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Title: |
Note and Warrant Purchase Agreement |
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Entities: |
Internet Capital Group, Inc.; Ryerson Tull Inc.; Steel Dynamics Inc.; Weirton Steel Corp.; Bryan Cave; Buchanan Ingersoll PC |
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Date: |
2001 |
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Size: |
144KB total |
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Price: |
$41 |
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ID: |
#378298 |
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METALSITE, INC.
NOTE AND WARRANT PURCHASE AGREEMENT
among
METALSITE, INC.,
WEIRTON STEEL CORPORATION
and
THE STOCKHOLDERS NAMED HEREIN
dated as of
October 10, 2000
{PAGE} 2
TABLE OF CONTENTS
{TABLE}
{CAPTION}
PAGE
----
{S} {C} {C}
ARTICLE I Amount and Terms of the Note................................................... 1
1.1. Promissory Note and Warrant for Lender......................................... 1
1.2. Closing ..................................................................... 1
1.3. Other Remedies Provided by Law................................................. 1
ARTICLE II Representations and Warranties of the Company.................................. 1
2.1. Organization and Qualification................................................. 2
2.2. Authorization.................................................................. 2
2.3. Consents and Approvals......................................................... 3
2.4. Capitalization................................................................. 3
2.5. Financial Statements........................................................... 4
2.6. Absence of Changes............................................................. 5
2.7. Taxes ...................................................................... 6
2.8. Litigation..................................................................... 7
2.9. No Brokers or Finders.......................................................... 7
2.10. Absence of Undisclosed or Contingent Liabilities............................... 7
2.11. Property ..................................................................... 8
2.12. Intellectual Property.......................................................... 8
2.13. Proprietary Information of Third Parties....................................... 9
2.14. Insurance...................................................................... 10
2.15. Permits .................................................................... 10
2.16. Compliance with Laws........................................................... 10
2.17. Transactions with Affiliates................................................... 11
2.18. Contracts and Commitments...................................................... 11
2.19. Absence of Questionable Payments............................................... 12
2.20. Books and Records.............................................................. 12
2.21. Significant Customers and Suppliers............................................ 12
2.22. Offering of the Note and Warrant............................................... 13
2.23. Officers .................................................................... 13
2.24. Disclosure..................................................................... 13
ARTICLE III Representations and Warranties of the Lender................................... 13
3.1. Authorization.................................................................. 13
3.2. Purchase Entirely for Own Account.............................................. 13
3.3. Disclosure of Information...................................................... 13
3.4. Investment Experience.......................................................... 13
3.5. Accredited Investor............................................................ 14
3.6. Restricted Securities.......................................................... 14
3.7. Further Limitations on Disposition............................................. 14
{/TABLE}
-i-
{PAGE} 3
{TABLE}
{CAPTION}
PAGE
----
{S} {C} {C}
3.8. Legends .................................................................... 14
ARTICLE IV Stockholders' Call Option...................................................... 14
4.1. Call Right..................................................................... 14
4.2. Exercise Price of Note Shares.................................................. 15
4.3. Calculation of Percentage Interest............................................. 15
4.4. Principal Stockholder's Representations and Warranties......................... 15
ARTICLE V Miscellaneous.................................................................. 15
5.1. Tax Treatment.................................................................. 15
5.2. Successors and Assigns......................................................... 16
5.3. Governing Law.................................................................. 16
5.4. Counterparts................................................................... 16
5.5. Interpretation................................................................. 16
5.6. Notices ...................................................................... 16
5.7. Finder's Fee................................................................... 17
5.8. Expenses .................................................................... 17
5.9. Entire Agreement; Amendments and Waivers....................................... 17
5.10 Severability................................................................... 18
5.11 Survival of Representations and Warranties..................................... 18
5.12 Stockholders' Agreement........................................................ 18
{/TABLE}
-ii-
{PAGE} 4
NOTE AND WARRANT PURCHASE AGREEMENT
THIS IS A NOTE AND WARRANT PURCHASE AGREEMENT (the "Agreement"), dated
as of October 10, 2000, by and among MetalSite, Inc., a Delaware corporation
(the "Company"), Weirton Steel Corporation, a Delaware corporation ("Weirton"
or, the "Lender"), and the stockholders of the Company set forth in the attached
Schedule I (individually a "Stockholder" and, collectively, the "Stockholders").
Background
A. The Company desires to issue to the Lender one convertible
promissory note and warrant, and the Lender desires to purchase such promissory
note and warrant on the terms and conditions set forth herein.
Terms
THEREFORE, in consideration of the mutual covenants, representations
and warranties contained herein, and intending to be legally bound hereby, the
parties hereto agree as follows:
ARTICLE I
Amount and Terms of the Note
1.1. Promissory Note and Warrant for Lender. In return for the
consideration provided by the Lender, the Company shall sell and issue to the
Lender a promissory note in favor of the Lender in the principal amount of
$10,000,000 in the form attached hereto as Exhibit A (each, a "Note" and
collectively, the "Notes") and a Purchase Warrant (the "Warrant") in favor of
the Lender in the form attached hereto as Exhibit B . The purchase price for the
Note and the Warrant shall be $10,000,000 and shall be payable in cash by wire
transfer of immediately available funds to an account designated by the Company.
1.2. Closing. The closing (the "Closing") of the purchase of the Notes
and Warrants shall take place at the offices of Buchanan Ingersoll Professional
Corporation, One Oxford Centre, 20th floor, 301 Grant Street, Pittsburgh, PA
15219-1410 (or such other place as the parties may agree), on the date of this
Agreement. The Company hereby acknowledges receipt from the Lender of the full
amount of the purchase price for the Note and Warrant. The Lender hereby
acknowledges receipt of the executed versions of the Note and Warrant.
1.3. Other Remedies Provided by Law. Upon the occurrence of an Event of
Acceleration, the Lender, shall be entitled to exercise and pursue all other
remedies provided by law, in addition to the remedies set forth in this
Agreement and the other Loan Documents.
ARTICLE II
Representations and Warranties of the Company
The Company hereby represents and warrants to Lender that:
{PAGE} 5
2.1. Organization and Qualification.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power to carry on its business as it is now being
conducted. The Company is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned or leased by it or the nature of its activities makes such
qualification necessary.
(b) The Company does not own, directly or indirectly,
beneficially or of record, any capital stock (or securities convertible into, or
options, warrants or rights to purchase, capital stock or such securities) or
other ownership, economic or voting interest in any corporation, partnership,
limited liability company, trust, joint venture or other entity of any kind.
(c) The Company's Certificate of Incorporation and Bylaws
have not been amended since July 27, 2000.
2.2. Authorization.
(a) The Company has all requisite corporate power and
authority to execute and deliver (i) this Agreement, (ii) the Note, (iii) the
Warrant, (iv) the Security Agreement, dated as of the date hereof, among the
Company and the Lender, and (v) the Intercreditor Agreement, dated the date
hereof, among the Company, the Lender and the other parties named therein
(collectively, the "Transaction Documents"), and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the other Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including the
issuance of the shares of Common Stock, par value $.01 per share ("Common
Stock"), of the Company issuable pursuant to the Notes and Warrants
(collectively, the "Conversion Shares")), have been duly and validly authorized
by the Board of Directors of the Company, and no other corporate proceedings on
the part of the Company are necessary to authorize this Agreement or the other
Transaction Documents or to consummate the transactions contemplated by this
Agreement or the other Transaction Documents, including any stockholder
approval. Each of this Agreement and the other Transaction Documents has been
duly and validly executed and delivered by the Company, and, assuming such
Transaction Document constitutes a valid and binding obligation of the Lender,
such Transaction Document constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy and other laws affecting creditors' rights generally
and to general principles of equity.
(b) The Conversion Shares are duly authorized and reserved for
issuance and, upon issuance in accordance with the Transaction Documents, will
be validly issued, fully paid and non-assessable, and free from all Liens.
Except as provided in Article IV hereof or as set forth in Schedule 2.2, neither
the issuance, sale or delivery of the Note and Warrant nor the issuance or
delivery of Conversion Shares is subject to any preemptive right of stockholders
of the Company or to any right of first refusal or similar right in favor of any
person. As used
- 2 -
{PAGE} 6
herein "person" means an individual or a corporation, partnership, trust,
limited liability company, joint venture or other organization or entity of any
kind.
2.3. Consents and Approvals. Except as set forth in Schedule 2.3,
neither the execution and delivery of this Agreement and the other Transaction
Documents by the Company nor the consummation of the transactions contemplated
hereby and thereby (including the issuance of the Note and Warrant and the
issuance of the Conversion Shares) will conflict with, or result in any
violation of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the creation
of, or give rise to, any claim, option, lien, charge, pledge, right of first
refusal, "tag" or "drag" along right, security interest or encumbrance of any
kind or nature whatsoever (collectively "Liens") upon any of the properties or
assets or the Company under:
(a) the Certificate of Incorporation or Bylaws of the Company,
(b) any loan or credit agreement, note, bond, mortgage,
indenture, lease, contract, agreement, instrument, permit, governmental
authorization, concession, franchise or license applicable to the Company or its
properties or assets, or
(c) any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to the Company or its properties or assets.
No consent, approval, order or authorization of, or registration,
declaration or filing with, any Authority (as defined in Section 2.8) is
required by the Company in connection with the execution and delivery of this
Agreement or the other Transaction Documents by the Company or the consummation
by the Company of the transactions contemplated hereby or thereby (including the
issuance of the Note and Warrant and the Conversion Shares).
2.4. Capitalization.
(a) As of the date hereof, the authorized capital stock of the
Company consists of 200,000,000 shares of Common Stock and 20,000,000 shares of
preferred stock, par value $.01 per share. As of the date hereof, 30,000,000
shares of Common Stock are issued and outstanding, and no shares of Common Stock
are held in the treasury of the Company. As of the date hereof, no shares of
preferred stock of the Company are issued and outstanding or are held in the
treasury of the Company. As of the date hereof, an aggregate of 1,578,947 shares
of Common Stock are reserved for issuance pursuant to options issued under the
MetalSite, Inc. Stock Incentive Plan (the "Stock Incentive Plan"), of which no
shares are subject to outstanding options and no shares have been issued, and an
aggregate of 3,000,000 shares of Common Stock are available for issuance
pursuant to options issued under the MetalSite, Inc. Management Ownership Plan
(the "MOP") of which 2,761,568 shares are subject to outstanding options and
1,500,000 shares have been issued pursuant to the MOP. All of the issued and
outstanding shares of Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, and, except provided in Article IV hereof or
as set forth on Schedule 2.4(a), are not subject to preemptive rights. Schedule
2.4(a) sets forth the exercise prices or conversion prices and number of shares
of Common Stock or other capital stock of the Company issuable in
- 3 -
{PAGE} 7
respect of each outstanding stock option, each outstanding warrant and the
outstanding convertible notes.
(b) Except as set forth in paragraph (a) above (or as
expressly contemplated by this Agreement), there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company is a party or by which it is bound
obligating the Company to issue, deliver or sell, or cause to be issued,
delivered or sold, directly or indirectly, additional shares of capital stock or
other voting securities (or securities convertible into or exchangeable for such
securities) of the Company, or obligating the Company to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. There are no bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which stockholders of the Company may vote. Except as set forth in Schedule
2.4(b) (or as expressly contemplated by this Agreement), there are not any
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire, or providing preemptive or registration rights with respect
to, any shares of capital stock of the Company. Except as set forth on Schedule
2.4(b), there are no anti-dilution or price adjustment provisions contained in
any security issued by the Company (or in any agreement providing rights to
security holders) that will be triggered by the issuance of the Note or Warrant
or any Conversion Shares. Except as set forth on Schedule 2.4(b), the Company
does not have outstanding any loans to any person in respect of the purchase of
securities issued by the Company.
(c) Except for on Schedule 2.4(c), there are no voting trusts
or agreements, stockholders agreements, pledge agreements, buy-sell agreements,
rights of first refusal, preemptive rights or proxies relating to any securities
of the Company to which the Company is a party, or, to the Company's knowledge,
any of such instruments to which it is not a party. All of the outstanding
securities of the Company were issued in compliance with all applicable Federal
and state securities laws, including the Securities Act of 1933, as amended (the
"Securities Act").
2.5. Financial Statements. The Company has made available to the Lender
copies of the audited financial statements of the Company for the annual period
ended, and as of, December 31, 1999, together with the audit reports thereon of
Arthur Andersen LLP (the "Audited Financial Statements"). The Audited Financial
Statements are in accordance with the books and records of the Company, and
fairly present in accordance with generally accepted accounting principles
("GAAP") consistently applied the assets, liabilities and financial position of
the Company, as at the respective dates thereof, and the results of its
operations for the periods covered thereby. The Company also has made available
to the Lender a copy of the unaudited financial statements of the Company (the
"Interim Financial Statements" and, together with the Audited Financial
Statements, the "Financial Statements") for the six (6) month period ended, and
as of, June 30, 2000. The Interim Financial Statements are consistent with the
books and records of the Company and fairly present in accordance with GAAP
consistently applied (except that the Interim Financial Statements do not
include all required note disclosures) the assets, liabilities and financial
position of the Company as at the respective dates thereof, and the results of
its operations for the periods covered thereby, and include all material
adjustments, which are of a normal and recurring nature, necessary for a fair
presentation. The contingency,
- 4 -
{PAGE} 8
tax, bad debt and other reserves reflected on the Financial Statements are, in
all material respects, adequate, appropriate and reasonable in accordance with
GAAP.
2.6. Absence of Changes. Since December 31, 1999, there has not been
any adverse effect that, individually or together with other adverse effects, is
material to (i) the assets, liabilities, operations, business, results of
operations or financial condition of the Company or (ii) the ability of the
Company to consummate the transactions contemplated hereby or (iii) the ability
of the Company to continue to operate its business immediately after the Closing
in substantially the same manner as such business is conducted prior to the
Closing (a "Material Adverse Effect") or any change or occurrence which could
reasonably be expected to have a Material Adverse Effect. Without limiting the
foregoing, except as set forth in Schedule 2.6, from December 31, 1999 to the
date of this Agreement, the Company has not:
(a) Increased, or experienced any change in any assumptions
underlying or methods of calculating, any bad debt, contingency, tax or other
reserves or changed its accounting practices, methods or assumptions (including
changes in estimates or valuation methods);
(b) Permitted or allowed any of its Leased Real Property (as
such term is defined in Section 2.11) or assets (real, personal or mixed,
tangible or intangible) to be subjected to any Lien, except for Permitted Liens
(as defined in Section 2.11);
(c) Written down the value of any assets (including
write-downs by reason of shrinkage or mark-down);
(d) Canceled any debts or waived any claims or rights having a
value in excess of $25,000;
(e) Sold, transferred, or otherwise disposed of any of its
properties or assets (real, personal or mixed, tangible or intangible), except
for dispositions of obsolete furniture, fixtures and equipment which are not
material in the aggregate;
(f) Disposed of or permitted to lapse any rights to the
use of any Intellectual Property (as defined in Section 2.12) having a value,
individually or in the aggregate, in excess of $25,000, or disposed of or
disclosed (except as necessary in the conduct of its business) to any person,
other than representatives of the Lenders, any material trade secret, formula,
process or know-how not theretofore a matter of public knowledge;
(g) Except for any matters approved by the Compensation
Committee of the Company, granted any increase in the compensation of directors,
officers or employees (including any such increase pursuant to any bonus,
pension, profit sharing or other plan or commitment) or any increases in the
compensation payable or to become payable to any director, officer or employee,
except for normal increases granted in the ordinary course of business
consistent with past practices, or entered into or amended any employment,
consulting or similar agreement, or made any agreement or commitment to pay
any severance or similar compensation;
- 5 -
{PAGE} 9
(h) Declared, paid or set aside for payment any dividend or
other distribution in respect of its capital stock or redeemed, purchased or
otherwise acquired, or offered, sold or issued, directly or indirectly, any
shares of capital stock or other securities of the Company (including options,
warrants or rights to acquire securities), or merged or consolidated with any
person, or effected any share exchange, reclassification or subdivision of any
of its capital stock or adopted any plan of liquidation or dissolution or other
reorganization, or acquired the stock, assets or business of any other person;
(i) Paid, distributed, loaned or advanced any amount to, or
sold, transferred or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, or entered into any agreement or arrangement with
any stockholder, director or employee of the Company, or any other "affiliate"
of the Company, or any "associate" (as such terms are defined in Rule 405 under
the Securities Act) of any of the foregoing persons, other than in the ordinary
course of business consistent with past practice and previously disclosed to
Lenders;
(j) Made any election for Tax (as defined in Section 2.7)
purposes (or had any election made on its behalf); or
(k) Agreed, whether in writing or otherwise, to take any
action described in this Section.
2.7. Taxes. (a) The Company has (i) timely filed all Tax Returns
required to be filed by it, (ii) paid all Taxes shown to have become due
pursuant to such Tax Returns and (iii) paid all other Taxes for which a notice
of assessment or demand for payment has been received. All Tax Returns are true
and correct and have been prepared in accordance with all applicable laws and
requirements. The accruals for Taxes contained in the balance sheet of the
Company included as part of the Interim Financial Statements are adequate to
cover all material liabilities for Taxes of the Company for all periods ending
on or before the date of such balance sheet, and include adequate provision for
all deferred Taxes, and nothing has occurred subsequent to that date to make any
of such accruals inadequate. All Taxes of the Company for periods after the date
of such balance sheet have been paid or are adequately reserved against on the
books of the Company. The Company has timely filed all information returns or
reports, including forms 1099, that are required to be filed and has accurately
reported all information required to be included on such returns or reports in
all material respects. True copies of federal and state income tax returns of
the Company for each of the fiscal years ended December 31, 1998 through
December 31, 1999 have been made available to the Lender.
(b) There are no proposed assessments of Taxes against the
Company, no proposed adjustments to any Tax Return pending against the Company
and no proposed adjustments to the manner in which any Tax of the Company is
determined. Except as disclosed on Schedule 2.7, each Tax Return of the Company
has been audited by the relevant Authorities (and all deficiencies or proposed
deficiencies resulting from such audits have been paid or are adequately
provided for in the Financial Statements), or the statute of limitations with
respect to each Tax Return has expired, and no Tax Return is under examination
by any taxing Authority. No claim has been made by a taxing Authority in a
jurisdiction where the Company does not file Tax Returns that the Company is or
may be subject to taxation by that jurisdiction.
- 6 -
{PAGE} 10
(c) Except as disclosed on Schedule 2.7, the Company has never
(i) filed any consent agreement under Section 341(f) of the Code, (ii) executed
a waiver or consent extending any statute of limitation for any Tax liability
that remains outstanding, (iii)joined in or been required to join in filing a
consolidated or combined federal, state or local income Tax Return, (iv) been
the subject of a Tax ruling that has continuing effect, (v) been the subject
of a closing agreement with any taxing authority that has continuing effect,
(vi) filed an election under Section 338(g) or Section 338(h)(10) of the Code or
caused a deemed election under Section 338(e) thereof or (vii) granted a power
of attorney with respect to any Tax matters that has continuing effect. The
Company has not agreed to make nor is it required to make any adjustment under
Section 481 of the Code by reason of a change in accounting method or otherwise.
(d) All taxes that the Company was required to withhold or
collect have been duly withheld or collected and, to the extent required, have
been paid to the appropriate taxing Authority (except for any failure to
withhold immaterial amounts not exceeding $10,000 in the aggregate).
(e) For purposes of this Agreement, "Code" means the Internal
Revenue Code of 1986, as amended, and any applicable predecessor or successor
statute; "Taxes" means all federal, state, local and foreign income, payroll,
withholding, excise, sales, use, real and personal property, use and occupancy,
business and occupation, mercantile, real estate, capital stock, franchise and
other taxes, including interest and penalties thereon and all estimated taxes;
and "Tax Returns" means all returns or reports, including accompanying
schedules, with respect to Taxes.
2.8. Litigation. Except as set forth on Schedule 2.8, there is no
pending or, to the knowledge of the Company, threatened claim, arbitration
proceeding, action, suit, investigation or other proceeding against or involving
the Company, or any of the property or rights of the Company. The Company is not
in violation of or default under any order, judgment, writ, injunction or decree
of any federal, state, local or foreign governmental or regulatory entity (or
any department, agency, authority or political subdivision thereof) or court or
arbitrator (any of the foregoing, an "Authority"). Any such order, injunction or
decree binding on the Company is disclosed in Schedule 2.8. Set forth in
Schedule 2.8 is a description of all settlements of any of the proceedings
described in this Section 2.8 since the Company's organization, together with a
description of the amount or nature of each such settlement.
2.9. No Brokers or Finders. Neither any the Company, nor any of its
affiliates, nor any of their respective officers, directors or employees, (a)
has employed (or will employ) any broker or finder, or (b) has incurred (or will
incur) any liability for any brokerage fees, commissions or finders' fees or
expenses or indemnification or similar obligations in connection with the
transactions contemplated by this Agreement.
2.10. Absence of Undisclosed or Contingent Liabilities. Except as set
forth on Schedule 2.10 and except as (and to the extent) accrued for in the
Audited Financial Statements, as of December 31, 1999, the Company had no
liability or obligation (whether known or unknown, absolute or contingent,
liquidated or unliquidated), other than executory obligations under Contracts
not required to be accrued in the Audited Financial Statements under GAAP and
- 7 -
{PAGE} 11
incurred in the ordinary course of business consistent with past practice. Since
December 31, 1999, the Company has not become subject to any such liability or
obligation, other than (a) liabilities and obligations incurred in the ordinary
course of business consistent with past practice of a type reflected on the
balance sheet included in the Audited Financial Statements; (b) executory
obligations under Contracts which are not required to be accrued in the Audited
Financial Statements under GAAP; and (c) liabilities and obligations set forth
on Schedule 2.10 hereto.
2.11. Property. The Company does not own (and in the past has not
owned) any real property. Attached hereto as Schedule 2.11 is a list of all
leases and agreements for the rental of real property (the "Leased Real
Property") to which the Company (or any affiliate of the Company) is (or has
been) a party (as lessee or sublessor or sublessee). All such leases are (or
were) for portions of buildings used solely for office space. Except as set
forth on Schedule 2.11 hereto, the Company has (i) a good and valid leasehold
interest in the Leased Real Property and (ii) good and valid title to the other
assets and personal properties the Company purports to own, tangible and
intangible, in each case free and clear of any Liens, except for (A) in the case
of real property, easements, zoning restrictions, land use restrictions,
restrictive covenants, licenses or other encumbrances or restrictions which do
not adversely affect the full use and enjoyment of such property for the
purposes for which it is currently used by the Company in the conduct of its
business or materially adversely affect the value of such property, (B) pledges
or deposits made in the ordinary course of business to secure payment of
workmen's compensation, or to participate in any fund in connection with
workmen's compensation, unemployment insurance, old-age pensions or other social
security programs; (C) liens of mechanics, materialmen, warehousemen, carriers,
or other Liens, securing obligations incurred in the ordinary course of business
that are not yet due and payable and Liens of landlords securing obligations to
pay lease payments that are not yet due and payable or in default; (D)
good-faith pledges or deposits made in the ordinary course of business to secure
performance of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases, not in excess of the aggregate amount due thereunder,
or to secure statutory obligations, or surety, appeal, indemnity, performance or
other similar bonds required in the ordinary course of business; (E)
encumbrances consisting of zoning restrictions, easements or other restrictions
on the use of real property, none of which materially impairs the use of such
property or the value thereof, and none of which is violated in any material
respect by existing or proposed structures or land use; (F) any lien existing on
the date of this Agreement and described on Schedule 2.12; (G) purchase money
security interests; and (H) Liens for Taxes or assessments not yet due and
payable (the liens and other encumbrances described in the foregoing clauses (A)
- (H) referred to herein as "Permitted Liens"). None of such Liens could
reasonably be expected to have a Material Adverse Effect.
2.12. Intellectual Property.
(a) Set forth in Schedule 2.12 is a list of all patents, registered
trademarks and service marks, registered copyrights, domain names, and
applications for any of the foregoing, owned or made by the Company. Except as
set forth in Schedule 2.12, the Company owns, free and clear of all Liens, or
has a license or other agreement sufficient to enable Company to use all
patents, patent applications, trademarks, trademark applications, service marks,
service mark applications, trade names, domain names, copyrights, trade secrets,
proprietary information, customer lists and know how (collectively,
"Intellectual Property") necessary for the operation of
- 8 -
{PAGE} 12
its business as currently conducted. Neither of the Company nor, to the
knowledge of the Company, any other party is in breach of or default under any
such license or other agreement and, to the knowledge of the Company, each such
license or other agreement is now and immediately following the Closing shall be
valid and in full force and effect.
(b) Except as set forth in Schedule 2.12, (i) no claim is
pending or, to the Company's knowledge, threatened to the effect that the
operations of the Company infringe upon or conflict with the asserted rights
of any other person with respect to any Intellectual Property, and, to the
Company's knowledge, there is no basis for any such claim (whether or not
pending or threatened); (ii) the Company has not asserted any claim of
infringement, misappropriation or misuse of Intellectual Property against any
person within the last three years; and (iii) to the Company's knowledge, no
person is infringing or misappropriating the rights of the Company with respect
to the Intellectual Property.
(c) No order, holding, decision or judgment has been rendered
by any Authority, and, except as set forth on Schedule 2.12 hereof, no
agreement, consent or stipulation exists, which limits the Company's use of
any of the Intellectual Property. Except as set forth in Schedule 2.12, no
opposition, extension of time to oppose, interference, rejection, or refusal to
register has been received in connection with any applications filed relating to
the Intellectual Property, and no cancellation or reexamination proceeding or
any other proceeding challenging the extent or validity of the Intellectual
Property has been instituted or, to Company's knowledge, threatened.
(d) Except as described in Schedule 2.12, all computer
software used in the business of the Company is capable of accurately
processing, calculating, manipulating, storing and exchanging date/time data
from, into, and between the twentieth and twenty-first centuries.
(e) Except as set forth in Schedule 2.12, the Company has not
granted or assigned to any other person any right to provide the services
currently provided by the Company.
2.13. Proprietary Information of Third Parties. The Company has not
received any notice that any third party has claimed or has reason to claim that
any person employed by or affiliated with the Company has:
(a) violated or may be violating any of the terms or
conditions of his/her employment, non-competition or non-disclosure agreement
with such third party,
(b) disclosed or may be disclosing or utilized or may be
utilizing any trade secret or proprietary information or documentation of such
third party, or
(c) interfered or may be interfering in the employment
relationship between such third party and any of its present or former
employees.
To the Company's knowledge, no person employed by or affiliated with the Company
has used or proposes to use any trade secret or any information or documentation
proprietary to any former employer of such person, and to the Company's
knowledge, no person employed by or
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{PAGE} 13
affiliated with the Company has violated any confidential relationship which
such person may have had with any third party, in connection with the
development or sale of any service or proposed service of the Company, and the
Company has no reason to believe there will be any such employment or violation.
2.14. Insurance. (a) Attached hereto as Schedule 2.14 is a true,
correct and complete list of all policies of insurance (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which the Company is a party, a named insured,
or otherwise the beneficiary of coverage. Genuine and complete copies of each of
the insurance policies listed in Schedule 2.14 have been provided to the Lender.
(b) Except as disclosed on Schedule 2.14, with respect to each
such insurance policy: (i) the policy is legal, valid, binding, enforceable, and
in full force and effect; (ii) the policy will continue to be legal, valid,
binding, enforceable, and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (iii) neither the
Company nor any other party to the policy is in breach or default (including
with respect to the payment of premiums or the giving of notices) thereunder,
and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default, or permit termination, modification, or
acceleration, under the policy; (iv) neither the Company nor any ERISA Affiliate
(as defined below) of the Company shall be subject to a retroactive rate
adjustment, loss sharing arrangement or other actual or contingent liability;
and (v) no party to the policy has repudiated any provision thereof. Except as
set forth in Schedule 2.14, the Company has been fully covered at all times
during the past three years by insurance in scope and amount customary and
reasonable for the businesses in which they have engaged and the nature and
amount of the liabilities they have incurred during the aforementioned period.
Schedule 2.14 describes any self-insurance arrangements affecting the Company.
As used herein, "ERISA Affiliate" means any corporation or other trade or
business (whether or not incorporated) which is treated as a single employer
with the Company within the meaning of Section 414 of the Code.
(c) Except as set forth on Schedule 2.14, all such insurance
policies are sufficient in all material respects for compliance with all
requirements of law and the Contracts (as defined in Section 2.18).
2.15. Permits. The Company has all franchises, permits, licenses, and
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects or financial condition of the Company. The
Company is not in default under any of such franchises, permits, licenses or
other similar authority, all of which are in full force and effect and none of
which will be affected by the transactions contemplated hereby.
2.16. Compliance with Laws. Except as set forth in Schedule 2.16, the
operations of the Company are and have been conducted in compliance with
applicable laws, regulations and other requirements of all Authorities having or
claiming jurisdiction over the Company or any part of its business or
operations, including laws, regulations and requirements relating to antitrust,
consumer protection, immigration, the environment, health, occupational safety
and health, plant closing, pension, requirements of any Board of Fire
Underwriters or similar body, building, zoning, subdivision matters and
securities, except for such non-compliance which
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{PAGE} 14
could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect. Except as set forth in Schedule 2.16, during the past
three years, the Company has not received any, notification of any asserted
present or past failure by the Company to comply with any laws, rules or
regulations.
2.17. Transactions with Affiliates. Except as set forth on Schedule
2.17, no affiliate of the Company, nor any of the Company's officers, directors
or employees (or any relative or spouse of the foregoing persons who has the
same home as such person, or any other associate of such person), has any
interest, directly or indirectly, in any lease, Lien, contract, license,
encumbrance, loan or other agreement or commitment to which the Company is a
party, or any property or asset used or owned by, or any interest in any
supplier of, the Company. Except as set forth on Schedule 2.17, the Company is
not indebted, directly or indirectly, to (a) any stockholder of the Company or
an associate of a stockholder of the Company or (b) any officer, director or
employee of the Company for any liability or obligation, whether arising by
reason of stock ownership, oral or written agreement or understanding, or
otherwise. Schedule 2.17 is a complete and accurate list of all employees of the
Company owing more than $10,000 (or all such employees where the aggregate
amount owed exceeds $25,000) (except in respect of advances for business
expenses, none of which exceeds $10,000 individually or $10,000 in the
aggregate) in principal to the Company, setting forth the amounts owned, the
applicable interest rates, a description of the security and the maturity dates
of all such debts.
2.18. Contracts and Commitments. For purposes of this Section 2.18, the
term "Contract" means any contract of the Company, whether written or oral,
which is "material" and:
(a) involving annual payments in excess of $50,000 where the
term of such contract will not expire of its own accord within three months of
the date hereof or cannot be terminated by the Company on not more than 30 days
prior written notice;
(b) which constitutes a consulting or similar agreement
involving annual payments in excess of $50,000 and having a term greater than
three months or which constitutes an employment agreement involving annual
payments in excess of $50,000 or an agreement which calls for severance
payments;
(c) which constitutes an agreement by the Company to pay an
employee or former employee compensation in an amount in excess of, or having a
value of more than, $50,000 (including any bonus but excluding any benefits made
available to Company employees generally);
(d) which constitutes an agreement which restricts the Company
from carrying out its business anywhere in the world or from competing with any
other person;
(e) which constitutes an agreement by the Company with any
officer, director, holder of 10% or more of any class or series of stock of the
Company or any person who shares a home with, or any other associate of, any of
the foregoing persons;
(f) which constitutes a franchising, partnership, joint
venture or similar agreement;
- 11 -
{PAGE} 15
(g) which is a lease or other agreement relating to real
property;
(h) which relates to indebtedness or indemnification or any
guarantee of the Company (including any letter of credit) or which grants any
Lien (other than a Permitted Lien) on any assets, rights or properties of the
Company, or which is a tax sharing or similar agreement;
(i) which is a license or similar agreement for Intellectual
Property involving consideration in excess of $50,000, whether as licensee or
licensor; or
(j) where the consequences of a breach or default thereunder,
or the termination, expiration or cancellation thereof, could reasonably be
expected to result in a Material Adverse Effect.
True, correct and complete copies of all written Contracts have been made
available to the Lender. Each of the Contracts is legal, valid and in full force
and effect and is valid, binding and enforceable by the Company, as applicable,
in accordance with its terms (except as enforceability may be limited by
bankruptcy and other laws affecting creditors' rights generally). Except as set
forth on Schedule 2.18, the Company is not in default under or has breached any
of the Contracts or any other contracts of the Company, and no act or omission
by the Company has occurred which, with notice or lapse of time or both, would
constitute a breach or default under any term or provision of any such contract.
To the knowledge of the Company and except as provided on Schedule 2.18, no
other party is in breach or default under any of such Contracts, and no act or
omission has occurred by any other party thereto which, with notice or lapse of
time or both, would constitute such a breach or default under any term or
provision thereof.
2.19. Absence of Questionable Payments. Neither the Company, nor, to
the knowledge of any executive officer (or the Chairman of the Board) of the
Company, any of its directors, officers, agents, employees or other person
acting on their behalf, has used any corporate or other funds for unlawful
contributions, payments, gifts, or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others or
established or maintained any unlawful or unrecorded funds. Neither the Company
nor, to the knowledge of any executive officer (or the Chairman of the Board) of
the Company, any of its directors, officers, agents, employee or other persons
acting on their behalf, has accepted or received any unlawful contributions,
payments, gifts, or expenditures.
2.20. Books and Records. The Company has maintained complete, current
and correct copies of: (a) the Certificate of Incorporation and Bylaws and other
organizational documents of the Company and all amendments thereto; (b) the
stock records of the Company; and (c) in all material respects, the minutes and
other records of the meetings and other proceedings of the stockholders and
directors of the Company.
2.21. Significant Customers and Suppliers. No customer or supplier
which was significant to the Company during the period covered by the financial
statements referred to in Section 2.5 or which has been significant to the
Company thereafter, has terminated, materially reduced or threatened to
terminate or materially reduce its purchases from or provision of products or
services to the Company, as the case may be, other than in the ordinary course
of the Company's business.
- 12 -
{PAGE} 16
2.22. Offering of the Note and Warrant. Neither the Company nor any
person authorized or employed by the Company as agent, broker, dealer or
otherwise in connection with the offering or sale of the Note and Warrant or any
security of the Company similar to the Note and Warrant, has offered the Note
and Warrant or any such similar security for sale to or solicited any offer to
buy the Note and Warrant or any such similar security from, or otherwise
approached or negotiated with respect thereto with, any person or persons, and
neither the Company nor any person acting on its behalf has taken or will take
any other action (including any offer, issuance or sale of any security of the
Company under circumstances which might require the integration of such security
with Note and Warrant under the Securities Act or the rules and regulations of
the U.S. Securities and Exchange Commission (the "Commission") thereunder), in
either case so as to subject the offering, issuance or sale of the Note and
Warrant to the registration provisions of the Securities Act.
2.23. Officers. Set forth in Schedule 2.23 is a list of the names of
the executive officers of the Company, together with the title or job
classification of each such person and the total compensation anticipated to be
paid to each such person by the Company in calendar year 2000.
2.24. Disclosure. No representation or warranty or other statement made
by the Company in this Agreement or any disclosure schedule, certificate or
other document delivered hereunder contains any untrue statement of a material
fact or omits any material fact necessary to make the statements contained
herein or therein not misleading.
ARTICLE III
Representations and Warranties of the Lender
The Lender hereby represents and warrants to the Company, with respect
to the Lender, that as of the date hereof:
3.1. Authorization. This Agreement constitutes Lender's valid and
legally binding obligation, enforceable in accordance with its terms.
3.2. Purchase Entirely for Own Account. The Lender acknowledges that
this Agreement is made with the Lender in reliance upon the Lender's
representation to the Company that the securities will be acquired for
investment for the Lender's own account, not as a nominee or agent, and not with
a view to the resale or distribution of any part thereof in a manner that would
violate the Securities Act. The Lender represents that its has full power and
authority to enter into this Agreement.
3.3. Disclosure of Information. The Lender represents that it has had
an opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the offering of the Notes and Warrants.
3.4. Investment Experience. The Lender is experienced in investing in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can bear the economic risk of its investment, and has
such knowledge and experience in financial or
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{PAGE} 17
business matters that it is capable of evaluating the merits and risks of the
investment in the securities.
3.5. Accredited Investor. The Lender is an "accredited investor" within
the meaning of Rule 501 of Regulation D of the Commission, as presently in
effect.
3.6. Restricted Securities. The Lender understands that the securities
are characterized as "restricted" under the federal securities laws inasmuch as
they are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may
be resold without registration under the Securities Act, only in certain limited
circumstances. In this connection, the Lender represents that it is familiar
with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
3.7. Further Limitations on Disposition. Without in any way limiting
the representations set forth above and except as otherwise agreed to in the
Transaction Documents, the Lender further agrees not to make any disposition of
all or any portion of the Note and Warrant unless and until:
(a) There is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(b) (i) The Lender shall have notified the Company of the
proposed disposition and (ii) if reasonably requested by the Company, the Lender
shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
of such shares under the Act.
3.8. Legends. It is understood that the Note and Warrant may bear a
restrictive legend substantially in the following form:
THE [INSERT SECURITIES] (THE "SECURITIES") REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES
LAWS (COLLECTIVELY, THE "ACTS"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACTS
OR UNLESS AN OPINION OF COUNSEL IS DELIVERED TO THE CORPORATION IN FORM AND
SUBSTANCE SATISFACTORY TO THE CORPORATION TO THE EFFECT THAT AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
ARTICLE IV
Stockholders' Call Option
4.1. Call Right. The Lender hereby grants to each Principal Stockholder
the right (the "Call Right") to require the Lender, upon any conversion of the
Lender's Note, to sell to such Principal Stockholder up to that number of shares
so received by the Lender pursuant to such conversion or exercise as is
necessary to allow such Principal Stockholder to maintain its
- 14 -
{PAGE} 18
comparative percentage ownership interest in the Company in relation to the
other Principal Stockholders (the "Percentage Interest"). Weirton shall provide
each Principal Stockholder written notice of the conversion of the Lender's Note
(the "Conversion Note") not more than five business days following such
conversion. Notice of any exercise of such Call Right must be provided in
writing by such Principal Stockholder to the Lender not more than fifteen
business days from its receipt of the Conversion Notice. The closing with
respect to any exercise of a Call Right pursuant to the terms of this Article IV
(a "Call Right Closing"), shall take place at a date, time and location mutually
agreeable to the Lender and the Principal Stockholder(s) exercising the Call
Right(s). At the Call Right Closing, the Lender shall deliver the certificates
representing the shares subject to the exercised Call Right and the exercising
Principal Stockholder shall deliver the Call Right Exercise Price together with
the written representations and warranties required pursuant to Section 4.4
hereof. For purposes of this Agreement, the term "Principal Stockholders" shall
mean Bethlehem Steel Corporation, ICG, The LTV Corporation, Ryerson Toll, Inc.,
Steel Dynamics, Inc. and Weirton.
4.2. Exercise Price of Note Shares. The exercise price for a Principal
Stockholder's Call Right ("Call Right Exercise Price") with respect to shares
received by the Lender pursuant to the conversion of the Lender's Note shall
equal the product of (i) the Principal Stockholder's Percentage Interest (or the
such lesser percentage as the Principal Stockholder elects to purchase)
multiplied by (ii) the sum of the principal amount owed by the Company on the
Note plus accrued but unpaid interest thereon.
4.3. Calculation of Percentage Interest. A Principal Stockholder's
Percentage Interest shall be calculated by dividing the total number of shares
of the Company's capital stock owned by such Principal Stockholder by the total
number of shares (calculated on a Fully Diluted basis) of the Company's capital
stock owned by all Principal Stockholders immediately prior to the transaction
giving rise to the Call Right. For the purposes of this paragraph "Fully
Diluted" shall mean that all warrants and other securities convertible into
Common Stock issued by the Company to the Principal Stockholders and outstanding
immediately prior to the transaction giving rise to the Call Right are treated
as exercised or converted.
4.4. Principal Stockholder's Representations and Warranties. The
Principal Stockholder must represent and warrant in writing to the Lender as to
each of the matters set forth in Article III hereof as a condition precedent to
the Lender's obligations under this Article IV.
ARTICLE V
Miscellaneous
5.1. Tax Treatment. The Company agrees to take the position that there
is no "original issue discount" related to the Warrants in any filing with the
Internal Revenue Service; provided, however, the parties acknowledge that such
determination is subject to review by the Internal Revenue Service.
5.2. Successors and Assigns. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties.
- 15 -
{PAGE} 19
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement.
5.3. Governing Law. This Agreement shall be governed by and construed
under the laws of the Commonwealth of Pennsylvania, without giving effect to
principles of conflicts of laws.
5.4. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.5. Interpretation. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement. For purposes of Article II hereof, references to
the "Company" shall be deemed to mean MetalSite, Inc., and its predecessors
MetalSite, L.P. and MetalSite General Partner, LLC.
5.6. Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery, or delivery by overnight carrier, to
the party to be notified or three business days after deposit with the United
States Post Office, by registered or certified mail, postage prepaid and
addressed to such party at the address set forth below, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
If to the Company:
MetalSite, Inc.
Penn Center West
Building Two, Suite 200
Pittsburgh, PA 15276
Attn: Michael Matesic
Telephone No.: (877) 246-4900
Telecopier No.: (412) 490-9124
with a required copy to:
Buchanan Ingersoll Professional Corporation
One Oxford Centre
301 Grant Street, 20th Floor
Pittsburgh, PA 15219-1410
Attn: Mary Ann Dunham, Esq.
Telephone No.: (412) 562-1374
Telecopier No.: (412) 562-1041
- 16 -
{PAGE} 20
If to Weirton:
Weirton Steel Corporation
400 Three Springs Drive
Weirton, West Virginia 26062
Attn: William Kiefer
Phone: (304) 797-2000
Fax: (304) 797-2792
with a required copy to:
Buchanan Ingersoll Professional Corporation
One Oxford Centre
301 Grant Street, 20th Floor
Pittsburgh, PA 15219-1410
Attn: Thomas M. Thompson, Esq.
Telephone No.: (412) 562-8855
Telecopier No.: (412) 562-1041
If to a Stockholder, to the address set forth opposite such
Stockholder's name on Schedule I attached hereto.
5.7. Finder's Fee. Each party represents that it neither is nor will be
obligated for any finder's fee or commission in connection with this
transaction. The Lender agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Lender or any of its officers, partners,
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless the Lender from any liability for any commission or
compensation in the nature of a finder's fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or
any of its officers, employees, or representatives is responsible.
5.8. Expenses. Irrespective of whether the Closing is effected, the
Company shall pay all costs and expenses that it and the Lender incur with
respect to the negotiation, execution, delivery and performance of this
Agreement and the other Transaction Documents and any amendment or modification
hereto or thereto. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the Lender shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which the Lender may be entitled.
5.9. Entire Agreement; Amendments and Waivers. This Agreement and the
other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof. Any term of this Agreement and the Note and Warrant may be
amended and the observance of any term of this Agreement and the Note and
Warrant may be waived (either generally or in a particular instance and either
retroactively or prospectively), with the written consent of the Company and the
holder or
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{PAGE} 21
holders of the Note and/or Warrant; provided, however, that Article IV of this
Agreement may not be amended without the prior written consent of the
Stockholders. Any waiver or amendment effected in accordance with this Section
shall be binding upon the holder of the Note and/or Warrant purchased under this
Agreement at the time outstanding, each future holder of such Note, and the
Company.
5.10. Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
5.11. Survival of Representations and Warranties. The representations
and warranties of the parties contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and the Closing;
provided, however, that such representations and warranties need only be
accurate as of the date of such execution and delivery and as of the Closing.
5.12. Stockholders' Agreement. The parties agree that, notwithstanding
any provision in this Agreement or the other Transaction Documents to the
contrary, the Warrant and any Common Stock issued upon the conversion of the
Note or the exercise of the Warrant will be subject to Articles 3 and 6 of that
certain Stockholders' Agreement dated July 27, 2000, between and among the
Company and its stockholders of such date (the "Stockholders' Agreement");
provided, however, that Lender may make such transfers of Common Stock to the
other Principal Stockholders as contemplated by Article IV of this Agreement,
provided further, that any such Principal Stockholders agree that the Common
Stock so transferred (the "Transferred Common Stock") shall after such transfer
be subject to Articles 3 and 6 of the Stockholders' Agreement. Stockholders
hereby agree that any Transferred Common Stock shall be subject to Articles 3
and 6 of the Stockholders' Agreement.
[Remainder of Page Left Intentionally Blank]
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{PAGE} 22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
METALSITE, INC.
By: /s/ Michael M. Matesic
-------------------------------
Name: Michael Matesic
Title: Vice President
LENDER:
WEIRTON STEEL CORPORATION
By: /s/ John H. Walker
-------------------------------
Name: John H. Walker
Title: President and
Chief Operating Officer
- 19 -
{PAGE} 23
STOCKHOLDERS:
BETHLEHEM STEEL CORPORATION
By: /s/ Thomas J. Conarty
-----------------------------------
Name: Thomas J. Conarty
Title: Senior Vice President
THE LTV CORPORATION
By: /s/ J. Peter Kelly
-----------------------------------
Name: J. Peter Kelly
Title: Chairman and CEO
RYERSON TULL, INC.
By: /s/ Neil S. Novich
-----------------------------------
Name: Neil S. Novich
Title: President, Chairman & CEO
STEEL DYNAMICS, INC.
By: /s/ Keith Busse
-----------------------------------
Name: Keith Busse
Title: President and CEO
1999 INTERNET CAPITAL, L.P.
By: ICG Holding, Inc., General Partner
-----------------------------------
By: /s/ Henry N. Nassau
-----------------------------------
Name: Henry N. Nassau
Title: Vice President and Secretary
- 20 -
{PAGE} 24
SCHEDULE I
Stockholder Address
----------- -------
Bethlehem Steel Corporation 1170 8th Avenue
Bethlehem, PA 18016-7699
Attn: Secretary
The LTV Corporation 200 Public Square
Cleveland, OH 44114-2308
Attn: Francis P. Mangano
Attn: Sheri Edison
Ryerson Tull, Inc. 2621 West 15th Place
Chicago, IL 60608
Attn: Joyce E. Minns
Steel Dynamics, Inc. 4500 County Road 59
Butler, IN 46721
Attn: Keith Busse
1999 Internet Capital, L.P. 435 Devon Park Drive, #600
Wayne, PA 19087
Attn: Henry Nassau
{PAGE} 25
Exhibit A
PROMISSORY NOTE
{PAGE} 26
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS (COLLECTIVELY, THE
"ACTS"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACTS OR UNLESS AN OPINION OF
COUNSEL IS DELIVERED TO THE CORPORATION IN FORM AND SUBSTANCE SATISFACTORY TO
THE CORPORATION TO THE EFFECT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE.
CONVERTIBLE PROMISSORY NOTE
U.S. $10,000,000 October 10, 2000
FOR VALUE RECEIVED, MetalSite, Inc., a Delaware corporation (the
"Borrower"), promises to pay to Weirton Steel Corporation, a Delaware
corporation (the "Lender"), at a location to be designated by the Lender, the
principal amount of TEN MILLION U.S. DOLLARS ($10,000,000) (the "Principal
Amount"), upon the terms and conditions specified below.
1. Repayment or Conversion. This convertible promissory note (this
"Note") shall be converted into common stock of the Borrower (the "Common
Stock") (with the per share conversion rate being referred to as the "Conversion
Rate"), or the Principal Amount and accrued interest thereon shall be due and
payable in accordance with the respective provisions:
(a) Immediately prior to the closing of the Borrower's first firm
commitment underwritten public offering of its Common Stock under the Securities
Act of 1933, as amended (the "IPO"), the Lender shall have the option to convert
the Principal Amount and accrued interest thereon into that number of shares of
Common Stock determined by dividing (i) the sum of the Principal Amount and
accrued interest thereon by (ii) a price per share equal to 80% of the price per
share at which the Common Stock is sold to the public at such IPO.
(b) At the Lender's option, upon the closing of the Borrower's next
financing with gross proceeds to the Borrower of TEN MILLION U.S. DOLLARS
($10,000,000) or more (the "Next Financing") (exclusive of any funds received by
the Borrower hereunder (including by reason of a conversion under this clause
(b))), the Lender may convert the Principal Amount and accrued interest thereon
into that number of shares of Common Stock determined by dividing (i) the sum of
the Principal Amount and accrued interest thereon by (ii) $6.00.
(c) If prior to the event of the closing of (i) the acquisition of
Borrower by means of any transaction or series of related transactions
(including, without limitation, any reorganization, merger or consolidation)
that results in the transfer of fifty percent (50%) or more of the outstanding
voting power of the Borrower; (ii) a sale of all or substantially all of the
assets of the Borrower to another entity, or (iii) the liquidation or
dissolution of the Borrower, the Lender shall have the option to convert the
Principal Amount and accrued interest thereon into
{PAGE} 27
that number of shares of Common Stock determined by dividing (i) the sum of the
Principal Amount and accrued interest thereon by (ii) $6.00.
(d) At any time after the date that is 90 days after the date hereof,
the Lender shall have the option to convert the Principal Amount and the accrued
interest thereon into that number of shares of Common Stock determined by
dividing (i) the outstanding Principal Amount and the accrued interest thereon
by (ii) (A) $6.00 if such conversion takes place prior to the date that is 180
days after the date hereof, or (B) an amount equal to fair market value of a
share of Common Stock, as determined by using the average price to revenues
multiple of a group of ten (10) public internet commerce companies selected by
the Board of Directors of the Borrower, if such conversion takes place on a date
that is at least 180 days after the date hereof.
(e) On the date that is 18 months after the date hereof (the "Repayment
Date") (and without the occurrence of above Section 1(a), (b), (c) or (d)), the
Principal Amount and accrued interest, if any, shall be due and payable in full.
2. Rate of Interest. Interest shall accrue under this Note at the rate
of five percent (5%) per annum, compounded annually, except upon the occurrence
of an Event of Acceleration set forth in Section 4 below, whereupon interest
shall begin to accrue thereafter on any unpaid principal balance at the rate of
eighteen percent (18%) per annum, compounded annually.
3. Prepayment. Prepayment of the Principal Amount may be made at any
time without the prior written consent of the Lender; provided that prior to any
prepayment, Borrower shall give Lender 5 business days written notice of such
intention to prepay.
4. Events of Acceleration. The entire unpaid Principal Amount and
accrued interest thereon shall become immediately due and payable upon one or
more of the following events (each an "Event of Acceleration"):
(a) the failure of the Borrower to pay when due the Principal Amount or
interest accrued thereon;
(b) the insolvency of the Borrower, the commission of an act of
bankruptcy by the Borrower, the execution by the Borrower of a general
assignment for the benefit of creditors, the filing by or against the Borrower
of a petition in bankruptcy or a petition for relief under the provisions of the
federal bankruptcy act or another state or federal law for the relief of debtors
and the continuation of such petition without dismissal for a period of ninety
(90) days or more;
(c) the occurrence of any default or event of default under any other
indebtedness of the Borrower, including the indebtedness arising under the
Letter Agreement - Committed Line of Credit, dated July 27, 2000, among the
Borrower and the Lenders named therein or the MetalSite, L.P. Line of Credit
referred to therein; or
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{PAGE} 28
(d) if any of the Borrower's representations and warranties under
Section 2 of the Note and Warrant Purchase Agreement of even date herewith by
and between the Borrower, Lender and the other parties named therein shall be
inaccurate.
5. Stock Fully Paid; Reservation of Shares. All of the shares issuable
upon conversion of this Note will, upon issuance, be fully paid and
nonassessable, and, except as provided in Article IV of the Note and Warrant
Purchase Agreement, dated the date hereof, by and among the Borrower, Weirton
Steel Corporation (as Lender) and the stockholders named therein (the "Purchase
Agreement"), free from all preemptive rights, rights of first refusal or first
offer, taxes, liens and charges with respect to the issuance thereof. Commencing
with the first sale pursuant to the Next Financing and for the period thereafter
during which this Note remains outstanding, the Borrower shall at all times have
authorized and reserved for issuance sufficient shares of its Common Stock to
provide for the conversion of this Note. The Borrower agrees that its issuance
of this Note shall constitute full authority to its officers who are charged
with the duty of executing stock certificates to execute and issue the necessary
certificates for shares upon the conversion of this Note.
6. Adjustment of Conversion Rate and Number of Shares. The number and
kind of shares into which this Note is convertible shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows:
(a) Reclassification, Consolidation or Merger. If while this Note, or
any portion hereof, remains outstanding there shall be (i) a reorganization
(other than a combination, reclassification, exchange or subdivision of shares
otherwise provided for herein), (ii) a merger or consolidation of the Borrower
with or into another corporation in which the Borrower is not the surviving
entity, or a reverse triangular merger in which the Borrower is the surviving
entity but the shares of the Borrower's capital stock outstanding immediately
prior to the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash, or otherwise, or (iii) a sale or
transfer of the Borrower's properties and assets as, or substantially as, an
entirety to any other person, then, as a part of such reorganization, merger,
consolidation, sale or transfer, lawful provision shall be made so that the
holder of this Note shall thereafter be entitled to receive upon conversion of
this Note, at the Conversion Rate then in effect, the greatest number of shares
of stock or other securities or property of the successor corporation resulting
from such reorganization, merger, consolidation, sale or transfer that a holder
of the shares deliverable upon conversion of this Note would have been entitled
to receive in such reorganization, consolidation, merger, sale or transfer if
this Note had been converted immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 6. The foregoing provisions of this paragraph shall similarly
apply to successive reorganizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other corporation that are at
the time receivable upon the conversion of this Note. If the per share
consideration payable to the holder hereof for shares in connection with any
such transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the Lender. In
all events, appropriate adjustment shall be made in the application of the
provisions of this Note (including
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{PAGE} 29
adjustment of the Conversion Rate and number of shares receivable pursuant to
the terms and conditions of this Note) with respect to the rights and interests
of the Lender after the transaction, to the end that the provisions of this Note
shall be applicable after that event, as near as reasonably may be, in relation
to any shares or other property deliverable after that event upon conversion of
this Note.
(b) Split, Subdivision or Combination of Shares. If the Borrower at any
time while this Note, or any portion hereof, remains outstanding shall split or
subdivide any class of securities as to which conversion rights under this Note
exist, into a different number of securities of the same class, the number of
shares of such class issuable upon conversion of this Note immediately prior to
such split or subdivision shall be proportionately increased and the Conversion
Rate for such class of securities shall be proportionately decreased. If the
Borrower at any time while this Note, or any portion hereof, remains outstanding
shall combine any class of securities as to which conversion rights under this
Note exist, into a different number of securities of the same class, the number
of shares of such class issuable upon conversion of this Note immediately prior
to such combination shall be proportionately decreased and the Conversion Rate
for such class of securities shall be proportionately increased.
(c) Adjustments for Dividends in Stock or Other Securities or Property.
If while this Note, or any portion hereof, remains outstanding, the holders of
any class of securities as to which conversion rights under this Note exist at
the time shall have received, or, on or after the record date fixed for the
determination of eligible stockholders, shall have become entitled to receive,
without payment therefor, other or additional stock or other securities or
property (other than cash) of the Borrower by way of dividend, then and in each
case, this Note shall represent the right to acquire, in addition to the number
of shares of such class of security receivable upon conversion of this Note, and
without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash) of
the Borrower that such holder would hold on the date of such conversion had it
been the holder of record of the class of security receivable upon conversion of
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