Exhibit 4.2
THIS CONVERTIBLE PROMISSORY NOTE AND ANY
SECURITIES WHICH MAY BECOME ISSUABLE UPON CONVERSION HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ SECURITIES ACT ”), OR THE SECURITIES LAWS
OF ANY STATE. NEITHER THIS PROMISSORY NOTE, NOR ANY PORTION
THEREOF, NOR ANY INTEREST THEREIN, MAY BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, OR AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT AND SUCH STATE LAWS.
CONVERTIBLE PROMISSORY
NOTE
FOR VALUE RECEIVED, the undersigned,
VERTICALNET, INC., a Pennsylvania corporation (“ Maker
”), intending to be legally bound, hereby promises to pay to
FBR INVESTMENT MANAGEMENT, INC. (“ Payee ”), in
his capacity as the Stockholders’ Representative of the
stockholders of B2eMarkets, Inc., a Delaware corporation (“
B2e ”), the principal amount of Five Million Nine
Hundred Twenty-Five Thousand Six Hundred Three ($5,925,603),
together with interest accrued thereon, upon the terms and
conditions specified herein.
This Convertible Promissory Note
(this “ Note ”) is issued by Maker pursuant to
that certain Agreement of Merger dated of even date herewith by and
among Maker, Popcorn Acquisition Sub, Inc., a Delaware corporation,
and B2e (the “ Merger Agreement ”). Capitalized
terms used and not otherwise defined herein shall have the meanings
ascribed to such terms in the Merger Agreement.
This Note will be registered on the
books of Maker or its agent as to principal and interest. This Note
may not be assigned or transferred by Payee without the prior
written consent of Maker. Any attempted assignment or transfer of
this Note in violation of the foregoing shall be void ab
initio .
1. Payments of Interest and
Principal.
(a) Interest . The
outstanding principal balance of this Note shall bear interest at a
per annum rate equal to eight percent (8%). Interest shall be
calculated on the basis of the actual number of days elapsed over a
year of 365 days. Interest on the outstanding principal amount of
this Note shall be payable quarterly on each of March 31, June 30,
September 30 and December 31 (or the next succeeding Business Day,
if any such date is not a Business Day) (each a “
Quarterly Payment Date ”), commencing on September 30,
2004; provided , however , that Maker may elect to
forego making any interest payment hereunder, in which case the
interest payable on a Quarterly Payment Date shall be added to the
outstanding principal amount of this Note.
(b) Principal Balance .
Provided that this Note has not been converted into shares of
Maker’s common stock, par value $0.01 per share (“
Maker Common Stock ”), and provided that a Change of
Control has not occurred, fifty percent (50%) of the outstanding
principal amount of this Note shall be payable on the third
anniversary of the Closing Date and the remaining outstanding
principal amount and any remaining interest accrued thereon shall
be payable on the fourth anniversary of the Closing Date. Upon a
Change of Control, the outstanding principal amount and any
interest accrued thereon shall automatically be declared
immediately due and payable in full. For purposes of this Note,
“Change in
Control” shall mean any of the following:
(i) a merger, consolidation or other business combination or
transaction to which Maker is a party which results in the
shareholders of Maker immediately prior to the effective date of
such merger, consolidation or other business combination or
transaction holding less than 50% of the voting power of the
surviving entity or acquiring entity following such merger,
consolidation or other business combination or transaction; (ii) an
acquisition by any person, entity or group of 50% or more of the
voting power of all classes of capital stock of Maker; or (iii) a
sale of all or substantially all of the assets of Maker.
(c) Manner of Payment . Any
payments required to be made hereunder shall be made in lawful
money of the United States of America via wire transfer of
immediately available funds or certified check at the business
office of Payee or at such place as Payee shall have designated in
writing to Maker.
(d) Prepayment . This Note
may be prepaid in whole or in part at any time, without penalty or
premium. Any prepayments shall be applied first to accrued and
unpaid interest and then to the unpaid principal amount of this
Note.
2. Conversion.
(a) Conversion Privilege .
Subject to and upon compliance with the terms and provisions of
this Note, at any time from and after the Shareholder Approval Date
(as defined in Section 3 ) the entire unpaid principal
amount of this Note and any accrued but unpaid interest thereon
may, at the option of Payee or Maker, in its sole discretion, be
converted into a number shares of Maker Common Stock (the “
Conversion Shares ”) equal to the quotient of (i) the
entire unpaid principal amount of this Note and any accrued but
unpaid interest thereon, divided by (ii) $2.00922 (the “
Conversion Price ”).
(b) Manner of Exercise of
Conversion Privilege.
(i) Payee Conversion . To
exercise the conversion privilege set forth in Section 2(a)
, Payee shall surrender this Note, together with a written
conversion notice (the “ Payee Conversion Notice
”), to Maker at the address set forth in Section 16(e)
, which notice shall set forth the name and address of each Person
to receive Conversion Shares in connection with such conversion (a
“ Recipient ”) and each Recipient’s pro
rata share of the total number of Conversion Shares (less the
Escrow Shares) to be issued upon such conversion. This Note shall
be deemed to have been converted immediately prior to the close of
business on the date of delivery of this Note and the Payee
Conversion Notice, even if Maker’s stock transfer books are
on that date closed, and each Recipient designated to receive
Conversion Shares in the Payee Conversion Notice shall be treated
for all purposes as the record holder of the Conversion Shares
deliverable to such Recipient upon such conversion (less such
Recipient’s pro rata share of the Escrow Shares) as of the
close of business on such date. Promptly after receipt by Maker of
this Note and the Payee Conversion Notice, Maker shall issue and
deliver or cause to be issued and delivered to each Recipient a
certificate or certificates for the number of Conversion Shares due
to such Recipient on such conversion (less such Recipient’s
pro rata share of the Escrow Shares) as set forth in the Payee
Conversion Notice.
(ii) Maker Conversion . To
exercise the conversion privilege set forth in Section 2(a)
, Maker shall deliver a written conversion notice to Payee at the
address set forth in Section 16(e) (the “ Maker
Conversion Notice ”), which notice shall set forth the
date upon which the conversion will be effective (the “
Conversion Date ”). Within 10 days of receiving the
Maker Conversion Notice, Payee shall surrender this Note to Maker
and deliver to Maker a written notice (the “ Payee
Response Notice ”) setting forth the name and address of
each Recipient and each Recipient’s pro rata share of the
total number of Conversion Shares (less the Escrow Shares) to be
issued upon conversion. This Note shall be
2
deemed to have been converted immediately prior
to the close of business on the Conversion Date, even if
Maker’s stock transfer books are on that date closed, and
each Recipient designated to receive Conversion Shares in the Payee
Response Notice shall be treated for all purposes as the record
holder of the Conversion Shares deliverable to such Recipient upon
such conversion (less such Recipient’s pro rata share of the
Escrow Shares) as of the close of business on the Conversion Date.
Promptly after receipt by Maker of this Note and the Payee Response
Notice, Maker shall issue and deliver or cause to be issued and
delivered to each Recipient a certificate or certificates for the
number of Conversion Shares due to such Recipient on such
conversion (less such Recipient’s pro rata share of the
Escrow Shares) as set forth in the Payee Response
Notice.
(c) Fractional Shares . No
fractional shares of Maker Common Stock shall be issued upon
conversion of this Note. All fractional shares of Maker Common
Stock that a Recipient would otherwise be entitled to receive as a
result of the conversion of this Note shall be aggregated and if a
fractional share of Maker Common Stock results from such
aggregation, the Recipient shall be entitled to receive, in lieu
thereof, an amount in cash equal to the value thereof based on the
Conversion Price.
(d) Registration Rights
Agreement . Any Recipient that is not a party to the
Registration Rights Agreement shall, as a condition to the issuance
of any Conversion Shares to such Recipient, execute a joinder to be
bound by the t
