1
EXHIBIT 10.4
eMAKE CORPORATION/USDATA CORPORATION
SECURITIES PURCHASE AGREEMENT
August 4, 2000
2
TABLE OF CONTENTS
Page
----
1. Purchase and Sale....................................................1
1.1 Sale and Issuance of Securities.............................1
1.2 Closing.....................................................2
1.3 Consideration...............................................2
2. Representations and Warranties regarding the Company.................3
2.1 Organization, Good Standing and Qualification...............3
2.2 Capitalization and Voting Rights............................3
2.3 Subsidiaries................................................4
2.4 Authorization...............................................4
2.5 Valid Issuance of Stock.....................................4
2.6 Governmental Consents.......................................5
2.7 Offering....................................................5
2.8 Litigation..................................................5
2.9 Nondisclosure and Inventions Agreements.....................6
2.10 Patents and Trademarks......................................6
2.11 Compliance with Certain Matters.............................8
2.12 Agreements; Action..........................................8
2.13 Related-Party Transactions..................................9
2.14 Permits.....................................................9
2.15 Environmental and Safety Laws..............................10
2.16 Manufacturing and Marketing Rights.........................10
2.17 Disclosure.................................................10
2.18 Registration Rights........................................10
2.19 Corporate Documents........................................10
2.20 Title to Property and Assets...............................10
2.21 Employee Benefit Plans.....................................10
2.22 Tax Returns, Payments and Elections........................10
2.23 Insurance..................................................11
2.24 Minute Books...............................................11
2.25 Labor Agreements and Actions...............................11
2.26 Damage; Loss...............................................12
2.27 Liens; Claims..............................................12
2.28 Real Property Holding Company..............................12
2.29 Transfer of Assets.........................................12
3. Representations and Warranties regarding the Parent.................12
3.1 Organization, Good Standing and Qualification..............12
3.2 SEC Reports; Financial Statements..........................12
3.3 Capitalization and Voting Rights...........................13
i
3
3.4 Authorization..............................................14
3.5 Valid Issuance of Preferred and Common Stock...............14
3.6 Governmental Consents......................................14
3.7 Offering...................................................14
3.8 Compliance with Certain Matters............................15
4. Representations and Warranties of the Investors.....................15
4.1 Authorization..............................................15
4.2 Purchase Entirely for Own Account..........................15
4.3 Disclosure of Information..................................16
4.4 Investment Experience......................................16
4.5 Accredited Investor........................................16
4.6 Restricted Securities......................................16
4.7 Further Limitations on Disposition.........................16
4.8 Legends....................................................17
5. Conditions of Investors' Obligations at Closing.....................17
5.1 Representations and Warranties.............................17
5.2 Performance................................................18
5.3 Compliance Certificate.....................................18
5.4 Qualifications.............................................18
5.5 Proceedings and Documents..................................18
5.6 Investors' Rights Agreement................................18
5.7 Stock Certificates; Warrants...............................18
5.8 Adoption of Plan...........................................18
5.9 Confidentiality Agreements.................................18
5.10 Board of Directors.........................................18
5.11 Co-Sale Agreement..........................................18
5.12 Parent Investors' Rights Agreement.........................18
5.13 Exchange Agreements........................................19
5.14 Legal Opinion..............................................19
5.15 Stockholder Approval.......................................19
5.16 NASD Matters...............................................19
5.17 Assignment of Trademarks...................................19
5.18 Assignment of Contracts....................................19
5.19 Contribution Agreement.....................................19
6. Conditions of the Company's and the Parent's Obligations
at Closing..........................................................19
6.1 Representations and Warranties.............................19
6.2 Performance................................................19
6.3 Proceedings and Documents..................................19
6.4 Payment of Purchase Price; Delivery of Certificate.........20
6.5 Qualifications.............................................20
6.6 Stockholder Approval.......................................20
ii
4
7. Miscellaneous.......................................................20
7.1 Survival of Warranties.....................................20
7.2 Use of Proceeds............................................20
7.3 Successors and Assigns.....................................20
7.4 Governing Law..............................................20
7.5 Counterparts...............................................21
7.6 Titles and Subtitles.......................................21
7.7 Notices....................................................21
7.8 Finder's Fee...............................................21
7.9 Expenses...................................................21
7.10 Dispute Resolution.........................................22
7.11 Amendments and Waivers.....................................23
7.12 Severability...............................................23
7.13 No Amendment of Parent Preferred Stock Terms...............23
7.14 Publicity..................................................24
7.15 Stockholders' Meeting and NASD Matters.....................24
7.16 Termination................................................25
7.17 Entire Agreement...........................................25
SCHEDULE A Disclosure Schedule
EXHIBIT A Amended and Restated Certificate of Incorporation of
eMake Corporation
EXHIBIT B Amended and Restated Certificate of Designation for
Series A Preferred Stock and Series B Preferred Stock
EXHIBIT C SCP Warrant
EXHIBIT D Safeguard Warrant
EXHIBIT E SCP Exchange Agreement
EXHIBIT F Safeguard Exchange Agreement
EXHIBIT G Investors' Rights Agreement
EXHIBIT H Co-Sale and First Refusal Agreement
EXHIBIT I Form of Noncompetition, Nondisclosure and Inventions
Agreement
EXHIBIT J Amended and Restated Investors' Rights Agreement
EXHIBIT K Opinion of Counsel
iii
5
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT is made as of the 4th day
of August, 2000, by and among eMake Corporation, a Delaware corporation (the
"Company"), USDATA Corporation, a Delaware corporation (the "Parent"), Safeguard
2000 Capital, L.P. ("Safeguard") and SCP Private Equity Partners II, L.P.
("SCP", and together with Safeguard, the "Investors").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale.
1.1 Sale and Issuance of Securities.
(a) The Company shall adopt and file with the Secretary of
State of Delaware, on or before the Closing (as defined below), an Amended and
Restated Certificate of Incorporation in the form attached hereto as Exhibit A
(the "Restated Certificate"), and the Parent shall adopt and file with the
Secretary of State of Delaware, on or before the Closing, an Amended and
Restated Certificate of Designation for Series A Preferred Stock and Series B
Preferred Stock in the form attached hereto as Exhibit B (the "Restated
Designation").
(b) Subject to the terms and conditions of this Agreement, SCP
agrees to purchase at the Closing, and the Company agrees to sell and issue to
SCP at the Closing, (i) 5,300,000 shares of the Company's Series A-1 Preferred
Stock, par value $0.01 per share (the "Series A-1 Preferred Stock"), and (ii) a
warrant (the "SCP Warrant") to purchase up to 5,300,000 shares of the Company's
Series A-1 Preferred Stock at an initial exercise price of $0.01 per share, for
an aggregate purchase price of $13,250,000. The rights, privileges and
preferences of the Series A-1 Preferred Stock shall be as stated in the Restated
Certificate, and the SCP Warrant shall be substantially in the form attached
hereto as Exhibit C.
(c) Subject to the terms and conditions of this Agreement,
Safeguard agrees to purchase at the Closing, and the Company agrees to sell and
issue to Safeguard at the Closing, 5,300,000 shares of the Company's Series A-2
Preferred Stock, par value $0.01 per share (the "Series A-2 Preferred Stock,"
and together with the Series A-1 Preferred Stock, the "Series A Preferred
Stock"), and (ii) a warrant (the "Safeguard Warrant," and together with the SCP
Warrant, the "Warrants") to purchase up to 5,300,000 shares of the Company's
Series A-2 Preferred Stock at an initial exercise price of $0.01 per share, for
an aggregate purchase price of $13,250,000. The rights, privileges and
preferences of the Series A-2 Preferred Stock shall be as stated in the Restated
Certificate, and the Safeguard Warrant shall be substantially in the form
attached hereto as Exhibit D. As used herein, the term "Purchased Securities"
means the shares of Series A Preferred Stock and the Warrants issued and sold
hereunder.
(d) Subject to the terms and conditions of this Agreement, at
the Closing, the Parent shall enter into separate exchange agreements (the
"Exchange Agreements") with each Investor agreeing to exchange shares of the
Parent's Series B Convertible Stock, par value $0.01 per share (the "Parent
Preferred Stock"), for shares of Series A Preferred Stock of the Company held by
such Investor. The rights, privileges and preferences of the Parent Preferred
Stock shall
6
be as set forth in the Restated Designation, and the Exchange Agreements shall
be substantially in the form attached hereto as Exhibits E and F, as
appropriate.
1.2 Closing. The purchase, sale and issuance of the Purchased
Securities shall take place at the offices of Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP,
000 Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 at 10:00 a.m. as soon as
practical, but in no event later than, the second business day, after the date
of the approval by the stockholders of the Parent at a meeting duly called and
held of (a) the issuance by the Parent of shares of its Common Stock, par value
$0.01 per share (the "Parent Common Stock"), issuable upon the conversion of the
Parent Preferred Stock issuable under the Exchange Agreements and (b) the
amendment of the Parent's Certificate of Incorporation pursuant to the Restated
Designation, or at such other place and time as the Company, the Parent and the
Investors mutually agree upon (which time is designated as the "Closing," and
the date upon which the Closing occurs is the "Closing Date").
1.3 Consideration. At the Closing, the Company shall deliver
(a) to SCP, certificates representing the Purchased Securities being sold to SCP
hereunder pursuant to Section 1.1(b) against (i) payment of $2,500,000, plus any
accrued interest thereon throughout the Closing Date, by SCP to Safeguard in
satisfaction of the Company's obligation to Safeguard pursuant to that certain
Demand Note, dated July 28, 2000 (the "SCP Note"), executed by the Company and
payable to the order of Safeguard in the amount of $2,500,000, (ii) the payment
by SCP to Safeguard of an amount equal to all accrued but unpaid interest on the
USDATA Note, the eMake Notes and the eMake Demand Notes (all as hereinafter
defined) in satisfaction of the obligations of the Company and the Parent to pay
such interest and (iii) payment of $13,250,000 less that amount paid to
Safeguard pursuant to the immediately preceding clauses (i) and (ii) by wire
transfer to the Company, and (b) to Safeguard, certificates representing the
Purchased Securities being sold to Safeguard hereunder pursuant to Section
1.1(c) against (i) cancellation by Safeguard of the principal amount owed under
the two Promissory Notes (the "eMake Notes"), dated February 8, 2000 and March
24, 2000, respectively, executed by the Company payable to the order of
Safeguard in the amount of $2,500,000 each, (ii) cancellation by Safeguard of
the principal amount owed under the Promissory Note (the "USDATA Note"), dated
April 26, 2000, executed by the Parent payable to the order of Safeguard
Delaware, Inc. in the amount of $5,000,000 (after giving effect to the
assignment of the USDATA Note from Safeguard Delaware, Inc. to Safeguard at or
prior to the Closing) and (iii) cancellation by Safeguard of the principal
amount owed under the two Demand Notes (the "eMake Demand Notes"), dated June
29, 2000 and July 13, 2000, respectively, executed by the Company payable to the
order of Safeguard in the amount of $1,500,000 and $1,750,000, respectively. All
amounts paid by SCP to Safeguard on behalf of the Company pursuant to the
preceding sentence shall be deemed to have been paid by the Company to Safeguard
to discharge its obligation to Safeguard described as being satisfied in the
previous sentence. In addition, the amount paid by SCP to Safeguard on behalf of
the Parent pursuant to the first sentence of this Section 1.3 shall be deemed to
have been paid first to the Company, then by the Company to the Parent to
discharge indebtedness owed by the Company to the Parent in such amount and then
by the Parent to Safeguard to discharge accrued but unpaid interest on the
USDATA Note. The cancellation of the principal amount of the USDATA Note
pursuant to the first sentence of this Section 1.3 shall be deemed a payment by
the Company of indebtedness owed by the Company to the Parent in such amount.
2
7
2. Representations and Warranties regarding the Company. Each
of the Company and the Parent hereby jointly and severally represents and
warrants to the Investors that, except as set forth on the Disclosure Schedule
attached hereto as Schedule A (the "Disclosure Schedule") furnished to the
Investors, which exceptions shall be deemed to be representations and warranties
as if made hereunder:
2.1 Organization, Good Standing and Qualification. Each of the
Company and eMake Solutions, Inc., an Delaware corporation (the "Subsidiary"),
is a corporation duly organized, validly existing and in good standing under the
laws of the state of its formation and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted. Each of the Company and the Subsidiary is duly qualified to transact
business and is in good standing in each jurisdiction in which the failure to so
qualify would have a material adverse effect on its business, properties,
results of operation or financial condition.
2.2 Capitalization and Voting Rights
(a) As of the date hereof, the authorized capital of the
Company consists of 1,000 shares of common stock, par value $0.01 per share, all
of which are issued and outstanding and are owned beneficially and of record by
the Parent free and clear of any liens, security interests, encumbrances and
other adverse claims.
(b) As of the Closing Date, the authorized capital of the
Company will consist of:
(i) 32,000,000 shares of Preferred Stock, par value
$0.01 per share (the "Preferred Stock"), of which 16,000,000 shares have been
designated as Series A-1 Preferred Stock and 16,000,000 shares have been
designated as Series A-2 Preferred Stock, none of which currently are issued or
outstanding.
(ii) 86,000,000 shares of Common Stock, par value
$0.01 per share (the "Common Stock"), of which 70,000,000 shares have been
designated as "Class A Common Stock" (the "Class A Common Stock"), 15,400,000 of
which are issued and outstanding, and 16,000,000 shares of which have been
designated as "Class B Common Stock" (the "Class B Common Stock," and together
with the Class A Common Stock, the "Common Stock"), none of which currently are
issued or outstanding. All such issued and outstanding shares of Class A Common
Stock are owned beneficially and of record by the Parent free and clear of any
liens, security interests, encumbrances and other adverse claims.
(c) The authorized capital of the Subsidiary consists of 1,000
shares of Common Stock, par value $0.01 per share, all of which are issued and
outstanding and are owned beneficially and of record by the Company free and
clear of any liens, security interests, encumbrances and other adverse claims.
(d) All outstanding shares of capital stock of the Company and
the Subsidiary have been duly and validly authorized and issued, are fully paid
and nonassessable and were issued in accordance with the registration or
qualification provisions of the Securities Act
3
8
of 1933, as amended (the "Securities Act"), and any relevant state securities
laws or pursuant to valid exemptions therefrom.
(e) Except for (i) the Series A Preferred Stock issuable upon
exercise of the Warrants, (ii) the conversion privileges of the Series A
Preferred Stock issued or issuable hereunder and under the Warrants, (iii) the
conversion privileges of the Class B Common Stock issuable upon conversion of
the Series A-2 Preferred Stock, (iv) conversion privileges of the Series A
Preferred Stock of the Parent, (v) the subscription rights provided for in the
Restated Designation and (vi) the rights provided for in the Investors' Rights
Agreement to be entered into in connection herewith and attached hereto as
Exhibit G (the "Investors' Rights Agreement"), there are no outstanding options,
warrants, rights (including conversion or preemptive rights) or agreements for
the purchase or acquisition from the Company or the Subsidiary of any shares of
their capital stock. In addition, the Company has reserved an additional
4,600,000 shares of its Class A Common Stock for purchase upon exercise of
options granted or to be granted in the future under its 2000 Equity
Compensation Plan (hereinafter, the "Plan"). Neither the Company nor the
Subsidiary is a party or subject to any agreement or understanding, and, to the
Company's knowledge, there is no agreement or understanding between any persons
and/or entities, which affects or relates to the voting or giving of written
consents with respect to any security or by a director of the Company or the
Subsidiary.
2.3 Subsidiaries. Except for its interest in the Subsidiary,
the Company does not presently own or control, directly or indirectly, any
interest in any other corporation, association, or other business entity. The
Subsidiary does not presently own or control, directly or indirectly, any
interest in any other corporation, association or other business entity. Neither
the Company nor the Subsidiary is a participant in any joint venture,
partnership, or similar arrangement.
2.4 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the Warrants, the
Investors' Rights Agreement and the Co-Sale and First Refusal Agreement to be
entered into by the Company in connection herewith and attached hereto as
Exhibit H (the "Co-Sale Agreement"), the performance of all obligations of the
Company hereunder and thereunder, and the authorization, issuance (or
reservation for issuance) and delivery of the Purchased Securities being sold
hereunder, the Series A Preferred Stock issuable upon exercise of the Warrants,
the Common Stock issuable upon conversion of the Series A Preferred Stock and
the Class A Common Stock issuable upon conversion of the Class B Common Stock,
has been taken, and this Agreement, the Warrants, the Investors' Rights
Agreement and the Co-Sale Agreement constitute valid and legally binding
obligations of the Company, enforceable in accordance with their respective
terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (b) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (c) to the extent the indemnification provisions contained in the
Investors' Rights Agreement may be limited by applicable federal or state
securities laws.
2.5 Valid Issuance of Stock. The shares of Series A Preferred
Stock that are being issued to the Investors hereunder, when issued, sold and
delivered in accordance with the
4
9
terms of this Agreement for the consideration expressed herein, will be duly and
validly issued, fully paid, and nonassessable, and will be free of restrictions
on transfer other than restrictions on transfer under this Agreement, the
Co-Sale Agreement and the Investors' Rights Agreement and under applicable state
and federal securities laws. The Series A Preferred Stock issuable upon exercise
of the Warrants has been duly and validly reserved for issuance and, upon
issuance in accordance with the terms of the Warrants, will be duly and validly
issued, fully paid and nonassessable, and will be free of restrictions on
transfers other than restrictions on transfers under this Agreement, the Co-Sale
Agreement and the Investors' Rights Agreement and under applicable state and
federal securities laws. The Common Stock issuable upon conversion of the Series
A Preferred Stock purchased under this Agreement or issuable upon the exercise
of the Warrants has been duly and validly reserved for issuance and, upon
issuance in accordance with the terms of the Restated Certificate, will be duly
and validly issued, fully paid, and nonassessable, and will be free of
restrictions on transfer other than restrictions on transfer under this
Agreement, the Co-Sale Agreement and the Investors' Rights Agreement and under
applicable state and federal securities laws. The Class A Common Stock issuable
upon conversion of the Class B Common Stock issuable upon conversion of the
Series A-2 Preferred Stock issued or issuable hereunder or under the Safeguard
Warrant has been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Restated Certificate, will be duly and validly
issued, fully paid, and nonassessable, and will be free of restrictions on
transfer other than restrictions on transfer under this Agreement, the Co-Sale
Agreement and the Investors' Rights Agreement and under applicable state and
federal securities laws.
2.6 Governmental Consents. Other than those that have been
duly obtained or made and that remain in full force and effect and those
described in Schedule 2.6 (which shall have been duly obtained or made and shall
remain in full force and effect as of the Closing Date), no consent, approval,
order or authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state or local governmental authority
on the part of the Company or the Subsidiary is required in connection with the
consummation of the transactions contemplated by this Agreement, the Warrants,
the Investors' Rights Agreement or the Co-Sale Agreement.
2.7 Offering. Subject in part to the truth and accuracy of the
Investors' representations set forth in Section 4 of this Agreement, the offer,
sale and issuance of the Securities as contemplated by this Agreement are exempt
from the registration requirements of the Securities Act and applicable state
securities laws, and neither the Company nor any authorized agent acting on its
behalf will take any action hereafter that would cause the loss of such
exemption. The issuance of shares of Series A Preferred Stock upon the exercise
of the Warrants, the issuance of shares of Common Stock upon the conversion of
shares of Series A Preferred Stock and the issuance of shares of Class A Common
Stock upon conversion of shares of Class B Common Stock will be exempt from the
registration requirement of the Securities Act and applicable state securities
laws.
2.8 Litigation. There is no action, suit, proceeding or
investigation pending or, to the best of the Company's and the Parent's
knowledge, currently threatened against the Company or the Subsidiary that
questions the validity of this Agreement, the Warrants, the Investors' Rights
Agreement or the Co-Sale Agreement or the right of the Company to enter into
such agreements, or to consummate the transactions contemplated hereby or
thereby, or that
5
10
might result, either individually or in the aggregate, in any material adverse
changes in the assets, condition, affairs or prospects of the Company or the
Subsidiary, financially or otherwise, or any change in the current equity
ownership of the Company or the Subsidiary. The foregoing includes, without
limitation, actions, suits, proceedings or investigations pending or, to the
best of the Company's and the Parent's knowledge, threatened involving the prior
employment of any of the Company's or the Subsidiary's employees or consultants,
their use in connection with the Company's or the Subsidiary's business of any
information or techniques allegedly proprietary to any of their former
employers, or their obligations under any agreements with prior employers.
Neither the Company nor the Subsidiary is a party or subject to the provisions
of any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. There is no action, suit, proceeding or investigation
by the Company or the Subsidiary currently pending or that the Company or the
Subsidiary intends to initiate.
2.9 Nondisclosure and Inventions Agreements. Except as
described in the Disclosure Schedule, each employee, officer and consultant of
the Company or the Subsidiary has executed a Nondisclosure and Inventions
Agreement in the form attached as Exhibit I hereto. The Company and the Parent,
after reasonable investigation, are not aware that any of the Company's or the
Subsidiary's key employees, officers or consultants are in violation of the
agreements specified in this Section 2.9, and the Company and the Parent will
use their reasonable efforts to prevent any such violation.
2.10 Patents and Trademarks. The Disclosure Schedule contains
a complete and accurate list of all (i) patented or registered Intellectual
Property Rights (as defined below) owned or used by the Company or the
Subsidiary, (ii) pending patent applications and applications for registrations
of other Intellectual Property Rights filed by the Company or the Subsidiary and
(iii) unregistered trade names and corporate names owned or used by the Company
or the Subsidiary. The Disclosure Schedule also contains a complete and accurate
list of all licenses and other rights granted by the Company or the Subsidiary
to any third party with respect to any Intellectual Property Rights and all
licenses and other rights granted by any third party to the Company or the
Subsidiary with respect to any Intellectual Property Rights, in each case
identifying the subject Intellectual Property Rights but not including licenses
arising from the purchase of standard "off the shelf" products. The Company or
the Subsidiary owns all right, title and interest in and to all of the
Intellectual Property Rights listed on the Disclosure Schedule free and clear of
all liens, encumbrances or claims of others except liens, encumbrances and
claims of others with respect to third-party licenses. Except as set forth on
the Disclosure Schedule, the Company or the Subsidiary owns all right, title and
interest to, or has the right to use pursuant to a valid license, all
Intellectual Property Rights, as they currently exist, necessary for the
operation of the business of the Company and the Subsidiary as presently
conducted and as presently proposed to be conducted, free and clear of all
liens, encumbrances or claims of others except liens, encumbrances and claims of
others with respect to third-party licenses. The Company and the Subsidiary have
taken all necessary and desirable actions to maintain and protect the
Intellectual Property Rights that each of them own. To the best of the Company's
and the Parent's knowledge, the owners of any Intellectual Property Rights
licensed to the Company or the Subsidiary have taken all necessary and desirable
actions to maintain and protect the Intellectual Property Rights that are
subject to such licenses. There have been no claims made against the Company or
the Subsidiary asserting the invalidity, misuse or unenforceability of any of
such Intellectual Property Rights, and to the best of the Company's knowledge,
there are no
6
11
valid grounds for the same. Neither the Company nor the Subsidiary has received
any notices of, and the Company and the Parent are not aware of any facts which
indicate a likelihood of, any infringement or misappropriation by, or conflict
with, any third party with respect to such Intellectual Property Rights
(including, without limitation, any demand or request that the Company or the
Subsidiary license any rights from a third party). To the best of the Company's
and the Parent's knowledge, the conduct of the Company's and the Subsidiary's
business has not infringed, misappropriated or conflicted with and does not
infringe, misappropriate or conflict with any Intellectual Property Rights of
others, nor to the best of the Company's and the Parent's belief would any
future conduct as presently contemplated infringe, misappropriate or conflict
with any Intellectual Property Rights of others. To the best of the Company's
and the Parent's knowledge, the Intellectual Property Rights owned by or
licensed to the Company or the Subsidiary have not been infringed upon, or
misappropriated by or conflict with others. The transactions contemplated by
this Agreement will have no material adverse effect on the Company's or the
Subsidiary's right, title and interest in and to the Intellectual Property
Rights listed on the Disclosure Schedule. To the best of the Company's and the
Parent's knowledge, none of its or the Subsidiary's employees is obligated under
any contract (including licenses, covenants or commitments of any nature) or
other agreement, or subject to any judgment, decree or order of any court or
administrative agency, that would interfere with the use of his or her best
efforts to promote the interests of the Company or the Subsidiary or that would
conflict with the Company's or the Subsidiary's business as presently conducted
and to the best of the Company's and the Parent's belief as presently proposed
to be conducted. Neither the execution of this Agreement nor the transactions
contemplated by this Agreement nor the carrying on of the Company's or the
Subsidiary's business by the employees of the Company and the Subsidiary, nor
the conduct of the Company's or the Subsidiary's business as presently conducted
or presently proposed to be conducted, will, the best of the Company's and
Parent's knowledge based upon a review by the Company and the Parent of
contracts and agreements relating to the employment of the Company's employees
and any third-party notices relating thereto (it being represented, however,
that neither the Parent or Company have any knowledge with respect thereto from
other sources), conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated. Neither the
Company nor the Parent believes it is or will be necessary for the Company or
the Subsidiary to utilize any inventions of any of the Company's or the
Subsidiary's employees (or people it currently intends to hire) made prior to
their employment by the Parent, the Company or the Subsidiary, as applicable.
For purposes of this Agreement, "Intellectual Property Rights" means all (i)
patents, patent applications, patent disclosures and inventions, (ii)
trademarks, service marks, trade dress, trade names, logos and corporate names
and registrations and applications for registration thereof together will all of
the goodwill associated therewith, (iii) copyrights (registered and
unregistered) and copyrightable works and registrations and applications for
registration thereof, (iv) mask works and registrations and applications for
registration thereof, (v) computer software, data, data bases and documentation
thereof, (vi) trade secrets and other confidential information (including,
without limitation, ideas, formulas, compositions, inventions (whether
patentable or unpatentable and whether or not reduced to practice), know-how,
manufacturing and production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals, technical
data, financial and marketing plans and customer and supplier lists and
7
12
information), (vii) other intellectual property rights and (viii) copies and
tangible embodiments thereof (in whatever form or medium).
2.11 Compliance with Certain Matters. Neither the Company nor
the Subsidiary is in violation or default under or in breach of any material
provision of its Certificate of Incorporation or Bylaws, any material agreement,
instrument, contract, document, judgment, order, writ or decree to which it is a
party or by which it is bound or any federal or state statute, rule or
regulation applicable to it. The execution, delivery and performance of this
Agreement, the Warrants, the Investors' Rights Agreement and the Co-Sale
Agreement and the consummation of the transactions contemplated hereby and
thereby will not result in any such violation or be in conflict with or
constitute, with or without the passage of time and giving of notice, either a
default under any such material provision, agreement, instrument, contract,
document, judgment, order, writ, decree, statute, rule or regulation or an event
that results in the creation of any lien, charge or encumbrance upon any assets
of the Company or the Subsidiary or the suspension, revocation, impairment,
forfeiture, or nonrenewal of any material permit, license, authorization, or
approval applicable to the Company or the Subsidiary, their business or
operations or any of their assets or properties.
2.12 Agreements; Action.
(a) The Disclosure Schedule lists all material agreements,
understandings, instruments and contracts, whether written or oral, to which the
Company or the Subsidiary is a party or by which the Company or the Subsidiary
or its assets and properties are bound.
(b) Except for agreements explicitly contemplated hereby,
existing employment agreements set forth in the Disclosure Schedule and matters
set forth in the Disclosure Schedule relating to the contribution of
Subsidiary's assets to the Company from the Parent, the Investors' Rights
Agreement and Co-Sale Agreement, there are no agreements, understandings or
proposed transactions between the Company or the Subsidiary and any of its
officers, directors, affiliates or any affiliate thereof.
(c) Except as set forth in this Agreement or as described in
the Disclosure Schedule, there are no agreements, understandings, instruments,
contracts, proposed transactions, judgments, orders, writs or decrees to which
the Company or the Subsidiary is a party or by which it is bound that may
involve (i) obligations (contingent or otherwise) of, or payments to, the
Company or the Subsidiary in excess of $25,000, (ii) the license of any patent,
copyright, trade secret or other proprietary right to or from the Company or the
Subsidiary, other than licenses arising from the purchase of "off the shelf" or
other standard products, (iii) provisions restricting or affecting the
development, manufacture or distribution of the Company's or the Subsidiary's
products or services, (iv) a warranty with respect to its services rendered or
its products sold or leased other than in the ordinary course of business, or
(v) indemnification by the Company or the Subsidiary with respect to
infringements of proprietary rights.
(d) Neither the Company nor the Subsidiary has (i) declared or
paid any dividends or authorized or made any distribution upon or with respect
to any class or series of its capital stock, (ii) except for the eMake Notes and
the eMake Demand Notes, incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $10,000 or, in
8
13
the case of indebtedness and/or liabilities individually less than $10,000, in
excess of $50,000 in the aggregate, (iii) made any loans or advances to any
person, other than advances for travel expenses and other customary
employment-related advances made in the ordinary course of business, or (iv)
sold, exchanged or otherwise disposed of any of its assets or rights, other than
the sale of its inventory in the ordinary course of business.
(e) For the purposes of subsections (c) and (d) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities either the Company or the Parent has reason to believe are
affiliated therewith) shall be aggregated for the purpose of meeting the
individual minimum dollar amounts of such subsections.
(f) All of the contracts, agreements and instruments set forth
on the Disclosure Schedule pursuant to this Section 2.12 are valid, binding and
enforceable in accordance with their respective terms and there has been no
material change to or amendment to a material contract by which the Company or
the Subsidiaries or any of their respective assets or properties is bound or
subject. Each of the Company and the Subsidiary has performed all material
obligations required to be performed by it and is not in material default under
or in material breach of nor in receipt of any claim of default or breach under
any contract, agreement or instrument and neither the Company nor the Subsidiary
have any present expectation or intention of not fully performing all such
obligations. No event has occurred which with the passage of time or the giving
of notice or both would result in a material default, breach or event of
noncompliance by the Company or the Subsidiary under any contract, agreement or
instrument. None of the Company, the Subsidiary or the Parent has knowledge of
any breach or anticipated breach by the other parties to any contract,
agreement, instrument or commitment.
(g) Neither the Company nor the Subsidiary is a party to or is
bound by any contract, agreement or instrument or subject to any restriction
under its Certificate of Incorporation that materially adversely affects its
business as now conducted or as proposed to be conducted, its properties or its
financial condition.
2.13 Related-Party Transactions. No employee, consultant,
officer, or director of the Company or the Subsidiary, or member of his or her
immediate family is indebted to the Company or the Subsidiary, nor is the
Company or the Subsidiary indebted (or committed to make loans or extend or
guarantee credit) to any of them except for compensation, wages and benefits and
travel and customary expenses. Except for employment agreements, benefit plans,
insurance policies and similar matters, no employee, consultant, officer, or
director of the Company or the Subsidiary, or member of the immediate family of
any officer or director of the Company or the Subsidiary is directly or
indirectly interested in any material contract with the Company or the
Subsidiary.
2.14 Permits. Each of the Company and the Subsidiary 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 its business, properties, prospects, or
financial condition, and the Company and the Parent believe that each of the
Company and the Subsidiary can obtain, without undue burden or expense, any
similar authority for the conduct of its business as planned to be conducted.
Neither the Company nor the
9
14
Subsidiary is in default in any material respect under any of such franchises,
permits, licenses or other similar authority.
2.15 Environmental and Safety Laws. To the Company's and the
Parent's knowledge, neither the Company nor the Subsidiary is in violation of
any applicable statute, law or regulation relating to the environment or
occupational health and safety, and to the Company's and the Parent's knowledge,
no material expenditures are or will be required in order to comply with any
such existing statute, law or regulation.
2.16 Manufacturing and Marketing Rights. Except in the
ordinary course of business, neither the Company nor the Subsidiary has granted
rights to manufacture, produce, assemble, license, market, or sell its products
to any other person and is not bound by any agreement that affects its exclusive
right to develop, manufacture, assemble, distribute, market or sell its
products.
2.17 Disclosure. The Company and the Parent have fully
provided the Investors with all the information that the Investors have
requested for deciding whether to purchase the Securities and to consummate the
transactions contemplated by this Agreement. None of this Agreement, the
Warrants, the Investors' Rights Agreement, the Co-Sale Agreement, any other
statements or certificates made or delivered in connection herewith or therewith
or any other information supplied by the Company or the Parent with respect to
the transactions contemplated hereby, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
herein or therein not misleading.
2.18 Registration Rights. Except as provided in the Parent
Investors' Rights Agreement, as defined below, and the Investors' Rights
Agreement, neither the Company nor the Subsidiary has granted or agreed to grant
any registration rights, including piggyback rights, to any person or entity.
2.19 Corporate Documents. The Company's Restated Certificate
is in the form attached hereto as Exhibit A and the Company's Bylaws and the
Subsidiary's Certificate of Incorporation and Bylaws are in the form previously
provided to the Investors.
2.20 Title to Property and Assets. Each of the Company and the
Subsidiary owns its property and assets free and clear of all mortgages, liens,
loans and encumbrances, except such encumbrances and liens that arise in the
ordinary course of business and do not materially impair its ownership or use of
such property or assets. With respect to the property and assets it leases, each
of the Company and the Subsidiary is in compliance with such leases and holds a
valid leasehold interest free of any liens, claims or encumbrances.
2.21 Employee Benefit Plans. Neither the Company nor the
Subsidiary has ever had any Employee Benefit Plan as defined in the Employee
Retirement Income Security Act of 1974.
2.22 Tax Returns, Payments and Elections. Each of the Company
and the Subsidiary has filed all tax returns and reports as required by law.
These returns and reports are true and correct in all material respects. Each of
the Company and the Subsidiary has paid all taxes and other assessments due,
except those contested by it in good faith that are listed in the
10
15
Disclosure Schedule. Neither the Company nor the Subsidiary has elected pursuant
to the Internal Revenue Code of 1986, as amended (the "Code"), to be treated as
a Subchapter S corporation or a collapsible corporation pursuant to Section
1362(a) or Section 341(f) of the Code, nor has it made any other elections
pursuant to the Code (other than elections that relate solely to methods of
accounting, depreciation or amortization) that would have a material effect on
it, its financial condition, its business as presently conducted or proposed to
be conducted or any of its properties or material assets.
2.23 Insurance. Each of the Company and the Subsidiary has in
full force and effect or will obtain in a reasonable amount of time after the
Closings, fire and casualty insurance policies, with extended coverage in
amounts customary for companies similarly situated. Each of the Company and the
Subsidiary has in full force and effect or will obtain in a reasonable amount of
time after the Closings, products liability and errors and omissions insurance
in amounts customary for companies similarly situated.
2.24 Minute Books. The minute books of the Company and the
Subsidiary made available to the Investors contain a complete summary of all
meetings of directors and stockholders since the time of incorporation and
reflect all transactions referred to in such minutes accurately in all material
respects.
2.25 Labor Agreements and Actions. Neither the Company nor the
Subsidiary is bound by or subject to (and none of its assets or properties is
bound by or subject to) any written or oral, express or implied, contract,
commitment or arrangement with any labor union, and no labor union has requested
or, to the Company's and the Parent's knowledge, requested or sought to
represent any of its employees, consultants, representatives or agents. There is
no strike or other labor dispute involving the Company or the Subsidiary
pending, or to the Company's and the Parent's knowledge, threatened, that could
have a material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company or the Subsidiary (as such
business is presently conducted and as it is proposed to be conducted), nor is
the Company aware of any labor organization activity involving the employees or
consultants of the Company or the Subsidiary. The Company is not aware that any
officer or key employee or key consultant, or that any group of key employees or
key consultants, intends to terminate their employment or consulting
relationship with the Company or the Subsidiary, nor does the Company or the
Subsidiary have a present intention to terminate the employment or consulting
relationship of any of the foregoing nor has there been any material change in
any compensation arrangement or agreement with any employee or consultant. With
the exception of those officers and employees that have executed employment
contracts with the Company as listed in the Disclosure Schedule, the employment
of each officer and employee of the Company and the Subsidiary is terminable at
the will of the Company or the Subsidiary and without any required severance
payment, other than payments under the severance policy described on Schedule
2.25 attached hereto. The consulting relationship of each consultant of the
Company or the Subsidiary is terminable at the will of the Company or the
Subsidiary, as applicable, and without any required severance payment. To the
knowledge of the Company, each of the Company and the Subsidiary have complied
in all material respects with all applicable state and federal equal employment
opportunity and other laws related to employment.
11
16
2.26 Damage; Loss. The Company has not experienced any damage,
destruction or loss, whether or not covered by insurance, that would materially
and adversely affect the assets, properties, financial condition, operating
results, prospects or business of the Company (as such business is presently
conducted and as it is proposed to be conducted).
2.27 Liens; Claims. There has not been any satisfaction or
discharge of any lien, claim or encumbrance or payment of any obligation by the
Company, except in the ordinary course of business and that is material to its
assets, properties, financial condition, operating results or business (as such
business is presently conducted and as it is proposed to be conducted).
2.28 Real Property Holding Company. Neither the Company nor
the Subsidiary is a real property holding company within the meaning of Section
897 of the Code.
2.29 Transfer of Assets. All of the assets of Smart Shop
Software, Inc., an Idaho corporation, have been transferred to the Subsidiary
without any restrictions or limitations thereon or the need for any approvals or
consents thereto and all material contracts previously entered into by the
Parent or United States Data Corporation on behalf of the Company or the
Subsidiary and all material assets held by the Parent or United States Data
Corporation relating to the business conducted or proposed to be conducted by
the Company and the Subsidiary have been or will have been assigned prior to the
Closing Date to either the Company or the Subsidiary.
3. Representations and Warranties regarding the Parent. Each
of the Company and the Parent hereby jointly and severally represents and
warrants to the Investors that, except as set forth on the Disclosure Schedule,
which exceptions shall be deemed to be representations and warranties as if made
hereunder:
3.1 Organization, Good Standing and Qualification. Each of the
Parent and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the state of its formation and
has all requisite corporate power and authority to carry on its business as now
conducted and as proposed to be conducted, except where such failure would not
have a material adverse effect on the assets, properties, financial condition,
operating results, or business of the Parent or its subsidiaries (as such
business is presently conducted and as it is proposed to be conducted). Each of
the Parent and each of its subsidiaries is duly qualified to transact business
and is in good standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect on its business, properties, results of
operation or financial condition.
3.2 SEC Reports; Financial Statements. The Parent Common Stock
is registered under Section 12(b) or (g) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the Parent is in compliance with its
reporting and filing obligations under the Exchange Act. The Parent has made
available to the Investors (a) its annual reports to stockholders and its Annual
Reports on Form 10-K for its last two fiscal years and (b) all of its Quarterly
Reports on Form 10-Q and each other report, registration statement or definitive
proxy statement filed with the Securities and Exchange Commission (the "SEC")
since the beginning of such two fiscal years (collectively, the "SEC Reports").
The SEC Reports (other than
12
17
Quarterly Reports on Form 10-Q filed prior to the latest Annual Report on Form
10-K filed by the Parent) do not (as of their respective dates) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The audited and
unaudited financial statements of the Parent included in the SEC Reports (the
"Financial Statements") have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as stated in such
Financial Statements or the notes thereto) and fairly present the financial
position of the Parent and its consolidated subsidiaries as of the dates thereof
and the results of their operations and changes in financial position for the
periods then ended. Except as disclosed by the Parent in the SEC Reports, since
the end of the most recent of such fiscal years, there has been no material
adverse change in the business, properties, financial condition or results of
operations of the Parent and its subsidiaries taken together, and there is no
existing condition, event or series of events which reasonably would be expected
to have a material adverse effect on the business, properties, financial
condition or results of operations of the Parent and its subsidiaries taken
together, or the ability of the Parent to perform its obligations under this
Agreement, the Co-Sale Agreement, the Exchange Agreements or the Amended and
Restated Investors' Rights Agreement to be executed and delivered in connection
herewith in the form attached hereto as Exhibit J (the "Parent Investors' Rights
Agreement").
3.3 Capitalization and Voting Rights
(a) As of the Closing Date, the authorized capital of the
Parent will consist of:
(i) 2,200,000 shares of Preferred Stock, par value
$0.01 per share (the "Preferred Stock"), of which 100,000 shares have been
designated as "Series A Convertible Preferred Stock," of which 50,000 currently
are issued or outstanding, and of which 800,000 shares have been designated as
"Series B Convertible Preferred Stock," of which none are currently issued or
outstanding.
(ii) 40,000,000 shares of Parent Common Stock, of
which, as of the date of the last Quarterly Report on Form 10-Q or Annual Report
on Form 10-K filed by the Parent, 13,968,265 shares are issued and outstanding
(as of June 30, 2000).
(b) All outstanding shares of capital stock of the Parent's
subsidiaries are owned beneficially and of record by the Parent, free and clear
of any liens, security interests, encumbrances or other adverse claims. Except
as described in the Disclosure Schedule, the Parent and its subsidiaries do not
presently own or control, directly or indirectly, any interest in any other
corporation, association or other business entity. Neither the Parent nor its
subsidiaries are participants in any joint venture, partnership, or similar
arrangement.
(c) All outstanding shares of capital stock of the Parent and
its subsidiaries have been duly and validly authorized and issued, are fully
paid and nonassessable and were issued in accordance with the registration or
qualification provisions of the Securities Act, and any relevant state
securities laws or pursuant to valid exemptions therefrom.
13
18
(d) Except as disclosed in the SEC Reports and except for the
rights provided for in the Parent Investors' Rights Agreement, this Agreement
and the Exchange Agreements, there are not any outstanding options, warrants,
rights (including conversion or preemptive rights) or agreements for the
purchase or acquisition from the Parent or any of its subsidiaries of any shares
of their capital stock.
3.4 Authorization. Except for the vote of the stockholders of
the Parent (which shall have been obtained and remain in full force as of the
Closing Date), all corporate action on the part of the Parent, its officers,
directors and stockholders necessary for the authorization, execution and
delivery of this Agreement, the Parent Investors' Rights Agreement, the Co-Sale
Agreement and the Exchange Agreements, the performance of all obligations of the
Parent hereunder and thereunder, and the authorization, issuance (or reservation
for issuance) and delivery of the Parent Preferred Stock issuable under the
Exchange Agreements and the Parent Common Stock issuable upon conversion of the
Parent Preferred Stock issuable under the Exchange Agreements has been taken as
of the Closing Date, and this Agreement, the Parent Investors' Rights Agreement,
the Co-Sale Agreement and the Exchange Agreements constitute valid and legally
binding obligations of the Parent, enforceable in accordance with their
respective terms, except (a) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (b) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (c) to the extent the indemnification provisions contained in the
Parent Investors' Rights Agreement may be limited by applicable federal or state
securities laws.
3.5 Valid Issuance of Preferred and Common Stock. The Parent
Preferred Stock issuable to the Investors under the Exchange Agreements, when
issued and delivered in accordance with the terms of the Exchange Agreements for
the consideration expressed therein, will be duly and validly issued, fully
paid, and nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and the Parent Investors' Rights
Agreement and under applicable state and federal securities laws. The Parent
Common Stock issuable upon conversion of the Parent Preferred Stock issuable
under the Exchange Agreements will have been as of the Closing Date duly and
validly reserved for issuance and, upon issuance in accordance with the terms of
the Restated Designation, will be duly and validly issued, fully paid, and
nonassessable, and will be free of restrictions on transfer other than
restrictions on transfer under this Agreement and the Parent Investors' Rights
Agreement and under applicable state and federal securities laws.
3.6 Governmental Consents. Other than filings which are
required under applicable securities laws, which filings, if any, will be made
within the applicable periods required act and by such laws, no consent,
approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority, including the NASD (as defined below), on the part of
the Parent is required in connection with the consummation of the transactions
contemplated by this Agreement, the Investors' Rights Agreement, the Co-Sale
Agreement and the Exchange Agreements.
3.7 Offering. Subject in part to the truth and accuracy of the
Investors' representations set forth in Section 4 of this Agreement, the
issuance of the Parent Preferred
14
19
Stock as contemplated by the Exchange Agreements and the issuance of the Parent
Common Stock issuable upon the conversion of the Parent Preferred Stock will be
exempt from the registration requirements of the Securities Act, and neither the
Parent nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.
3.8 Compliance with Certain Matters. Neither the Parent nor
any of its subsidiaries is in violation or default under or in breach of any
material provision of its Certificate of Incorporation or Bylaws, any material
agreement, instrument, contract, document, judgment, order, writ or decree to
which it is a party or by which it is bound or any federal or state statute,
rule or regulation applicable to it. The execution, delivery and performance of
this Agreement, the Parent Investors' Rights Agreement, the Co-Sale Agreement
and the Exchange Agreements and the consummation of the transactions
contemplated hereby and thereby will not result in any such violation or be in
conflict with or constitute, with or without the passage of time and giving of
notice, either a default under any such material provision, agreement,
instrument, contract, document, judgment, order, writ, decree, statute, rule or
regulation or an event that results in the creation of any lien, charge or
encumbrance upon any assets of the Parent or any of its subsidiaries or the
suspension, revocation, impairment, forfeiture, or nonrenewal of any material
permit, license, authorization, or approval applicable to the Parent or any of
its subsidiaries, their business or operations or any of their assets or
properties.
4. Representations and Warranties of the Investors. Each
Investor hereby severally represents and warrants to the Company and the Parent
that:
4.1 Authorization. The Investor has full power and authority
to enter into this Agreement, the Investors' Rights Agreement, the Parent
Investors' Rights Agreement, the Exchange Agreements and the Co-Sale Agreement,
and each of them constitutes the valid and legally binding obligation of the
Investor enforceable against the Investor in accordance with its terms, except
(a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium,
and other laws of general application affecting enforcement of creditors' rights
generally, (b) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (c) to the
extent the indemnification provisions contained in the Parent Investors' Rights
Agreement and the Investors' Rights Agreement may be limited by applicable
federal or state securities laws.
4.2 Purchase Entirely for Own Account. The Securities to be
purchased by the Investor hereunder, the Series A Preferred Stock issuable upon
exercise of the Warrant to be issued to the Investor hereunder, the Common Stock
issuable upon conversion of the Series A Preferred Stock issued or issuable to
the Investor hereunder or under the Warrant issued to the Investor hereunder,
the Class A Common Stock issuable upon conversion of the Class B Common Stock,
the Parent Preferred Stock issuable to the Investor upon exercise of the
Exchange Agreement with the Investor and the Parent Common Stock issuable upon
the conversion of the Parent Preferred Stock issuable to the Investor pursuant
to the Exchange Agreement with the Investor, are being acquired for investment
for the Investor's own account, not as a nominee or agent, and not with a view
to the resale or distribution of any part thereof, and the Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. The Investor does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third
15
20
person, with respect to any of the Securities to be purchased by the Investor
hereunder, the Series A Preferred Stock issuable upon exercise of the Warrant to
be issued to the Investor hereunder, the Common Stock issuable upon conversion
of the Series A Preferred Stock issued or issuable to the Investor hereunder or
under the Warrant issued to the Investor hereunder, the Class A Common Stock
issuable upon conversion of the Class B Common Stock, the Parent Preferred Stock
issuable to the Investor upon exercise of the Exchange Agreement with the
Investor and the Parent Common Stock issuable upon the conversion of the Parent
Preferred Stock issuable to the Investor pursuant to the Exchange Agreement with
the Investor.
4.3 Disclosure of Information. The Investor has received all
the information it considers necessary or appropriate for deciding whether to
purchase the Securities. The Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company and the Parent
regarding the terms and conditions of the offering of the Securities and the
business, properties, prospects and financial condition of the Company and the
Parent. The foregoing, however, does not limit or modify the representations and
warranties in Sections 2 and 3 of this Agreement or the right of the Investor to
rely thereon.
4.4 Investment Experience. The Investor is an investor 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 business matters that it is
capable of evaluating the merits and risks of the investment in the Securities.
The Investor also represents it has not been organized for the purpose of
acquiring the Securities.
4.5 Accredited Investor. The Investor is an "accredited
investor" within the meaning of Rule 501 of Regulation D promulgated under the
Securities Act, as presently in effect.
4.6 Restricted Securities. The Investor understands that the
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
and the Parent 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 Investor represents that it is familiar with Rule 144
promulgated under the Securities Act, as presently in effect, and understands
the resale limitations imposed thereby and by the Securities Act.
4.7 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, the Investor further agrees not to
make any disposition of all or any portion of the Securities to be purchased by
the Investor hereunder, the Series A Preferred Stock issuable upon exercise of
the Warrant to be issued to the Investor hereunder, the Common Stock issuable
upon conversion of the Series A Preferred Stock issued or issuable to the
Investor hereunder or under the Warrant to be issued to the Investor hereunder,
the Class A Common Stock issuable upon conversion of the Class B Common Stock,
the Parent Preferred Stock issuable to the Investor upon exercise of the
Exchange Agreement with the Investor and the Parent Common Stock issuable upon
the conversion of the Parent Preferred Stock issuable to the Investor pursuant
to the Exchange Agreement with the Investor unless and until the transferee
16
21
has agreed in writing for the benefit of the Company and the Parent to be bound
by this Section 4 and the applicable provisions of the Investors' Rights
Agreement and the Parent Investors' Rights Agreement and:
(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) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition and, if
requested by the Company, such Investor 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. It is agreed that
the Company will not require opinions of counsel for transactions made pursuant
to Rule 144 except in unusual circumstances or unless required by a transfer
agent.
Notwithstanding the provisions of subsections (a) and (b) above, no such
registration statement or opinion of counsel shall be necessary for a transfer
by an Investor that is a partnership to a partner of such partnership or a
retired partner of such partnership who retires after the date hereof, or to the
estate of any such partner or retired partner or the transfer by gift, will or
intestate succession of any partner to his or her spouse or to the siblings,
lineal descendants or ancestors of such partner or his or her spouse, if the
transferee agrees in writing to be subject to the terms hereof to the same
extent as if he or she were an original Investor hereunder.
4.8 Legends. It is understood that the certificates evidencing
the Securities, the Series A Preferred Stock issuable upon exercise of the
Warrants, the Common Stock issuable upon conversion of the Series A Preferred
Stock, the Class A Common Stock issuable upon conversion of the Class B Common
Stock, the Parent Preferred Stock and the Parent Common Stock issuable upon
conversion of the Parent Preferred Stock may bear one or all of the following
legends:
(a) "These securities have not been registered under the
Securities Act of 1933, as amended. They may not be sold, offered for sale,
pledged or hypothecated in the absence of a registration statement in effect
with respect to the securities under such Act or an opinion of counsel
satisfactory to the issuer thereof that such registration is not required or
unless sold pursuant to Rule 144 of such Act."
(b) Any legend required by the securities laws of any
applicable jurisdictions.
(c) Any legend required by the Investors' Rights Agreement,
the Parent Investors' Rights Agreement or other applicable agreement.
5. Conditions of Investors' Obligations at Closing. The
obligations of the Investors under Sections 1.1 and 1.2 of this Agreement are
subject to the fulfillment on or before the Closing of each of the following
conditions:
5.1 Representations and Warranties. The representations and
warranties of the Company and the Parent contained in Sections 2 and 3 shall be
true in all material respects on
17
22
and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing, unless another
date is specified therein.
5.2 Performance. The Company and the Parent shall have
performed and complied in all material respects with all agreements, obligations
and conditions contained in this Agreement that are required to be performed or
complied with by each of them on or before the Closing.
5.3 Compliance Certificate. The Chief Financial Officer of
each of the Company and the Parent shall deliver to the Investors at the Closing
certificates on behalf of the Company and the Parent, respectively, stating that
the conditions specified in Sections 5.1 and 5.2 have been fulfilled.
5.4 Qualifications. All authorizations, approvals, or permits,
if any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Securities and the other transactions contemplated by this Agreement
shall be duly obtained and effective as of the Closing.
5.5 Proceedings and Documents. All corporate approvals,
stockholder approvals and other proceedings in connection with the transactions
contemplated at the Closing and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Investors and their special
counsel, and they shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.
5.6 Investors' Rights Agreement. The Company and the Investors
shall have entered into the Investors' Rights Agreement.
5.7 Stock Certificates; Warrants. The Company shall have
delivered to the Investors executed certificates representing the Series A
Preferred Stock and the Warrants to be purchased at the Closing.
5.8 Adoption of Plan. The Company shall have adopted the Plan
by all requisite corporate action, and, as of the date hereof, the Plan shall
not authorize the issuance of more than 4,600,000 shares of Class A Common
Stock.
5.9 Confidentiality Agreements. Each employee, officer and
consultant of the Company or the Subsidiary shall have entered into the
applicable confidentiality agreement as specified in Section 2.9 hereof.
5.10 Board of Directors. The directors of the Company shall be
as set forth in the Co-Sale Agreement.
5.11 Co-Sale Agreement. The Company, the Parent and the
Investors shall have entered into the Co-Sale Agreement.
5.12 Parent Investors' Rights Agreement. The Parent, Safeguard
Delaware, Inc., the Investors and Safeguard Scientifics, Inc. shall have entered
into the Parent Investors' Rights Agreement.
18
23
5.13 Exchange Agreements. The Parent and the Investors shall
have entered into the Exchange Agreements.
5.14 Legal Opinion. The Investors shall have received an
opinion of Jenkens & Xxxxxxxxx, P.C., counsel to the Company and the Parent, in
the form attached hereto as Exhibit K.
5.15 Stockholder Approval. The Parent shall have called and
convened a meeting of its stockholders pursuant to Section 7.15, and at such
meeting, the stockholders of the Parent shall have duly approved (i) the
issuance by the parent of the Parent Common Stock issuable upon conversion of
the Parent Preferred Stock, and (ii) the amendment of the Parent's Certificate
of Incorporation pursuant to the Restated Designation and the amendment of the
Parent's Certificate of Incorporation to increase the authorized Common Stock of
the Parent to 40,000,000 shares.
5.16 NASD Matters. The Parent shall have given or made all
notices to or filings with the National Association of Securities Dealers, Inc.
(the "NASD"), and shall have complied with all rules and regulations of the
NASD, required in connection with the transactions contemplated hereby.
5.17 Assignment of Trademarks. The Parent and the Company
shall have taken all actions necessary for the purpose of assigning all
trademarks set forth on subsection (i) of Schedule 2.10 to the Company
(including without limitation an assignment of the pending registrations of such
trademarks with the Patent and Trademark Office).
5.18 Assignment of Contracts. The Parent and the Company shall
have taken all actions necessary for the purpose of assigning all contracts set
forth on Schedule 2.12 to the Subsidiary, including obtaining all third-party
consents necessary to complete such assignments.
5.19 Contribution Agreement. The Parent, the Company and any
of their affiliates shall have entered into a form of contribution agreement
that is reasonably acceptable to counsel for the Investors, effecting the
transfer and assignment to the Company of all assets, contracts or any other
rights related to or necessary for the business of the Company as presently
conducted or proposed to be conducted.
6. Conditions of the Company's and the Parent's Obligations at
Closing. The obligations of the Company and the Parent to the Investors under
this Agreement are subject to the fulfillment on or before the Closing of each
of the following conditions by the Investors:
6.1 Representations and Warranties. The representations and
warranties of the Investors contained in Section 4 shall be true on and as of
the Closing with the same effect as though such representations and warranties
had been made on and as of the date of the Closing.
6.2 Performance. The Investors shall have performed and
complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
6.3 Proceedings and Documents. All corporate approvals,
stockholder approvals and other proceedings in connection with the transactions
contemplated at the Closing
19
24
and all documents incident thereto shall be reasonably satisfactory in form and
substance to the Company's and the Parent's counsel, and they shall have
received all such counterpart original and certified or other copies of such
documents as they may reasonably request.
6.4 Payment of Purchase Price; Delivery of Certificate. The
Investors shall have delivered to the Company the purchase price payable at the
Closing pursuant to Section 1.3.
6.5 Qualifications. All authorizations, approvals, or permits,
if any, of any governmental authority or regulatory body of the United States or
of any state that are required in connection with the lawful issuance and sale
of the Securities and the other transactions contemplated by this Agreement
shall be duly obtained and effective as of the Closing.
6.6 Stockholder Approval. The stockholders of the Parent shall
have duly approved (i) the issuance by the parent of the Parent Common Stock
issuable upon conversion of the Parent Preferred Stock, and (ii) the amendment
of the Parent's Certificate of Incorporation pursuant to the Restated
Designation.
7. Miscellaneous.
7.1 Survival of Warranties. The warranties, representations
and covenants of the Company, the Parent and the Investors contained in or made
pursuant to this Agreement shall survive the execution and delivery of this
Agreement and the Closing for a period of two years, and shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the Investors, the Parent or the Company; provided, however, that there shall
be no limitation period for those matters addressed in Section 2.2(a) or (b)
hereof.
7.2 Use of Proceeds. The Company shall use the proceeds from
the sale of the Securities to the Investors hereunder for general corporate
purposes.
7.3 Successors and Assigns. Except as otherwise provided
herein, 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
(including transferees of any Securities, any Series A Preferred Stock issuable
upon exercise of the Warrants, any Common Stock issuable upon conversion of the
Series A Preferred Stock, any Class A Common Stock issuable upon conversion of
the Class B Common Stock, any Parent Preferred Stock issuable under the Exchange
Agreements or any Parent Common Stock issuable upon conversion of the Parent
Preferred Stock). 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.
7.4 Governing Law. The construction, validity and
interpretation of this Agreement will be governed by the internal laws of the
State of Delaware without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
20
25
7.5 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.
7.6 Titles and Subtitles. 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.
7.7 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally or by
commercial overnight courier (with confirmation of receipt) or sent via
facsimile (with confirmation of receipt), (a) in case of the Company, to the
Company at 0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxxxxxxx, Xxxxx 00000 (Fax: (972)
000-0000), Attention: President, (b) in case of the Parent, to the Parent at
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxxxxxxx, Xxxxx 00000 (Fax: (000) 000-0000),
Attention: President, (c) in the case of Safeguard Scientifics, Inc., to
Safeguard Scientifics, Inc. at 800 The Safeguard Building, 000 Xxxxx Xxxx Xxxxx,
Xxxxx, Xxxxxxxxxxxx 00000, (Fax: (000) 000-0000), Attention: Chief Financial
Officer, and (d) in the case of SCP Private Equity Partners II, L.P., to SCP
Private Equity Partners II, L.P. at 000 Xxxxx Xxxx Xxxxx, Xxxxxxxx 000, Xxxxx,
Xxxxxxxxxxxx 00000, (Fax: (000) 000-0000), Attention: General Partner (or at
such other address for a party as shall be specified by like notice).
Notice given by facsimile shall be confirmed by appropriate
answer back and shall be effective upon actual receipt if received during the
recipient's normal business hours, or at the beginning of the recipient's next
business day after receipt if not received during the recipient's normal
business hours. All notices by facsimile shall be confirmed promptly after
transmission in writing by certified mail or personal delivery. Any party may
change any address to which notice is to be given to it by giving notice as
provided above of such change of address.
7.8 Finder's Fee. Each party represents that it neither is nor
will be obligated for any finders' fee or commission in connection with this
transaction. Each Investor severally agrees to indemnify and to hold harmless
the Company and the Parent from any liability for any commission or compensation
in the nature of a finders' fee (and the costs and expenses of defending against
such liability or asserted liability) for which such Investor or any of its
officers, partners, employees, or representatives is responsible. The Company
and the Parent jointly and severally agree to indemnify and hold harmless the
Investors from any liability for any commission or compensation in the nature of
a finders' fee (and the costs and expenses of defending against such liability
or asserted liability) for which the Company or the Parent or any of their
respective officers, employees, consultants or representatives is responsible.
7.9 Expenses. Irrespective of whether the Closing is effected,
the parties shall pay all costs and expenses that they incur with respect to the
negotiation, execution, delivery and performance of this Agreement and any
schedules or exhibits hereto.
21
26
7.10 Dispute Resolution.
(a) If any dispute arising out of or relating to this
Agreement, any Warrant, the Investors' Rights Agreement, the Co-Sale Agreement
or any Exchange Agreement, or any other agreement executed in connection
herewith or the breach, termination or validity thereof (a "Dispute") is not
settled promptly in the ordinary course of business, the parties shall seek to
resolve any such Dispute between them, first, by negotiating promptly with each
other in good faith in face-to-face negotiations. These face-to-face
negotiations shall be conducted by the respective designated senior management
representative of each party. If the parties are unable to resolve the Dispute
between them through these face-to-face negotiations, within 20 business days
(or such period as the parties shall otherwise agree) following the date of
notification (the "Notice Date") by one party to the others of the existence of
such Dispute, then any such Dispute shall be resolved in the following manner.
(b) The parties shall endeavor to resolve any such Dispute by
mediation under the CPR Mediation Procedures for Business Disputes. Unless
otherwise agreed, the parties will select a mediator from the CPR Panels of
Neutrals and shall notify CPR to initiate the selection process.
(c) Any action, suit or proceeding where the amount in
controversy as to at least one party, exclusive of interest and costs, exceeds
$100,000 ("Summary Proceeding"), arising out of or relating to a Dispute which
has not been resolved by mediation as provided herein within 90 days of the
Notice Date, shall be litigated exclusively in the Superior Court of the State
of Delaware (the "Delaware Superior Court") as a summary proceeding pursuant to
Rules 124-131 of the Delaware Superior Court, or any successor rules (the
"Summary Proceeding Rules"). Each of the parties hereto hereby irrevocably and
unconditionally (A) submits to the jurisdiction of the Delaware Superior Court
for any Summary Proceeding, (B) agrees not to commence any Summary Proceeding
except in the Delaware Superior Court, (C) waives, and agrees not to plead or to
make, any objection to the venue of any Summary Proceeding in the Delaware
Superior Court, (D) waives, and agrees not to plead or to make any claim that
any Summary Proceeding brought in the Delaware Superior Court has been brought
in an improper or otherwise inconvenient forum, (E) waives, and agrees not to
plead or to make, any claim that the Delaware Superior Court lacks personal
jurisdiction over it, (F) waives its right to remove any Summary Proceeding to
the federal courts except where such courts are vested with sole and exclusive
jurisdiction by statute, and (G) understands and agrees that it shall not seek a
jury trial or punitive damages in any Summary Proceeding based upon or arising
out of a Dispute, and waives any and all rights to any such jury trial or to
seek punitive damages.
(d) In the event any action, suit or proceeding where the
amount in controversy as to at least one party, exclusive of interest and costs,
does not exceed $100,000 (a "Proceeding"), arising out of or relating to a
Dispute is brought, the parties to such Proceeding agree to make application to
the Delaware Superior Court to proceed under the Summary Proceeding Rules. Until
such time as such application is rejected, such Proceeding shall be treated as a
Summary Proceeding and all of the foregoing provisions of Section 7.10(c)
relating to Summary Proceedings shall apply to such Proceeding.
22
27
(e) If a Summary Proceeding is not available to resolve any
Dispute hereunder, the controversy or claim shall be settled by arbitration
conducted on a confidential basis, under the U.S. Arbitration Act, if
applicable, and the then current Commercial Arbitration Rules of the American
Arbitration Association (the "Association") strictly in accordance with the
terms of this Agreement and the substantive law of the State of Delaware
including law in respect of any statute of limitations. The arbitration shall be
conducted at the Association's regional office located in Philadelphia,
Pennsylvania by three arbitrators, at least one of whom shall be knowledgeable
in the industry in which the Company is engaged in business, one of whom shall
be an attorney and one of whom shall be a member of a "Big Five" accounting firm
familiar with the industry in which the Company is engaged in business. Absent
mutual agreement of the parties, the arbitrators specified in the preceding
sentence shall be appointed pursuant to the Commercial Arbitration Rules of the
Association. The arbitrators are not empowered to award damages in excess of
compensatory damages and each party hereby irrevocably waives any right to
recover damages in excess of compensatory damages with respect to any such
Dispute. Judgment upon the arbitrators' award may be entered and enforced in any
court of competent jurisdiction.
(f) No party shall be precluded hereby from securing equitable
remedies in courts of any jurisdiction, including, but not limited to, temporary
restraining orders and preliminary injunctions to protect its rights and
interests but shall not be sought as a means to avoid or stay arbitration or
Summary Proceeding.
(g) Each party is required to continue to perform its
obligations under this contract pending final resolution of any Dispute, unless
to do so would be impossible or impracticable under the circumstances.
7.11 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company, the Parent and the
holders of at least two-thirds of the Parent Common Stock issued or issuable
upon conversion of the Parent Preferred Stock issued or issuable under the
Exchange Agreements. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each holder of any Securities purchased under
this Agreement at the time outstanding, any securities into or for which such
Securities are convertible or exchangeable, each future holder of all such
securities, the Parent and the Company.
7.12 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.
7.13 No Amendment of Parent Preferred Stock Terms. As long as
either Exchange Agreement remains in effect, the Parent shall not take any
action specified in Sections 7(i) or 8(i) of the Restated Designation without
the prior consent of the holders of at least two-thirds of the Parent Preferred
Stock issued or issuable under the Exchange Agreements.
23
28
7.14 Publicity. None of the Company, the Parent or the
Investors shall take any action, or permit any of its employees, consultants,
officers, directors or stockholders to take any action, which may result in the
public disclosure of the transactions effected hereby or the identity of the
Investors, except pursuant to the Parent's filing obligations under applicable
securities laws or unless otherwise required by law. Other than with respect to
filing obligations under applicable securities laws, if the Company or the
Parent determines that it is required by law to disclose these transactions or
the identity of the Investors, it shall, at a reasonable time before making any
such disclosure, consult with the Investors regarding such disclosure and seek
confidential treatment of this Agreement and all schedules and exhibits hereto.
7.15 Stockholders' Meeting and NASD Matters.
(a) As promptly as practicable after the execution of this
Agreement, the Parent shall prepare and shall file with the Securities and
Exchange Commission (the "SEC") a proxy statement relating to the special
meeting of the Parent's stockholders (the "Stockholders' Meeting") to be held to
consider the approval of the matters required by Section 5.15 (together with any
amendments or supplements thereto, the "Proxy Statement"). The Proxy Statement
shall be in form and substance satisfactory to the Investors. Copies of the
Proxy Statement shall be provided to the Nasdaq National Market (the "NNM") in
accordance with its rules. The Parent shall notify the Investors of the receipt
of any comments from the SEC on the Proxy Statement and of any requests by the
SEC for any amendments or supplements thereto or for additional information and
shall provide to the Investors promptly copies of all correspondence between the
Parent or any of its representatives and advisors and the SEC. The Parent shall
cause the Proxy Statement to comply as to form and substance in all material
respects with the applicable requirements of (i) the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and (ii) the rules and regulations of the
NNM. The Parent shall mail the Proxy Statement to its stockholders as promptly
as practicable after the SEC either informs the Parent that it will not review
the Proxy Statement or all comments or requests for information by the SEC with
respect thereto have been resolved.
(b) The Proxy Statement shall include the recommendation of
the board of directors of the Parent to the Parent's stockholders that they vote
in favor of approval of the matters required by Section 5.15.
(c) The Proxy Statement shall, at the time filed with the SEC
or other regulatory agency and, in addition, at the date it or any amendments or
supplements thereto are mailed to stockholders of the Parent, at the time of the
Stockholders' Meeting and at the Closing, not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior to
the Closing any event or circumstance is discovered by the Parent that should be
set forth in an amendment or a supplement to the Proxy Statement, the Parent
shall promptly inform the Investors. All documents that the Parent is
responsible for filing with the SEC in connection with the transactions
contemplated hereby will comply as to form in all material respects with the
applicable requirements of the rules and regulations of the Exchange Act.
24
29
(d) The Parent shall call and hold the Stockholders' Meeting
as promptly as practicable after the date hereof for the purpose of voting upon
the approval of the matters required by Section 5.15 pursuant to the Proxy
Statement. Except as otherwise contemplated by this Agreement, the Parent shall
use all reasonable efforts to solicit from its stockholders proxies in favor of
the approval of the matters required by Section 5.15 pursuant to the Proxy
Statement and shall take all other action necessary or advisable to secure the
vote or consent of stockholders required by the Delaware General Corporation
Law.
(e) The Parent shall take all actions necessary to comply with
the rules and regulations of the NNM in connection with the consummation of the
transactions contemplated by this Agreement.
7.16 Termination. If the approval of the stockholders of the
Parent required by Section 5.16 has not been obtained or the Closing has not
occurred on or prior to October 31, 2000, either Investor may terminate this
Agreement effective immediately by sending written notice thereof to the
Company, the Parent and the other Investor, whereupon no party hereto shall have
any liability to any other party hereto other than any liability arising out of
the breach of this Agreement by such party prior to the termination.
Notwithstanding the foregoing, Sections 7.1, 7.4, 7.8, 7.9, 7.10 and 7.14 hereof
shall survive any termination of this Agreement.
7.17 Entire Agreement. This Agreement and the documents
referred to herein constitute the entire agreement among the parties and no
party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein.
[Signature Page Follows]
25
30
IN WITNESS WHEREOF, the parties have executed this Securities
Purchase Agreement as of the date first above written.
COMPANY:
eMAKE CORPORATION
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx,
Chief Financial Officer
PARENT:
USDATA CORPORATION
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx,
Chief Financial Officer
INVESTORS:
SAFEGUARD 2000 CAPITAL, L.P.
By: Safeguard Delaware, Inc.,
its General Partner
By: /s/
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
SCP PRIVATE EQUITY PARTNERS II, L.P.
By: SCP Private Equity II General Partner, L.P.,
its General Partner
By: SCP Private Equity II LLC,
its Manager
By: /s/
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
[SIGNATURE PAGE-SECURITIES PURCHASE AGREEMENT]
31
SCHEDULE A
DISCLOSURE SCHEDULE
32
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF EMAKE CORPORATION
[ATTACHED]
33
EXHIBIT B
AMENDED AND RESTATED
CERTIFICATE OF DESIGNATION
FOR SERIES A PREFERRED STOCK AND SERIES B PREFERRED STOCK
[ATTACHED]
34
EXHIBIT C
SCP WARRANT
[ATTACHED]
35
EXHIBIT D
SAFEGUARD WARRANT
[ATTACHED]
36
EXHIBIT E
SCP EXCHANGE AGREEMENT
[ATTACHED]
37
EXHIBIT F
SAFEGUARD EXCHANGE AGREEMENT
[ATTACHED]
38
EXHIBIT G
INVESTORS' RIGHTS AGREEMENT
[ATTACHED]
39
EXHIBIT H
CO-SALE AND RIGHT OF FIRST REFUSAL AGREEMENT
[ATTACHED]
40
EXHIBIT I
FORM OF
NONCOMPETITION, NONDISCLOSURE AND INVENTIONS AGREEMENT
[ATTACHED]
41
EXHIBIT J
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
[ATTACHED]
42
EXHIBIT K
OPINION OF COUNSEL
[ATTACHED]
