EXHIBIT 1.2
STANDBY STOCK PURCHASE AGREEMENT
by and between
SAFEGUARD SCIENTIFICS, INC.
AND
U.S. INTERACTIVE, INC.
Dated August __, 1999
STANDBY STOCK PURCHASE AGREEMENT
THIS STANDBY STOCK PURCHASE AGREEMENT (the "Agreement") is made and
entered into on this August __, 1999, by and between SAFEGUARD SCIENTIFICS,
INC., a Delaware corporation ("Safeguard"), and U.S INTERACTIVE, INC., a
Delaware corporation (the "Company").
BACKGROUND
A. The Company is contemplating an initial public offering (the "Public
Offering") of its common stock, par value $.001 per share (the "Common Stock"),
through an underwritten public offering lead by Xxxxxx Brothers Inc., as the
representative of the several underwriters (the "Underwriters").
B. In connection with the Public Offering the Company will offer
1,750,000 shares of its common stock (the "DSSP Shares") directly to the
shareholders of Safeguard pursuant to a directed share subscription program (the
"DSSP").
C. If and to the extent any of the DSSP Shares are not subscribed for
or, if subscribed for, are not purchased by the shareholders of Safeguard under
the DSSP, Safeguard has agreed to purchase all such DSSP Shares (the "Backstop
Shares") directly from the Company for its own account for investment purposes
only on the terms and subject to the conditions set forth herein.
X. Xxxxx Mellon Shareholder Services, L.L.C. will act as the offering
agent for the DSSP and as the Company's transfer agent. The offering agent will
determine the record date shareholders eligible to participate in the DSSP and
will collect subscriptions and subscription payments from eligible Safeguard
shareholders until 5:00 p.m. on the fourth business day following the date the
Company determines the initial public offering price for the Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE 1
THE TRANSACTION
1.1. Purchase Price.
(a) Purchase Price. The purchase price for the Backstop Shares (the
"Purchase Price") shall be equal to the product of multiplying (i) the aggregate
number of Backstop Shares, by (ii) the price per share of Common Stock sold
pursuant to the Public Offering (the "IPO Price").
(b) Transfer of Funds on the Public Offering Closing Date. At the closing
for the Public Offering Safeguard shall transfer, or cause the offering agent to
pay out of subscription funds received, to the Company in immediately available
funds an amount equal to the product of the IPO price multiplied by 1,750,000.
1.2. Closing.
(a) Time and Place. The closing under this Agreement (the "Closing") will
take place at _________., Washington, DC time, at the time of the closing of the
Public Offering, at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, or at such
other time, date or place as the parties shall mutually agree. The date on which
the Closing occurs is sometimes referred to herein as the "Closing Date."
(b) Deliveries and Proceedings.
(i) Escrow of Stock Certificates. On the Closing Date, the Company
shall instruct its transfer agent and offering agent to hold the certificates
representing DSSP Shares in escrow and to release such shares to the purchasers
upon transfer to Safeguard of the amounts received by the offering agent
therefor and to release the Backstop Shares to Safeguard.
(ii) Release of Payment and DSSP Shares. Following the Closing the
Company shall authorize its transfer agent and offering agent to accept
instructions from Xxxxxxx Xxxxxxxxx, or her designee at Safeguard, with a copy
of such instructions to the Company, to release all payments received from
Saferguard's shareholders who subscribed for DSSP Shares to Safeguard on a
reasonably prompt basis.
(iii) DSSP Purchasers. Safeguard and the Company shall cause to be
delivered to the transfer agent a list indicating the names, addresses and
denominations for which certificates representing the DSSP Shares are to be
completed. Any person other than Safeguard for whom certificates are to be
prepared is referred to herein as a "DSSP Purchaser." The Company will instruct
its transfer agent and registrar to accept instructions from Xxxxxxx Xxxxxxxxx,
or her designee at Safeguard, with a copy of such instructions to the Company,
to prepare certificates in accordance with such instructions and deliver to each
DSSP certificates evidencing the DSSP Shares purchased by such DSSP Purchaser
and the Backstop Shares to Safeguard, if any, as soon as practical. The Company
agrees to cooperate with Safeguard, including providing instructions to the
transfer and offering agents, such that certificates are released to the
purchasers of the DSSP Shares.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Safeguard as follows:
2.1 Organization. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
2.2. Power and Authority. The Company has full corporate power and authority to
make, execute, deliver and perform this Agreement and the transactions
contemplated hereby.
2.3. Authorization and Enforceability. The execution, delivery and performance
of this Agreement by the Company have been duly authorized by all necessary
corporate action on the part of the Company, and this Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms.
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ARTICLE 3
REPRESENTATION AND WARRANTIES OF SAFEGUARD
Safeguard represents and warrants to the Company as follows:
3.1 Organization. Safeguard is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
3.2. Power and Authority. Safeguard has full corporate power and authority to
make, execute, deliver and perform this Agreement and the transactions
contemplated hereby.
3.3. Authorization and Enforceability. The execution, delivery and performance
of this Agreement by Safeguard have been duly authorized by all necessary
corporate action on the part of Safeguard, and this Agreement constitutes the
legal, valid and binding obligation of Safeguard, enforceable against Safeguard
in accordance with its terms.
3.4 Investment Intent. Safeguard represents, warrants and covenants that it is
acquiring the Backstop Shares for its own account, as a long-term investment,
and not with the view to resale or redistribution. To that end, Safeguard agrees
it will retain and not sell, pledge, hypothecate or otherwise transfer, directly
or indirectly, any interest (beneficial or otherwise) in the Backstop Shares for
a period of one year from the date of the Closing.
ARTICLE 4
CONDITIONS TO CLOSING; TERMINATION
4.1 Conditions Precedent to Obligations of Safeguard. The obligations of
Safeguard to proceed with the Closing are subject to the fulfillment prior to or
at Closing of the following conditions (any one or more of which may be waived
in whole or in part by Safeguard at Safeguard's option):
(a) Bringdown of Representations and Warranties. The representations and
warranties of the Company contained in this Agreement shall be true and correct
on and as of the time of Closing, with the same force and effect as though such
representations and warranties had been made on, as of and with reference to
such time, and Safeguard shall have received a certificate, signed by an
executive officer of the Company, to such effect.
(b) Performance and Compliance. The Company shall have performed all of the
covenants and complied with all of the provisions required by this Agreement to
be performed or complied with by it on or before the Closing, and Safeguard
shall have received a certificate, signed by any vice president of the Company,
to such effect.
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(c) Public Offering. The Closing of the Public Offering shall have
occurred.
4.2. Conditions Precedent to the Obligations of the Company. The obligations of
the Company to proceed with the Closing hereunder are subject to the fulfillment
prior to or at Closing of the following conditions (any one or more of which may
be waived in whole or in part by the Company at the Company's option):
(a) Bringdown of Representations and Warranties. The representations and
warranties of Safeguard contained in this Agreement shall be true and correct on
and as of the time of Closing, with the same force and effect as though such
representations and warranties had been made on, as of and with reference to
such time, and Safeguard shall have delivered to the Company a certificate,
signed by an executive officer of Safeguard, to such effect.
(b) Performance and Compliance. Safeguard shall have performed all of the
covenants and complied with all the provisions required by this Agreement to be
performed or complied with by it on or before the Closing and Safeguard shall
have delivered to the Company a certificate, signed by any vice president of
Safeguard, to such effect.
(c) Public Offering. The closing of the Public Offering shall have
occurred.
4.3. Termination.
(a) When Agreement May Be Terminated. This Agreement may be terminated at
any time prior to Closing:
(i) by mutual consent of Safeguard and the Company; or
(ii) by Safeguard or the Company, if the Company shall have withdrawn
its Registration Statement on Form S-1 relating to the Public Offering (Reg. No.
333-78751).
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(b) Effect of Termination. In the event of termination of this Agreement by
either Safeguard or the Company, as provided above, this Agreement shall
forthwith terminate and there shall be no liability on the part of either
Safeguard or the Company, except for liabilities arising from a breach of this
Agreement prior to such termination; provided, however, that the obligations set
forth in Article 5 hereof shall survive such termination.
ARTICLE 5
CERTAIN ADDITIONAL COVENANTS
5.1 Indemnification.
(a) Safeguard hereby agrees to indemnify the Company and its underwriters,
affiliates, officers, employees, representatives and directors (the "Indemnified
Persons") against, and hold them harmless from, any loss, liability, claim,
damage or expense, joint or several ("Losses"), arising directly or indirectly,
out of or in connection with, the DSSP, including, without limitation, (i) costs
and expenses associated with the failure of any shareholders of Safeguard to
consummate purchases of DSSP Shares for which they have subscribed, (ii) any
claims by shareholders of Safeguard or other persons arising from the DSSP, and
(iii) other costs and expenses, including printing costs and reasonable legal
fees and expenses, arising from the establishment, execution and performance of
the DSSP. Notwithstanding the foregoing, Safeguard shall not indemnify the
Company against liabilities arising from any untrue or allegedly untrue
statement of a material fact, or omission or alleged omission of a material fact
required to be stated to make the statements not misleading, in the prospectus
contained in the Company's Registration Statement on Form S-1 (Reg. No.
333-78751 (the "Prospectus"), except for statements or omissions regarding the
DSSP and except for any materials related to the DSSP delivered to Safeguard's
shareholders and not to other recipients of the Prospectus generally. Safeguard
agrees to reimburse the Indemnified Persons, as incurred, for any reasonable
legal or other expenses reasonably incurred by them in connection with
investigating or defending any Losses.
(b) Promptly after receipt by an Indemnified Person of notice of the
commencement of any action for which indemnification or contribution may be
sought hereunder, such Indemnified Person will notify Safeguard in writing of
the commencement thereof. The failure to so notify Safeguard will not relieve
Safeguard from liability under Section 5.1(a) above unless and to the extent
that Safeguard did not otherwise learn of such action and such failure results
in the forfeiture of substantial rights and defenses. Safeguard shall be
entitled to appoint counsel at Safeguard's expense to represent the Indemnified
Person in any action for which indemnification is sought (in which case
Safeguard shall not thereafter be liable for the fees and expenses of separate
counsel retained by the Indemnified Person except as set forth below); provided,
however, that such counsel shall be reasonably satisfactory to the Indemnified
Person. Notwithstanding Safeguard's election to appoint counsel to represent the
Indemnified Person in an action, the Indemnified Person shall have the right to
employ separate counsel (including local counsel), and Safeguard shall bear the
reasonable fees, costs and expenses of such counsel if (i) the use of counsel
chosen by Safeguard to represent the Indemnified Person would present such
counsel with a conflict of interest, (ii) the actual or potential defendants in,
or targets of, any such action include both Safeguard and the Indemnified Person
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and the Indemnified Person shall have reasonably concluded that there may be
legal defenses available to it that are different from or in addition to those
available to Safeguard, (iii) Safeguard shall not have employed counsel
reasonably satisfactory to the Indemnified Person within a reasonable time after
notification of the commencement of such action or (iv) Safeguard shall have
authorized the Indemnified Person to employ separate counsel at the expense of
Safeguard.
(c) Safeguard shall not, without the prior written consent of the relevant
Indemnified Person, settle or compromise or consent to the entry of any judgment
with respect to any pending or threatened claim, action, suit or proceeding in
respect of which indemnification or contribution may be sought hereunder unless
such settlement, compromise or consent includes an unconditional release of such
Indemnified Person from all liability arising from such claim, action, suit or
proceeding. An Indemnified Person may not settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim, action,
suit or proceeding in respect of which indemnification or contribution may be
sought hereunder without the consent of Safeguard, such consent not to be
unreasonably withheld.
(d) In the event that the indemnity provided for in this Article 5 is
unavailable to or insufficient to hold harmless an Indemnified Person for any
reason, the Indemnified Persons and Safeguard shall contribute to the Losses
(including the legal and other expenses attributable to investigating or
defending same) to which the Indemnified Person may be subject in such
proportion as is appropriate to reflect the relative fault of the Indemnified
Person and Safeguard in connection with the statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations,
including that the Company performed the DSSP as an accommodation to Safeguard
without any legal obligation to do so. Relative fault shall be determined by
reference to, among other things, whether any untrue or allegedly untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information provided by the Indemnified Person or
Safeguard, the intent of the Indemnified Person and Safeguard, and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The parties agree that it would not be just
and equitable if contribution was determined by any method of allocation that
does not take into account the equitable considerations discussed above.
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ARTICLE 6
MISCELLANEOUS
6.1. Nature and Survival of Representations. The representations, warranties,
covenants and agreements of Safeguard and the Company contained in this
Agreement, and all statements contained in this Agreement or any exhibit hereto
or any certificate or other document delivered pursuant to this Agreement or in
connection with the transactions contemplated hereby, shall be deemed to
constitute representations, warranties, covenants and agreements of the
respective party delivering the same. All such representations, warranties,
covenants and agreements shall survive the Closing.
6.2. Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered or, if mailed, when mailed by United States first-class, certified or
registered mail, postage prepaid, to the other party at the following addresses
(or at such other address as shall be given in writing by any party to the
other):
(a) If to Safeguard, to:
Safeguard Scientifics, Inc.
800 The Safeguard Building
000 Xxxxx Xxxx Xxxxx
Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
(b) If to the Company, to:
U.S. Interactive, Inc.
0000 Xxxxxxxxxxx Xxxx.
Xxxx xx Xxxxxxx, XX 00000
Attention: Xxxxxxxx X. Xxxx, Esquire
With a required copy to:
Xxxxxxxx Xxxxxx LLP
3200 Mellon Bank Center
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esquire
6.3. Third Party Beneficiaries. Safeguard acknowledges that each of the
Underwriters of the Public Offering shall be a third party beneficiary entitled
to exercise the rights and remedies provided for herein directly against
Safeguard. The Company shall cooperate with and assist each of the Underwriters
of the Public Offering with respect to any action such Underwriters take to
exercise such rights and remedies directly against Safeguard.
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6.4. Successors and Assigns. This Agreement, and all rights and powers granted
hereby, will bind and inure to the benefit of the parties hereto and their
respective successors and permitted assigns but shall not be assignable or
delegable by any party without the prior written consent of the other party.
6.5. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of Pennsylvania, without giving effect to its
principles of conflicts of laws or choice of forum.
6.6. Headings. The headings preceding the text of the sections and subsections
hereof are inserted solely for convenience of reference, and shall not
constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
6.7. Counterparts. This Agreement may be executed in two counterparts, each of
which shall be deemed an original, but which together shall constitute one and
the same instrument. Each such copy shall be deemed an original and it shall not
be necessary in making proof of this Agreement to produce or account for more
than one such counterpart.
6.8. Further Assurances. Each party shall cooperate and take such action as may
be reasonably requested by the other party in order to carry out the provisions
and purposes of this Agreement and the transactions contemplated hereby.
6.9. Amendment and Waiver. The parties may by mutual agreement amend this
Agreement in any respect, and either party, as to such party, may (a) extend the
time for the performance of any of the obligations of the other party, (b) waive
any inaccuracies in representations by the other party, (c) waive compliance by
the other party with any of the agreements contained herein and performance of
any obligations by the other party, and (d) waive the fulfillment of any
condition that is precedent to the performance by such party of any of its
obligations under this Agreement. To be effective, any such amendment or waiver
must be in writing and be signed by the party against whom enforcement of the
same is sought.
6.10. Entire Agreement. This Agreement sets forth all of the promises,
covenants, agreements, conditions and undertakings between the parties hereto
with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written.
6.11. Interpretations. No party to this Agreement shall be considered the
draftsman. This Agreement has been reviewed, negotiated and accepted by all
parties and their attorneys and shall be construed and interpreted according to
the ordinary meaning of the words used so as fairly to accomplish the purposes
and intentions of all parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
SAFEGUARD SCIENTIFICS, INC.
By:
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Name:
Title:
U.S. INTERACTIVE, INC.
By:
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Name:
Title:
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