INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT (this "Agreement"), dated as of February 29,
2000 between XXXXXX X. XXXXXXXXXX, XX. (the "Indemnitor") and eB2B COMMERCE,
INC., a Delaware corporation ("eCom").
WHEREAS, the Indemnitor is a director, officer and principal shareholder of
DynamicWeb Enterprises, Inc., a New Jersey corporation (the "Company");
WHEREAS, eCom and the Company have entered into an Agreement and Plan of
Merger dated December 1, 1999, as amended by Amendment No. 1 to Agreement and
Plan of Merger dated February 29, 2000 (as such agreement may be further
amended, modified, supplemented or restated from time to time, the "Merger
Agreement") pursuant to which eCom shall merge with and into the Company (the
surviving corporation being hereinafter referred to as the "Surviving
Corporation"); and
WHEREAS, it is a condition to closing of the transactions contemplated in
the Merger Agreement that Indemnitor enter into this Agreement with eCom.
NOW, THEREFORE, in consideration of the mutual agreements herein contained,
the parties agree as follows:
1. Definitions. Capitalized terms used, but not defined herein, shall have
the meanings given to them in the Merger Agreement.
2. Indemnification:
2.1 Duty to Indemnify. The Indemnitor shall defend and hold harmless the
Surviving Corporation and its affiliates (each of the foregoing being
hereinafter referred to as an "Indemnified Party" and, collectively, as the
"Indemnified Parties") from and against all assessments, losses, damages,
liabilities, costs and expenses, including, without limitation, interest,
penalties and reasonable attorney's fees and disbursements (collectively,
"Damages"), incurred by any Indemnified Party resulting from any material breach
or material inaccuracy of any representation or warranty of the Company
contained in the Merger Agreement if, at the time such representation or
warranty was made, any member of the Knowledge Group (as hereinafter defined)
had actual knowledge of such misrepresentation. As used herein, the term
"Knowledge Group" shall consist of the Indemnitor and Xxxxx X. Xxxxxxx, the
Company's President and Chief Operating Officer.
2.2 Indemnification Procedures. An Indemnified Party shall give the
Indemnitor prompt written notice (hereinafter, the "Indemnification Notice") of
any Damages, including any demands, claims, actions or causes of action
(collectively, "Claims") asserted against the Indemnified Party for which the
Indemnified Party may be entitled to indemnification hereunder; provided that
such Indemnification Notice states that the Indemnified Party believes, in good
faith, that the Damages are a result of any material breach or material
inaccuracy of any representation or warranty of the Company contained in the
Merger Agreement and that the Knowledge Group had actual knowledge of such
misrepresentation, in accordance with Section 2.1 hereof. Failure to give such
Indemnification Notice in prompt fashion shall not relieve the Indemnitor of any
obligations which the Indemnitor may have to the Indemnified Party under this
Section 2, except if and to the extent that such failure has adversely
prejudiced the Indemnitor. Within twenty (20) days after the receipt of the
Indemnification Notice (or, if the amount of Damages is not set forth in the
Indemnification Notice, within twenty (20) days after
the receipt of a notice setting forth the amount of Damages ("Damage Amount
Notice")), Indemnitor shall pay to the Indemnified Party an amount equal to the
Damages set forth in the Indemnification Notice or Damage Amount Notice, as
applicable, after the threshold set forth in Section 2.4(b) is exceeded (up to
the maximum set forth in Section 2.4(c)), unless the Indemnitor has delivered to
the Indemnified Party notice of his intention to contest his liability hereunder
or such Damages in good faith, in which case the Indemnitor's obligations shall
be suspended (and the Escrow Shares (defined below) shall remain in escrow)
until the parties have resolved the matter in accordance with Section 5 hereof
and, in such case, the Indemnitor's obligations, if any, shall be fulfilled
within twenty (20) days after the resolution of such matter.
2.3 Third Party Claims. In addition to the foregoing, the obligations and
liabilities of the Indemnitor with respect to Claims against an Indemnified
Party by persons not party to the Merger Agreement, for which an Indemnified
Party may be entitled to indemnification hereunder, shall be subject to the
following terms and conditions:
(a) The Indemnified Parties will have the right (upon further notice to
the Indemnitor) to undertake the defense, compromise or settlement of such Claim
for the account of the Indemnitor, if applicable, with counsel reasonably
satisfactory to the Indemnitor (and in such case the Indemnified Parties shall
use their best efforts to vigorously defend such Claim), subject to the right of
the Indemnitor to participate in the defense of such Claim in accordance with
Section 2.3(b) at any time. If the Indemnified Parties desire not to defend any
Claim and/or desire to settle or compromise any Claim or consent to entry of any
judgment with respect to such Claim, the Indemnified Parties shall provide
written notice (the "Proposed Settlement Notice") to the Indemnitor of such
desire, which Proposed Settlement Notice shall state the amount of Damages which
the Indemnified Parties are prepared to incur as a result of such settlement,
compromise or entry of judgment (the "Proposed Damage Limit"). Indemnitor shall
have the right to assume the defense of such Claim in accordance with Section
2.3(c).
(b) At any time after delivery of an Indemnification Notice in respect
of a Claim and prior to the settlement, compromise or final termination of a
Claim, the Indemnitor may elect, by written notice to the Indemnified Parties
received by the Indemnified Parties within ten (10) days of the Indemnitor's
receipt of the Indemnification Notice, to participate in the defense of such
Claim with counsel reasonably satisfactory to the Indemnified Parties (provided
that such claim involves only monetary damages and does not seek an injunction
or other equitable relief).
(c) At any time after delivery of a Proposed Settlement Notice with
respect to a Claim, the Indemnitor may elect, by written notice to the
Indemnified Parties received by the Indemnified Parties within ten (10) days of
the Indemnitor's receipt of the Proposed Settlement Notice, to assume the
defense of such Claim and to employ his own counsel in the defense of such
Claim, provided that upon final determination of Damages with respect to such
Claim, any Damages in excess of the Proposed Damage Limit shall be the sole
responsibility of the Indemnitor and shall not be considered Damages for the
purposes of the limitations set forth in Section 2.4 below.
(d) If the Indemnitor chooses to participate in or assume the defense
of any claim, the Indemnified Parties shall cooperate with all reasonable
requests of the Indemnitor and his counsel and shall make available books,
records or other documents within its control that are necessary or appropriate
for such defense.
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(e) If the Indemnitor elects to participate in or assume the defense of
any Claim, the Indemnitor shall not settle or compromise any Claim without the
prior written consent of the Indemnified Parties (which shall not be
unreasonably withheld or delayed) or consent to entry of any judgment which does
not include as an unconditional term thereof the release by the claimant or the
plaintiff of all Indemnified Parties from all liability arising from events
which allegedly give rise to such Claim.
2.4 Limitations on Indemnification.
(a) For the purposes of this Agreement, the representations and
warranties of the Company shall survive from the closing pursuant to the Merger
Agreement until the conclusion of the first annual audit of the Surviving
Corporation following the closing of the Merger (the "Termination Date").
However, if a claim for indemnification hereunder is asserted by an Indemnified
Party prior to the Termination Date, then such representation or warranty shall
continue to survive solely in respect of such claim until such claim for
indemnification has been satisfied or otherwise resolved. Thereafter, the
obligations of Indemnitor shall be of no force and effect. In any event, the
parties shall fully cooperate with each other and their respective counsel in
connection with any such litigation, defense, settlement or any other
resolution.
(b) The Indemnitor shall not be liable for any claim for
indemnification hereunder until such time as the Damages, in the aggregate,
exceed $250,000, in which event the Indemnified Parties shall be indemnified
only for Damages incurred by them in excess of $250,000.
(c) The Indemnitor shall not be liable for any claims for
indemnification hereunder, in the aggregate, in excess of the value of all of
the Escrow Shares (as hereinafter defined).
2.5 Escrow Shares. To secure the Indemnitor's obligations hereunder, at the
Closing, the Indemnitor shall deposit with an escrow agent reasonably
satisfactory to the parties hereto stock certificates evidencing 100,000 of the
Indemnitor's shares of Company Common Stock ("Escrow Shares"), together with a
stock power executed in blank by the Indemnitor. Such Escrow Shares shall be
held by the escrow agent in accordance with an escrow agreement in form and
substance reasonably satisfactory to the parties hereto. For purposes of this
Agreement, the value of the Escrow Shares shall be the average of the closing
bid prices for the shares of the Surviving Corporation's common stock as
reported upon the principal stock exchange where such shares are traded for the
ten (10) days immediately preceding and the ten (10) days immediately succeeding
the date of the resolution of any claim by the Indemnified Party for any such
indemnification.
3 Notices. All notices and instructions provided for or permitted hereunder
shall be in writing and delivered personally, sent by facsimile, or sent by
registered or certified mail (postage prepaid) or by courier service (with proof
of delivery, charges prepaid) as follows:
If to the Indemnitor: Xxxxxx X. Xxxxxxxxxx, Xx., 00 Xxxxxx Xxxxx, Xxxx
Xxxxxx, Xxx Xxxxxx 00000, with a copy to Xxxxx Raysman Xxxxxxxxx Xxxxxx &
Xxxxxxx, LLP, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxx Xxxxxx, Esq.
If to eCom: eB2B Commerce, Inc., 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000,
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unless and until in either case a different address shall be furnished in
writing to the other parties by the party to whom such notice or instruction is
to be given.
4. Governing Law. This Agreement shall be construed in accordance with the
laws of the State of New York.
5. Dispute Resolution. Any controversy, dispute or disagreement arising out
of or relating to this Agreement shall be settled in accordance with the terms
of Section 9.16 of the Merger Agreement, which are incorporated herein by
reference.
6. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their successors and assigns.
7. Modification and Waiver. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by the parties
hereto. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provisions hereof (whether or not
similar) nor shall such waiver constitute a continuing waiver.
8. Counterparts. This Agreement may be executed in any number of
counterparts (including by facsimile signature), each of which shall be deemed
an original, and all of such counterparts shall constitute a single instrument.
9. Exclusive Remedy. The contract rights conferred by this Agreement shall
be exclusive of any other right which the Indemnified Parties may have or may
hereinafter acquire under any statute, agreement or otherwise.
IN WITNESS WHEREOF, the parties have executed this Indemnification
Agreement as of the date first set forth above.
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Xxxxxx X. Xxxxxxxxxx, Xx.
eB2B COMMERCE, INC.
By:
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Name: Xxxxxx Xxxxxxx
Title: Chief Financial Officer
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