MERGER AGREEMENT

Exhibit 2.1

 

 

 

 

 

 

 

 

 

 

 

 

 

AGREEMENT OF MERGER

 

by and among

 

VERTICALNET, INC.,

 

POPCORN ACQUISITION SUB, INC.

 

and

 

B2eMARKETS, INC.

 

July 16, 2004

 

 

 

 

i

 

ii

 

iii

AGREEMENT OF MERGER

 

THIS AGREEMENT OF MERGER (this “ Agreement ”) is made and entered into this 16th day of July, 2004, by and among Verticalnet, Inc., a Pennsylvania corporation (“ Verticalnet ”), Popcorn Acquisition Sub, Inc., a Delaware corporation and wholly-owned direct subsidiary of Verticalnet (“ Acquisition Sub ”, and together with Verticalnet, the “ Acquiring Parties ”), and B2eMarkets, Inc., a Delaware corporation (“ B2e ”)(B2e and the Acquiring Parties are collectively the “ Parties ”).

 

Background

 

The respective Boards of Directors of B2e, Verticalnet and Acquisition Sub have approved a merger (the “ Merger ”) of B2e with and into Acquisition Sub in accordance with the Delaware General Corporation Law (the “ DGCL ”), on the terms and conditions set forth herein. The Merger provides for the payment of the consideration specified in Section 2.06 to the holders of B2e’s equity securities.

 

The Parties intend for the Merger to qualify as reorganization for purposes of Section 368 of the Code and adopt this Agreement as a plan of reorganization.

 

Terms and Conditions

 

NOW, THEREFORE, in consideration of the premises and of the representations, warranties, covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

 

ARTICLE 1.

DEFINITIONS; INTERPRETATION

 

1.01 Definitions . For convenience, certain terms used in more than one Section of this Agreement are listed in alphabetical order and defined or referred to below (such terms as well as any other terms defined elsewhere in this Agreement shall be equally applicable to both singular and plural forms of the terms defined).

 

“ 5/31 Balance Sheet ” is defined in Section 3.06 .

 

“ Accounts Receivable ” means, with respect to any Person, any (a) trade accounts receivable or notes receivable, (b) employee advances and (c) other miscellaneous receivables of such Person.

 

“ Acquiring Parties ” is defined above in the preamble.

 

“ Acquisition Sub ” is defined above in the preamble.

 

“ Affiliate ” means, with respect to a particular Person, any Person controlling, controlled by or under common control with that Person as well as any officers, directors and majority owned entities of that Person. The term “ control ” and phrases of similar import, as used in this definition, means the possession, directly or indirectly, of the power to direct or cause the direction or management of the policies of a Person, whether through ownership of voting securities, by Contract or otherwise.

 

“ Agreement ” is defined above in the preamble, and shall include each of the Schedules and Exhibits to this Agreement.

“ Applicable Rate ” is defined in Section 6.02 .

 

“ Assets” means with respect to a Person, all of the assets of every kind and description, real and personal, tangible and intangible, that are owned, possessed or licensed by such Person.

 

“ Audited Financial Statements ” is defined in Section 3.06 .

 

“ B2e ” is defined above in the preamble.

 

“ B2e 401(k) Plan ” means the B2eMarkets Employee 401(k) Plan.

 

“ B2e Capital Stock ” means the B2e Common Stock and B2e Preferred Stock, collectively.

 

“ B2e Certificate of Incorporation ” means the Ninth Amended and Restated Certificate of Incorporation of B2e.

 

“ B2e Common Stock ” means the Class A Common Stock and the Class B Common Stock.

 

“ B2e Employee Plan ” means any Benefit Plan which is or has been maintained, sponsored, contributed to, or required to be contributed to, by any B2e Group Member for the benefit of any Employee and for which any B2e Group Member otherwise has or may have any Liability, contingent or otherwise, either directly or as a result of an ERISA Affiliate.

 

“ B2e Financial Statements ” is defined in Section 3.06 .

 

“ B2e Group ” means B2e together with each of its Subsidiaries.

 

“ B2e Group Member ” means any member of B2e Group.

 

“ B2e Options ” is defined in Section 2.06(e) .

 

“ B2e Preferred Stock ” means the Series A Preferred Stock and the Series B Preferred Stock.

 

“ B2e Transaction Expenses ” means any and all expenses for which any B2e Group Members are liable, or may become liable, with respect to the Transactions, including all accounting or legal expenses, brokers’ or finders’ fees, commissions, facilitation fees, and fees for advisory services of any nature including those expenses incurred directly post-Closing which are related to or result from the Transactions, including post-Closing director and officer liability insurance coverage, severance obligations which become payable to any B2e Group Member employees, directors, consultants and advisors in connection with the Transactions and the cash portion of B2e’s Chief Executive Officer’s incentive bonus pursuant to the agreement dated April 19, 2004 between B2e and its Chief Executive Officer. For purposes of this Agreement, B2e Transaction Expenses shall also include $360,000 of any payments due to FreeMarkets, Inc. in connection with the Transactions pursuant to that certain Settlement Agreement dated March 21, 2003 between B2e and FreeMarkets, Inc.

 

“ B2e Warrants ” is defined in Section 2.06(d) .

 

“ Benefit Plan ” means any employment, compensation, vacation, bonus, deferred compensation, incentive compensation, stock purchase, stock option, stock appreciation right or other stock-based incentive, severance, change-in-control, or termination pay, hospitalization or other medical, disability, life or other insurance, supplemental unemployment benefits, profit-sharing, pension, retirement or fringe benefit plan, practice, program, agreement, arrangement, or employee benefit plan or remuneration within the meaning of Section 3(3) of ERISA and any related or separate Contracts, plans, trusts, programs,

 

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policies and arrangements (whether or not within the meaning of Section 3(3) or ERISA) that provide benefits of economic value to any present or former employee, director or consultant, or present or former beneficiary, dependent or assignee of any such present or former employee, director or consultant.

 

“ Business ” means the entire business, operations and facilities of the B2e Group.

 

“ Business Day ” means any day other than a Saturday or Sunday, or a day on which the banking institutions of the Commonwealth of Pennsylvania are authorized or obligated by Law or executive order to close.

 

“ Certificate of Merger ” is defined in Section 2.02 .

 

“ Certificates ” is defined in Section 2.06(h) .

 

“ Charter Documents ” means a Person’s certificate or articles of incorporation or formation, certificate defining the rights and preferences of securities, articles of organization, bylaws, general or limited partnership agreement, operating or limited liability company agreement, certificate of limited partnership, joint venture agreement or similar document governing such Person.

 

“ Class A Common Stock ” means the Class A Common Stock, par value $0.0001 per share, of B2e.

 

“ Class B Common Stock ” means the Class B Common Stock, par value $0.0001 per share, of B2e.

 

“ Closing ” is defined in Section 2.11 .

 

“ Closing Date ” is defined in Section 2.11 .

 

“ Closing Date Average Price ” means the average closing price of Verticalnet Common Stock on the Nasdaq SmallCap Market for the period of 90 consecutive calendar days ending on the trading day before the Closing Date.

 

“ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the rules and regulations promulgated thereunder.

 

“ Code ” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

 

“ Component ” means any Software, Product, Custom Software or Database.

 

“ Confidentiality Agreement ” is defined in Section 3.12(g)(ii) .

 

“ Contingent Conversion Provision ” is defined in Section 2.06(c) .

 

“ Contract ” means any written or oral contract, agreement, lease, license, instrument, or other document, commitment, arrangement, undertaking, practice or authorization that is binding on any Person or its Assets under any applicable Law.

 

“ Copyrights ” means all copyrights in both published and unpublished works and all registrations and applications for registration for copyrights in any jurisdiction throughout the world, and any renewals, modifications and extensions thereof.

 

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“ Court Order ” means any judgment, order, decree, injunction or ruling of any Governmental Body that is binding on any Person or its Assets under applicable Law.

 

“ Current Assets ” means current assets as determined by GAAP.

 

“ Current Liabilities ” means current liabilities as determined by GAAP, which includes any severance obligations that have been incurred but unpaid prior to the Closing, less deferred revenue and less the B2e Transaction Expenses.

 

“ Custom Software ” means any computer software that has been developed or designed specifically for use in the Business.

 

“ Database ” means any data and other information recorded, stored, transmitted and retrieved in electronic form by a Product, whether located on any Product or archived in storage media of a type employed or used in conjunction with any Product.

 

“ Default ” means (a) a breach, default or violation, (b) the occurrence of an event or an omission that with or without the passage of time or the giving of notice, or both, would constitute a breach, default or violation or cause an Encumbrance to arise or (c) with respect to any Contract, the occurrence of an event or an omission that with or without the passage of time or the giving of notice, or both, would reasonably be expected to give rise to a right of termination, renegotiation or acceleration or a right to receive damages or a payment of penalties.

 

“ DGCL ” is defined in the Background Section.

 

“ Disclosure Schedule ” means the disclosure schedule of B2e containing information pursuant to Article 3 and other provisions hereof that has been identified as such and provided to Verticalnet on the date hereof.

 

“ Dissenting Shares ” is defined in Section 2.08 .

 

“ DOL ” means the US Department of Labor.

 

“ Effective Time ” is defined in Section 2.02 .

 

“ Embedded Control ” means any microprocessor, microcontroller, smart instrumentation or other sensor, driver, monitor, robotic or other device containing a semiconductor, memory circuit, BIOS, PROM or other microchip.

 

“ Employee ” means any employee of any B2e Group Member. For purposes of (a) the definitions of “B2e Employee Plan” and “International Employee Plan” and (b) Section 3.23 , “Employee” means any current or former employee, consultant or director of any B2e Group Member.

 

“ Employment Agreement ” means each management, employment, severance, consulting, relocation, repatriation, expatriation, visas, work permit or other Contract between any B2e Group Member and any Employee.

 

“ Encumbrance ” means any lien, mortgage, security interest, pledge, restriction on transferability, defect of title or other claim, charge or encumbrance of any nature whatsoever on any Assets or interest in any Assets, including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.

 

“ Environmental Condition ” is defined in Section 3.25 .

 

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“ Environmental Law ” means all Laws and Court Orders as well as any principles under common law in existence as of the Closing Date relating to pollution or protection of the environment or occupational health under which a Person may be held liable for the Release of any Hazardous Substance into the environment.

 

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

 

“ ERISA Affiliate ” means any other Person under common control with any B2e Group Member within the meaning of Section 414(b), (c), (m) or (o) of the Code.

 

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

“ FMLA ” means the Family Medical Leave Act of 1993, as amended, and any rule or regulation promulgated thereunder.

 

“ GAAP ” means generally accepted US accounting principles.

 

“ Governmental Body ” means any (a) nation, state, commonwealth, province, territory, county, municipality, district or other jurisdiction of any nature, or any political subdivision thereof, (b) federal, state, local, municipal, foreign or other government or (c) governmental or quasi-governmental authority of any nature (including any governmental division, department, agency, commission, instrumentality, official, organization, body or other entity and any court, arbitrator or other tribunal).

 

“ Governmental Permits ” means any regulatory or administrative permits, licenses, registrations, certificates of occupancy, approvals and other regulatory and administrative authorizations of any Governmental Body.

 

“ Hardware ” means any mainframe, midrange computer, personal computer, notebook or laptop computer, server, switch, printer, modem, driver, peripheral or any component of any of the foregoing.

 

“ Hazardous Substances ” means (a) any “hazardous substance” as defined by the federal Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq., (b) any “extremely hazardous substance,” “hazardous chemical,” or “toxic chemical” as those terms are defined by the federal Emergency Planning and Community Right-to-Know Act, 42 U.S.C. §§ 11001 et seq., (c) any “hazardous waste,” as defined under the federal Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., (d) any “pollutant,” as defined under the federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq., as any of such Laws in clauses (a) through (d) may be amended from time to time, and (e) any regulated substance or waste under any Laws or Court Orders that have been or will be enacted, promulgated or issued by any Governmental Body concerning protection of the environment.

 

“ Identified Real Property ” is defined in Section 3.11(b) .

 

“ Indemnified Party ” is defined in Section 6.02(a) .

 

“ Intellectual Property ” means any Copyrights, Patents, Trademarks, Internet domain names and Trade Secrets.

 

“ Interim Balance Sheets ” is defined in Section 3.06 .

 

“ Interim Balance Sheet Dates ” is defined in Section 3.06 .

 

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“ Interim Financial Statements ” is defined in Section 3.06 .

 

“ International Employee Plan ” means each B2e Employee Plan that has been adopted or maintained by any B2e Group Member or any Affiliate thereof, whether informally or formally, or with respect to which any B2e Group Member or any Affiliate thereof will or may have any Liability, which provides benefits to Employees who perform services outside the US.

 

“ Key Personnel ” means Orville Bailey, Ron Holtz, Richard Waugh, Seth Lucash, Luke Schneider and Laszlo Zeke, collectively.

 

“ Knowledge ” means (i) in the case an individual, knowledge of a particular fact or other matter only if such individual is actually aware of such fact or other matter or that such individual would come to know such fact or other matter in the ordinary course of the performance of their employment or service to B2e or an Acquiring Party, respectively, (ii) in the case of each B2e Group Member, such B2e Group Member will be deemed to have “Knowledge” of a particular fact or other matter only if any of the Key Personnel or directors of B2e has Knowledge (as contemplated by clause (i) above) of such fact or other matter on the date of this Agreement, and (iii) in the case of the Acquiring Parties, they will be deemed to have “Knowledge” of a particular fact or other matter if Nate Lentz, Brent Habig, Gene Godick, Chris Kuhn, Dan Tiernan, John McNeill or Jim Wetikamp has Knowledge (as contemplated by clause (i) above) of such fact or other matter on the date of this Agreement.

 

“ Law ” means any constitution, statute, law, code, ordinance, regulation, order or rule of any Governmental Body as well as any applicable principle of common law.

 

“ Liability ” means any direct or indirect liability, indebtedness, obligation, expense, claim, loss, damage, deficiency, guaranty or endorsement of or by any Person, absolute or contingent, secured or unsecured, accrued or unaccrued, choate or inchoate, due or to become due, liquidated or unliquidated, known or unknown.

 

“ Litigation ” means any lawsuit, action, arbitration, administrative, quasi-administrative or other proceeding, or any prosecution, investigation or inquiry of any Governmental Body.

 

“ Management Group ” means the Key Personnel, collectively.

 

“ Management Letter Agreements ” means those letter agreements between B2e and each of Orville Bailey, Richard Waugh, Ron Holtz, Luke Schneider, Seth Lucash, Laszlo Zeke, Allen McArtor and Delta Airlines, Inc.

 

“ Material Adverse Effect ” means a change, event or effect that is materially adverse to the (i) assets, business or condition (financial or otherwise), properties, Liabilities, reserves, working capital, earnings, technology, prospects or relations with customers, suppliers, distributors, employees or regulators of a Person, or (ii) the right or ability to consummate the transactions contemplated hereby. Notwithstanding the above, the following shall not constitute a Material Adverse Effect: (i) any changes or effects which are substantially due to changes in the U.S. economy or financial markets generally, or (ii) any changes or effects which are substantially due to changes in the industry in which the Person and its subsidiaries operate that affect all Persons active in such industry substantially in the same manner and to the same extent.

 

“ Merger ” is defined above in the Background section.

 

“ Merger Consideration ” means the Note Consideration, subject to downward adjustment as set forth herein, and the Stock Consideration.

 

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“ Merger Consideration Adjustments ” means the amount by which the value of the Merger Consideration shall be subject to downward adjustment (i) for the Working Capital Adjustment prepared in accordance with Section 2.13 and for the (ii) B2e Transaction Expenses pursuant to Section 2.12(b)(v) .

 

“ Merger Note ” is defined in Section 2.06(a)(iii) .

 

“ Merger Note Proposal ” is defined in Section 5.06 .

 

“ Multiemployer Plan ” means any “Pension Plan” (as defined below) which is a “ multiemployer plan ”, as defined in Section 3(37) of ERISA.

 

“ Note Consideration ” is defined in Section 2.06(a)(iii) .

 

“ Off-the-Shelf Software ” means any applications software that is licensed to any B2e Group Member by a third party in its standard, unmodified condition pursuant to a “shrinkwrap,” “clickwrap” or other standard license agreement for a one-time license fee of $10,000 or less.

 

“ ordinary course ” or “ ordinary course of business ” means, with respect to an action taken by any Person, an action that (a) is consistent in nature, scope and magnitude with the past practices of such Person and (b) does not require authorization by the board of directors or any shareholders of such Person (or by any Person or group of Persons exercising similar authority).

 

“ Parties ” is defined above in the preamble.

 

“ Patents ” means all patents and patent applications together with any extensions, reexaminations and reissues of such patents, patents of addition, divisions, continuations, continuations-in-part, and any subsequent filings in any country or jurisdiction throughout the world claiming priority therefrom.

 

“ Pension Plan ” means each B2e Employee Plan which is an “employee pension benefit plan,” within the meaning of Section 3(2) of ERISA.

 

“ Permitted Liens ” means (a) liens for Taxes, assessments or similar charges not yet due and payable, (b) liens not yet due and payable of mechanics, materialmen, warehousemen, carriers, or other like liens securing obligations incurred in the ordinary course of the Business, and (c) easements, rights of way, claims, objections, defects, reservations, consents, tenancies, licenses and the like affecting any Identified Real Property, in each case of record, visible upon a physical inspection of the Identified Real Property.

 

“ Person ” means any natural person, business trust, corporation, partnership, limited liability company, joint stock company, proprietorship, association, trust, joint venture, unincorporated association or any other legal entity of whatever nature.

 

“ Post-Closing Tax Period ” means any Tax period (or portion thereof) other than a Pre-Closing Tax Period.

 

“ Pre-Closing Tax Period ” means any Tax period (or portion thereof) ending on (and including) the Closing Date, or ending before the Closing Date.

 

“ Product ” means any Software, Component or System, excluding Embedded Controls and Hardware, sold, licensed, distributed or marketed by any B2e Group Member in the operation of the Business as it is currently conducted and has been conducted during the 12 months prior to the date hereof.

 

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“ Public Software ” means any software that contains, or is derived in any manner (in whole or in part) from, any software that is distributed as free software, open source software (e.g., Linux) or similar licensing or distribution models, including software licensed or distributed under any of the following licenses or distribution models, or licenses or distribution models similar to the following: (a) GNU’s General Public License (GPL) or Lesser/Library GPL (LGPL); (b) the Artistic License (e.g., PERL); (c) the Mozilla Public License; (d) the Netscape Public License; (e) the Sun Community Source License (SCSL); (f) the Sun Industry Standards License (SISL); (g) the BSD License; and (h) the Apache License.

 

“ Real Property ” is defined in Section 3.11(a) .

 

“ Registration Rights Agreement ” means that certain Registration Rights Agreement dated as of even date hereof by and among Verticalnet and the Stockholders in substantially the same form as Exhibit A .

 

“ Release ” means any release, spill, emission, leaching, leaking, pumping, injection, deposit, disposal, discharge or dispersal into the indoor or outdoor environment, or into or out of any property.

 

“ Relevant Group ” means any affiliated, combined, consolidated, unitary or similar group of which any B2e Group Member is or was a member.

 

“ Required Consents ” is defined in Section 3.05 .

 

“ SEC ” is defined in Section 4.04 .

 

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“ Series A Accumulated Dividends ” has the meaning specified in the B2e Certificate of Incorporation.

 

“ Series A Consideration Ratio ” means the Series A Preferred Merger Consideration divided by the aggregate value of the Merger Consideration as of the Effective Time.

 

“ Series A Liquidation Amount ” has the meaning specified in the B2e Certificate of Incorporation.

 

“ Series A Liquidation Preference Amount ” means the sum of the Series A Accumulated Dividends plus the Series A Liquidation Amount.

 

“ Series A Non-Voting Preferred Stock ” means the Series A Non-Voting Preferred Stock, par value $0.01 per share, of B2e.

 

“ Series A Preferred Merger Consideration ” means the aggregate value of the Merger Consideration as of the Effective Time less the Series B Preferred Merger Consideration.

 

“ Series A Preferred Stock ” means the Series A Non-Voting Preferred Stock and the Series A Voting Preferred Stock.

 

“ Series A Voting Preferred Stock ” means the Series A Voting Preferred Stock, par value $0.01 per share, of B2e.

 

“ Series B Accumulated Dividends ” has the meaning specified in the B2e Certificate of Incorporation.

 

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“ Series B Consideration Ratio ” means the Series B Preferred Merger Consideration divided by the aggregate value of the Merger Consideration as of the Effective Time.

 

“ Series B Liquidation Amount ” has the meaning specified in the B2e Certificate of Incorporation.

 

“ Series B Liquidation Preference Amount ” means the sum of the Series B Accumulated Dividends plus the Series B Liquidation Amount.

 

“ Series B Non-Voting Preferred Stock ” means the Series B Non-Voting Preferred Stock, par value $0.01 per share, of B2e.

 

“ Series B Preferred Merger Consideration ” means the Series B Liquidation Preference Amount.

 

“ Series B Preferred Stock ” means the Series B Non-Voting Preferred Stock and the Series B Voting Preferred Stock.

 

“ Series B Voting Preferred Stock ” means the Series B Voting Preferred Stock, par value $0.01 per share, of B2e.

 

“ Significant Customers ” is defined in Section 3.15(a) .

 

“ Significant Suppliers ” is defined in Section 3.15(a) .

 

“ Software ” means any computer software of any nature whatsoever, including all systems software, all applications software, whether for general business usage (e.g., accounting, finance, word processing, graphics, spreadsheet analysis, etc.) or specific, unique-to-the-business usage (e.g., purchase or service order processing, etc.), all computer operating, security or programming software, and any and all written documentation and object and source codes related thereto, including Custom Software and Off-the-Shelf Software.

 

“ Stock Consideration ” is defined in Section 2.06(a)(i)

 

“ Stock Option Plan ” means the B2eMarkets, Inc. 2003 Stock Incentive Plan (the “ 2003 Incentive Plan ”) and the B2eMarkets, Inc. 1999 Long-Term Incentive Plan (the “ 1999 Incentive Plan ”).

 

“ Stockholders ” means the holders of record of shares of B2e Preferred Stock outstanding as of the Effective Time.

 

“ Stockholder’s Certificate ” means a Stockholder’s Certificate delivered to Verticalnet in the form attached hereto as Exhibit B .

 

“ Stockholder Documents ” is defined in Section 2.09(a) .

 

“ Stockholders’ Representative ” is defined in Section 7.11 .

 

“ Subsidiary ” is defined in Section 3.04(a) .

 

“ Surviving Corporation ” is defined in Section 2.01 .

 

“ System ” means any combination of Software, Custom Software or Database.

 

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“ Tax Returns ” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

“ Taxes ” means any federal, state, local, or foreign tax and similar governmental charges, fees, levies, and assessments, including without limitation, income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Code § 59A), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, bulk sales, registration, value added, alternative or add-on minimum, or estimated tax, including any interest, penalty, or addition thereto, whether disputed or not.

 

“ Trade Secrets ” means all proprietary know-how, trade secrets, customer lists, personnel information, sales and profit figures, distribution and sales methods, supplier lists, technology rights and licenses, specifications and other technical information, data, process technology, plans, drawings (including engineering and auto-cad drawings), innovations, designs, ideas, proprietary information and blue prints, or computer source code, owned, used or licensed by any B2e Group Member.

 

“ Trademarks ” means trademarks, service marks, trademark and service mark applications, trade names, logos, brand names, certification marks, trade dress, goodwill associated with the foregoing, and all registrations in any jurisdictions throughout the world of, and all applications in any jurisdiction throughout the world to register, the foregoing, including any extension, modification or renewal of any such registration or application thereto.

 

“ Transaction Documents ” means this Agreement, the Certificate of Merger, the Merger Note, the New Employment Agreements, the Registration Rights Agreement, the Stockholder Documents and all other documents executed in connection with any of the foregoing.

 

“ Transactions ” means the Merger and the other transactions contemplated by any of the Transaction Documents.

 

“ Transfer Taxes ” is defined in Section 5.09(f) .

 

“ US ” means the United States of America.

 

“ Unbilled Fees ” mean amounts earned by a B2e Group Member but not yet invoiced to the client, shown on the balance sheet in accordance with GAAP.

 

“ Verticalnet ” is defined above in the preamble.

 

“ Verticalnet Common Stock ” means the common stock, par value $0.01 per share, of Verticalnet.

 

“ Working Capital ” means Current Assets less the sum of (a) Current Liabilities, (b) the cost of replacing any licenses from any vendor from whom consent to the transfer of such license pursuant to the Merger was not delivered in writing to Verticalnet prior to the Closing as indicated on Section 3.05(b) of the Disclosure Schedule (a “ Cancelled License ”) and (c) the amount of any prepaid maintenance fees that are written-off in connection with a Cancelled License, provided that with respect to the costs and amounts in clauses (b) and (c) above, such costs and amounts shall be deemed to be incurred as of the Closing.

 

“ Working Capital Adjustment ” shall mean the amount by which the Working Capital set forth on the Working Capital Statement shall be less than the Working Capital Minimum.

 

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“ Working Capital Minimum ” means, with respect to B2e at the time of Closing, Working Capital of not less than a $400,000 deficit.

 

“ Working Capital Statement ” means a calculation of the Working Capital as of Closing to be prepared by Verticalnet in accordance with GAAP, consistently applied, and B2e’s previously prepared financial statements and in accordance with the procedures set forth on Section 2.13 .

 

1.02 Valuation . Unless otherwise stated herein, for the purposes of computing the value of shares of Verticalnet Common Stock hereunder, each share of Verticalnet Common Stock shall be deemed to have a value equal to the Closing Date Average Closing Price.

 

1.03 Interpretation . Unless the context of this Agreement clearly requires otherwise, (a) references to the plural include the singular, the singular the plural, the part the whole, (b) references to any gender include all genders, (c) “ including ” has the inclusive meaning frequently identified with the phrase “ but not limited to ” and (d) references to “ hereunder ,” “ hereof ” and “ herein ” relate to this Agreement. Each accounting term used herein that is not specifically defined herein shall have the meaning given to it under GAAP. Any reference to a Party’s being satisfied with any particular item or to a Party’s determination of a particular item presumes that such standard will not be achieved unless such Party shall be reasonably satisfied.

 

1.04 Headings . The Article and Section references and other headings contained herein are for reference purposes only and shall not control or affect the construction of this Agreement or the interpretation thereof in any respect. Article, Section, subsection, paragraph, Schedule and Exhibit references are to this Agreement unless otherwise specified.

 

ARTICLE 2.

THE MERGER

 

2.01 The Merger . Upon the terms and subject to the conditions hereof, and in accordance with the relevant provisions of the DGCL, B2e shall be merged with and into Acquisition Sub at the Effective Time. Acquisition Sub shall be the surviving corporation of the Merger (the “ Surviving Corporation ”), initially under the name “B2eMarkets, Inc.,” and shall continue its existence under the laws of the State of Delaware, and the separate corporate existence of B2e shall cease.

 

2.02 Effective Time . The Merger shall be consummated by filing with the Delaware Secretary of State a certificate of merger in the form attached hereto as Exhibit C (the “ Certificate of Merger ”), as is required by, and executed in accordance with, the relevant provisions of the DGCL. The Merger shall become effective at the time of the filing of the Certificate of Merger (the “ Effective Time ”).

 

2.03 Effects of the Merger . The Merger shall have the effects set forth in the DGCL and the Certificate of Merger.

 

2.04 Certificate of Incorporation and Bylaws . The form of certificate of incorporation attached to the Certificate of Merger shall be the certificate of incorporation of the Surviving Corporation at the Effective Time and thereafter until amended in accordance with applicable Law and the terms thereof. The bylaws of Acquisition Sub shall be the bylaws of the Surviving Corporation at the Effective Time and thereafter until amended in accordance with applicable Law and the terms thereof.

 

2.05 Directors and Officers . The initial directors and the initial officers of the Surviving Corporation at the Effective Time shall be the individuals specified in Schedule 2.05 .

 

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2.06 Conversion of Securities .

 

(a) Each share of B2e Preferred Stock (including each share of B2e Preferred Stock issued upon conversion or exercise of outstanding B2e Options, B2e Warrants and any other security directly or indirectly convertible into or exercisable for shares of B2e Preferred Stock) issued and outstanding immediately prior to the Effective Time (other than Dissenting Shares) shall, by virtue of the Merger and without any action on the part of Verticalnet, Acquisition Sub, B2e or the holder thereof, be converted into the right to receive the Merger Consideration as follows:

 

(i) With regard to each share of Series B Preferred Stock issued and outstanding immediately prior to the Effective Time, a number of shares of Verticalnet Common Stock equal to the quotient obtained by dividing (A) the product of (i) 5,100,000 shares of Verticalnet Common Stock (the “ Stock Consideration ”) multiplied by (ii) the Series B Consideration Ratio, by (B) the total number of shares of Series B Preferred Stock that are issued and outstanding immediately prior to the Effective Time;

 

(ii) With regard to each share of Series A Preferred Stock issued and outstanding immediately prior to the Effective Time, a number of shares of Verticalnet Common Stock equal to the quotient obtained by dividing (A) the product of (i) the Stock Consideration multiplied by (ii) the Series A Consideration Ratio, by (B) the total number of shares of Series A Preferred Stock that are issued and outstanding immediately prior to the Effective Time; and

 

(iii) For the benefit of the holders of the Series A Preferred Stock and the Series B Preferred Stock issued and outstanding immediately prior to the Effective Time, based on the Series A Consideration Ratio and the Series B Consideration Ratio, respectively, cash equal to the quotient obtained by dividing (A) the difference of (1) the product of (a) 3,900,000 shares of Verticalnet Common Stock multiplied by (b) an amount equal to a 25% premium to the Closing Date Average Price, minus (2) the B2e Transaction Expenses paid by Verticalnet at Closing (the “ Note Consideration ”), by (B) the total number of shares of Series A Preferred Stock and Series B Preferred Stock that are issued and outstanding immediately prior to the Effective Time, which shall be payable through the issuance of a promissory note from Verticalnet to the Stockholders’ Representative in an aggregate principal amount equal to the Note Consideration bearing interest at eight percent per annum in substantially the form attached hereto as Exhibit D (the “ Merger Note ”).

 

(b) The value of the Merger Consideration shall be subject to downward adjustment only for the Working Capital Adjustment prepared in accordance with Section 2.13 . The Working Capital Adjustment shall reduce the principal amount payable by Verticalnet under the Merger Note on a dollar-for-dollar basis. Any amounts payable by Verticalnet under the Merger Note which are reduced pursuant to this Section 2.06 shall be considered cancelled and shall no longer be due or payable by Verticalnet under the Merger Note.

 

(c) The Merger Note shall provide that at the option of either Verticalnet or the Stockholders’ Representative, the Merger Note may be converted into shares of Verticalnet Common Stock at a conversion price per share equal to a 25% premium to the Closing Date Average Price (the “ Contingent Conversion Provision ”); provided , however , that the option to choose the Contingent Conversion Provision shall not be effective unless and until Verticalnet’s shareholders have approved the Contingent Conversion Provision in accordance with applicable Law and the rules and regulations of the Nasdaq Stock Market. If the Contingent Conversion Provision is exercised, a number of shares of Verticalnet Common Stock (the “ Escrow Shares ”) equal to the quotient of (i) the difference of (A) ten percent of the Merger Consideration minus (B) the aggregate amount set-off under this Merger Note to cover any indemnification claims of the Indemnified Parties under this Agreement, divided by (ii) a conversion price per share equal to a 25% premium to the Closing Date Average Price. The Escrow Shares shall be deposited with an escrow agent mutually acceptable to Verticalnet and the Stockholders’

 

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Representative to be held by such escrow agent as security for indemnification claims of the Indemnified Parties under this Agreement until the nine month anniversary of the Closing Date (unless distributed earlier to pay such indemnification claims) pursuant to a mutually acceptable escrow agreement. The escrow agreement shall contain a provision substantially in the form attached hereto as Appendix A .

 

(d) At or immediately prior to the Effective Time, all unexercised warrants to purchase shares of B2e Capital Stock outstanding (the “ B2e Warrants ”) shall be canceled and terminated, and each B2e Warrant shall cease to represent a right to acquire B2e Capital Stock. B2e shall provide each holder of a B2e Warrant with written notice notifying them that such holder’s B2e Warrant will be cancelled if not immediately exercised by such holder prior to the Effective Time. To the extent that consent from any holder of a B2e Warrant is required under the terms of any B2e Warrant in order to terminate such B2e Warrant in accordance with this Section 2.06(d) , B2e shall obtain such consent prior to the Effective Time. Neither Verticalnet nor the Surviving Corporation shall assume any B2e Warrants after the Merger.

 

(e) At or immediately prior to the Effective Time, all unexercised options to purchase shares of B2e Capital Stock (whether or not vested) outstanding (the “ B2e Options ”) shall be canceled and terminated, and each B2e Option shall cease to represent a right to acquire B2e Capital Stock. To the extent that consent from any holder of a B2e Option is required under the terms of the Stock Option Plan or any B2e Option in order to cancel such B2e Option in accordance with this Section 2.06(e) , B2e shall obtain such consent prior to the Effective Time. Neither Verticalnet nor the Surviving Corporation shall assume any B2e Option after the Merger.

 

(f) In the event any certificates evidencing shares of B2e Preferred Stock shall have been lost, stolen or destroyed, Verticalnet shall issue certificates representing that number of shares of Stock Consideration in exchange for such lost, stolen or destroyed certificates as such lost, stolen or destroyed certificates would entitle the Stockholder to receive under Section 2.06 , upon the making of an affidavit of that fact by the Stockholder; provided , however , that Verticalnet may, in its sole and absolute discretion and as a condition precedent to the issuance thereof, require the Stockholder, in such case, to provide an indemnity or deliver a bond in such sum as it may reasonably direct as security against any claim that may be made against Verticalnet with respect to such certificates alleged to have been lost, stolen or destroyed.

 

(g) At the Effective Time all shares of B2e Common Stock shall be cancelled and no longer deemed to be outstanding and no shares of Verticalnet Common Stock or any other security or cash shall be issuable in connection therewith.

 

(h) Until surrendered in accordance with the provisions of Section 2.09 , each share of B2e Preferred Stock outstanding immediately prior to the Effective Time and the certificates representing such shares (“ Certificates ”) shall, after the Effective Time, represent for all purposes, only the right to receive that portion of the Merger Consideration that such share of B2e Preferred Stock would entitle the holder thereof to receive hereunder. Any shares of B2e Capital Stock held in the treasury of B2e shall be canceled.

 

(i) No fractional shares of Verticalnet Common Stock shall be issued in the Merger. All fractional shares of Verticalnet Common Stock that a Stockholder would otherwise be entitled to receive as a result of the Merger shall be aggregated and if a fractional share of Verticalnet Common Stock results from such aggregation, the Stockholder shall be entitled to receive, in lieu thereof, an amount in cash equal to the value thereof as of the Closing Date determined in accordance with Section 1.02 .

 

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(j) All shares of Verticalnet Common Stock deliverable to any Stockholder under this Section 2.06 shall be subject to the terms of the Registration Rights Agreement and the Stockholder’s agreement to be bound by the terms thereof is a condition to the issuance of such shares.

 

2.07 Conversion of Acquisition Sub Capital Stock . Each share of capital stock of Acquisition Sub issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of Verticalnet, Acquisition Sub or B2e, be converted into one share of common stock of the Surviving Corporation.

 

2.08 Dissenting Shares . Notwithstanding anything in this Agreement to the contrary, those shares of B2e Capital Stock issued and outstanding immediately prior to the Effective Time that are held by stockholders who did not vote in favor of the Merger and who comply with all of the relevant provisions of Section 262 of the DGCL (the “ Dissenting Shares ”) shall not be converted into or represent the right to receive the Merger Consideration, unless and until such stockholders shall have failed to perfect or shall have effectively withdrawn or lost their rights to appraisal under the DGCL, and any such stockholder shall have only such rights in respect of the Dissenting Shares owned by them as are provided by Section 262 of the DGCL. If any such stockholder shall have failed to perfect or shall have effectively withdrawn or lost such right, such stockholder’s Dissenting Shares shall thereupon be deemed to have been converted into and to have become exchangeable, as of the Effective Time, for the right to receive the applicable Merger Consideration without any interest thereon, pursuant to the terms of Section 2.06 .

 

2.09 Delivery of Merger Consideration .

 

(a) At and after the Effective Time, each Stockholder shall deliver the Certificates, duly endorsed in blank or stock powers duly executed in blank, along with a duly executed Stockholder’s Certificate (such documents together with a duly executed counterpart signature page to the Registration Rights Agreement, collectively, being the “ Stockholder Documents ”), to Verticalnet or its designated agent. As to each Stockholder or any other B2e stockholder who does not surrender the same at the Closing, the Surviving Corporation shall transmit a letter of transmittal to such stockholder providing for delivery to Verticalnet of the Stockholder Documents.

 

(b) Promptly after receipt of the appropriate Stockholder Documents, Verticalnet shall deliver or caused to be delivered to such stockholder the Stock Consideration to which such stockholder is entitled under Section 2.06 . Promptly after receipt of completed Stockholder Documents from all of the Stockholders, Verticalnet shall deliver the Merger Note duly executed by Verticalnet to Stockholders’ Representatives.

 

2.10 No Further Transfer of Shares . After the Effective Time, there shall be no transfers of B2e Capital Stock that were outstanding immediately prior to the Effective Time on the stock transfer books of the Surviving Corporation. If, after the Effective Time, Certificates or any other securities of B2e are presented to the Surviving Corporation for transfer, they shall be canceled and exchanged for the Merger Consideration as provided in this Article 2 . As of the Effective Time, the stock ledger of B2e shall be closed.

 

2.11 Closing . The consummation of the Transactions contemplated by this Agreement (the “ Closing ”) shall take place at the offices of Morgan, Lewis & Bockius LLP, 1701 Market Street, Philadelphia, PA 19103 on the date of execution and delivery of this Agreement, or at such other place and date as Verticalnet and B2e may mutually agree. The date of the Closing is sometimes herein referred to as the “ Closing Date .”

 

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2.12 Closing Deliveries . At the Closing:

 

(a) B2e shall deliver or cause to be delivered to Verticalnet the following:

 

(i) a certificate of the Secretary of B2e, in form and substance satisfactory to Verticalnet and its counsel, regarding B2e’s Charter Documents, good standing, all board and stockholder resolutions relating to the Transactions contemplated by this Agreement and the incumbency of B2e’s officers;

 

(ii) letters of resignation in the name of and executed by (A) each member of each B2e Group Member’s Board of Directors resigning his or her position as a director of such B2e Group Member effective as of the Closing Date, and (B) each of Ronald Holtz and Richard Waugh resigning his position as an officer of B2e effective as of the Closing Date, in each case, except as otherwise agreed to by the Parties;

 

(iii) duly executed counterparts to each of the Transaction Documents to which B2e is a party;

 

(iv) bank account signature cards for each account of each B2e Group Member;

 

(v) the Required Consents;

 

(vi) all corporate, minute and stock records of each B2e Group Member, which delivery requirement shall be deemed satisfied if B2e makes such items available to Verticalnet by leaving them in the offices of B2e at the Closing;

 

(vii) duly executed counterparts to employment agreements, each substantially in the same form as Exhibit E (“ New Employment Agreements ”), entered into on or prior to the date hereof, by B2e and each of Orville Bailey, Lucas Schneider, Seth Lucash and Laszlo Zeke;

 

(viii) counterparts to each of the Transaction Documents duly executed by the Stockholders to which any such Stockholder is a party;

 

(ix) unaudited consolidated financial statements for (A) the six-month period ending June 30, 2004 and the three-month period ended March 31, 2004, and (B) the six-month period ended June 30, 2003 for inclusion in a Form 8-K to be filed with the SEC by Verticalnet with respect to the Merger as required by the Exchange Act;

 

(x) evidence satisfactory to Verticalnet that B2e has amended the B2e 401(k) Plan prior to the date of Closing, which amendment shall provide that employees of Verticalnet and its subsidiaries prior to the Closing Date shall not be automatically deemed to be eligible to participate in the B2e 401(k) Plan for any period after the Closing Date; and

 

(xi) a duly completed and executed certification of non-foreign status pursuant to Section 1.1445-2(b)(2) of the Treasury Regulations.

 

(b) Verticalnet shall deliver the following:

 

(i) irrevocable instructions to its transfer agent to deliver the Stock Consideration deliverable in respect of each B2e stockholder who has executed and delivered the applicable Stockholder Documents;

 

(ii) to the Stockholders’ Representative, a certificate of Verticalnet’s Secretary, in form and substance satisfactory to the Stockholders and their counsel, regarding

 

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Verticalnet’s articles of incorporation, bylaws, good standing, all board resolutions relating to the Transactions contemplated by this Agreement and the incumbency of certain of Verticalnet’s officers;

 

(iii) to the Stockholders’ Representative, duly executed counterparts to each of the Transaction Documents (except the Merger Note) to which Verticalnet is a party;

 

(iv) the New Employment Agreements to the counterparties thereto; and

 

(v) to all parties to whom B2e Transaction Expenses as set forth on Section 3.31 of the Disclosure Schedule , payment in full of all such B2e Transaction Expenses; provided , however , that Verticalnet shall pay the certain B2e Transaction Expenses set forth on Schedule 2.12(b)(v) as set forth therein. Verticalnet shall, after such payments have been made, have the right to set-off such amount against the amounts payable by Verticalnet under the Merger Note on a dollar-for-dollar basis. Any amounts payable by Verticalnet under the Merger Note which are set-off pursuant to this paragraph shall be deemed cancelled and shall no longer be due or payable by Verticalnet under the Merger Note.

 

(c) Each member of the Management Group shall deliver a duly executed Non-Competition and Non-Solicitation Agreement, the form of which is attached as Exhibit F .

 

(d) Each member of Verticalnet’s Board of Directors that holds voting power with respect to shares of Verticalnet Common Stock and each of Nate Lentz, Brent Habig and Chris Kuhn shall deliver proxies to the Stockholder’s Representative with respect to the shares of Verticalnet Common Stock over which such persons hold voting power to vote such shares of Verticalnet Common Stock in favor of the Merger Note Proposal.

 

(e) B2e shall provide all information available to B2e which is required to calculate the Merger Consideration Adjustments.

 

(f) B2e shall have provided Verticalnet all information required by Verticalnet to allow Verticalnet to pay all B2e Transaction Expenses in accordance with Section 2.12(b)(v) .

 

(g) B2e shall file with the Secretary of State of Delaware a duly executed and certified Certificate of Merger, as required by the DGCL, and the Parties shall take all such other and further actions as may be required by Law to make the Merger effective upon the terms and subject to the conditions hereof.

 

2.13 Working Capital Adjustment .

 

(a) Within 45 days after the Closing, Verticalnet shall deliver the Working Capital Statement to the Stockholders’ Representative and notice of whether the Working Capital Statement provides for a reduction of the Merger Consideration. If such notice is given, Verticalnet shall simultaneously provide detailed schedules, and any additional information as reasonably requested by the Stockholders’ Representative, to support such Working Capital Statement. Within 20 days after the Stockholders’ Representative’s receipt of the Working Capital Statement, or, in the alternative, within 20 days after the final resolution of any dispute of the Working Capital Statement, the principal amount of the Merger Note shall be automatically reduced by the amount, if any, of the Working Capital Adjustment.

 

(b) The Stockholders’ Representative may dispute the Working Capital Adjustment in the following manner. Within 10 days after the Stockholders’ Representative’s receipt of the Working Capital Statement, the Stockholders’ Representative shall give Verticalnet notice of its disagreement with the Working Capital Statement (the “ Working Capital Dispute Notice ”), and such notice shall specify in

 

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detail the nature of the disagreement. During the 20 days after the day on which any Working Capital Dispute Notice is given, Verticalnet and the Stockholders’ Representative shall attempt to resolve such dispute. If they fail to reach a written agreement regarding the dispute, the Stockholders’ Representative shall refer the matter to a firm of certified independent accountants that is approved by Verticalnet (the “ Second Firm ”), and request the Second Firm to determine the Working Capital of B2e as of the Closing (the “ Independent Working Capital Valuation ”). The Stockholders’ Representative and Verticalnet shall be entitled to have their respective independent accountants or other representatives observe the Second Firm’s methods of calculation and other activities in determining the Independent Working Capital Valuation. The Stockholders’ Representative shall give Verticalnet prompt notice of the results of the Independent Working Capital Valuation. The Independent Working Capital Valuation determined by the Second Firm shall be the final and binding Working Capital for the purposes of determining any Working Capital Adjustment. The Stockholders’ Representative shall pay the fees and expenses of the Second Firm with respect to the Independent Working Capital Valuation unless the Independent Working Capital Valuation changes the amount of the Working Capital as determined by Verticalnet by more than 15%, in which case Verticalnet shall pay such fees and expenses.

 

Any rights accruing to any Party under this Section 2.13 shall be in addition to and independent of the rights to indemnification under Article 6 and any payments made to any Party under this Section 2.13 shall not be subject to the requirements of Article 6 .

 

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES OF B2E

 

As of the date of this Agreement, B2e hereby represents and warrants to each of the Acquiring Parties as follows:

 

3.01 Due Organization . Each B2e Group Member is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to own, operate and lease its properties and to carry on its business in the places and in the manner as now conducted. Section 3.01 of the Disclosure Schedule sets forth (a) a list of all jurisdictions throughout the world in which any B2e Group Member is authorized or qualified to do business as a foreign corporation and (b) a list of all the officers and directors of each B2e Group Member. Each B2e Group Member is in good standing in all jurisdictions where the failure to be in good standing is reasonably likely to have a Material Adverse Effect. B2e has delivered to Verticalnet true, complete and correct copies of the Charter Documents of each B2e Group Member, as amended through the date hereof. No B2e Group Member is in violation of any its Charter Documents.

 

3.02 Authorization; Validity . Each B2e Group Member has the corporate power, authority and legal right to execute and deliver this Agreement and any other Transaction Document to which such B2e Group Member is a party and to perform its obligations hereunder and thereunder. The execution and delivery of this Agreement by B2e and the performance of its obligations hereunder have been duly authorized by all necessary corporate and stockholder action. This Agreement and any other Transaction Document to which any B2E Group Member is a party has been duly executed and delivered by a duly authorized officer of such B2e Group Member, and this Agreement and any other Transaction Document to which any B2e Group Member is a party constitutes the legal, valid and binding obligations of such B2e Group Member enforceable against such B2e Group Member in accordance with its terms.

 

3.03 Capital Stock of B2e; Stockholders .

 

(a) Immediately prior to the Closing, the authorized capital stock of B2e consists of (i) 66,788,048 shares of B2e Common Stock, of which, 33,394,024 shares are designated Class A Voting

 

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Common Stock, and 33,394,024 shares are designated Class B Non-Voting Common Stock; 2,363,271 shares of Class A Voting Common Stock are issued and outstanding and no shares of Class B Common Stock are issued or outstanding, and (ii) 55,833,020 shares of B2e Preferred Stock, 24,809,501 shares of which are designated Series A Voting Preferred Stock, 21,832,452 of which are issued and outstanding; 24,809,501 shares of which are designated Series A Non-Voting Preferred Stock, none of which is issued or outstanding; 3,107,009 shares of which are designated Series B Voting Preferred Stock, 2,624,531 shares of which are issued and outstanding, and 3,107,009 shares of which are designated Series B Non-Voting Preferred Stock, none of which are issued and outstanding. All of the outstanding shares of B2e Capital Stock are owned of record by the Persons set forth in Section 3.03(a) of the Disclosure Schedule in the respective amounts set forth thereon. A true and correct listing of the addresses of all holders of B2e Capital Stock is also set forth in Section 3.03(a) of the Disclosure Schedule .

 

(b) There are currently outstanding B2e Options to purchase 3,085,166 shares of Class A Common Stock and 124,220 shares of Series A Voting Preferred Stock, each of which was granted under the Stock Option Plan. The holders of all options to purchase the Class A Common Stock and the Series A Voting Preferred Stock, and each such holder’s country of residence, together with the number of shares of B2e Preferred Stock subject to such B2e Options and information regarding the exercise price and vesting schedule applicable to such B2e Options, is set forth in Section 3.03(b) of the Disclosure Schedule .

 

(c) There are currently outstanding B2e Warrants to purchase 14,917 shares of Series A Voting Preferred Stock and 221,000 shares of Class A Common Stock. There are also currently outstanding B2e Options to purchase 1,386 shares of Series A Voting Preferred Stock and 108,600 shares of Class A Common Stock granted to consultants of B2e which were not granted under the Stock Option Plan (the “ Non-Plan Options ”). The holders of all B2e Warrants and Non-Plan Options, each such holder’s country of residence, the number of shares of B2e Preferred Stock or B2e Common Stock subject to such B2e Warrants and Non-Plan Options and the exercise price applicable to such B2e Warrants and Non-Plan Options, is set forth in Section 3.03(c) of the Disclosure Schedule .

 

(d) Except as set forth in Section 3.03(b) and (c) of the Disclosure Schedule , there are no outstanding options, warrants, convertible securities, Contracts or rights of any kind to purchase or otherwise acquire from B2e any shares of B2e Capital Stock. Except for B2e Options, B2e Warrants and as set forth on Section 3.03(b), (c) and (d) of the Disclosure Schedule , no shares of B2e Capital Stock are reserved for issuance on the date hereof.

 

(e) All actions necessary have been taken to cause the termination of all outstanding B2e Warrants and B2e Options prior to the Effective Time. After giving effect to termination of all outstanding B2e Warrants and B2e Options pursuant to Sections 2.06(d) and (e) , respectively, there will be no warrants or options to purchase shares of B2e Capital Stock.

 

(f) All outstanding shares of B2e Capital Stock have been duly authorized and validly issued, are fully paid and non-assessable and were issued in compliance with all applicable Charter Documents of B2e, all Contracts binding upon B2e and all applicable Laws, including federal, state and foreign securities Laws.

 

(g) Other than as set forth herein, no B2e Group Member currently has any outstanding vote, plan or pending proposal involving any merger or consolidation of any B2e Group Member with or into any other Person, any sale of B2e Capital Stock or any sale of Assets of any B2e Group Member.

 

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(h) Except as set forth in Section 3.03(h) of the Disclosure Schedule , there are no Contracts among any Persons which affect or relate to the voting or giving of written consents with respect to any B2e Capital Stock.

 

(i) The Merger Consideration shall be payable to the Stockholders in accordance with Section 3.03(i) of the Disclosure Schedule .

 

3.04 Subsidiaries; Interest in Other Entities .

 

(a) Set forth in Section 3.04(a) of the Disclosure Schedule is a true, correct and complete list of the subsidiaries of B2e (each a “ Subsidiary ”, and collectively the “ Subsidiaries ”) and each B2e Group Member identified therein is the lawful record and beneficial owner of all of the issued and outstanding shares of capital stock of each Subsidiary listed opposite its name, free and clear of all Encumbrances.

 

(b) The issued and outstanding capital stock of each Subsidiary is listed in Section 3.04(b) of the Disclosure Schedule . All of such issued and outstanding shares of capital stock have been duly authorized and validly issued, are fully paid and non-assessable, were not issued in violation of the terms of any Contract binding upon B2e or such Subsidiary and were issued in compliance with all applicable Charter Documents of the Subsidiary and all applicable Laws, including federal, state and foreign securities Laws. There are no outstanding options, warrants, convertible securities, Contracts or rights of any kind to purchase or otherwise acquire from any Subsidiary any shares of, or any securities convertible into, the capital stock of any Subsidiary.

 

(c) Except as listed in Section 3.04(c) of the Disclosure Schedule , B2e owns no equity security of any Person other than the Subsidiaries and has no other ownership or other investment interest, either of record, beneficially or equitably, in any Person, except for bank, checking and money market accounts and other cash equivalent investments.

 

3.05 No Conflicts .

 

(a) Except for the items set forth in Section 3.05(a) of the Disclosure Schedule (the “ Required Consents ”), the execution and delivery of this Agreement and the other Transaction Documents by B2e and the performance of B2e’s obligations hereunder and thereunder do not, and could not reasonably be expected to, constitute a Default under (a) any Law or Court Order to which any B2e Group Member is subject or (b) the Charter Documents of any B2e Group Member, or the terms of any securities issued by any B2e Group Member; nor does or could such execution, delivery or performance, conflict with or result in a Default under any term, condition or provision of any Contract, indenture, plan or Governmental Permit to which any B2e Group Member is a party, by which any B2e Group Member may have rights or by which any of the Assets of any B2e Group Member may be bound or affected, or give any party with rights thereunder the right to receive notice of the Transactions, terminate, modify, accelerate or otherwise change the existing rights or obligations of any B2e Group Member thereunder.

 

(b) Except for the Required Consents set forth on Section 3.05(b) of the Disclosure Schedule , all Required Consents have been obtained by B2e and have been delivered to Verticalnet prior to the Closing.

 

3.06 Financial Statements; Books of Account . Section 3.06 of the Disclosure Schedule includes (a) true, complete and correct copies of B2e’s audited consolidated balance sheets as of December 31, 2002 and audited consolidated statements of operations, changes in stockholders’ equity and cash flows for the year then ended and true, complete and correct copies of B2e’s draft consolidated balance sheets as of December 31, 2003 and consolidated statements of operations, changes in

 

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stockholders’ equity and cash flows for the year then ended, for which B2e’ auditors will issue as audited statements without further adjustment in accordance with Section 5.07 (collectively, the “ Audited Financial Statements ”); (b) true, complete and correct copies of B2e’s unaudited consolidated balance sheets as of March 31, 2004 and June 30, 2004 (the “ Interim Balance Sheets ”; and the date thereof, the “ Interim Balance Sheet Dates ”) and consolidated statements of operations and cash flows for the 3-month and 6-month periods then ended (such income and cash flow statements, together with the Interim Balance Sheet, the “ Interim Financial Statements ”); and (c) a true, correct and complete copy of B2e’s unaudited consolidated balance sheet as of May 31, 2004 (the “ 5/31 Balance Sheet ” and, collectively with the Audited Financial Statements and the Interim Financial Statements, the “ B2e Financial Statements ”). The B2e Financial Statements have been prepared in accordance with GAAP, subject to, in the case of the Interim Financial Statements and the 5/31 Balance Sheet, the omission of footnote information. B2e Financial Statements present fairly in all material respects the financial position of B2e as of the dates thereof and, in the case of the Audited Financial Statements and the Interim Financial Statements, the results of its operations and cash flows for the periods then ended, in each case in accordance with GAAP, except for, in the case of Interim Financial Statements and the 5/31 Balance Sheet, the omission of footnote information. The books of account, including all ancillary work papers, of each B2e Group Member reflect in all material respects all of its items of income and expense, and all of its Assets and Liabilities, required to be reflected therein in accordance with GAAP.

 

3.07 Accounts Receivable and Accounts Payable .

 

(a) All Accounts Receivable of the B2e Group represent valid obligations arising from sales actually made or services actually performed by a B2e Group Member in the ordinary course and are not subject to defenses, set-offs or counterclaims. All Accounts Receivable of the B2e Group are pursuant to their terms collectible within 90 days of the date they are booked, net of the reserve shown on the 5/31 Balance Sheet (which reserve is calculated consistent with past practice). Section 3.07(a) of the Disclosure Schedule sets forth a true and correct aging of the Accounts Receivable shown on the 5/31 Balance Sheet.

 

(b) All accounts payable are reflected on the 5/31 Balance Sheet. There is no dispute or claim with any account creditor of any such account payable that could result in any such accounts payable being due in greater than its recorded amount, other than ordinary course late fees, except as may be reserved in the 5/31 Balance Sheet. Section 3.07(b) of the Disclosure Schedule sets forth a true and correct aging of the accounts payable set forth on the 5/31 Balance Sheet.

 

(c) All Unbilled Fees that are reflected on the 5/31 Balance Sheet have been acquired or have arisen only in the ordinary course and are not subject to defenses, set-offs or counterclaims. There is no reason to believe such Unbilled Fees are not collectible net of a reserve as reflected in the 5/31 Balance Sheet (which reserve is calculated consistent with past practice). Section 3.07(c) of the Disclosure Schedule sets forth a true and correct schedule of the Unbilled Fees set forth in the 5/31 Balance Sheet.

 

3.08 No Undisclosed Liabilities . Except as set forth in Section 3.08 of the Disclosure Schedule , no B2e Group Member has any Liabilities, except:

 

(a) Liabilities pursuant to the terms of a Transaction Document;

 

(b) those Liabilities set forth on the 5/31 Balance Sheet and not heretofore paid or discharged;

 

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(c) Liabilities incurred in the ordinary course since the date of the 5/31 Balance Sheet that are of a type that would appear on a balance sheet of B2e Group Members as of the date hereof and which do not arise from breach of contract, breach of warranty, tort or infringement; and

 

(d) other Liabilities that are not material in character or amount and in any event do not exceed $25,000 in the aggregate.

 

3.09 Existing Conditions . Except as disclosed in Section 3.09 of the Disclosure Schedule , since the date of the 5/31 Balance Sheet, no B2e Group Member has:

 

(a) declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its equity securities or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its equity securities;

 

(b) discharged or satisfied any Encumbrance, or paid any Liabilities, other than in the ordinary course, or failed to pay or discharge when due any Liabilities;

 

(c) sold, assigned or transferred or agreed to sell, assign or transfer any of its Assets (other than fixed assets which in the aggregate have a value not greater than $15,000) except in the ordinary course;

 

(d) incurred, issued, assumed or guaranteed any indebtedness for money borrowed or any other indebtedness of any type or subjected to or created any Encumbrance other than (i) Permitted Liens with respect to any of its Assets and (ii) other indebtedness incurred in the ordinary course;

 

(e) made or suffered any amendment or termination of any material Contract, to which it is a party or by which it is or any of its Assets are bound, or canceled, modified or waived any material debts or claims held by it, oth