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Exhibit 10.3
METALSITE, INC.
NOTE AND WARRANT PURCHASE AGREEMENT
among
METALSITE, INC.,
WEIRTON STEEL CORPORATION
and
THE STOCKHOLDERS NAMED HEREIN
dated as of
October 10, 2000
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TABLE OF CONTENTS
PAGE
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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
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PAGE
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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
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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 ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Professional
Corporation, One Oxford Centre, 20th floor, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇ (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:
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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
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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
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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
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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,
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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 ▇▇▇▇-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;
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(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.
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(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
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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 ▇▇▇▇ applications, trade names, domain names, copyrights, trade secrets,
proprietary information, customer lists and know how (collectively,
"Intellectual Property") necessary for the operation of
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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
- 9 -
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
- 10 -
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 -
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 -
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
- 13 -
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 -
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 -
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.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a required copy to:
▇▇▇▇▇▇▇▇ Ingersoll Professional Corporation
One Oxford Centre
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
- 16 -
20
If to Weirton:
Weirton Steel Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a required copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Professional Corporation
One Oxford Centre
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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
- 17 -
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]
- 18 -
22
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
METALSITE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
LENDER:
WEIRTON STEEL CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and
Chief Operating Officer
- 19 -
23
STOCKHOLDERS:
BETHLEHEM STEEL CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
THE LTV CORPORATION
By: /s/ J. ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: J. ▇▇▇▇▇ ▇▇▇▇▇
Title: Chairman and CEO
RYERSON ▇▇▇▇, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President, Chairman & CEO
STEEL DYNAMICS, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: President and CEO
1999 INTERNET CAPITAL, L.P.
By: ICG Holding, Inc., General Partner
-----------------------------------
By: /s/ ▇▇▇▇▇ ▇. Nassau
-----------------------------------
Name: ▇▇▇▇▇ ▇. Nassau
Title: Vice President and Secretary
- 20 -
24
SCHEDULE I
Stockholder Address
----------- -------
Bethlehem Steel Corporation ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Secretary
The LTV Corporation ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, Inc. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Steel Dynamics, Inc. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇
1999 Internet Capital, L.P. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, #▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ Nassau
25
Exhibit A
PROMISSORY NOTE
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
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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(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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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
this Note on the date hereof and had thereafter, during the period from the date
hereof to and including the date of such conversion, retained such shares and/or
all other additional stock available by it as aforesaid during said period,
giving effect to all adjustments called for during such period by the provisions
of this Section 6.
(d) Notice of Adjustments. Upon any adjustment of the Conversion Rate
and any increase or decrease in the number of shares into which this Note is
convertible, then, and in each such case, the Borrower, within thirty (30) days
thereafter, shall give written notice thereof to the Lender at the address of
such Lender as shown on the books of the Borrower which notice shall state the
Conversion Rate as adjusted and, if applicable, the increased or decreased
number of shares into which this Note is convertible, setting forth in
reasonable detail the method of calculation of each.
7. Registration Rights. The Borrower hereby grants the Lender
registration rights with respect to any and all shares of Common Stock
receivable upon conversion of this Note
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pursuant to Section 1, which registration rights shall be identical to those
provided in that certain Stockholders' Agreement, dated as of July 27, 2000,
among the Borrower, the Lender and the other parties thereto (the "Stockholders
Agreement").
8. Conversion Notice. The Lender may effect the conversion of this
Note, in whole or in part, at any time, or from time to time by the surrender of
this Note (with the notice of conversion form (the "Notice of Conversion")
attached hereto as Exhibit A duly executed) at the principal office of the
Borrower. The person or persons in whose name(s) any certificate(s) representing
shares shall be issuable upon conversion of this Note shall be deemed to have
become the holder(s) of record of, and shall be treated for all purposes as the
record holder(s) of, the shares represented thereby (and such shares shall be
deemed to have been issued) immediately prior to the close of business on the
date or dates upon which this Note is converted.
9. Collection. If any action is instituted to collect this Note, the
Borrower promises to pay to Lender all reasonable costs and expenses (including
reasonable attorneys' fees) incurred in connection with such action.
10. Security Agreement. Borrower hereby acknowledges that in connection
with executing this Note, the Borrower will enter into a Security Agreement with
the Lender substantially in the form attached hereto as Exhibit B whereby
Borrower shall grant to the Lender a security interest in its assets as set
forth therein.
11. Amendments and Waivers. Any term of this Note may be amended and
the observance of any term of this Note may be waived (either generally or in a
particular instance and either retroactively or prospectively) in accordance
with Section 5.9 of the Purchase Agreement.
12. Conflicting Agreements. In the event of any inconsistencies between
the terms of this Note and the terms of any other document related to the loan
evidenced by this Note, the terms of this Note shall prevail.
13. Severability. The unenforceability or invalidity of any provision
or provisions of this Note as to any persons or circumstances shall not render
that provision or those provisions unenforceable or invalid as to any other
provisions or circumstances, and all provisions hereof, in all other respects,
shall remain valid and enforceable.
14. Governing Law. This Note shall be governed by and construed under
the laws of the Commonwealth of Pennsylvania as applied to agreements among
Pennsylvania residents entered into and to be performed entirely within the
Commonwealth of Pennsylvania.
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15. Presentment, Etc. The Borrower hereby expressly waives presentment,
demand for payment, dishonor, notice of dishonor, protest, notice of protest,
and any other formality.
16. Stockholders' Agreement. Notwithstanding any provision in this Note
to the contrary, the Borrower hereby issues this Note subject to Section 5.12 of
the Purchase Agreement, which provides in part that any Common Stock issued upon
any conversion of this Note will be subject to Articles 3 and 6 of the
Stockholders' Agreement; provided, however, the Lender may make such transfers
of Common Stock to the other stockholders of the Borrower as is contemplated by
Article IV of the Purchase Agreement, provided further, that any such
stockholders agree that the Common Stock so transferred shall after such
transfer be subject to Articles 3 and 6 of the Stockholders' Agreement.
17. Assignment. This Note may not be transferred or assigned by Lender
without the prior written consent of the Borrower, unless such assignment is to
an Affiliate (as defined in the Purchase Agreement) of Lender.
METALSITE, INC.
By:
---------------------------------
Name:
Title:
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Exhibit A
Notice of Conversion
TO: MetalSite, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
The undersigned hereby elects to convert _____________ shares of Common
Stock of MetalSite, Inc. pursuant to the terms of this Note.
Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
-------------------------------
(Name)
-------------------------------
-------------------------------
(Address)
The undersigned hereby represents and warrants that the aforesaid
shares of Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale, in connection with the
distribution thereof, and that the undersigned has no present intention of
distributing or reselling such shares.
-------------------------------
(Signature and Date)
Title:
-------------------------
33
Exhibit B
[insert Security Agreement.]
34
SECURITY AGREEMENT
THIS AGREEMENT is made as of October 10, 2000, by and among MetalSite,
Inc., a Delaware corporation ("Debtor"), and Weirton Steel Corporation, a
Delaware corporation ("Secured Party").
STATEMENT OF FACTS
A. Debtor and Secured Party are parties to a Convertible Promissory
Note of even date herewith (the "Note") and the Purchase Agreement as defined
therein, pursuant to which Secured Party has agreed to make certain loans to
Debtor (the "Loans").
B. Debtor has agreed to provide Secured Party with a security interest
in the assets of Debtor as collateral security for the payment of the principal
and interest due under the Note and other obligations due thereunder and under
the Purchase Agreement.
1. NOW, THEREFORE, in consideration of the Statement of Facts and the mutual
covenants and agreements contained herein, the parties, intending to be legally
bound, covenant and agree as follows: For valuable consideration, receipt of
which is hereby acknowledged, Debtor hereby grants to Secured Party a security
interest in all Accounts, Chattel Paper, Documents, Equipment, General
Intangibles, Inventory, Instruments, and Letters of Credit (as those terms are
used in the UCC as herein defined) (collectively referred to as the
"Collateral") as security for the payment of the indebtedness and the
performance of any obligation of Debtor created under the Note and Purchase
Agreement (the obligations of Debtor under the Note and Purchase Agreement and
under this Security Agreement are collectively referred to as the
"Obligations").
2. Debtor agrees to join with Secured Party in executing one or more financing
statements pursuant to the Uniform Commercial Code of the Commonwealth of
Pennsylvania (the "UCC") in form reasonably satisfactory to Secured Party, and
Debtor will pay the cost of filing such financing statements in all public
offices wherever filing is reasonably required by the UCC in order to perfect
the security interest granted to Secured Party.
3. The security interest granted to Secured Party hereunder will be expressly
junior and subordinate to the security interest granted by Debtor to any
financing now or hereafter provided by any bank or other institutional lender of
Debtor (the "Institutional Indebtedness"), all interest accrued thereon, and all
costs of collection and enforcement incurred by lender(s) of the Institutional
Indebtedness in collecting such principal amount. Secured Party agrees to
execute and deliver any documents or instruments reasonably required by such
institutional lenders or other third parties in order to evidence the
subordination of the security interest granted to
35
Secured Party hereunder, including one or more Subordination Agreements in form
and substance reasonably satisfactory to Secured Party.
4. Upon the occurrence of an Event of Acceleration (as defined in the Note), and
at any time thereafter until such Event of Acceleration is cured, Secured Party
will have the rights and remedies of a secured party under the UCC, subject to
the subordination by Secured Party in favor of the lender(s) of the
Institutional Indebtedness. Secured Party will give to Debtor 10 days' prior
written notice of the time and place of any public sale or the time after which
any private sale or any other intended disposition of the Collateral is to be
made.
5. Secured Party may exercise its rights and remedies with respect to the
Collateral without regard to any other security or sources for payment. Secured
Party will not be deemed to have waived any of its rights or remedies hereunder
unless such waiver is in writing and signed by Secured Party. No delay or
omission on the part of Secured Party in exercising any rights or remedies will
operate as a waiver of such right or remedy or any other rights or remedies. A
waiver on any one occasion will not be construed as a bar or waiver of any right
or remedy on future occasions. All rights and remedies of Secured Party
hereunder will be cumulative and may be exercised singularly or concurrently.
6. All notices or other communications required or permitted hereunder will be
in writing and will be deemed given when delivered: (i) personally, (ii) by
registered or certified mail (postage prepaid), (iii) by legible facsimile
transmission or (iv) by overnight courier (fare prepaid), in all cases addressed
as follows:
IF TO DEBTOR, TO: WITH A COPY TO:
MetalSite, Inc. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Professional Corporation
Two Penn Center ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, Esquire
Vice President of Finance Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
IF TO SECURED PARTY, TO: WITH A COPY TO:
Weirton Steel Corporation ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Professional Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esquire
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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36
or to such address as such party may indicate by a notice delivered to the other
party hereto. Notice will be deemed received the same day (when delivered
personally), 5 days after mailing (when sent by registered or certified mail),
or the next business day (when sent by fax transmission or when delivered by
overnight courier). Any party to this Security Agreement may change its address
to which all communications and notices may be sent hereunder by addressing
notices of such change in the manner provided.
7. This Security Agreement will be binding upon Debtor, its permitted successors
and assigns, and will inure to the benefit of Secured Party, its permitted
successors and assigns.
8. This Security Agreement and the rights and the obligations of the parties
hereto will be governed by and construed and enforced in accordance with the
laws of the Commonwealth of Pennsylvania without regard to any jurisdiction's
conflict of laws provisions.
9. This Security Agreement may be executed in one or more counterparts, each of
which when taken together will constitute one instrument. Delivery of executed
signature pages hereof by facsimile transmission will constitute effective and
binding execution and delivery hereof.
[Signatures Begin on the Next Page]
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37
IN WITNESS WHEREOF, the parties have caused this Security Agreement to
be executed and delivered on the day and year first above written.
METALSITE, INC.
By:
-------------------------------
Name:
Title:
WEIRTON STEEL CORPORATION
By:
-------------------------------
38
Exhibit B
WARRANT TO PURCHASE COMMON STOCK
39
NEITHER THIS WARRANT NOR THE UNDERLYING SHARES HAVE 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.
VOID AFTER OCTOBER 9, 2010
METALSITE, INC.
WARRANT TO PURCHASE SHARES OF STOCK
THIS CERTIFIES THAT, for value received, Weirton Steel Corporation, or
its registered assign(s) as permitted hereunder (the "Holder"), is entitled to
subscribe for and purchase from MetalSite, Inc., a Delaware corporation (the
"Company"), at any time until and including October 9, 2010 (the "Expiration
Date"), the Shares (as defined below) at the per share exercise price set forth
below (the "Exercise Price") (each as adjusted pursuant to Section 4 hereof),
subject to the provisions and upon the terms and conditions hereinafter set
forth;
This Warrant is subject to the following terms and conditions:
1. Shares Issuable Upon Exercise; Exercise Price; Exercisability.
(a) The Shares shall mean 250,000 shares of the Company's
Common Stock, par value $.01 (the "Common Stock").
(b) The Exercise Price of the Shares shall be $.01 per share.
2. Method of Exercise; Payment.
(a) Cash Exercise. The purchase rights represented by this
Warrant may be exercised by the Holder, in whole or in part, at any time, or
from time to time, by the surrender of this Warrant (with the notice of exercise
form (the "Notice of Exercise") attached hereto as Exhibit A duly executed) at
the principal office of the Company, and by payment to the Company of an amount
equal to the Exercise Price multiplied by the number of the Shares being
purchased, which amount may be paid, at the election of the Holder, by (i) wire
transfer or check payable to the order of the Company, (ii) cancellation by the
Holder of indebtedness or other obligations of the Company to the Holder or
(iii) a combination of (i) and (ii). The person or
40
persons in whose name(s) any certificate(s) representing Shares shall be
issuable upon exercise of this Warrant shall be deemed to have become the
holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the Shares represented thereby (and such Shares shall be deemed to
have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised.
(b) Net Issue Exercise. In lieu of exercising this Warrant
pursuant to Section 2(a) hereof, the Holder may elect to receive a number of
Shares equal to the value (as determined below) of this Warrant (or the portion
thereof being canceled) by surrender of this Warrant at the principal office of
the Company together with Notice of Exercise in which alternative No. 1 is
initiated by the Holder. In such event, the Company shall issue to the Holder a
number of Shares computed using the following formula:
X=Y(A-B)
------
A
Where X = the number of Shares to be issued to the Holder.
Y = the number of Shares subject to this Warrant or,
if only a portion of this Warrant is being
exercised, the portion of the Warrant being
canceled (at the time of such calculation).
A = the fair market value of one (1) Share (at the
date of such calculation).
B = the Exercise Price (as adjusted to the date of
such calculation).
(c) Fair Market Value. For purposes of this Section 2, the
fair market value of one (1) Share shall equal:
(i) the average of the closing per share bid and
asked prices of the Common Stock quoted on the Nasdaq Stock Market or in the
Over-The-Counter Market Summary or the closing price quoted on any exchange on
which the Common Stock is listed, whichever is applicable, as published in the
Western Edition of The Wall Street Journal for the ten (10) trading days prior
to the date of determination of fair market value; or
(ii) if the Common Stock is not traded on the
Nasdaq Stock Market or Over-The-Counter or on an exchange, the fair market value
of a Share shall be agreed upon by the parties hereto. If parties cannot agree
on the fair market value within five (5) business days of delivery of the Notice
of Exercise, the Board of Directors in good faith shall determine the fair
market value of a Share in the same manner used to determine the fair market
value of incentive stock options granted by the Company.
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41
(iii) Stock Certificates. In the event of any
exercise of the rights represented by this Warrant, as promptly as practicable
on or after the date of exercise and in any event within ten (10) days
thereafter, the Company at its expense shall issue and deliver to the person or
persons entitled to receive the same a certificate or certificates for the
number of Shares issuable upon such exercise. In the event this Warrant is
exercised in part, the Company at its expense will execute and deliver a new
Warrant of like tenor exercisable for the number of Shares for which this
Warrant may then be exercised.
(d) Taxes. The issuance of the Shares upon the exercise of
this Warrant, and the delivery of certificates or other instruments representing
such Shares, shall be made without charge to the Holder for any tax or other
charge in respect of such issuance.
3. Stock Fully Paid; Reservation of Shares. All of the Shares issuable
upon the exercise of the rights represented by this Warrant will, upon issuance
and receipt of the Exercise Price therefor, be fully paid and nonassessable,
and free from all preemptive rights, rights of first refusal or first offer,
taxes, liens and charges with respect to the issuance thereof. During the period
within which the rights represented by this Warrant may be exercised, the
Company shall at all times have authorized and reserved for issuance sufficient
shares of its Common Stock to provide for the exercise of the rights represented
by this Warrant. The Company shall take all steps necessary to amend its charter
documents to provide sufficient reserves of shares of Common Stock issuable upon
exercise of this Warrant. The Company agrees that its issuance of this Warrant
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 exercise of this Warrant.
4. Adjustment of Exercise Price and Number of Shares. Subject to the
provisions of Section 14 hereof, the number and kind of Shares purchasable upon
the exercise of this Warrant and the Exercise Price therefor shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows:
(a) Adjustment for Reclassification, Consolidation or Merger.
If while this Warrant, or any portion hereof, remains outstanding and unexpired
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 Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which the
Company is the surviving entity but the shares of the Company'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 Company'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 Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Exercise Price 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
- 3 -
42
holder of the shares deliverable upon exercise of this Warrant would have been
entitled to receive in such reorganization, consolidation, merger, sale or
transfer if this Warrant had been exercised immediately before such
reorganization, merger, consolidation, sale or transfer, all subject to further
adjustment as provided in this Section 4. 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 exercise of this Warrant.
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 Holder. In all events, appropriate adjustment shall be made in the
application of the provisions of this Warrant (including adjustment of the
Exercise Price and number of Shares purchasable pursuant to the terms and
conditions of this Warrant) with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant
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 exercise of
this Warrant.
(b) Adjustments for Split, Subdivision or Combination of
Shares. If the Company at any time while this Warrant, or any portion hereof,
remains outstanding and unexpired shall split or subdivide any class of
securities as to which purchase rights under this Warrant exist, into a
different number of securities of the same class, the number of Shares of such
class issuable upon exercise of this Warrant immediately prior to such split or
subdivision shall be proportionately increased and the Exercise Price for such
class of securities shall be proportionately decreased. If the Company at any
time while this Warrant, or any portion hereof, remains outstanding and
unexpired shall combine any class of securities as to which purchase rights
under this Warrant exist, into a different number of securities of the same
class, the number of Shares of such class issuable upon exercise of this Warrant
immediately prior to such combination shall be proportionately decreased and the
Exercise Price for such class of securities shall be proportionately increased.
(c) Adjustments for Dividends in Stock or Other Securities or
Property. If while this Warrant, or any portion hereof, remains outstanding and
unexpired, the holders of any class of securities as to which purchase rights
under this Warrant 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 Company by way of
dividend, then and in each case, this Warrant shall represent the right to
acquire, in addition to the number of shares of such class of security
receivable upon exercise of this Warrant, 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 Company that such holder would
hold on the date of such exercise had it been the holder of record of the class
of security receivable upon exercise of this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock available
by it as aforesaid during said period, giving effect to all adjustments called
for during such period by the provisions of this Section 4.
- 4 -
43
(d) Notice of Adjustments. Upon any adjustment of the Exercise
Price and any increase or decrease in the number of Shares purchasable upon the
exercise of this Warrant, then, and in each such case, the Company, within
thirty (30) days thereafter, shall give written notice thereof to the Holder at
the address of such Holder as shown on the books of the Company which notice
shall state the Exercise Price as adjusted and, if applicable, the increased or
decreased number of Shares purchasable upon the exercise of this Warrant,
setting forth in reasonable detail the method of calculation of each.
5. Notices.
(a) In the event that the Company shall propose at any time:
(i) to declare any dividend or distribution upon its
Common Stock (or other stock or securities at the time receivable upon the
exercise of this Warrant) whether in cash, property, stock or other securities,
whether or not a regular cash dividend and whether or not out of earnings or
earned surplus;
(ii) to offer for subscription pro rata to the
holders of any class or series of its stock any additional shares of stock of
any class or series or other rights;
(iii) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to voluntarily liquidate, dissolve or wind up; or
(iv) to effect an initial public offering of the
Common Stock (the "Public Offering") pursuant to an effective registration
statement filed with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended (the "Act");
then, in connection with each such event, the Company shall send to the Holder
(1) at least ten (10) days' prior written notice of the date on which a record
shall be taken for such dividend, distribution or subscription rights (and
specifying the date on which the holders of Common Stock shall be entitled
thereto) or for determining rights to vote, if any; and (2) at least ten (10)
days' prior written notice of the date when the same shall take place, and the
date, if any is to be fixed, on which the holders of record of Common Stock
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event). Notwithstanding the
above, the ten (10) days' notice requirement may be shortened or waived upon the
written consent of the Holder.
(b) Any written notice by the Company required or permitted
hereunder shall be given by hand delivery or first class mail, postage prepaid,
addressed to the Holder at the address shown on the books of the Company for the
Holder.
6. Registration Rights. The Company hereby grants the Holder
registration rights with respect to the shares receivable upon the exercise
hereof identical to those provided in that
- 5 -
44
certain Stockholders' Agreement, dated as of July 27, 2000, among the Company,
Weirton Steel Corporation and the other parties thereto (the "Stockholders
Agreement").
7. Legend. Each certificate evidencing the Shares issued upon exercise
of this Warrant, or transfer of such shares (other than a transfer registered
under the Act or any subsequent transfer of shares so registered) shall be
stamped or imprinted with a legend substantially in the following form:
NEITHER THIS WARRANT NOR THE UNDERLYING SHARES HAVE 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.
8. Removal of Legend. Upon request of a holder of a certificate with
the legends referred to in Section 7 hereof, the Company shall issue to such
holder a new certificate therefor free of any transfer legend, if, with such
request, the Company shall have received an opinion of counsel to the effect
that any transfer by such holder of the shares evidenced by such certificate
will not violate the Act and applicable state securities laws and that such
shares will no longer be subject to rights of first offer and voting agreements.
9. Fractional Shares. No fractional shares will be issued in connection
with any exercise hereunder. Any fraction of a share resulting from any
calculation will be rounded up to the next whole share.
10. Transferability. Subject to compliance with applicable federal and
state securities laws and Section 15 hereof, this Warrant and all rights
hereunder are transferable, in whole or in part, without charge to the Holder
hereof (except for transfer taxes), upon surrender of this Warrant properly
endorsed.
11. Representations and Warranties of the Company. The Company
represents and warrants to the Holder as follows:
(a) This Warrant has been duly authorized and executed
by the Company and is a valid and binding obligation of the Company enforceable
in accordance with its terms;
(b) Prior to the date that this Warrant becomes exercisable,
the Shares will have been duly authorized and reserved for issuance by the
Company and, when issued in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable;
- 6 -
45
(c) The execution and delivery of this Warrant are not, and
the issuance of the Shares upon exercise of this Warrant in accordance with the
terms hereof will not be, inconsistent with the Company's charter documents.
12. Representations and Warranties by the Holder. The Holder represents
and warrants to the Company as follows:
(a) This Warrant is being acquired for its own account, for
investment and not with a view to, or for resale in connection with, any
distribution thereof within the meaning of the Act. Upon exercise of this
Warrant, the Holder shall, if so requested by the Company, confirm in writing,
in a form reasonably satisfactory to the Company, that the Shares issuable upon
exercise of this Warrant are being acquired for investment and not with a view
toward distribution or resale that would violate the Act.
(b) The Holder understands that the Warrant and the Shares
have not been registered under the Act by reason of their issuance in a
transaction exempt from the registration and prospectus delivery requirements of
the Act pursuant to Section 4(2) thereof, and that they must be held by the
Holder indefinitely, and that the Holder must therefore bear the economic risk
of such investment indefinitely, unless a subsequent disposition thereof is
registered under the Act or is exempted from such registration.
(c) The Holder has such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks of
the purchase of this Warrant and the Shares purchasable pursuant to the terms of
this Warrant and of protecting its interests in connection therewith.
(d) The Holder is able to bear the economic risk of the
purchase of the Shares pursuant to the terms of this Warrant.
13. Rights of Stockholders. Subject to Sections 4 and 5 hereof, no
holder of this Warrant shall be entitled, as a Warrant holder, to vote or
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company that may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the holder of this Warrant, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value,
consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.
14. Expiration of Warrant. This Warrant shall expire and shall no
longer be exercisable as of 5:00 p.m., Eastern Standard Time, on October 9,
2010.
- 7 -
46
15. Assignment; Stockholders' Agreement. Notwithstanding any provision
in this Warrant to the contrary, this Warrant may not be transferred or assigned
by Holder without the prior written consent of the Company, unless such
assignment is to an Affiliate (as defined in the Stockholders' Agreement of
Holder and any Common Stock issued upon the exercise of this Warrant is subject
to Articles 3 and 6 of the Stockholders' Agreement.
16. Miscellaneous.
(a) This Warrant shall be governed by and construed for all purposes
under and in accordance with the laws of the Commonwealth of Pennsylvania
without regard to principles of conflicts of law.
(b) The headings in this Warrant are for purposes of reference only,
and shall not limit or otherwise affect any of the terms hereof.
(c) The representations, warranties, covenants and conditions of the
respective parties contained herein or made pursuant to this Warrant shall
survive the execution and delivery of this Warrant.
(d) The terms of this Warrant shall be binding upon and shall inure to
the benefit of any successors or assigns of the Company and of the holder or
holders hereof and of the Shares issued or issuable upon the exercise hereof.
(e) This Warrant 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.
(f) The Company shall not, by amendment of its charter documents, or
through any other means, directly or indirectly, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant and shall at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment.
(g) Upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant and, in the case of
any such loss, theft or destruction, upon delivery of an indemnity agreement
reasonably satisfactory in form and amount to the Company or, in the case of any
such mutilation, upon surrender and cancellation of such Warrant, the Company,
at its expense, will execute and deliver to the holder of record, in lieu
thereof, a new Warrant of like date and tenor.
(h) This Warrant and any provision hereof may be amended, waived or
terminated only by an instrument in writing signed by the Company and the
Holder.
- 8 -
47
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
Issued this 10th day of October, 2000.
METALSITE, INC.
By:
------------------------------
Title:
---------------------------
Acknowledged and Accepted:
WEIRTON STEEL CORPORATION
By:
------------------------------
Name:
Title:
- 9 -
48
EXHIBIT A
NOTICE OF EXERCISE
TO: MetalSite, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
1. In lieu of exercising the attached Warrant for cash or check, the
undersigned hereby elects to effect the net issuance provision of Section 2(b)
of this Warrant and receive _____________ (leave blank if you choose Alternative
No.2 below) shares of Common Stock of MetalSite, Inc. pursuant to the terms of
this Warrant. (Initial here if the undersigned elects this alternative).
____________
2. The undersigned hereby elects to purchase ________________ (leave
blank if you choose alternative No. 1 above) shares of Common Stock of
MetalSite, Inc. pursuant to the terms of this Warrant, and tenders herewith
payment of the purchase price of such shares in full.
3. Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned or in such other name as is
specified below:
--------------------------------------
(Name)
--------------------------------------
--------------------------------------
(Address)
4. The undersigned hereby represents and warrants that the aforesaid
shares of Common Stock are being acquired for the account of the undersigned for
investment and not with a view to, or for resale, in connection with the
distribution thereof, and that the undersigned has no present intention of
distributing or reselling such shares and all representations and warranties of
the undersigned set forth in Section 12 of the attached Warrant are true and
correct as of the date hereof.
----------------------------------------
(Signature and Date)
Title:
-----------------------------------
A-1
49
SCHEDULE OF EXCEPTIONS
50
DISCLOSURE SCHEDULES
TO
NOTE AND WARRANT PURCHASE AGREEMENT
BETWEEN
METALSITE, INC.
AND
WEIRTON STEEL CORPORATION
OCTOBER 10, 2000
51
SCHEDULE 2.2
TO
NOTE AND WARRANT PURCHASE AGREEMENT
PREEMPTIVE RIGHTS
None
52
SCHEDULE 2.3
TO
NOTE AND WARRANT PURCHASE AGREEMENT
CONFLICTS, CONSENTS AND APPROVALS
The Amended and Restated Letter Agreement - Committed Line of Credit dated
December 28, 1999 between and among MetalSite, L.P. (the "Partnership"), Weirton
Steel Corporation ("Weirton"), Internet Capital Group, Inc. ("ICG Parent") The
LTV Corporation ("LTV"), Steel Dynamics, Incorporated ("SDI"), Bethlehem Steel
Corporation ("Bethlehem") and Ryerson ▇▇▇▇, Inc. ("Ryerson") and all agreements
related thereto (the "Partner Loan Facility").
The Letter Agreement - Committed Line of Credit dated July 27, 2000 between and
among the Partnership, ICG Parent, Weirton, LTV, SDI, Bethlehem and Ryerson and
all agreements related thereto (the "Corporate Loan Facility").
The Weirton 1998 Loan, as defined on Schedule 2.11, and all agreements related
thereto.
53
SCHEDULE 2.4(a)
TO
NOTE AND WARRANT PURCHASE AGREEMENT
CAPITALIZATION - STOCK OPTIONS
54
SCHEDULE 2.4(b)
TO
NOTE AND WARRANT PURCHASE AGREEMENT
OUTSTANDING CONTRACTUAL OBLIGATIONS
AND LOANS RELATING TO SECURITIES PURCHASE
Stockholders' Agreement, dated as of July 27, 2000, by and between MetalSite,
Inc., Bethlehem, 1999 Internet Capital L.P. ("1999 ICLP"), LTV, M-Holdings, Inc.
("M-Holdings"), Ryerson, SDI., Weirton, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇.
MOP Stock Award Agreement, dated as of July 27, 2000, by and between MetalSite,
Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
MOP Stock Award Agreement, dated as of July 27, 2000, by and between MetalSite,
Inc. and ▇▇▇▇▇ ▇▇▇▇▇.
MOP Stock Award Agreement, dated as of July 27, 2000, by and between MetalSite,
Inc. and ▇▇▇▇▇ ▇▇▇▇.
83(b) Loans (as defined on Schedule 2.17)
55
SCHEDULE 2.4(c)
TO
NOTE AND WARRANT PURCHASE AGREEMENT
AGREEMENTS RELATING TO SECURITIES
Stockholders' Agreement, dated as of July 27, 2000, by and between MetalSite,
Inc., Bethlehem, 1999 ICLP, LTV, M-Holdings, Ryerson, SDI, Weirton, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇.
Plan Stockholders' Agreement, dated as of July 27, 2000, by and between
MetalSite, Inc., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇.
Escrow Agreement, dated as of July 27, 2000, by and between MetalSite, Inc.,
1999 ICLP, M-Holdings, Weirton, and Chase Manhattan Trust Company, National
Association.
56
SCHEDULE 2.6
TO
NOTE AND WARRANT PURCHASE AGREEMENT
ABSENCE OF CHANGES
2.6(a)
Failure of most stockholder sellers to meet revenue projections in connection
with their use of the Company's website.
2.6(b)
Partner Loan Facility
Corporate Loan Facility
The Weirton 1998 Loan
2.6(g)
Severance payment of three months salary to ▇▇▇▇▇▇ ▇▇▇▇ upon the termination of
her employment
Amendment to Employment Agreements of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇, dated July 27, 2000 increasing the length of the restrictive covenants
from one year to two years.
2.6(h)
Merger of MetalSite, L.P. and MetalSite General Partner, LLC into MetalSite,
Inc. on July 27, 2000.
57
SCHEDULE 2.7
TO
NOTE AND WARRANT PURCHASE AGREEMENT
TAXES
Consolidated return for MetalSite, L.P. and MetalSite General Partner, LLC.
58
SCHEDULE 2.8
TO
NOTE AND WARRANT PURCHASE AGREEMENT
LITIGATION
A former consultant to Weirton, which previously licensed and has
recently transferred to the Company a portion of the Company's intellectual
property pursuant to that certain Technology Assignment and License Agreement
dated as of August 3, 2000 by and between the Company and Weirton ("TALA"), has
asserted to Weirton that he is the sole owner of the intellectual property
subject to such Weirton transfer. This former consultant is also a former
employee of the Company and a co-inventor of the intellectual property subject
to the Weirton transfer. To date, the former consultant is pursuing his claims
relating to such intellectual property with Weirton. Although Weirton has orally
represented to the Company that the former consultant's existing claim against
Weirton is without merit, any related infringement claims could be asserted
against the Company.
59
SCHEDULE 2.10
TO
NOTE AND WARRANT PURCHASE AGREEMENT
ABSENCE OF UNDISCLOSED OR CONTINGENT LIABILITIES
None
60
SCHEDULE 2.11
TO
NOTE AND WARRANT PURCHASE AGREEMENT
PROPERTY
Leases
1. The Company subleases office space located at Two ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ pursuant to
sublease agreement from Prudential.
2. The Company leases office space located at Two ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, pursuant to an
Assignment and Assumption Agreement, dated July 12, 1999, by and
between Weirton and the Partnership (the "Weirton Sublease").
Liens
1. Security Interest granted by the Promissory Note in the amount of
$1,826,565.97 payable to Weirton and dated August 31, 1999 (the
"Weirton 1998 Loan").
2. Security Interest granted by the Amended and Restated Security
Agreement between and among the Company, ICG Parent, Weirton, LTV,
SDI, Bethlehem and Ryerson, dated December 28, 1999.
3. Security Interest granted by Security Agreement between and among
the Company, ICG Parent, Weirton, LTV, SDI, Bethlehem and Ryerson,
dated July 27, 2000.
4. Equipment leased from Weirton pursuant to the Equipment Leasing
Facility (as defined on Schedule 2.17).
61
SCHEDULE 2.12
TO
NOTE AND WARRANT PURCHASE AGREEMENT
INTELLECTUAL PROPERTY
2.12(a)
Patent Applications
1. U.S. provisional patent application: Ser. #:60/110,977: Filed: 12/4/98 Title:
System and Method for an Interactive Commercial Community
2. U.S. utility patent application: Ser. #:09/452,499: Filed: 12/1/99 Title:
System and Method for an Interactive Commercial Community
3. Japanese ▇▇▇. Appln. No. 2000-181956
4. U.S. provisional patent application: Ser. #:60/187,281: Filed: 3/6/00 Title:
System and Method for Conducting Electronic Commerce in the Metals Industry
Patent applications 1, 2 and 3 above were assigned to the Company pursuant to
the TALA.
Trademark Applications
See attached Trademark List dated September 18, 2000
Copyright Registrations
NONE
Liens
All MetalSite intellectual property is subject to the security interests granted
pursuant to the Partner Loan Facility and the Corporate Loan Facility.
Other License Issues
The Company has not renewed its rights to license Microsoft products after the
sale by Weirton of part of its interest to ICG Parent.
2.12(b)
A former consultant to Weirton, which previously licensed and has
recently transferred to the Corporation a portion of the Corporation's
intellectual property pursuant to the TALA, has asserted to Weirton that he is
the sole owner of the intellectual property subject to such Weirton transfer.
This former consultant is also a former employee of the Corporation and a named
co-inventor of patent applications 1 and 2 subject to the Weirton transfer. To
date, the former
62
consultant is pursuing his claims relating to such intellectual property with
Weirton. Although Weirton has orally represented to the Corporation that the
former consultant's existing claim against Weirton is without merit, any related
infringement claims could be asserted against the Company.
2.12(c)
A former consultant to Weirton, which previously licensed and has
recently transferred to the Corporation a portion of the Corporation's
intellectual property pursuant to the TALA, has asserted to Weirton that he is
the sole owner of the intellectual property subject to such Weirton transfer.
This former consultant is also a former employee of the Corporation and a named
co-inventor of patent applications 1 and 2 subject to the Weirton transfer. To
date, the former consultant is pursuing his claims relating to such intellectual
property with Weirton. Although Weirton has orally represented to the
Corporation that the former consultant's existing claim against Weirton is
without merit, any related infringement claims could be asserted against the
Company.
The pending application to register the word ▇▇▇▇ "METALSITE" (75/55
8690) currently stands rejected under Section 2(e)(1) of the Trademark Act
(Trademark Act Section 2(e)(1), 15 U.S.C. Section 1052(e)(1).
Weirton received a cease and desist letter dated August 28, 1998 from
▇▇▇▇▇ ▇▇▇▇, LLP representing Metal Exchange Corporation with respect to use of
"MetalExchange", and the Company has used "MetalSite" since September of 1998.
2.12(d)
NONE
2.12(e)
ScrapSite, LLC (to be formed)
MetalSite Japan Corporation
63
SCHEDULE 2.14
TO
NOTE AND WARRANT PURCHASE AGREEMENT
INSURANCE
------------------------------------------------------------------------------------------------------------------------
Type Carrier Aggregate Per Occurrence Expiration Term
Coverage Limit Coverage Limit
------------------------------------------------------------------------------------------------------------------------
General Liability Zurich-American 2,000,000 1,000,000 7-1-01
------------------------------------------------------------------------------------------------------------------------
Umbrella American 5,000,000 5,000,000 7-1-01
Liability Guarantee &
Liability
------------------------------------------------------------------------------------------------------------------------
Workers Zurich-American Statutory 1,000,000 7-1-01
Compensation
------------------------------------------------------------------------------------------------------------------------
Business Zurich-American 1,000,000 7-1-01
Automobile
------------------------------------------------------------------------------------------------------------------------
Directors & American. 5,000,000 5,000,000 12-7-00
Officers* International
Specialty
------------------------------------------------------------------------------------------------------------------------
Website Steadfast 5,000,000 5,000,000 12-7-00
Liability** Insurance
Company
------------------------------------------------------------------------------------------------------------------------
* General Partners and Limited Partnership Liability
** Specified Professions Professional Liability Insurance
See also benefits-related insurance listed on Schedule 2.22
64
SCHEDULE 2.16
TO
NOTE AND WARRANT PURCHASE AGREEMENT
COMPLIANCE WITH LAWS
None
65
SCHEDULE 2.17
TO
NOTE AND WARRANT PURCHASE AGREEMENT
TRANSACTIONS WITH AFFILIATES
1. For the purpose of enabling certain officers of the Company who are
stockholders to pay the tax liability relating to their 83(b) elections,
the Company has loaned $49,469.86, $32,078.32 and $31,775.17 to ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇, respectively (the "83(b) Loans).
2. The Weirton 1998 Loan.
3. Partner Loan Facility.
4. Corporate Loan Facility.
5. Weirton has guaranteed the Partnership's obligations under certain
operating leases of office furniture.
6. The Company leases the office space pursuant to the Weirton Sublease.
7. IP Services Agreement between the Company and Ryerson dated September 1,
1999.
8. Equipment in approximately the amount of $1,000,000 purchased from and
financed by Weirton (the "Equipment Leasing Facility").
9. Employment Agreements with ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇.
10. Severance Arrangement with ▇▇▇▇▇▇ ▇▇▇▇.
11. Seller's Website Agreements.
12. MOP Award Agreements.
13. Plan Stockholders' Agreement.
14. ScrapSite, LLC organizational documents, including the ScrapSite Omnibus
Services Agreement (all of which are currently being finalized).
66
SCHEDULE 2.18
TO
NOTE AND WARRANT PURCHASE AGREEMENT
CONTRACTS AND COMMITMENTS
Compensation Committee is currently considering deferring all payments under the
83(b) Loans until maturity. Officers are therefore late in making payments under
the 83(b) Loans.