eB2B Commerce, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
November 19, 1999
Xxxxxx X. Xxxxxxxxxx, Xx.
Chief Executive Officer
DynamicWeb Enterprises, Inc.
271 Route 00 Xxxx
Xxxxxxxx X, Xxxxx 000
Xxxxxxxxx, XX 00000
Re: Amendment No. 1 to Letter Agreement - Merger of eB2B Commerce,
Inc. with DynamicWeb Enterprises, Inc.
Dear Xx. Xxxxxxxxxx:
This letter shall serve as Amendment No. 1 to the Letter Agreement (the
"Letter Agreement") between eB2B Commerce, Inc. ("eCom") and DynamicWeb
Enterprises, Inc. (the "Company"), dated November 10, 1999, by which the parties
set forth the terms upon which eCom proposes to merge with and into the Company.
Unless otherwise defined herein, the terms used in this Amendment No. 1
("Amendment") have the meanings assigned in the Letter Agreement.
1 Amendment of Section 1.1. The parties agree that Section 1.1 of the Letter
Agreement, captioned "Conversion of Shares" is hereby deleted in its entirety,
and replaced with the following provision:
"Conversion of Shares. Immediately prior to the closing of the
Transaction, the Company's outstanding capital stock will be comprised of
approximately 5,000,000 shares (but in no event shall there be more than
5,400,000 shares) of common stock (inclusive of the conversion of all
outstanding Series A and Series B Preferred Stock, and assuming the
conversion of all other warrants, options or other convertible
instruments). The Company will issue shares of its common stock (preferred
stock, warrants, options or other securities convertible into common
stock) equivalent to an aggregate amount of not less than 25 million
shares of common stock in exchange for all of the outstanding shares of
common stock (preferred stock, warrants, options or other securities
convertible into common stock) of eCom (including the preferred stock and
warrants issued by eCom in connection with the private placement of eCom's
securities referred to below). In addition, (i) for each outstanding share
of common stock of the Company (or common stock equivalent) in excess of
5,000,000 shares, the Company shall issue to eCom stockholders five (5)
additional shares of its common stock in connection with the Transaction,
and (ii) in the event eCom receives in excess of $15 million in gross
proceeds from the private placement of its securities, for each additional
dollar in excess
of the $15 million gross proceeds received by eCom, the Company will issue
to eCom stockholders .484 of a share of its common stock and a warrant to
purchase .242 of a share of the Company's common stock at an exercise
price of $2.06 per shares (subject to appropriate adjustment as may be
required by (i) above. In furtherance of the foregoing, as a condition
precedent to the closing of the Transaction, the Company will provide eCom
with evidence of the agreement of the holders of the Company's outstanding
Series A and Series B Preferred Stock (the "Preferred Holders") to (i)
convert their holdings to the Company's common stock as of the closing of
the Transaction, and (ii) enter into the Lock-Up Agreement with the
modifications and provisions acceptable to eCom."
2 Amendment of Section 1.2. The parties agree that Section 1.2 of the Letter
Agreement, captioned "Directors and Officers" is hereby deleted in its entirety,
and replaced with the following provision:
"Directors and Officers. The directors and officers of eCom in office at
and as of the date of the closing of the Transaction will remain the
directors and officers of the Surviving Corporation (retaining their
respective positions and terms of office except for the current Chief
Technology Officer who shall change positions upon the closing of the
Transaction). One additional member of the Board of Directors of the
Surviving Corporation will be Xxxxxx X. Xxxxxxxxxx, Xx. For a period of
two years from the date of the closing of the Transaction, the Surviving
Corporation, acting through its Board of Directors and in accordance with
its Certificate of Incorporation, By-Laws and applicable law, shall
recommend in its proxy statement for each annual or special meeting of
stockholders, at which directors shall be elected, and shall nominate at
each such subsequent stockholders meeting, as part of the management's or
the Board of Directors' slate for election to the Surviving Corporation's
Board of Directors, Xxxxxx X. Xxxxxxxxxx, Xx. as a member of the Board of
Directors. All shares for which the Surviving Corporation's management or
Board of Directors holds proxies (including undesignated proxies) shall be
voted in favor of the election of Xxxxxx X. Xxxxxxxxxx, Xx."
3 Replacement of Section 4. The parties agree that Section 4 of the Letter
Agreement, captioned "Break-up Fee," is hereby deleted in its entirety, and
replaced with the following provision:
"Break-up Fee. If the Company either withdraws from or terminates this
Agreement (other than by reason of mutual agreement by both parties to
terminate this Agreement) then, within 30 days of such event, the Company
will pay to eCom the sum of $500,000 as liquidated damages, provided
however, no such liquidated damages shall be due and payable in the event
eCom does not proceed to close the Transaction solely as a result of the
failure of the Preferred Holders to agree to convert their securities to
common stock as of the closing of the Transaction and/or enter into the
Lock-Up Agreement; and, provided further, if prior to such date, the
Company receives an unsolicited offer to participate in a Transaction
which would result in a 'change of control' of the Company, and the
Company subsequently accepts such offer, the Company will pay eCom the sum
of $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 750,000 shares
of the Company's common stock issuable immediately upon written notice to
the Company to that effect."
4 Amendment of Section 6. The parties agree that the last sentence of Section 6
of the Letter Agreement, captioned "Definitive Agreement," is hereby amended by
replacing the date reference "November 15, 1999" with the date "November 23,
1999."
5 Additional Provisions. The parties agree that the following provisions are
hereby added to and are deemed part of the Letter Agreement:
5.1 Employment Terms for Xxxxxx X. Xxxxxxxxxx, Xx.. The parties agree that
upon the closing of the Transaction, Xxxxxx X. Xxxxxxxxxx, Xx. ("SLV" for
purposes of this Section) will be employed by the Surviving Corporation as its
Chief Technology Officer. The principal terms of such an employment relationship
will be set forth in an employment agreement between the Surviving Corporation
and SLV to be entered into upon the closing of the Transaction. The principal
terms the employment agreement are as follows: (i) term of two years, (ii)
annual compensation comprised of base salary of $170,000, and a minimum
guaranteed annual bonus of $40,000, with $20,000 of such sum paid in four
quarterly $5,000 installments during each year, and the balance paid within 90
days of the end of each year, (iii) four weeks of vacation annually, and (iv)
severance pay equal to two years of base compensation, paid in accordance with
normal payroll procedures, in the event the Surviving Corporation terminates the
employment of SLV without "cause" prior to the end of the term. The definition
of the term "cause" will be the same definition as that set forth in the
employment agreement between eCom and Xxxxx Xxxxxxxx, dated December 1, 1998.
The form of the employment agreement between the Surviving Corporation and SLV
shall be reasonably acceptable to the parties.
5.2 Terms of Indemnification to be Provided by Xxxxxx X. Xxxxxxxxxx, Xx.
The parties agree that Xxxxxx X. Xxxxxxxxxx, Xx. ("SLV" for purposes of this
Section) will enter into an indemnification agreement with eCom upon the closing
of the Transaction. The principal terms of the indemnification agreement are as
follows: (i) SLV will indemnify and hold harmless the Surviving Corporation and
its affiliates from any damages incurred as a result of any material breach or
inaccuracy of any representation or warranty of the Company if, at the time such
representation or warranty was made any member of the "Knowledge Group" (the
"Knowledge Group" will be comprised of SLV and Xxxxx X. Xxxxxxx, (the Company's
president and chief operating officer) had actual knowledge of such
misrepresentation; (ii) the representations and warranties of the Company will
survive for the period from the date of the Merger Agreement until the
conclusion of the first annual audit of the Surviving Corporation following the
closing of the Transaction, (iii) no claim for indemnification will be made by
the Surviving Corporation and no indemnification shall be due until such time as
the damages incurred by the Surviving Corporation exceeds $250,000, in which
event the Surviving Corporation shall be reimbursed only for the damages
incurred by the Surviving Corporation in excess of $250,000 up to a maximum
amount equal to the value of the "SLV Shares" (as defined below). Any claim for
indemnification made by the Surviving Corporation may be satisfied by SLV by
surrendering such number of SLV Shares as are equal in value to the claim or in
cash. For purposes of this Agreement the "SLV Shares" means the shares of the
Surviving Corporation owned by SLV, which are to be held in escrow pursuant to
the terms of a separate escrow agreement for a term as set forth in the
Indemnification Agreement, and the value of such 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 10 days immediately preceding and the 10 days immediately succeeding the
date of the resolution of any claim by the Surviving Corporation for any such
indemnification.
5.3 Representations Concerning Interworld Technology. The Definitive
Agreement will contain representations regarding the "Interworld Commerce
Exchange Software" licensed by eCom from Interworld Corporation (the "Interworld
Software"). The representations will include representations to the effect that
(i) the Interworld Software can operate on a Solaris (Unix) Platform with an
Oracle database, and an Apache Web Server platform, and (ii) eCom has the right
to integrate additional software applications with the Interworld Software which
will operate in conjunction with the Interworld Software. Such rights do not
include the right to modify, enhance or change the source code of the Interworld
Software.
6 Agreement to Remain in Full Force and Effect. The parties agree that except as
modified by the terms of this Amendment, the Letter Agreement shall remain in
full force and effect.
THE REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK
Please indicate your agreement to the terms set forth in this Amendment by
executing the enclosed copy of this Amendment
Very truly yours, eB2B Commerce, Inc.
By: /s/ Xxxxx Xxxxxxxx
--------------------------------
Xxxxx Xxxxxxxx
Chief Executive Officer
ACKNOWLEDGED AND AGREED TO:
This 19th day of November, 1999
DynamicWeb Enterprises, Inc.
By: /s/ Xxxxxx X. Xxxxxxxxxx, Xx.
--------------------------------
Xxxxxx X. Xxxxxxxxxx, Xx.
Chief Executive Officer
