Appendix B
AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER (the "Amendment")
entered into on February 29, 2000 by and between eB2B COMMERCE, INC., a Delaware
corporation with its principal place of business at 00 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 ("eCom"), and DYNAMICWEB ENTERPRISES, INC., a New Jersey
corporation with its principal place of business at 000 Xxxxx 00 Xxxx,
Xxxxxxxx X, Xxxxx 000, Xxxxxxxxx, Xxx Xxxxxx 00000 (the "Company").
WHEREAS, the parties hereto are parties to that certain Agreement and
Plan of Merger dated December 1, 1999 ("Merger Agreement"); and
WHEREAS, the parties desire to amend certain terms of the Merger
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions. Except as modified hereby, capitalized terms used but not
defined in this Amendment shall have the meanings given to them in the Merger
Agreement.
1.1 Section 1.49 of the Merger Agreement (containing the definition of
"Existing Common Stock") is hereby deleted.
1.2 Section 1.50 of the Merger Agreement (containing the definition of
"Existing Company Preferred Holders") is hereby deleted.
1.3 Section 1.51 of the Merger Agreement (containing the definition of
"Existing Preferred Stock") is hereby deleted.
1.4 Section 1.59 of the Merger Agreement is hereby amended to read in
its entirety as follows:
"1.59 "Loan Agreement" means that certain Loan Agreement dated November
12, 1999, among the Parties, as amended as of November 19, 1999, and as
of the date hereof, as such agreement may be further amended, modified,
supplemented or restated from time to time."
1.5 Section 1.63 of the Merger Agreement (containing the definition of
"Newco") is hereby deleted. Any reference to "Newco" contained in the Merger
Agreement is hereby deemed to be a reference to the Company.
1.6 The following additional definitions are hereby added to Section 1
of the Merger Agreement, in the appropriate alphabetical order:
"Amendment" has the meaning set forth in Section 3.10.2 below.
"Break-up Fee" has the meaning set forth in Section 8.3 below.
"Fixed Percentage" has the meaning set forth in Section 2.4.7 below.
"Fixed Shares" has the meaning set forth in Section 2.4.7 below.
"Netlan Transaction" has the meaning set forth in Section 3.10.2 below.
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2. Basic Transaction.
2.1 Section 2.1 of the Merger Agreement is hereby amended to read in its
entirety as follows:
"2.1 The Merger. On and subject to the terms and conditions of this
Agreement and in accordance with the Delaware General Corporation Law
and the NJBCA, eCom will merge with and into the Company (the "Merger")
at the Effective Time. The Company shall be the corporation surviving
the Merger."
2.2 Section 2.4.4 of the Merger Agreement is hereby amended to read in
its entirety as follows:
"2.4.4.Directors and Officers. The directors and officers of eCom in
office at and as of the Effective Time will become the directors and
officers of the Surviving Corporation, retaining their respective
positions and terms of office, subject to action by the board of
directors of the Surviving Corporation after the Effective Time."
2.3 Section 2.4.5 of the Merger Agreement is hereby amended to read in
its entirety as follows:
"2.4.5 Common Stock Conversion. At the Effective Time, each outstanding
share of eCom Common Stock outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into 2.66 shares of Company
Common Stock, subject to adjustment as set forth in Section 2.4.7 below
(the "Exchange Ratio")."
2.4 Section 2.4.6 of the Merger Agreement is hereby amended to read in
its entirety as follows:
"2.4.6 Preferred Stock Conversion. At the Effective Time, each
outstanding share of eCom Preferred Stock, and each eCom Option and
other security convertible into eCom Common Stock, outstanding
immediately prior to the Effective Time, shall, by virtue of the Merger
and without any action on the part of the holder thereof, be converted
into shares of Company Preferred Stock, Company Options or other
securities convertible into Company Common Stock, as the case may be.
The number of shares of Company Common Stock issuable upon exercise or
conversion of each share of such Company Preferred Stock, and each such
Company Option or other such security convertible into Company Common
Stock shall be equal to the number of shares of eCom Common Stock into
which each share of such eCom Preferred Stock, each eCom Option or other
security convertible into eCom Common Stock is exercisable or
convertible, multiplied by the Exchange Ratio. The exercise or
conversion price of each share of such Company Preferred Stock, each
such Company Option and each such other security convertible into
Company Common Stock shall be equal to the exercise or conversion price
of each share of such eCom Preferred Stock, each such eCom Option, or
other such security convertible into eCom Common Stock, divided by the
Exchange Ratio. No fractional shares of Company Common Stock shall be
issued in connection with the conversion or exercise of any such share
of Company Preferred Stock, Company
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Option or other security convertible into Company Common Stock; rather
the aggregate number of shares to be issued pursuant to any conversion
or exercise of any such security shall be rounded to the nearest whole
number (with 0.5 rounded up to the nearest whole number). Except as set
forth in this Section 2.4.6, the terms of the Company Preferred Stock,
Company Options and other securities convertible into Company Common
Stock issued pursuant to this Section 2.4.6 shall be substantially the
same as the terms of the eCom Preferred Stock, eCom Options or other
securities convertible into eCom Common Stock, as the case may be, being
exchanged therefor. In addition, it is the intention of the Parties that
the Company Options issued pursuant to this Section 2.4.6 qualify, to
the maximum extent possible following the Effective Time, as incentive
stock options (as defined in Section 422 of the Code) to the extent that
the eCom Options exchanged for such Company Options so qualified
immediately prior to the Effective Time."
2.5. Adjustment to Merger Consideration. Section 2.4.7 of the Merger
Agreement is hereby amended to read in its entirety as follows:
"2.4.7 Adjustment to Merger Consideration. eCom hereby represents and
warrants to the Company that, as of February 28, 2000, there are
14,368,965 shares of eCom Common Stock outstanding (including all shares
of eCom Preferred Stock, eCom Options and other securities convertible
into eCom Common Stock, all on an as-converted, fully-diluted basis,
except for (i) shares underlying stock options granted to employees of
eCom subsequent to October 31, 1999, (ii) shares underlying warrants
issued to customers of eCom subsequent to October 31, 1999 and (iii) any
securities issued in connection with the Netlan Transaction, as defined
below) ("Fixed Shares"). The Company hereby represents and warrants to
eCom that, as of February 28, 2000, there are 5,150,793 shares of
Company Common Stock outstanding (including all shares of Company
Preferred Stock, Company Options and other securities convertible into
Company Common Stock, all on an as-converted, fully-diluted basis). The
Parties hereby agree that, determined on the basis of the numbers of
shares set forth in the preceding representations, eCom Stockholders
would own 88.12% (the "Fixed Percentage") (on an as-converted,
fully-diluted basis). If, as of the Effective Time, the number of shares
of eCom Common Stock outstanding (determined on an as-converted,
fully-diluted basis) exceeds the Fixed Shares and/or the number of
shares of the Company Common Stock outstanding (determined on an
as-converted, fully-diluted basis) exceeds 5,200,000 (not including
stock options granted to new employees of the Company after the date
hereof), then appropriate adjustments shall be made to the aggregate
amount of Company Securities issued pursuant to Section 2.4.5 and
Section 2.4.6 hereof so that, as of the Effective Time, eCom
Stockholders will own the Fixed Percentage of outstanding shares of
Company Common Stock (on an as-converted, fully-diluted basis). Such
adjustments, if any, shall be made on a pro rata basis among all eCom
Stockholders as of the Effective Time."
3. Representations and Warranties of eCom.
3.1 Section 3.8 of the Merger Agreement is hereby amended to read in its
entirety as follows:
"3.8 Subsidiaries. Each of eCom's Subsidiaries listed on Schedule 3.8 to
the eCom
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Disclosure Schedule is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its
incorporation or organization. eCom is the record and beneficial owner
of all of the outstanding shares of capital stock or other ownership
interests in each of its Subsidiaries, free and clear of any lien,
mortgage, pledge, charge, security interest or encumbrance of any kind,
and there are no irrevocable proxies with respect to such shares."
3.2 Section 3.10.2 of the Merger Agreement is hereby amended to read in
its entirety as follows:
"3.10.2 eCom has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) involving more than $25,000 and outside the Ordinary Course of
Business, other than the Letter Agreement, the Loan Agreement, the
Agency Agreement, and the Netlan Transaction (as defined in Amendment
No. 1 to Agreement and Plan of Merger (the "Amendment"));"
3.3 Section 3.10.6 of the Merger Agreement is hereby amended to read in
its entirety as follows:
"3.10.6 eCom has not made any capital investment in, any loan to, or any
acquisition of the securities and assets of, any other Person (or series
of related capital investments, loans, and acquisitions) either
involving more than $25,000 or outside the Ordinary Course of Business,
with the exception of the Netlan Transaction (as defined in the
Amendment);"
4. Representations and Warranties of the Company.
4.1 Section 4.10.17 of the Merger Agreement is hereby amended to read in
its entirety as follows:
"4.10.17 The Company has not granted any increase in the compensation of
or changed any of the employment terms for any of its directors,
officers, and employees outside the Ordinary Course of Business, except
as set forth in the Company Disclosure Schedule, as amended as of the
Effective Time;"
4.2 Section 4.30 of the Merger Agreement is hereby amended by adding at
the end the following sentence:
"The Company's Board of Directors shall receive a written affirmation of
its opinion from an investment bank reasonably acceptable to the
Parties, dated as of the record date of the Company Proxy Materials, to
the effect that the Merger is fair to the Company's shareholders, and
will deliver to eCom a copy of such affirmation."
5. Covenants.
5.1 Section 5.2.1 of the Merger Agreement is hereby amended to read in
its entirety as follows:
"5.2.1 notwithstanding Section 5.7.1 of this Agreement, the amendment of
the certificate of incorporation in a manner which is acceptable to the
Parties and which is not inconsistent with the terms and provisions of
this Agreement."
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5.2 Section 5.2.3 of the Merger Agreement (regarding consent of the
"Existing Company Preferred Holders") is hereby deleted in its entirety.
5.3 Section 5.5 of the Merger Agreement is hereby amended to remove "the
Delaware General Corporation Law" from the first sentence.
5.4 Section 5.14 of the Merger Agreement (regarding "Election of
Director") is hereby deleted.
6. Conditions to Close.
6.1 Section 6.1.6 of the Merger Agreement is hereby amended to add at
the end of the section the following: "; provided that eCom hereby acknowledges
that Sands Brothers & Co., Ltd. has initiated a lawsuit against the Company, as
disclosed in the Company Disclosure Schedule."
6.2 Section 6.1.12 of the Merger Agreement is hereby amended to read in
its entirety as follows:
"6.1.12 Xxxxxx X. Xxxxxxxxxx, Xx. shall have executed and delivered to
the Parties an indemnification agreement substantially in the form
attached hereto as Exhibit A;"
6.3 Section 6.2.9 of the Merger Agreement is hereby deleted.
6.4 Section 6.2.12 of the Merger Agreement is amended to read in its
entirety as follows:
"6.2.12 the Company and Xxxxxx X. Xxxxxxxxxx, Xx. shall have entered
into a consulting agreement substantially in the form attached hereto as
Exhibit B;"
7. Additional Agreements.
7.1 Section 7.2 of the Merger Agreement is hereby amended to read in its
entirety as follows:
"7.2 Lock Up Agreements. The Company shall cause each person listed on
Schedule 7.2 to enter into an agreement, substantially in the form
attached hereto as Exhibit C, regarding restrictions on the sale or
transfer of such Company Securities ("Lock Up Agreement")."
8. Termination.
8.1 Termination of Agreement. Section 8.1.4 of the Merger Agreement is
hereby deleted.
8.2 Break-up Fee. Section 8.3 of the Merger Agreement is hereby amended
to read in its entirety as follows:
"8.3 If the Company either withdraws from or terminates this Agreement
(other than in accordance with Sections 8.1.1 or 8.1.2 above) then,
within 30 days of such event, the Company will pay to eCom the sum of
five hundred thousand dollars ($500,000) as liquidated damages ("Break-up
Fee"); provided that, if prior to the Closing, the Company
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receives an unsolicited offer to participate in a transaction which
would result in a "change of control" of the Company or a sale of all or
a material portion of the assets of the Company, and the Company
subsequently accepts such offer, the Company will pay eCom the sum of
five hundred thousand dollars ($500,000) as liquidated damages within 30
days of the acceptance of the offer. In the event the liquidated damages
described in the previous sentence are not paid within 30 days of the
due date, the $500,000 due to eCom will be convertible, at the
discretion of eCom, into seven hundred fifty thousand (750,000) shares
of Company Common Stock, which shall be issuable immediately upon
written notice to the Company to that effect. Without limiting the
foregoing, at eCom's option, the Company shall be deemed to have
withdrawn from or terminated this Agreement in the event that either (i)
this Agreement is terminated by eCom pursuant to Section 8.1.3 or (ii)
the Board of Directors of the Company passes a resolution which would
propose to eCom any material modifications to the terms of this
Agreement (except if the failure to pass such resolution would violate
or breach any fiduciary duty owed to the Company) or any other agreement
executed and delivered by the parties pursuant to or in connection with
this Agreement prior to the Effective Time; provided that the Company
shall not be required to pay the Break-up Fee if the Agreement and the
Merger shall not receive the Requisite Company Stockholder Approval."
9. Representations and Warranties of eCom as of the Date of this Amendment.
9.1 eCom hereby represents and warrants to the Company that, except as
set forth in the eCom Disclosure Schedule, as amended hereby or contemplated by
the terms of this Amendment, including any amendments to the eCom Disclosure
Schedule, as of the date hereof (i) the representations and warranties contained
in Section 3 of the Merger Agreement are true and correct in all material
respects and (ii) eCom has performed and complied in all material respects with
all of its covenants under the Merger Agreement.
9.2 eCom hereby represents and warrants to the Company that it has
received the Requisite eCom Stockholder Approval and there are no eCom
Dissenting Shares.
10. Representations and Warranties of the Company as of the Date of this
Amendment.
10.1 The Company hereby represents and warrants to eCom that, except as
set forth in the Company Disclosure Schedule, as amended hereby or as of the
Effective Time, or contemplated by the terms of this Amendment, including any
amendments to the Company Disclosure Schedule, as of the date hereof (i) the
representations and warranties contained in Section 4 of the Merger Agreement
are true and correct in all material respects and (ii) the Company has performed
and complied in all material respects with all of its covenants under the Merger
Agreement.
10.2 The Company hereby represents and warrants that there are no shares
of Company Preferred Stock outstanding as of the date hereof.
11. Certain Covenants.
11.1 The Company shall not initiate new employment of any Person (or
engage any Person as an independent contractor) on terms providing for annual
compensation in excess of $50,000, or grant any stock options or other
securities to any employees of the Company,
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without eCom's prior consent. ECom `s review of any such employee proposed by
the Company shall be completed within five (5) days.
11.2 The Company shall use its best efforts to cause the appropriate
Persons to enter into the agreements described in Sections 6.1.11, 6.1.12 and
6.1.13 as promptly as practicable following the date hereof.
12. Certain Consents.
12.1 eCom shall engage McKinsey & Co. ("Consultant") to provide advice
and consultation with respect to the integration of the operations of eCom and
the Company. The Company's employees shall participate in meetings and
discussions conducted by the Consultant, provided that the duration, timing and
location of such meetings shall be reasonable, and that reasonable advance
notice shall be provided. Except as otherwise consented by eCom, to the extent
practicable and in compliance with applicable fiduciary duties and obligations,
the Company shall comply with all reasonable recommendations made by the
Consultant in connection with such engagement.
12.2 eCom hereby consents to the following:
(i) The Settlement Agreement between the Company, Xxxxxxx
Xxxxxxxxxx and Xxxxxx Xxxxx, dated as of January 27, 2000;
(ii) The issuance to Xxxxxxxx Xxxxxxxxx & Company, Inc. of a
warrant to purchase 50,000 shares of the Company's Common Stock, dated as of
February 16, 1999, and a warrant to purchase 25,000 shares of the Company's
Common Stock, dated as of November 1, 1999;
(iii) The Executive Performance Agreement between the Company and
Xxxxx Xxxxxxxxxx, Xx., dated as of the date hereof;
(iv) The Company's amending the warrants, issued to (a) Virtual
`Ex, Inc. to purchase 27,000 shares of the Company's Common Stock, and Xxxxxx
Xxxxxxxx to purchase 26,400 shares of the Company's Common Stock to include a
provision for cashless exercise; and (b) the shareholders listed on Schedule
12.2(iv), to include a provision for a cashless exercise, in exchange for a
waiver from each such warrant holder, expressly waiving any and all dilution
rights, set forth in Section 8(a) of the Warrant Agreements, dated December
1997, such warrant holder may now have or hereinafter acquire under such
warrants;
(v) Reasonable expenditures made by the Company in connection with
the Merger;
(vi) The Company's increase in the compensation for Xxxxxx X.
Xxxxxxxxxx, Xx., Chief Executive Officer of the Company, from $125,000 to
$210,000, on an annualized basis; and
(vii) Approval by the Company's Compensation Committee of a
resolution waiving the lapse provisions of the 1997 Outside Directors Stock
Option Plan and the 1997 Employee Stock Option Plan for options granted to
employees that will resign pursuant to provisions of this Agreement.
12.3 The Company hereby agrees not to file any S-3s or similar filings
that effect a registration of the Company's shares other than registrations
provided for herein, between the
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date hereof and the Effective Time.
13. Ratification of Merger Agreement. Except as modified hereby, the terms and
conditions of the Merger Agreement are hereby ratified by the parties and shall
remain in full force and effect. From and after the date hereof, all references
to the Merger Agreement contained therein or otherwise shall be deemed to refer
to the Merger Agreement as amended hereby.
14. Governing Law. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to any
choice or conflict of law rule of any jurisdiction which would cause the
application of the laws of any other jurisdiction.
15. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which taken together will
constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties hereto have executed this Amendment No.
1 to Agreement and Plan of Merger on the date first above written.
eB2B COMMERCE, INC. DYNAMICWEB ENTERPRISES, INC.
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxx X. Xxxxxxxxxx, Xx.
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Xxxxxx Xxxxxxx Xxxxxx X. Xxxxxxxxxx, Xx.
Chief Financial Officer Chief Executive Officer
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