Terms shall control.
12. MISCELLANEOUS. These Standard Terms, together with the Insertion Order, (i)
shall be governed by and construed in accordance with, the laws of the State of
California, without giving effect to principles of conflicts of law; (ii) may be
amended only by a written agreement executed by an authorized representative of
each party; and (iii) constitute the complete and entire expression of the
agreement between the parties, and shall supersede any and all other agreements,
whether written or oral, between the parties. Advertiser shall make no public
announcement regarding the existence or content of the Insertion Order without
Yahoo's written approval, which may be withheld at Yahoo's sole discretion. Both
parties consent to the jurisdiction of the courts of the State of California
with respect to any legal proceeding arising in connection with the Insertion
Order/Standard Terms.
11
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