AMENDMENT NO. 2
TO THE
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
EDNET, INC., EDN SUB, INC. AND
INTERNET WORLDWIDE BUSINESS SOLUTIONS
THIS AMENDMENT NO. 2 (the "Amendment") is made and entered into as of
January 31, 1997 to be effective as of December 31, 1996 and amends that certain
Agreement and Plan of Reorganization by and among EDnet, Inc. ("Parent"), EDN
Sub, Inc. ("Merger Sub") and Internet Worldwide Business Solutions (the
"Company") dated as of June 24, 1996, as amended September 13, 1996 (the
"Agreement") and certain exhibits thereto.
RECITALS
WHEREAS, Parent, Merger Sub and the Company have heretofore executed
and entered into the Agreement. Pursuant to Section 7.3 of the Agreement,
Parent, Merger Sub and the Company may from time to time amend the Agreement in
accordance with the provisions of Section 7.3 thereto.
WHEREAS, Parent, Merger Sub and the Company have determined that the
amendments to the Agreement set forth below are in the best interests of all the
parties to the Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants contained herein, the parties hereto hereby agree as
follows:
1. The introductory paragraph of Section 1.6 shall be amended to read in its
entirety as follows:
"1.6 Merger Consideration; Effect on Capital Stock. The
consideration to be paid by Parent in exchange for the acquisition of
all outstanding Company Common Stock shall be (i) secured promissory
notes payable for an aggregate principal amount of $250,000 in the form
of Exhibit A hereto (the "First Notes"), (ii) 311,284 shares of Parent
Common Stock, and (iii) the contractual obligation to issue up to
125,000 additional shares of Parent Common Stock in the event that
certain milestones are reached as evidenced by the Earn-Out Plan
attached hereto as Exhibit C."
Section 1.6(a) of the Agreement shall be amended to read in its
entirety as follows:
"(a) Payment of Merger Consideration. Subject to the terms and
conditions of this Agreement, as of the Effective Time, by virtue of
the Merger and without any action on the part of Merger Sub, the
Company or the holders of any
1.
shares of Company Common Stock, each share of Company Common Stock
issued and outstanding as of immediately prior to the Effective Time
will be canceled and extinguished at the Effective Time and will be
converted at such time into the right to receive, upon surrender of the
certificate representing such share of Company Common Stock in the
manner provided in Section 1.8, a First Note, a number of shares of
Parent Common Stock, a right to receive shares of Parent Common Stock
pursuant to the terms of the Earn-Out Plan such amount of notes, stock
and rights to receive stock (collectively, the "Merger Consideration")
on the terms and conditions set forth in this Agreement as follows:
(A) Stock. Each share of Company Common
Stock shall be entitled to receive a number of shares of Parent Common
Stock equal to the quotient of (i) 311,284, divided by (ii) the number
of shares of Company Common Stock outstanding as of the Closing,
provided that no fractional shares of Parent Common Stock shall be
issued, and in lieu thereof, any fractional shares issuable to any
holder after aggregating all shares of Company Common Stock owned by
such holder shall be rounded up to a whole share;
(B) Notes. In addition, each holder of
Company Common Stock shall be entitled to receive a First Note in the
principal amount of $250,000 multiplied by the quotient of (i) the
number of shares of Company Common Stock owned by the holder, divided
by (ii) the total outstanding shares of Company Common Stock; and
(C) Earn-Out Plan. In addition, each holder
of Company Common Stock shall be entitled to receive additional Parent
Common Stock pursuant to the Earn Out Plan in the form of Exhibit C."
2. Exhibit B to the Agreement shall be deleted. The unsecured promissory notes
for an aggregate principal amount of $250,000 executed by the Parent on June 24,
1996, shall be returned to the Parent for cancellation.
3. Sections I, IV, VI and VII of the Earn Out Plan, Exhibit C to the Agreement,
shall be amended, pursuant to Section IX thereof, to read in their entirety as
follows:
"I. Purposes of the Plan.
Pursuant to the Agreement and Plan of Reorganization by and
among EDnet, Inc., EDN Sub, Inc., and Internet Worldwide Business
Solutions dated as of June 24, 1996 (the "Reorganization Agreement"),
EDnet, Inc. (the "Company") is hereby establishing an Earn-Out Plan
(the "Plan") to issue up to an aggregate of 125,000 shares of the
Company Common Stock to certain persons identified herein over a period
provided herein provided that the revenues or profits of Internet
Worldwide Business Solutions or of the Surviving Corporation (as that
term is defined in the Reorganization Agreement) ("IBS") reach certain
levels provided herein."
2.
"IV. Term of Plan.
The Plan shall become effective upon the "Effective Time," as
such term is defined in the Reorganization Agreement, and shall
terminate one hundred twenty (120) days after December 31, 1996, unless
a determination is being disputed pursuant to Section VIII."
"VI. Company Common Stock Allocation.
Plan Participants shall be eligible to receive up to an
aggregate of 125,000 shares of Company Common Stock in the applicable
time period ("Stock Allocation"). The Stock Allocation shall be
distributed among the Plan Participants according to the percentages
stated next to each Plan Participant's name on Exhibit A. The Stock
Allocation shall be issued to Plan Participants within one hundred
twenty (120) days following the end of the applicable time period,
unless a determination is being disputed pursuant to Section VIII."
"VII. Stock Allocation Formula.
Set forth below is the time period during which a measurement
IBS' Revenues and IBS' Profits will be made and the Stock Allocation
that will be distributed if either threshold set forth for such period
is met or exceeded.
Jan. 1, 1996 to
Time Period Dec. 31, 1996
-----------
(1) IBS' Revenues $675,000
IBS' Profits $ 90,000
Stock Allocation 93,750
(2) IBS' Revenues $900,000
IBS' Profits $ 90,000
Stock Allocation 125,000
4. The first sentence of Section 1 of Exhibits F-1 and F-2 shall be amended to
read as follows: "This Agreement shall remain in force from the date hereof
until December 31, 1996 (the "Expiration Date") unless sooner terminated in
accordance with Section 5 (the "Term")."
5. This Amendment supersedes the Memorandum of Understanding between the Parent
and the Company dated December 22, 1996.
6. Except as expressly set forth in this Amendment, the Agreement shall continue
in full force and effect in accordance with its terms.
3.
7. This Amendment may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the date first above written, and hereby consent to and ratify all the Exhibits
to the Amendment and the Agreement and all the documents related to the Merger.
INTERNET WORLDWIDE BUSINESS EDNET, INC.
SOLUTIONS
By /s/ Xxxxxxx X. Xxxxxxx By /s/ Xxx Xxxxxxxxx
--------------------------------- --------------------------
Xxxxxxx X. Xxxxxxx, Xxx Xxxxxxxxx,
Chief Executive Officer Chairman and CEO
EDN SUB, INC.
By /s/ Xxxxxx X. Xxxxx
--------------------------
Xxxxxx X. Xxxxx,
President and CFO
/s/ Xxxxxx X. Xxxxx /s/ Xxxxxxx X. Xxxxxxx
--------------------------------- --------------------------
Xxxxxx X. Xxxxx Xxxxxxx X. Xxxxxxx
4.
