DEFINITIVE PROXY STATEMENT
SCHEDULE 14(a) INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
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DYNAMICWEB ENTERPRISES, INC.
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[LOGO]
DYNAMICWEB ENTERPRISES, INC.
271 ROUTE 46 WEST, BUILDING F, SUITE 209
FAIRFIELD, NEW JERSEY 07004
AUGUST 18, 1999
Dear Shareholder:
We are pleased to invite you to the 1999 Annual Meeting of Shareholders of
DynamicWeb Enterprises, Inc. to be held on, Thursday, September 9, 1999 at
2:30 p.m., at the Ramada Inn, located at 38 Two Bridges Road, Fairfield, New
Jersey 07004.
The Notice of the Annual Meeting and the Proxy Statement on the following
pages address the formal business of the Annual Meeting, which consists of the
election of the Class II directors and the election of one Class I director to
fill a vacancy, an amendment to our 1997 Employee Stock Option Plan to add
500,000 shares to that plan, an amendment to our 1997 Stock Option Plan for
Outside Directors to increase by 2,755 the number of Common Stock options
granted to new directors, and the approval of the selection of auditors for the
year ending September 30, 1999. Also, at the Annual Meeting, our management will
address other corporate matters which may be of interest to you and will be
available to respond to your questions.
The Corporation's Annual Report on Form 10-K for the fiscal year ended
September 30, 1998 is included in this document immediately following the Proxy
Statement and serves as our annual report to shareholders.
It is requested that you promptly execute the enclosed proxy and return it
in the enclosed postpaid envelope.
Sincerely,
STEVEN L. VANECHANOS, JR.
STEVEN L. VANECHANOS, JR.
Chairman and Chief Executive Officer
----------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON THURSDAY, SEPTEMBER 9, 1999
----------------------------------
To The Shareholders of
DYNAMICWEB ENTERPRISES, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
DYNAMICWEB ENTERPRISES, INC. (the 'Corporation') will be held at 2:30 p.m., on
Thursday, September 9, 1999 at the Ramada Inn, 38 Two Bridges Road, Fairfield,
New Jersey 07004, for the following purposes:
1. To elect two members of Class II and to elect one member of Class I
of the Board of Directors, to serve until their successors are elected and
qualified;
2. To amend the Corporation's 1997 Employee Stock Option Plan to
increase the number of shares reserved for issuance thereunder by 500,000
shares;
3. To amend the 1997 Stock Option Plan for Outside Directors to (i)
increase the number of options granted at the time of appointment to 20,000
shares; and (ii) increase by 50,000 the number of shares reserved for
issuance under the plan;
4. To approve the selection of Richard A. Eisner & Company, LLP, New
York, New York, Certified Public Accountants, as our independent auditors
for the fiscal year ending September 30, 1999; and
5. To transact such other business as may properly come before the
Annual Meeting and any adjournment or postponement thereof.
In accordance with the Bylaws of the Corporation and action of the Board of
Directors, only those shareholders of record at the close of business on August
10, 1999 will be entitled to notice of and to vote at the Annual Meeting.
By Order of the Board of Directors,
STEVE VANECHANOS, SR.
STEVE VANECHANOS, SR.
Secretary
August 18, 1999
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. PLEASE
PROMPTLY DATE, SIGN, AND RETURN YOUR PROXY IN THE ENVELOPE WHICH ACCOMPANIES
THIS PROXY STATEMENT.
DYNAMICWEB ENTERPRISES, INC.
271 ROUTE 46 WEST, BUILDING F, SUITE 209
FAIRFIELD, NEW JERSEY 07004
(973) 244-1000
ATTN: STEVEN L. VANECHANOS, JR.
CHAIRMAN OF THE BOARD
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PROXY STATEMENT FOR THE 1999 ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON SEPTEMBER 9, 1999
----------------------------------
INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Annual Meeting: September 9, 1999 Ramada Inn
2:30 p.m., local time 38 Two Bridges Road
Fairfield, NJ 07004
Record Date: Close of business on August 10, 1999. If you were a shareholder of
Common Stock on the record date, you may vote at the Annual Meeting.
Each share of Common Stock is entitled to one vote. On the record
date, we had 2,603,769 shares of Common Stock outstanding. Therefore,
a total of 2,603,769 votes may be cast at the Annual Meeting.
Agenda: 1. Elect two (2) Class II Directors and elect one (1) Class I Director
to fill a vacancy.
2. Approve Amendment No. 2 to the Corporation's 1997 Employee Stock
Option Plan to add 500,000 shares to the existing 334,764 shares
that may be issued under the 1997 Employee Stock Option Plan.
3. Approve an Amendment to the Corporation's 1997 Stock Option Plan
for Outside Directors to (i) increase the number of options granted at
the time of appointment to 20,000 shares; and (ii) increase by
50,000 the number of shares reserved for issuance under the plan.
4. Approve the selection of Richard A. Eisner & Co., LLP as our
independent auditors for the fiscal year ending September 30, 1999.
5. Any other proper business.
Vote Required: Proposal 1: The affirmative vote of a majority
Elect two (2) Class II of all of the outstanding Common
Directors and elect one (1) Stock is required to elect the
Class I Director to fill a Class II nominees for director and
vacancy the new Class I nominee. So, if
you do not vote for one or both of
the Class II nominees or for the
Class I nominee, it has the same
effect as if you voted against the
election.
Proposal 2: Approve Amendment No. 2 The affirmative vote of a majority
to the 1997 Employee Stock of all of the outstanding Common
Option Plan Stock is required to approve
Amendment No. 2 to the 1997
Employee Stock Option Plan. So, if
you do not vote, it has the same
effect as if you voted against the
amendment.
Proposal 3: Approve an Amendment to The affirmative vote of a majority
the 1997 Stock Option Plan of all of the outstanding Common
for Outside Directors Stock is required to approve an
Amendment to the 1997 Stock Option
Plan for Outside Directors. So, if
you do not vote, it has the same
effect as if you voted against the
amendment.
Proposal 4: Approve the Selection of The affirmative vote of a majority
Auditors of the votes cast at the Annual
Meeting, whether in person or by
proxy, is required to approve the
selection of the auditors. So, if
you do not vote, it has the same
effect as if you voted against the
selection.
Quorum and
Broker Non-Votes: To conduct the Annual Meeting, at least a majority of the votes that
are entitled to be cast must be present. For purposes of determining
whether a majority exists, broker non-votes and abstentions will be
counted.
Broker non-votes and abstentions will not count as 'votes.' If your
broker does not vote on any of the three (3) proposals, it will have
no effect on the votes with respect to any of the three (3) proposals.
Proxies: Please vote; your vote is important. Prompt return of your proxy will
help reduce the costs of resolicitation.
Unless you tell us on the proxy card to vote differently, we will vote
signed returned proxies 'FOR' the Board's nominees for directors,
'FOR' the approval of Amendment No. 2 to the 1997 Employee Stock
Option Plan, 'FOR' the approval of an Amendment to the 1997 Stock
Option Plan for Outside Directors, and 'FOR' approval of the selection
of the auditors.
At the time we began printing this proxy statement, we did not know of
any matters that needed to be acted upon at the Annual Meeting other
than those discussed in this proxy statement. However, if any
additional matters are presented to the Annual Meeting for action,
your proxy will be voted according to the recommendations of the
management of the Corporation.
Proxies
Solicited By: The Board of Directors.
Revoking
Your Proxy: You may revoke your proxy before it is voted at the meeting.
You may revoke it if you:
deliver a signed, written revocation letter, dated later than your
proxy, to: Steven L. Vanechanos, Jr., Chairman and Chief Executive
Officer of the Corporation, 271 Route 46 West, Building F, Suite 209,
Fairfield, New Jersey 07004;
2
deliver another signed proxy, dated later than this proxy, to Steven
L. Vanechanos, Jr., Chairman and Chief Executive Officer of the
Corporation, at the address above; or
attend the Annual Meeting, inform Steven L. Vanechanos, Jr., Chairman
and Chief Executive Officer of the Corporation, of your desire to vote
in person or by another proxy, and then vote in person or by another
proxy at the Annual Meeting. Please note that attending the Annual
Meeting alone will not revoke your proxy.
The Corporation will pay all costs, estimated at $30,000 in the
Cost of aggregate, of soliciting these proxies. Although we are mailing these
Solicitation: proxy materials, our directors, officers and employees may also
solicit proxies by telephone, telegram, facsimile, mail or personal
contact. Such persons will receive no additional compensation for such
services, but the Corporation may reimburse them for reasonable
out-of-pocket expenses. We will also furnish copies of solicitation
materials to fiduciaries, custodians, nominees and brokerage houses
for forwarding to beneficial owners of shares of Common Stock held in
their names, and the Corporation will reimburse them for reasonable
out-of-pocket expenses.
Your Comments: Your comments about any aspects of our business are welcome. You may
use the space provided on the proxy card for this purpose, if desired.
Although we may not respond on an individual basis, your comments help
us to measure your satisfaction and we may benefit from your
suggestions.
3
INFORMATION ABOUT NOMINEES,
CONTINUING DIRECTORS AND EXECUTIVE OFFICERS
The following table contains certain information with respect to the
nominees for the Board of Directors, the other directors, and the executive
officers of the Corporation.
NAME AGE POSITION
---- --- --------
Steven L. Vanechanos, Jr.(1)......... 45 Chairman of the Board and Chief Executive Officer
James D. Conners..................... 60 President and Chief Operating Officer
Steve Vanechanos, Sr.(1)............. 69 Director, Vice President Treasurer and Secretary
Kenneth R. Konikowski................ 52 Director and Executive Vice President
Denis Clark.......................... 55 Director
Frank T. DiPalma(2).................. 54 Director
Robert Droste(2)(3)(4)(5)............ 46 Director
Robert J. Gailus(3)(5)............... 50 Director
- ------------
(1) Steve Vanechanos, Sr. is the father of Steven L. Vanechanos, Jr.
(2) Member of the Compensation Committee during fiscal year 1998. The
Compensation Committee meets on an as-needed basis between meetings of the
Board of Directors to discuss compensation-related matters. This Committee
was formed in 1997.
(3) Anticipated member of the Audit Committee of the Board of Directors during
fiscal year 2000.
(4) Member of the Audit Committee of the Board of Directors during fiscal year
1998. The Audit Committee recommends an outside auditor for the year and
reviews the financial statements and progress of the Corporation. This
Committee was formed in 1997.
(5) Anticipated member of the Compensation Committee during fiscal year 2000.
BIOGRAPHICAL AND OTHER INFORMATION
Steven L. Vanechanos, Jr. became Chief Executive Officer and Chairman of
the Board of Directors of the Corporation on March 26, 1996. He was President of
DynamicWeb Transaction Systems, Inc., a wholly-owned subsidiary of the
Corporation, from its incorporation in October 1995 until it merged with the
Corporation in September 1998. He also was a co-founder in 1981 of Megascore,
Inc., which was a wholly-owned subsidiary of the Corporation, and was its
President from October 1985 until it merged with the Corporation in September
1998. He has a Bachelor of Science degree in Finance and Economics from
Fairleigh Dickinson University, Rutherford, New Jersey.
James D. Conners became President and Chief Operating Officer of the
Corporation on August 26, 1997. Prior to joining the Corporation, Mr. Conners
served as the Vice President of Strategic Planning of Sterling Commerce in 1996
and the Vice President of its Internet Business Unit in 1997. Prior to joining
Sterling Commerce, Mr. Conners spent fifteen years at General Electric
Information Services in various sales and marketing positions, most recently as
the General Manager in charge of the Ameritech Alliance. Mr. Conners graduated
from the University of Detroit with a Bachelor of Science degree in Mathematics
and a minor in Physics.
Steve Vanechanos, Sr. became Vice President, Treasurer, Secretary and a
director of the Corporation on March 26, 1996. He was a co-founder of Megascore
in 1981 and DynamicWeb Transaction Systems, Inc. in 1995. He was Vice President
of Megascore from April 1985 and of DynamicWeb Transaction Systems, Inc. from
October 1995 until the companies merged with the Corporation in September 1998.
He attended Newark College of Engineering in Newark, New Jersey
4
for two years. He continued his education with certifications from PSI
Programming Institute in New York City and with courses in principles of
accounting at ABA Institute, Hudson County Chapter.
Kenneth R. Konikowski became the Executive Vice President and a director of
the Corporation on December 1, 1996. Prior to that date, Mr. Konikowski was
President of Software Associates, Inc., which he founded in 1985. Software
Associates, Inc. was a subsidiary of the Corporation until it was merged into
the Corporation in September 1998. In addition to building Software Associates,
Inc., Mr. Konikowski has been actively involved in the electronic data
interchange industry for the past twelve years and he continues to make numerous
presentations about the subject. Mr. Konikowski earned a degree in marketing
from Rutgers University in New Jersey.
Denis Clark became a director of the Corporation in June 1997. Mr. Clark
has served as Vice President of Sterling Commerce, Inc. from 1993 to 1996 and
was employed by IBM Corporation as a Director of Consulting from 1991 to 1992
and as a Director of Software Marketing from 1989 to 1991. Mr. Clark has been
employed as regional vice president by Ajilon Services, Inc. since June 28,
1999. Previously, he was employed by Candle Corp. as Vice President of
Application Management, a position he held from 1996 to December 31, 1998.
Frank T. DiPalma became a director of the Corporation on March 26, 1996.
Since January 1997, Mr. DiPalma has been employed as Vice President of
Operations and Engineering for Energy Corporation of America, Mountaineer Gas
Division. Prior to that time, and during the past five years, he held various
management positions for Public Service Electric and Gas, a public utility
located in Newark, New Jersey. In 1995 and 1996, he was the owner of Palmer
Associates, a management consulting company. Mr. DiPalma graduated from New
Jersey Institute of Technology with a Bachelor of Science in Mechanical
Engineering; Fairleigh Dickinson University with a Masters in Business
Administration; and the University of Michigan's Executive Development Program.
Robert Droste became a director of the Corporation on March 26, 1996. Mr.
Droste served as a director of Megascore, Inc. from 1985 and of DynamicWeb
Transaction Systems, Inc. from February 1996 until the two companies merged into
the Corporation in September 1998. Since June 1987, Mr. Droste has been the
Director of Administration and Manager of Internal Audit for Russ Berrie & Co.,
Inc., Oakland, New Jersey. He has a Bachelor of Science Degree in Accounting
from Fairleigh Dickinson University, Rutherford, New Jersey.
Robert J. Gailus is a nominee to become a director of the Corporation. Mr.
Gailus has been employed as the Founding Partner of Software Technology Venture
Partners since January 1994. Mr. Gailus has been serving as a consultant to the
Corporation since November 1998. He has a Bachelor of Arts degree in American
Studies from Columbia College and a Masters in Business Administration from the
Columbia Graduate School of Business.
BOARD AND COMMITTEE MEETINGS
During the year ended September 30, 1998, the Corporation's Board of
Directors held three board meetings and also took other actions by unanimous
written consent.
The Board of Directors has a standing Compensation Committee, which in
fiscal year 1998 was composed of Frank DiPalma and Robert Droste. The
Compensation Committee administers the Corporation's stock option plans and is
responsible for establishing the compensation of the Corporation's executive
officers. The Compensation Committee met three times in the fiscal year ended
September 30, 1998, including actions taken by unanimous written consent.
The Board of Directors has a standing Audit Committee, which in fiscal year
1998 was composed of F. Patrick Ahearn, Jr. and Robert Droste. The Audit
Committee recommends an outside auditor for the year and reviews the financial
statements and progress of the Corporation. The Audit Committee did not meet
during the fiscal year ended September 30, 1998.
The Board of Directors does not have a standing nominating committee.
All directors attended seventy-five percent (75%) or more of the aggregate
number of meetings of the Board of Directors and of the various committees of
the Board of Directors on which they served.
5
COMPENSATION OF DIRECTORS
On June 12, 1997, the shareholders of the Corporation approved the 1997
Stock Option Plan for Outside Directors. Under the 1997 Stock Option Plan for
Outside Directors, each non-employee director, or 'outside director,' currently
receives an annual grant of options to purchase 3,912 shares of Common Stock of
the Corporation. Otherwise, the non-employee directors and the employee
directors do not receive a fee for attending meetings or other fees or retainers
for serving on the Board of Directors.
At the time that this proxy statement was written, future directors elected
or appointed by the Board to fill a vacancy are eligible at each annual meeting
at which directors are elected to receive a grant of options to purchase 3,912
shares of Common Stock. We currently have 78,254 shares of Common Stock reserved
for issuance under the 1997 Stock Option Plan for Outside Directors. However, if
the shareholders of the Corporation vote in favor of Proposal III, new directors
will receive at the time of appointment grants of options to purchase an
aggregate of 20,000 shares vesting in equal increments over a three-year period
and the number of shares of Common Stock reserved for issuance under the plan
will be increased by 50,000 to a total of 128,254 shares.
During each of the years ended September 30, 1998 and 1997, 11,736 and
15,648 options, respectively, were granted to directors to purchase the
Corporation's Common Stock pursuant to the 1997 Stock Option Plan for Outside
Directors. These options, which were granted at prices equivalent to the market
value of the Common Stock at the dates of the grants, are exercisable
immediately and expire on October 31, 2008 and 2007, respectively.
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table for fiscal year 1998 shows salaries, bonuses, options,
and long-term compensation paid during the last three years for the Chief
Executive Officer and our other highly compensated executive officers whose
total annual salary and bonus exceeded $100,000.
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------------------------- ---------------------------------
SECURITIES
OTHER UNDERLYING
ANNUAL OPTIONS OPTIONS/ LTIP
FISCAL SALARY BONUS COMPENSATION AWARDED SARS PAYOUTS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) (#) (#) ($) COMPENSATION
--------------------------- ---- --- --- --- --- --- --- ------------
Steven L. Vanechanos, Jr. ... 1998 $ 88,451(1)(2) (3)
Chairman and Chief
Executive Officer
Kenneth R. Konikowski ....... 1998 $135,600(2) None (3)
Executive Vice President
James D. Conners ............ 1998 $160,000 104,338(4) 104,338 $18,000(5)
President and Chief
Operating Officer
- ------------
(1) Mr. Vanechanos is entitled to an annual salary of $108,000 through February
1999, and $120,000 through February 2000.
(2) Eligible for increases based on annual performance reviews pursuant to the
Corporation's policies and practices.
(3) Includes $500,000 in life insurance, disability and health insurance,
vacation days, use of an automobile, and eligibility to participate in the
Corporation's 1997 Employee Stock Option Plan.
(4) The employment agreement with Mr. Conners obligates the Corporation to grant
to Mr. Conners options to purchase 104,338 shares of the Corporation's
Common Stock during his employment period for a price of $3.83 per share. On
September 11, 1997, Mr. Conners was granted 104,338 options under the 1997
Employee Stock Option Plan. Of these options, 45,648 of the shares vested on
August 25, 1998; 32,606 will vest on August 25, 1999; and the remaining
26,084 will vest on August 25, 2000.
(5) Mr. Conners is entitled to receive a $1,000 per month housing allowance and
a $500 per month leased automobile allowance. He is also eligible to
participate in the 1997 Employee Stock Option Plan and the Corporation's
other employee benefit plans.
6
OPTION GRANTS TO EXECUTIVE OFFICERS IN FISCAL YEAR 1998
The following table contains information concerning options granted during
fiscal year 1998 to the Chief Executive Officer and our other highly compensated
executive officers whose total annual salary and bonus exceeded $100,000.
NUMBER OF PERCENT
SHARES OF TOTAL GRANT
UNDERLYING OPTIONS DATE
OPTIONS GRANTED TO EXERCISE PRESENT
GRANTED EMPLOYEES IN PRICE EXPIRATION VALUE
NAME ($) FISCAL YEAR (%) ($/SH) DATE ($)
---- --- --------------- ------ ---- ---
Steven L. Vanechanos, Jr............. -- -- -- -- --
Kenneth R. Konikowski................ -- -- -- -- --
James D. Conners..................... 104,338 -- $3.83 (1) $399,614.54
- ------------
(1) Mr. Conners was granted options to purchase 104,338 shares on September 11,
1997 under the 1997 Employee Stock Option Plan. Of these options, 45,648 of
the shares vested on August 25, 1998; 32,606 will vest on August 25, 1999;
and the remaining 26,084 will vest on August 25, 2000.
AGGREGATED OPTION/STOCK APPRECIATION RIGHTS ('SAR') EXERCISES IN FISCAL YEAR
1998 AND FISCAL YEAR-END OPTION/SAR VALUES
No options were exercised during fiscal 1998 by the Chief Executive Officer
or our other highly compensated officers whose total annual salary and bonus
exceeded $100,000.
7
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT
DATE OF OFFICER NAME
AGREEMENT AND TITLE TERMS OF AGREEMENT
--------- ------------ ------------------
12/1/1996 Kenneth R. Konikowski, If Mr. Konikowski's employment is terminated by the
Executive Vice President Corporation other than for 'Cause,' 'Disability,' or
and Director 'Material Breach,' or if he terminates his
employment for 'Good Reason' as these terms are
defined in Mr. Konikowski's employment agreement,
Mr. Konikowski is entitled to a lump sum amount
equal to the base salary that he would be entitled to if
he worked from the time of termination until
November 30, 2001. This payment will be reduced by
an interest rate that is equivalent to the rates for the
latest two-year Treasury bill.
8/26/1997 James D. Conners, President If Mr. Conners' employment is terminated other than for
Three-year 'Cause,' as defined in his employment agreement, Mr.
employment Conners is entitled to receive his base salary,
period with incentive compensation and options for the balance of
automatic his employment period.
renewal
3/1/1998 Steven L. Vanechanos, Jr., If Mr. Vanechanos' employment is terminated by the
Chief Executive Officer, Corporation other than for 'Cause,' 'Disability,' or
Chairman and Director 'Material Breach,' or if he terminates his employment
for 'Good Reason,' as these terms are defined in Mr.
Vanechanos' employment agreement, Mr. Vanechanos is
entitled to a lump sum amount equal to the base salary
that he would be entitled to if he worked from the time
of termination until the end of his employment period.
This payment will be reduced by an interest rate that is
equivalent to the rates for the latest two-year Treasury
bill.
3/1/1998 Steve Vanechanos, Sr., If Mr. Vanechanos' employment is terminated by the
Vice President, Treasurer Corporation other than for 'Cause,' 'Disability,' or
and Secretary 'Material Breach,' or if he terminates his employment
for 'Good Reason,' as these terms are defined in Mr.
Vanechanos' employment agreement, Mr. Vanechanos is
entitled to a lump sum amount equal to the base salary
that he would be entitled to if he worked from the time
of termination until the end of his employment period.
This payment will be reduced by an interest rate that is
equivalent to the rates for the latest two-year Treasury
bill.
3/1/1998 to Douglas Eadie, Mr. Eadie's employment will continue from May 1, 1998 to
3/31/1999 Executive Vice President March 31, 1999, and thereafter, if neither party has
given written notice of nonrenewal, shall be
automatically renewed on April 1 of each subsequent year
for one additional year, provided that Mr. Eadie's
employment may be terminated for 'Cause' or
'Disability,' as those terms are defined in his
employment agreement, as well as retirement or voluntary
termination.
8
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
AGREEMENTS
DATE OF
AGREEMENT PARTIES TERMS OF AGREEMENT
--------- ------- ------------------
12/1997 to Mask Group We lease a portion of our office facility from
12/31/2002 the Mask Group, a partnership in which Kenneth
R. Konikowski, the Executive Vice President and
a director, and his wife are partners. The
annual rent for the year ended September 30,
1998 under such lease, as amended, is
approximately $43,384, subject to fixed annual
increases of three percent (3%), plus the
payment of condominium maintenance fees. The
lease expires on December 31, 2002. We believe
that the rent charged by the Mask Group
approximates fair market rents in the area and
is no less favorable to the Corporation than
would have been obtained from an unaffiliated
third party for similar office space. The
Corporation is jointly obligated with the Mask
Group on approximately $246,000 of indebtedness
(as of September 1, 1997) to a third party
lender to the Mask Group relating to a mortgage
loan on those premises. The Mask Group is making
the payments on that loan, and has informed the
Corporation that the loan is current.
12/1998 Robert J. Gailus As part of his consultancy agreement with the
Corporation, Robert J. Gailus received options
to purchase 25,000 shares of Common Stock of the
Corporation.
9/15/98 Merger of DynamicWeb On September 15, 1998, pursuant to an Agreement
Enterprises, Inc., and Plan of Merger, DynamicWeb Enterprises,
DynamicWeb Transaction Inc., DynamicWeb Transaction Systems, Inc.,
Systems, Inc., Software Software Associates, Inc., Megascore, Inc. and
Associates, Inc., Design Crafting, Inc. merged into a single
Megascore, Inc. and Design corporation existing under the laws of the State
Crafting, Inc. of New Jersey called DynamicWeb Enterprises,
Inc. DynamicWeb Enterprises, Inc., as the
surviving corporation, possesses all of the
assets, rights, privileges, powers and
franchises, as well as all of the restrictions,
disabilities, duties and liabilities of the
former subsidiaries. All of the issued and
outstanding stock in the former subsidiaries was
cancelled as of the date of the merger.
8/7/1998 Shaar Fund, Ltd. Pursuant to a Securities Purchase Agreement and
Registration Rights Agreement, both dated August
7, 1998, the Corporation closed a private
placement to the Shaar Fund, Ltd. of 875 shares
of Series A 6% Convertible Preferred Stock, par
value $0.001 per share, together with 87,500
Common Stock Purchase Warrants with a term of
three years and at an exercise price of $6.00
per share for an aggregate price of $875,000. We
received net proceeds of approximately $779,000,
which we used to fund operating deficits
incurred during that period, including sales and
marketing expenses, product development,
operations and working capital.
5/1/1998 Design Crafting, Inc. On May 1, 1998, the Corporation purchased all
the outstanding stock of Design Crafting, Inc.,
a provider of electronic commerce consulting
services, in exchange for 101,697 shares of
Common Stock. The acquisition, which was
accounted for as a purchase, was recorded at a
total cost of $551,000, including
9
DATE OF
AGREEMENT PARTIES TERMS OF AGREEMENT
--------- ------- ------------------
related expenses, of which $508,000 was
allocated to cost in excess of fair value of the
identifiable net assets acquired.
4/2/1998 Perry & Co. In April 1998, we granted options to purchase
90,000 shares of the Corporation's Common Stock
at $5.50 per share as compensation to
individuals other than employees for investment
relation services. The options are exercisable
immediately and expire in April 2000. The
estimated fair value of the options, which
amounted to $205,000, was charged to operations
during fiscal 1998.
4/1997 to Kenneth R. Konikowski On November 30, 1996, pursuant to a Stock
12/1997 Purchase Agreement of the same date among the
Corporation, Software Associates and Kenneth R.
Konikowski, the sole shareholder of Software
Associates, Mr. Konikowski received 224,330
shares of the Corporation's Common Stock for all
of the issued and outstanding capital stock of
Software Associates. Pursuant to the same
agreement, Kenneth R. Konikowski was named
Executive Vice President and a director of the
Corporation and his Employment Agreement was
executed. Pursuant to the Stock Purchase
Agreement, as amended by letter agreements dated
April 17, 1997, November 20, 1997, and December
15, 1997 between the Corporation and Mr.
Konikowski, the Corporation is obligated to
issue to Mr. Konikowski up to 178,420 additional
shares of its Common Stock in the event the
average closing bid price of the Common Stock
does not equal $21.565 per share for the five
trading days immediately prior to January 30,
2000. If those additional shares are issued, the
ownership interest of all other holders of
Common Stock will be diluted in favor of Mr.
Konikowski.
7/1997 to Steven L. Vanechanos, Jr. Steven L. Vanechanos, Jr. loaned $167,675 to the
12/1997 Corporation, $23,000 of which was advanced on
July 11, 1997, $35,000 of which was advanced on
July 28, 1997, $875 of which was advanced on
August 1, 1997, $16,000 of which was advanced on
August 11, 1997, $2,800 of which was advanced on
September 26, 1997 and $15,000 of which was
advanced on December 11, 1997. This loan bore
interest at eight percent (8%) per annum, and
was repaid in March 1998.
12/1997 Kenneth R. Konikowski, In connection with financing for the
Steven L. Vanechanos, Jr., Corporation, Kenneth R. Konikowski, Steven L.
and Steve Vanechanos, Sr. Vanechanos, Jr. and Steve Vanechanos, Sr.
contributed shares of Common Stock to the
Corporation in December 1997 (89,732 for Mr.
Konikowski, 184,135 for Mr. Vanechanos, Jr. and
182,191 for Mr. Vanechanos, Sr.).
10/31/1997 Steven L. Vanechanos, Jr. In connection with the August 1997 financing,
and Steve Vanechanos, Sr. the placement agent required that Steven L.
Vanechanos, Jr. and Steve Vanechanos, Sr.
contribute to the capitalization of the
Corporation by relinquishing some of their
outstanding Common Stock. Messrs. Vanechanos
each contributed to the Corporation, in exchange
for $1.00 each, 33,330 shares of Common Stock of
the Corporation.
10
SECURITY OWNERSHIP BY MANAGEMENT
The table below contains information concerning the beneficial ownership of
Common Stock by the three persons nominated to the Board of Directors, by the
four continuing members of the Board, by the executive officers who are named in
the Summary Compensation Table, by all directors and executive officers as a
group, and by each person who owns of record or is known by the Board of
Directors to be the owner of more than five percent (5%) of the Corporation's
Common Stock.
Unless otherwise indicated in a footnote, each of the following persons
holds sole voting and investment power over the shares listed as beneficially
owned.
BENEFICIAL OWNERSHIP OF
OPTIONS EXERCISEABLE
NAME AND ADDRESS BENEFICIAL OWNERSHIP WITHIN 60 DAYS OF PERCENT OF
OF BENEFICIAL OWNER OF SHARES(1)(2) RECORD DATE(1) COMMON STOCK(3)
------------------- --------------- -------------- ---------------
Steven L. Vanechanos, Jr. ............. 276,202 40,748 11.6%
92 Clarken Drive
West Orange, New Jersey 07052
Steve Vanechanos, Sr.(4) .............. 273,288 40,626 11.5%
96 Union Avenue
Rutherford, New Jersey 07070
Kenneth R. Konikowski ................. 134,598 4.9%
36 Pinebrook Road
Towaca, New Jersey 07082
James D. Conners ...................... 45,648 32,606 2.9%
5506 Carnoustie Court
Dublin, Ohio 43017
Robert J. Gailus ...................... 0 6,667 0.2%
50 Riverside Drive, Apt. 2-B
New York, NY 10024
Frank T. DiPalma(5) ................... 10,697 3,912 0.5%
179 Claremont Road
Ridgewood, New Jersey 07450
Robert Droste ......................... 6,067 3,912 0.4%
24 Summit Road
Clifton, New Jersey 07012
Denis Clark ........................... 3,912 3,912 0.3%
16628 Calle Brittany
Pacific Palisades, CA 90272
All directors and executive ........... 750,412 132,383 32.3%
officers as a group (8 in number)
- ------------
(1) The securities 'beneficially owned' by an individual are determined in
accordance with the definitions of 'beneficial ownership' set forth in the
General Rules and Regulations of the Securities and Exchange Commission
('SEC') and may include securities owned by or for the individual's spouse
and minor children and any other relative who has the same home, as well as
securities to which the individual has or shares voting or investment power
or has the right to acquire beneficial ownership within sixty (60) days
after August 10, 1999. Beneficial ownership may be disclaimed as to certain
of the securities.
(2) Information furnished by the directors and executive officers of the
Corporation.
(3) Percentages based upon a total of (a) 2,603,769 shares outstanding on August
10, 1999, plus (b) an additional 132,383 shares issuable within sixty (60)
days of that date to directors under the 1997 Stock Option Plan for Outside
Directors and other agreements.
(4) All of such shares are held jointly by Mr. Vanechanos, Sr. and his spouse.
(5) All of such shares are held jointly by Mr. DiPalma and his spouse.
11
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's officers and directors and persons who own more than ten percent
(10%) of a registered class of the Corporation's equity securities to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than ten percent (10%) shareholders
are required by SEC regulation to furnish the Corporation with copies of all
Section 16(a) forms they file. The rules of the SEC regarding the filing of such
statements require that 'late filings' of such statement be disclosed in this
Proxy Statement.
Based solely on review of the copies of such forms furnished to the
Corporation, the Corporation believes that, during the fiscal year ended
September 30, 1998, its officers, directors and greater than ten percent (10%)
beneficial owners complied with applicable Section 16(a) filing requirements,
except that (i) F. Patrick Ahearn, Jr., Frank DiPalma, Robert Droste and Denis
Clark each inadvertently failed to file a Form 5 to report the receipt of stock
options for 3,912 shares of Common Stock received under the 1997 Stock Option
Plan for Outside Directors; (ii) Steven L. Vanechanos, Jr. and Steve Vanechanos,
Sr. each inadvertently failed to file a Form 5 to report their contribution of
33,330 shares of Common Stock of the Corporation in connection with an August
1997 financing transaction; (iii) James D. Conners inadvertently failed to file
a Form 3 when he became an officer of the Corporation, and a Form 5 to report
stock options for 104,338 shares of Common Stock he received from the
Corporation, and (iv) Kenneth R. Konikowski, Steven L. Vanechanos, Jr., and
Steve Vanechanos, Sr. each inadvertently failed to file a Form 5 to report their
contribution of shares of Common Stock to the Corporation in December 1997
(89,732 for Mr. Konikowski, 184,135 for Mr. Vanechanos, Jr. and 182,191 for Mr.
Vanechanos, Sr.).
12
PROPOSAL I:
ELECTION OF DIRECTORS
GENERAL
The Board has nominated two directors for election as Class II Directors at
the annual meeting. According to the Bylaws, the directors are divided into
three classes: Class I, Class II, and Class III. Each class is elected for a
term of three years, except that the Class I Directors who were elected in 1997
had an initial term expiring in 1998 and the Class II Directors who also were
elected in 1997 have an initial term expiring in 1999.
The Certificate of Incorporation of the Corporation provides that the Board
of Directors shall consist of not less than five (5) nor more than twenty-five
(25) persons, as fixed by the Board of Directors from time to time. Each Class
shall consist as nearly as possible of one-third (1/3) of the number of the
whole Board of Directors.
The Board has also nominated one director, who is currently serving as a
Class II Director, to be elected to fill a vacancy on the Board created when one
of the Class I Directors resigned. According to the Bylaws, the newly appointed
director will hold office for the unexpired term for that class of directors.
NOMINEES
The Board of Directors unanimously nominated the following persons for
election as Class II Directors at the 1999 Annual Meeting for a term of
three (3) years. Mr. Konikowski is currently serving as a director of the
Corporation, and Mr. Gailus has never served as a director of the Corporation.
If you elect them, they will hold office until the next annual meeting after the
end of their term or until their successors have been elected.
Election as Class II Director:
Robert J. Gailus.............. Robert J. Gailus is a nominee to become a director of the
Corporation. Mr. Gailus has been employed as the Founding
Partner of Software Technology Venture Partners since
January 1994. Mr. Gailus has been serving as a consultant to
the Corporation since November 1998. He has a Bachelor of
Arts Degree in American Studies from Columbia College and a
Masters in Business Administration from the Columbia
Graduate School of Business.
Kenneth R. Konikowski......... Kenneth R. Konikowski became the Executive Vice President
and a director of the Corporation on December 1, 1996. Prior
to that date, Mr. Konikowski was President of Software
Associates, Inc., which he founded in 1985. Software
Associates, Inc. was a subsidiary of the Corporation until
it merged with the Corporation in September 1998.
On March 19, 1999, F. Patrick Ahearn, Jr. resigned from the Board of
Directors. To fill the vacancy, the Board of Directors unanimously nominated the
following person to be elected to serve as a Class I Director for the remainder
of the term of the Class I directors. He is currently serving as a Class II
Director of the Corporation until his term ends at the Annual Meeting.
Election as Class I Director:
Steve Vanechanos, Sr.......... Steve Vanechanos, Sr. became Vice President, Treasurer,
Secretary and a director of the Corporation on March 26,
1996. He was a co-founder of Megascore in 1981 and
DynamicWeb Transaction Systems, Inc. in 1995. He served as a
Vice President of Megascore from April 1985 and of
DynamicWeb Transaction Systems, Inc. from October 1995 until
those subsidiaries merged into the Corporation in September
1998. He attended Newark College of Engineering in Newark,
New Jersey for two years. He continued his education with
certifications from PSI Programming Institute in New York
City and with courses in principles of accounting at ABA
Institute, Hudson County Chapter.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE ELECTION OF EACH OF THE NOMINEES
FOR CLASS II DIRECTOR AND FOR THE ELECTION OF THE NOMINEE FOR CLASS I DIRECTOR.
13
PROPOSAL II:
AMENDMENT NO. 2 TO THE 1997 EMPLOYEE STOCK OPTION PLAN
TO INCREASE THE NUMBER OF SHARES
RESERVED FOR ISSUANCE THEREUNDER
GENERAL
In June of 1997, the Board of Directors and the shareholders adopted and
approved the 1997 Employee Stock Option Plan. The 1997 Employee Stock Option
Plan authorizes the Compensation Committee of the Board of Directors to grant
options for the purchase of shares of Common Stock.
PURPOSE:
The purpose of the 1997 Employee Stock Option Plan is to improve the
performance of the Corporation by encouraging significant employees to own stock
in the Corporation, thereby more closely aligning the interests of employees and
shareholders. Moreover, the 1997 Employee Stock Option Plan is designed to have
a positive effect on the Corporation's ability to attract, motivate and retain
employees having outstanding leadership and management ability.
NUMBER OF SHARES DESIGNATED FOR ISSUANCE AND ISSUED:
When the 1997 Employee Stock Option Plan was first approved, a total of
234,764 (as adjusted to reflect the Corporation's reverse stock split) shares of
Common Stock were reserved for issuance. In July 1998, the Board of Directors
and the shareholders adopted and approved the first amendment to the 1997
Employee Stock Option Plan to designate an additional 100,000 shares of Common
Stock, for a total of 334,764 shares, for issuance.
The 1997 Employee Stock Option Plan includes both Incentive Stock Options,
as defined in Section 422 of the Internal Revenue Code of 1986, as amended, and
Nonqualified Stock Options. Incentive Stock Options qualify for certain tax
benefits, but Nonqualified Stock Options do not.
All current employees of the Corporation are eligible to participate in the
1997 Employee Stock Option Plan. As of the Record Date, approximately 52
employees were eligible for options, 11,228 shares had been issued pursuant to
the exercise of options granted under the 1997 Employee Stock Option Plan, and
Incentive Stock Options to purchase 323,536 shares were outstanding. Therefore,
as of the Record Date, there were no shares available for future grants of
options under the 1997 Employee Stock Option Plan.
EXERCISE PRICE:
The exercise price for Incentive Stock Options granted under the 1997
Employee Stock Option Plan will be equal to at least the fair market value of
the stock underlying the option on the date the option is granted. However, the
exercise price for Nonqualified Stock Options granted under the 1997 Employee
Stock Option Plan will be the dollar amount that is specified by the
Compensation Committee. Therefore, the Corporation may issue Nonqualified Stock
Options with an exercise price that is less than the fair market value of the
stock underlying the option on the date of the grant. Incentive Stock Options
granted under the 1997 Employee Stock Option Plan may be exercised for up to ten
(10) years after the date of the grant, except in certain limited circumstances.
Nonqualified Stock Options granted under the 1997 Employee Stock Option Plan may
be exercised for up to ten (10) years and one (1) month after the date of the
grant.
TAX CONSEQUENCES:
The 1997 Employee Stock Option Plan is not a qualified plan under Code
Section 401(a). We have been advised that, under the Code, certain federal
income tax consequences will result when Incentive Stock Options or Nonqualified
Stock Options, or any combination thereof, are granted or exercised.
14
ADMINISTRATION AND NEW PLAN BENEFITS
The Compensation Committee has the discretion to select participants who
will receive awards under the 1997 Employee Stock Option Plan and to determine
the size and type of award. Any shares as to which an option expires, lapses
unexercised, or is terminated or canceled may be subject to a new option. Future
grants are not presently determinable and it is not possible to predict the
benefits or amounts that will be received by or allocated to particular
individuals or groups in the future.
NEW PLAN BENEFITS FOR FISCAL YEAR 1998
The following table sets forth the benefits that were received by the
following people pursuant to the 1997 Employee Stock Option Plan during the
fiscal year ended September 30, 1998: (i) the executive officers named in the
Executive Compensation Table under the section above entitled 'Executive
Compensation and Other Information;' (ii) all current executive officers as a
group; (iii) all current directors who are not executive officers as a group;
and (iv) all employees who are not executive officers, as a group:
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF UNITS
- ----------------- ---------------- ---------------
Named Executive Officers $700,107.98(1) 45,648(2)
(3 persons)
Executive Group $700,107.98(1) 45,648(2)
(4 persons)
Non-Executive Director Group $ 80,430.72(3) 15,648(4)
(4 persons)
Non-Executive Officer Employee Group $234,691.80(5) 92,036
(19 persons)
(1) The exercise price for 104,338 of those options granted was $3.83 per share.
The last bid price for the Common Stock on the Nasdaq Over-the-Counter
('OTC') Bulletin Board Service on the date of grant was $6.71 per share (as
adjusted to reflect the Corporation's reverse stock split). The figure in
the chart above is the product of the number of shares times $6.71.
(2) The number of units shown corresponds to the number of the Corporation's
shares underlying options that were granted to James D. Conners, the
President and Chief Operating Officer of the Corporation, on September 11,
1997 and that vested on August 25, 1998.
(3) The bid prices for the Common Stock on the Nasdaq OTC Bulletin Board Service
on the date of grants ranged from $5.03 per share to $5.25 per share. The
figure in the chart above is the product of the average bid price, $5.14,
times the number of shares.
(4) On the date of each succeeding annual meeting of shareholders at which
directors are elected, each non-employee director will automatically be
granted an option to purchase 3,912 shares of Common Stock, or, if
Proposal III is approved at the 1999 Annual Meeting, 20,000 shares of Common
Stock that will vest in even increments over a three-year period.
(5) The bid prices for the Common Stock on the Nasdaq OTC Bulletin Board Service
on the dates of grant ranged from $1.56 per share to $3.53 per share. The
figure in the chart above is the product of the average bid price on date of
grant, $2.55, times the number of options granted.
PROPOSED AMENDMENT TO INCREASE SHARES RESERVED
The Board of Directors proposes a second amendment to the 1997 Employee
Stock Option Plan to increase by 500,000 shares the number of shares of Common
Stock reserved for issuance under the 1997 Employee Stock Option Plan. If the
proposed amendment is approved, the total number of shares of Common Stock
reserved for issuance under the 1997 Employee Stock Option Plan will be 834,764.
THE BOARD RECOMMENDS THAT YOU VOTE FOR AMENDMENT NO. 2 TO THE 1997 EMPLOYEE
STOCK OPTION PLAN.
15
PROPOSAL III:
AMENDMENT OF THE 1997 STOCK OPTION PLAN FOR OUTSIDE DIRECTORS
GENERAL
On April 28, 1997, the Board of Directors adopted a Stock Option Plan for
Outside Directors and, in June 1997, our shareholders approved the plan. The
purpose of the 1997 Stock Option Plan for Outside Directors is to attract,
retain and compensate highly qualified individuals who are not employees to
serve as members of the Board of Directors by encouraging them to invest in the
Common Stock and thereby increase their proprietary and personal interest in the
Corporation's continued success and progress. Under the plan, options to
purchase 3,912 shares (as adjusted after the reverse split of the Corporation's
stock) of our Common Stock are automatically granted to directors who are not
employed by us, i.e., the 'outside directors.' The first grant was made on
September 30, 1997. Thereafter, at each annual meeting of shareholders at which
directors are elected, the outside directors automatically receive an additional
grant of options to purchase 3,912 shares of our Common Stock.
ADMINISTRATION AND NEW PLAN BENEFITS
The 1997 Stock Option Plan for Outside Directors authorizes a committee of
members of the Board of Directors to administer and interpret the plan. Any
shares as to which an option expires, lapses unexercised, or is terminated or
canceled may be subject to a new option. Only Nonqualified Stock Options, which
have certain federal tax consequences, may be granted under the 1997 Stock
Option Plan for Outside Directors. The exercise price for options granted under
the 1997 Stock Option Plan for Outside Directors will be equal to the fair
market value of the stock underlying the option on the date the option is
granted. Nonqualified Stock Options granted under the 1997 Stock Option Plan for
Outside Directors may be exercised for 10 years and 1 month after the date of
grant. No option may be transferred by the option holder other than by will or
by the laws of descent and distribution, and each option is exercisable during
the option holder's lifetime only by the option holder, or his guardian or legal
representative, unless otherwise approved by the committee of the Board of
Directors. Under the 1997 Stock Option Plan for Outside Directors, options may
not be exercised during the 11-month period following the date of grant unless
(i) there occurs a 'change in control' of the Corporation during such period, or
(ii) the committee waives the 11-month continuous service requirement for a
director whose service has terminated within the 11-month period. In the event
of a 'change in control,' the options become immediately exercisable. The term
'change in control' is defined in the 1997 Stock Option Plan for Outside
Directors to mean, among other things, a merger, consolidation or similar
transaction in which (i) the Corporation's shareholders do not own, after the
transaction, at least 66 2/3% of the voting securities of the surviving
institution, and (ii) persons who were members of the Corporation's Board do not
constitute at least 66 2/3% of the members of the Board of the surviving
institution.
Under the 1997 Stock Option Plan for Outside Directors, in the event of an
option holder's retirement, options may continue to be exercised during the term
of the option for up to 24 months, at the discretion of the Board's committee,
from the date of retirement. With respect to an option holder whose service as a
director terminates due to death or disability, the option holder or his legal
representative may exercise the option until the earlier of the expiration of
the term of the option or one year after such termination of service. If an
option holder's service as a director is terminated for any reason except
retirement, death or disability, all options granted to such person under the
1997 Stock Option Plan for Outside Directors terminate on the date such service
is terminated, unless the committee permits the option holder to exercise such
options until the earlier of (i) the expiration of the term of the option, or
(ii) up to 24 months from the date of termination. The Board of Directors may
amend, suspend or terminate the 1997 Stock Option Plan for Outside Directors at
any time without shareholder approval, unless the approval of shareholders is
otherwise required under applicable tax, securities or other laws. In addition,
the Board may not modify or amend the 1997 Stock Option Plan for Outside
Directors with respect to any outstanding option, or impair or cancel any
outstanding option, without the consent of the affected option holder.
16
The shares of Common Stock issued under the 1997 Stock Option Plan for
Outside Directors are registered with the Securities and Exchange Commission and
with any applicable state securities commission where registration is required.
The cost of such registrations is borne by the Corporation.
PROPOSED AMENDMENT TO INCREASE THE NUMBER OF OPTIONS GRANTED TO NEW DIRECTORS
AND TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE
The Board of Directors proposes to amend the 1997 Stock Option Plan for
Outside Directors to make the following two modifications:
First, the grant to new directors of options to purchase the Corporation's
Common Stock will be increased from options to purchase 3,912 (as adjusted to
reflect the Corporation's reverse stock split) shares to options to purchase
20,000 shares. These options will vest over a three-year period in even
increments as follows: options to purchase 6,667 shares vest in year one,
options to purchase 6,667 shares vest in year two, and options to purchase 6,666
shares vest in year three. In fiscal year 1999, directors are eligible for this
award if they have not yet served on our Board of Directors. In fiscal year 2000
and thereafter, directors will be eligible if they are elected to the Board of
Directors at an annual meeting of the shareholders.
Second, the number of shares reserved for issuance under the 1997 Stock
Option Plan for Outside Directors will be increased by 50,000. The total number
of shares reserved for issuance will therefore increase from 78,254 (as adjusted
for the Corporation's reverse stock split) shares to 128,254 shares of the
Common Stock of the Corporation.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE AMENDMENTS TO THE 1997 STOCK
OPTION PLAN FOR OUTSIDE DIRECTORS.
17
PROPOSAL IV:
APPROVAL OF THE SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
GENERAL
We have appointed Richard A. Eisner & Company, LLP, New York, New York,
Certified Public Accountants, as the Corporation's independent public
accountants for the fiscal year ending September 30, 1999, and are requesting
that the shareholders approve this selection at the Annual Meeting. We have been
advised by Richard A. Eisner & Company, LLP that none of its members has any
financial interest in the Corporation.
ANNUAL MEETING
In the event that the shareholders do not approve the selection of Richard
A. Eisner & Company, LLP as the Corporation's independent public accountants to
perform audit services for the 1999 fiscal year, another accounting firm may be
chosen to provide audit services for the 1999 fiscal year.
Representatives of Richard A. Eisner & Company, LLP are expected to attend
the Annual Meeting, will be given an opportunity to make a statement and will be
available to respond to questions from shareholders.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE SELECTION OF
RICHARD A. EISNER & COMPANY, LLP AS THE CORPORATION'S AUDITORS FOR THE 1999
FISCAL YEAR.
18
SHAREHOLDER PROPOSALS FOR THE 2000 ANNUAL MEETING
If you wish to submit proposals to be presented at the 2000 Annual Meeting
of Shareholders of the Corporation, they must be received by the Corporation no
later than April 10, 2000 for them to be included in the Corporation's proxy
material for that meeting.
ANNUAL REPORT
Our Annual Report on Form 10-K for the year ended September 30, 1998
immediately follows this Proxy Statement. This Proxy Statement does not include
references to the Annual Report. If you would like a copy of any exhibit, please
send a written request, including a statement that you believe in good faith
that, as of August 10, 1999, you were a beneficial owner of shares of the Common
Stock and were entitled to vote at the Annual Meeting. This request should be
sent, with a payment of $0.25 per page, to Steve Vanechanos, Sr., Secretary,
DynamicWeb Enterprises, Inc., 271 Route 46 West, Building F, Suite 209,
Fairfield, New Jersey 07004.
By Order of the Board of Directors,
STEVE VANECHANOS, SR.
STEVE VANECHANOS, SR.
Secretary
Dated: August 18, 1999
PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE VOTE -- YOUR VOTE IS IMPORTANT
19
APPENDIX 1
PROXY CARD
DYNAMICWEB ENTERPRISES, INC.
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 9, 1999
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Steven L. Vanechanos, Jr. or James D.
Conners, and each of them, proxies of the undersigned, with full power of
substitution, to vote all shares of Common Stock of DynamicWeb Enterprises,
Inc., a New Jersey corporation, which the undersigned is entitled to vote at the
Annual Meeting of Shareholders of DynamicWeb Enterprises, Inc. to be held at the
Ramada Inn, located at 38 Two Bridges Road, Fairfield, New Jersey 07004, on
Thursday, September 9, 1999 at 2:30 p.m. (local time), or any adjournment
thereof, with all the powers the undersigned would have if personally present,
on the following matters:
IMPORTANT: SIGNATURE AND DATE REQUIRED ON REVERSE SIDE
A [X] Please mark your
votes as in
this example
FOR all nominees WITHHOLD AUTHORITY
at the right (except as to vote for all nominees
marked to the contrary) listed at right
1. Election of [ ] [ ] Nominees: Class II Directors:
Directors Robert Gailus
Kenneth R. Konikowski
Class I Director:
(INSTRUCTION: To withhold authority to vote for any individual nominee, Steve Vanechanos, Sr.
write that nominee's name in the space provided below.)
- ------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Approval of Amendment No. 2 to the 1997 Employee [ ] [ ] [ ]
Stock Option Plan to increase by 500,000 the number
of shares reserved for issuance thereunder.
3. Approval of an Amendment to the 1997 Stock [ ] [ ] [ ]
Option Plan for Outside Directors to (i) increase the
grant at time of appointment to options to purchase
20,000 shares; and (ii) increase by 50,000 the
number of shares reserved for issuance thereunder.
4. Approval of the appointment of Richard A. Eisner & [ ] [ ] [ ]
Company, LLP as the Company's independent
auditors for the fiscal year ending September 30,1999.
5. In their discretion, the above named proxies are authorized to vote
in accordance with their own judgment upon such other business as may
properly come before the meeting.
This Proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. If no direction is indicated, this Proxy will be
voted "FOR" items 1, 2, 3, and 4 and the Proxies will use their discretion with
respect to any matters referred to in item 5.
The undersigned hereby acknowledges receipt of a copy of the accompanying Notice
of Annual Meeting of Shareholders and Proxy Statement and hereby revokes any
Proxy or Proxies heretofore given. You may strike out the persons named as
proxies and designate a person of your choice, and may send this Proxy directly
to such person.
SIGNATURE(S): ___________________ _______________________ DATED: ________,1999
(Signature if jointly)
NOTE: Please complete, date and sign exactly as your name appears hereon. When
signing as attorney, administrator, executor, guardian, trustee or corporate
official, please add your title. If shares are held jointly, each holder should
sign.