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EXHIBIT 4.1
USDATA CORPORATION
SERIES C PREFERRED STOCK PURCHASE AGREEMENT
March 30, 2001
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TABLE OF CONTENTS
Page
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1. Purchase and Sale........................................................................................1
1.1 Sale and Issuance of Series C Preferred Stock...................................................1
1.2 Closing.........................................................................................1
1.3 Consideration...................................................................................1
1.4 Option Preferred Stock..........................................................................1
2. Representations and Warranties regarding the Company.....................................................2
2.1 Organization, Good Standing and Qualification...................................................2
2.2 SEC Reports; Financial Statements...............................................................2
2.3 Capitalization and Voting Rights................................................................2
2.4 Authorization...................................................................................3
2.5 Stockholder Approval............................................................................3
2.6 Valid Issuance of Stock.........................................................................3
2.7 Governmental Consents...........................................................................4
2.8 Offering........................................................................................4
2.9 Compliance with Certain Matters.................................................................4
2.10 Litigation......................................................................................4
2.11 Non-Disclosure and Proprietary Rights Agreements................................................5
2.12 Patents and Trademarks..........................................................................5
2.13 Agreements; Action..............................................................................6
2.14 Related-Party Transactions......................................................................7
2.15 Permits.........................................................................................7
2.16 Environmental and Safety Laws...................................................................7
2.17 Manufacturing and Marketing Rights..............................................................7
2.18 Disclosure......................................................................................7
2.19 Registration Rights.............................................................................7
2.20 Corporate Documents.............................................................................8
2.21 Title to Property and Assets....................................................................8
2.22 Tax Returns, Payments and Elections.............................................................8
2.23 Insurance.......................................................................................8
2.24 Minute Books....................................................................................8
2.25 Labor Agreements and Actions....................................................................8
2.26 Damage; Loss....................................................................................9
2.27 Liens; Claims...................................................................................9
2.28 Real Property Holding Company...................................................................9
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3. Representations and Warranties of the Investor...........................................................9
3.1 Authorization...................................................................................9
3.2 Purchase Entirely for Own Account...............................................................9
3.3 Disclosure of Information.......................................................................9
3.4 Investment Experience...........................................................................9
3.5 Accredited Investor.............................................................................9
3.6 Restricted Securities..........................................................................10
3.7 Further Limitations on Disposition.............................................................10
3.8 Legends........................................................................................10
4. Conditions of Investor's Obligations at Closing.........................................................10
4.1 Representations and Warranties.................................................................10
4.2 Performance....................................................................................11
4.3 Compliance Certificate.........................................................................11
4.4 Qualifications.................................................................................11
4.5 Proceedings and Documents......................................................................11
4.6 Second Amended and Restated Investors' Rights Agreement........................................11
4.7 Stock Certificates; Warrant....................................................................11
4.8 Confidentiality Agreements.....................................................................11
4.9 Board of Directors.............................................................................11
4.10 Legal Opinion..................................................................................11
4.11 Designation....................................................................................11
4.12 NASD Matters...................................................................................11
4.13 Safeguard Agreement............................................................................11
5. Conditions of the Company's and the Company's Obligations at Closing....................................11
5.1 Representations and Warranties.................................................................12
5.2 Performance....................................................................................12
5.3 Proceedings and Documents......................................................................12
5.4 Payment of Purchase Price......................................................................12
5.5 Qualifications.................................................................................12
6. Miscellaneous...........................................................................................12
6.1 Survival of Warranties.........................................................................12
6.2 Use of Proceeds................................................................................12
6.3 Successors and Assigns.........................................................................12
6.4 Governing Law..................................................................................12
6.5 Counterparts...................................................................................12
6.6 Titles and Subtitles...........................................................................12
6.7 Notices........................................................................................12
6.8 Finder's Fee...................................................................................13
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6.9 Expenses.......................................................................................13
6.10 Dispute Resolution.............................................................................13
6.11 Amendments and Waivers.........................................................................14
6.12 Severability...................................................................................14
6.13 Publicity......................................................................................14
6.14 Entire Agreement...............................................................................15
SCHEDULE A Disclosure Schedule
EXHIBIT A Certificate of Designation
EXHIBIT B Warrant
EXHIBIT C Budget and Financial Management Plan
EXHIBIT D Second Amended and Restated Investors' Rights Agreement
EXHIBIT E Form of Non-Disclosure and Proprietary Rights Agreement
EXHIBIT F Opinion of Counsel
EXHIBIT G Warrant Agreement
EXHIBIT H Investor Waiver
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SERIES C PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT is made as of the 30th day of
March, 2001, by and among USDATA Corporation, a Delaware corporation (the
"Company") and SCP Private Equity Partners II, L.P., a Delaware limited
partnership (the "Investor").
In consideration of the mutual promises hereinafter set forth, the parties
hereto, each intending to be legally bound hereby, agree as follows:
1. Purchase and Sale.
1.1 Sale and Issuance of Series C Preferred Stock.
1. The Company shall adopt and file with the Secretary of State of
Delaware, on or before the Closing (as defined below), a Certificate of
Designation in the form attached hereto as Exhibit A (the "Designation").
(a) Subject to the terms and conditions of this Agreement, the Investor
agrees to purchase at the Closing, and the Company agrees to sell and issue to
the Investor at the Closing, (i) 37,500 shares of the Company's Series C-1
Preferred Stock, par value $0.01 per share (the "Series C-1 Preferred Stock"),
and (ii) a warrant (the "Warrant") to purchase up to 75,000 shares of the
Company's Series C-2 Preferred Stock, par value $0.01 per share (the "Series C-2
Preferred Stock") (at an initial exercise price of $40.00 per share), for an
aggregate purchase price of $1,500,000. The Series C-1 Preferred Stock and the
Series C-2 Preferred Stock are sometimes collectively and individually referred
to as "Series C Preferred Stock". The rights, privileges and preferences of the
Series C Preferred Stock shall be as stated in the Designation, and the Warrant
shall be substantially in the form attached hereto as Exhibit B. As used herein,
the term "Securities" means the shares of Series C Preferred Stock and the
Warrant to be issued and sold hereunder.
1.2 Closing. The purchase, sale and issuance of the Securities shall
take place at the offices of ▇▇▇▇ ▇▇▇▇▇ LLP, Centre Square West, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇ at 10:00 a.m. on March 30, 2001,
or at such other place and time as the Company and the Investor mutually agree
upon (which time is designated as the "Closing").
1.3 Consideration. At the Closing, the Company shall deliver to the
Investor, certificates representing the Securities being sold to the Investor
hereunder pursuant to Section 1.1(b) against payment of $1,500,000 by the
Investor of the purchase price therefor by wire transfer.
1.4 Option Preferred Stock. On the basis of the representations,
warranties and agreements herein contained, and upon the terms but subject to
the conditions herein set forth and the approval of the Company's stockholders
as set forth in Section 2.5, the Investor commits to purchase an additional
37,500 shares of the Series C-1 Preferred Stock (the "Option Preferred Stock")
at the purchase price of $40.00 per share of Option Preferred Stock at the
option of the Company. The Company may exercise its right to sell shares of the
Option Preferred Stock on or before the expiration of 9 months after the date of
Closing, but not before 2 months after the date of Closing, by means of a
written notice therefore to the Investor (each, a "Notice") which certifies (a)
the Company's compliance with the specified monthly "EBITDA Targets" and
"Revenue Targets" as stated in the Budget and Financial Management Plan (the
"Plan") attached hereto as Exhibit C for three consecutive months prior to the
date of such notice, (b) the Company's then current need for an installment of
the purchase price for the Option Preferred Stock (the "Purchase Price
Installment"), including that (i) such need is necessary for the Company to keep
a positive cash balance for the then current month and that (ii) the need does
not arise out of the Company falling out of compliance with the specified EBITDA
Targets and Revenue Targets set in the Plan and (c) the Board's approval of such
Notice. Each Notice must be received by the Investor not less than ten business
days prior to the desired date of payment and must be accompanied by financial
information from the Company confirming to the reasonable satisfaction of the
Investor the accuracy of the certifications contained in the Notice. The
purchase and sale of the Option Preferred Stock pursuant to this Section may
take place in one or more
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closings at such times or places as the Company and the Investor may mutually
agree (each a "Subsequent Closing"). At each Subsequent Closing, the Company
shall deliver to the Investor a certificate or certificates, registered in the
Investor's name, representing such number of shares of Option Preferred Stock
purchasable for the amount of the Purchase Price Installment therefore, against
payment of the Purchase Price Installment therefore, by check payable to the
Company or wire transfer in accordance with the Company's instructions. The
Investor's obligation to purchase the Option Preferred Stock at a Subsequent
Closing is conditioned upon the Investor's receipt of a certificate, dated as of
the date of such Subsequent Closing (the "Subsequent Closing Date"), and signed
by an executive officer of the Company, certifying that the representations
contained in Section 2 of this Agreement, are true and correct at and as of such
Subsequent Closing Date.
2. Representations and Warranties regarding the Company. The Company
hereby represents and warrants to the Investor that, except as set forth on the
Disclosure Schedule attached hereto as Schedule A (the "Disclosure Schedule")
furnished to the Investor, which exceptions shall be deemed to be
representations and warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company 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. The Company 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.
2.2 SEC Reports; Financial Statements. The Company's Common Stock,
$0.01 par value per share (the "Common Stock") is registered under Section 12(b)
or (g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and the Company is in compliance with its reporting and filing obligations under
the Exchange Act. The Company has made available to the Investor (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 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
Company 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 Company 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 Company 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 Company 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
Company and its subsidiaries taken together, or the ability of the Company to
perform its obligations under this Agreement, the Warrant or the Second Amended
and Restated Investors' Rights Agreement to be executed and delivered in
connection herewith in the form attached hereto as Exhibit D (the "Second
Amended and Restated Investors' Rights Agreement").
2.3 Capitalization and Voting Rights
(a) As of the date hereof, unless otherwise specified herein, the
authorized capital of the Company consists of:
(i) 2,200,000 shares of Preferred Stock, par value $0.01 per
share (the "Preferred Stock"), of which (x) 100,000 shares have been designated
as "Series A Preferred Stock," of which 50,000 currently are issued or
outstanding; (y) 800,000 shares have been designated as "Series B Preferred
Stock," of which 265,000 currently are issued or outstanding; and (z) 125,000
shares have been designated as "Series ▇-▇
▇
▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇," none of which are currently issued or outstanding and 125,000
shares have been designated as "Series C-2 Preferred Stock," none of which are
currently issued or outstanding.
(ii) 40,000,000 shares of Company Common Stock, of which, as of
March 16, 2001, 14,007,182 shares are issued and outstanding.
(b) Except for the ownership of shares and warrants in eMake Corporation
by the parties to the Second Amended and Restated Investors' Rights Agreement
and holders of options pursuant to the 2000 Equity Compensation Plan of eMake
Corporation, all outstanding shares of capital stock of the Company's
subsidiaries are owned beneficially and of record by the Company, free and clear
of any liens, security interests, encumbrances or other adverse claims. Except
as described in the Disclosure Schedule, the Company 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 Company nor its
subsidiaries are participants in any joint venture, partnership, or similar
arrangement.
(c) All outstanding shares of capital stock of the Company 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 of 1933, as amended (the
"Securities Act"), and any relevant state securities laws or pursuant to valid
exemptions therefrom.
(d) Except (i) as disclosed in the SEC Reports, (ii) for warrants,
options and rights in eMake Corporation held by the parties to the Second
Amended and Restated Investors' Rights Agreement and holders of options pursuant
to the 2000 Equity Compensation Plan of eMake Corporation, and (iii) except for
the rights provided for in the Second Amended and Restated Investors' Rights
Agreement and this Agreement, there are no outstanding options, warrants, rights
(including conversion or preemptive rights) or agreements for the purchase or
acquisition from the Company or any of its subsidiaries of any shares of their
capital stock.
2.4 Authorization. All corporate action on the part of the Company, its
officers, directors and stockholders necessary for the authorization, execution
and delivery by the Company of this Agreement, the Warrant, and the Second
Amended and Restated Investors' Rights Agreement, the performance of all
obligations of the Company hereunder and thereunder, and the authorization,
issuance (or reservation for issuance) and delivery of the Securities being sold
hereunder, the Series C Preferred Stock issuable upon exercise of the Warrant
and the Common Stock issuable upon conversion of the Series C Preferred Stock,
has been taken, and this Agreement, the Warrant, and the Second Amended and
Restated Investors' Rights 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
Second Amended and Restated Investors' Rights Agreement may be limited by
applicable federal or state securities laws.
2.5 Stockholder Approval. Except as otherwise provided in Section 1.4
of the Agreement and Section 1.1 of the Warrant, approval by the stockholders of
the Company is not required for the authorization, execution and delivery of
this Agreement, the Warrant, and the Second Amended and Restated Investors'
Rights Agreement, the performance of all obligations of the Company hereunder
and thereunder, and the authorization, issuance (or reservation for issuance)
and delivery of the Securities being sold hereunder, the Series C Preferred
Stock issuable upon exercise of the Warrant and the Common Stock issuable upon
conversion of the Series C Preferred Stock. The Company agrees to use its best
efforts to obtain stockholder approval of the transactions contemplated in
Section 1.4 of the Agreement and Section 1.1 of the Warrant, as soon as
practicable, but no later than the date of the Company's next Annual Meeting of
Stockholders, scheduled to take place on May 29, 2001.
2.6 Valid Issuance of Stock. The shares of Series C Preferred Stock
that are being issued to the Investor hereunder, when issued, sold and delivered
in accordance with the terms of this Agreement for the
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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 Second Amended and Restated
Investors' Rights Agreement and under applicable state and federal securities
laws. The Series C Preferred Stock issuable upon exercise of the Warrant has
been duly and validly reserved for issuance and, upon issuance in accordance
with the terms of the Warrant, will be duly and validly issued, fully paid and
nonassessable, and will be free of restrictions on transfers other than
restrictions on transfer under this Agreement, the Second Amended and Restated
Investors' Rights Agreement and under applicable state and federal securities
laws. The Common Stock issuable upon conversion of the Series C Preferred Stock
purchased under this Agreement or issuable upon the exercise of the Warrant has
been duly and validly reserved for issuance and, upon issuance in accordance
with the terms of the 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, the Second Amended and Restated
Investors' Rights Agreement and under applicable state and federal securities
laws.
2.7 Governmental Consents. Other than those that have been duly
obtained or filings which are required under applicable securities laws, which
filings, if any, will be made within the applicable periods required 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 National Association of Securities
Dealers, Inc. (the "NASD"), on the part of the Company is required in connection
with the consummation of the transactions contemplated by this Agreement, the
Warrant and the Second Amended and Restated Investors' Rights Agreement.
2.8 Offering. Subject in part to the truth and accuracy of the Investor
representations set forth in Section 3 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 C Preferred Stock upon the exercise of the Warrant
and the issuance of shares of Common Stock upon the conversion of shares of
Series C Preferred Stock will be exempt from the registration requirement of the
Securities Act and applicable state securities laws.
2.9 Compliance with Certain Matters. Neither the Company 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 Warrant and the Second Amended and Restated Investors' Rights
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 any of its subsidiaries or the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit, license,
authorization, or approval applicable to the Company or any of its subsidiaries,
their business or operations or any of their assets or properties.
2.10 Litigation. There is no action, suit, proceeding or investigation
pending or, to the best of the Company's knowledge, currently threatened against
the Company or any of its subsidiaries that questions the validity of this
Agreement, the Warrant or the Second Amended and Restated Investors' Rights
Agreement or the right of the Company to enter into such agreements, or to
consummate the transactions contemplated hereby or thereby, or that might
result, either individually or in the aggregate, in any material adverse changes
in the assets, condition, affairs or prospects of the Company or any of its
subsidiaries, financially or otherwise, or any change in the current equity
ownership of the Company or any of its subsidiaries. The foregoing includes,
without limitation, actions, suits, proceedings or investigations pending or, to
the best of the Company's knowledge, threatened involving the prior employment
of any of the Company's or any of its subsidiaries' employees or consultants,
their use in connection with the Company's or any of its subsidiaries' 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 any of its subsidiaries is a party or subject to the
provisions of any order,
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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 any of its subsidiaries currently pending or that the Company or any
of its subsidiaries intends to initiate.
2.11 Non-Disclosure and Proprietary Rights Agreements. Except as
described in the Disclosure Schedule, each employee, officer and consultant of
the Company or any of its subsidiaries has executed a Non-Disclosure and
Proprietary Rights Agreement in the form attached as Exhibit E hereto. The
Company, after reasonable investigation, is not aware that any of the Company's
or its subsidiaries' key employees, officers or consultants are in violation of
the agreements specified in this Section 2.11, and the Company and its
subsidiaries will use their reasonable efforts to prevent any such violation.
2.12 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 any of its
subsidiaries, (ii) pending patent applications and applications for
registrations of other Intellectual Property Rights filed by the Company or any
its subsidiaries and (iii) unregistered trade names and corporate names owned or
used by the Company or any of its subsidiaries. The Disclosure Schedule also
contains a complete and accurate list of all licenses and other rights granted
by the Company or any of its subsidiaries 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 any of its subsidiaries 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 a subsidiary of the Company 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 a subsidiary of the Company 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 its subsidiaries 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 its subsidiaries 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 knowledge, the owners of any
Intellectual Property Rights licensed to the Company or any of its subsidiaries
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 any of its subsidiaries 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 valid grounds
for the same. Neither the Company nor any of its subsidiaries has received any
notices of, and the Company is 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 any of its
subsidiaries license any rights from a third party). To the best of the
Company's knowledge, the conduct of the Company's and each of its subsidiaries'
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 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 knowledge,
the Intellectual Property Rights owned by or licensed to the Company or any of
its subsidiaries 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 any of its subsidiaries' right,
title and interest in and to the Intellectual Property Rights listed on the
Disclosure Schedule. To the best of the Company's knowledge, none of the
Company's nor any of its subsidiaries' 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 any of its subsidiaries or that would conflict
with the Company's or any of its subsidiaries' business as presently conducted
and to the best of the Company'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 each of its subsidiaries'
business by the employees of the Company and each of its subsidiaries, nor the
conduct of the Company's or each of its subsidiaries' business as presently
conducted or presently proposed to be conducted, will, to the best of the
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Company's knowledge, 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. The
Company does not believe it is or will be necessary for the Company or any of
its subsidiaries to utilize any inventions of any of the Company's or any of its
subsidiaries' employees (or people it currently intends to hire) made prior to
their employment by the Company or any of its subsidiaries, 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 with 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
information), (vii) other intellectual property rights and (viii) copies and
tangible embodiments thereof (in whatever form or medium).
2.13 Agreements; Action.
(a) The SEC Reports list all material agreements, understandings,
instruments and contracts, whether written or oral, to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or its assets and properties are bound.
(b) Except as set forth in the SEC Reports or the Disclosure Schedule,
there are no agreements, understandings or proposed transactions between the
Company or any of its subsidiaries and any of its officers, directors,
affiliates or any affiliate thereof.
(c) Except as set forth in the SEC Reports, 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 any of its subsidiaries is a party or by which
it is bound that may involve (i) obligations (contingent or otherwise) of, or
payments to, the Company or any of its subsidiaries in excess of $25,000, (ii)
the license of any patent, copyright, trade secret or other proprietary right to
or from the Company or any of its subsidiaries, 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 any of its subsidiaries' 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 any of
its subsidiaries with respect to infringements of proprietary rights.
(d) Except as set forth in the SEC Reports, neither the Company nor any
of its subsidiaries 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) incurred any material indebtedness for money borrowed or any other
liabilities, (iii) made any material 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 material amount 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
the Company 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 2.13 are valid, binding and
enforceable in accordance with their respective terms and there
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has been no material change to or amendment to a material contract by which the
Company or any of its subsidiaries or any of their respective assets or
properties is bound or subject. Each of the Company and each of its subsidiaries
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 any of its subsidiaries 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 any of its
subsidiaries under any contract, agreement or instrument. None of the Company
nor any of its subsidiaries have knowledge of any breach or anticipated breach
by the other parties to any contract, agreement, instrument or commitment.
(g) Neither the Company nor any of its subsidiaries is a party to or is
bound by any contract, agreement or instrument, that materially adversely
affects its business as now conducted or as proposed to be conducted, its
properties or its financial condition.
2.14 Related-Party Transactions. Except as disclosed in the SEC
Reports, no employee, consultant, officer, or director of the Company or any of
its subsidiaries, or member of his or her immediate family is indebted to the
Company or any of its the subsidiaries, nor is the Company or any of its
subsidiaries 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 any of its subsidiaries, or member of the immediate family of any
officer or director of the Company or any of its subsidiaries is directly or
indirectly interested in any material contract with the Company or any of its
subsidiaries.
2.15 Permits. Each of the Company and each of its subsidiaries 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 believes that each of the Company and each
of its subsidiaries 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 any of its subsidiaries is in default in any material respect
under any of such franchises, permits, licenses or other similar authority.
2.16 Environmental and Safety Laws. To the Company's knowledge, neither
the Company nor any of its subsidiaries is in violation of any applicable
statute, law or regulation relating to the environment or occupational health
and safety, and to the Company's knowledge, no material expenditures are or will
be required in order to comply with any such existing statute, law or
regulation.
2.17 Manufacturing and Marketing Rights. Except in the ordinary course
of business or as disclosed in the SEC Reports, neither the Company nor any of
its subsidiaries 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.
2.18 Disclosure. The Company has fully provided the Investor with all
the information that the Investor has requested for deciding whether to purchase
the Securities and to consummate the transactions contemplated by this
Agreement. None of this Agreement, the Warrant, the Second Amended and Restated
Investors' Rights Agreement, any other statements or certificates made or
delivered in connection herewith or therewith or any other information supplied
by the Company 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.
2.19 Registration Rights. Except as (a) provided in the Second Amended
and Restated Investors' Rights Agreement, (b) provided in the Investors' Rights
Agreement dated as of September 12, 2000 by and among eMake Corporation and the
other parties named therein, or (c) as disclosed in the SEC Reports, neither
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the Company nor any of its subsidiaries has granted or agreed to grant any
registration rights, including piggyback rights, to any person or entity.
2.20 Corporate Documents. Except as contemplated by this Agreement, the
Company's Certificate of Incorporation and Bylaws and each of its subsidiaries'
Certificates of Incorporation or Articles of Incorporation, as applicable, and
Bylaws are in the form previously provided to the Investor.
2.21 Title to Property and Assets. Each of the Company and each of its
subsidiaries 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 each of its subsidiaries is in compliance with
such leases and holds a valid leasehold interest free of any liens, claims or
encumbrances.
2.22 Tax Returns, Payments and Elections. Each of the Company and each
of its subsidiaries 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 each of its subsidiaries has paid all taxes and other
assessments due, except those contested by it in good faith that are listed in
the Disclosure Schedule.
2.23 Insurance. Each of the Company and each of its subsidiaries has in
full force and effect or will obtain in a reasonable amount of time after the
Closing, fire and casualty insurance policies, with extended coverage in amounts
customary for companies similarly situated. Each of the Company and each of its
subsidiaries has in full force and effect or will obtain in a reasonable amount
of time after the Closing, products liability and errors and omissions insurance
in amounts customary for companies similarly situated. Each of the Company and
each of its subsidiaries shall have or will obtain in a reasonable amount of
time after the Closing, directors' and officers' insurance in amounts
satisfactory to the Investor.
2.24 Minute Books. The minute books of the Company and each of its
subsidiaries made available to the Investor 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 any of its
subsidiaries 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 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 any of its subsidiaries pending, or to
the Company's knowledge, threatened, that could have a material adverse effect
on the assets, properties, financial condition, operating results, or business
of the Company or any of its subsidiaries (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 any of its subsidiaries. Except with respect to eMake Corporation,
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 any of its
subsidiaries, nor does the Company or any of its subsidiaries 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
or any subsidiary of the Company as listed in the Disclosure Schedule, the
employment of each officer and employee of the Company and each of its
subsidiaries is terminable at the will of the Company or a subsidiary of the
Company, as applicable, and without any required severance payment. With the
exception of the Company's consulting arrangement with Phoenix Management, Inc.,
the consulting relationship of each consultant of the Company or any of its
subsidiaries is terminable at the will of the Company or a subsidiary of the
Company, as applicable, and without any required severance payment. To the
knowledge of the Company, each of the Company and each of its subsidiaries have
complied in all material respects with all applicable state and federal equal
employment opportunity and other laws related to employment.
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2.26 Damage; Loss. Neither the Company nor any of its subsidiaries has
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 or
any of its subsidiaries, 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 any of its
subsidiaries is a real property holding company within the meaning of Section
897 of the Internal Revenue Code of 1986, as amended.
3. Representations and Warranties of the Investor. The Investor hereby
represents and warrants to the Company that:
3.1 Authorization. The Investor has full power and authority to enter
into this Agreement and the Second Amended and Restated Investors' Rights
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 Second Amended and
Restated Investors' Rights Agreement may be limited by applicable federal or
state securities laws.
3.2 Purchase Entirely for Own Account. The Securities to be purchased
by the Investor hereunder, the Series C Preferred Stock issuable upon exercise
of the Warrant to be issued to the Investor hereunder and the Common Stock
issuable upon conversion of the Series C Preferred Stock issued or issuable to
the Investor hereunder or under the Warrant issued to the Investor hereunder,
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 person, with
respect to any of the Securities to be purchased by the Investor hereunder, the
Series C Preferred Stock issuable upon exercise of the Warrant to be issued to
the Investor hereunder, and the Common Stock issuable upon conversion of the
Series C Preferred Stock issued or issuable to the Investor hereunder or under
the Warrant issued to the Investor hereunder.
3.3 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 regarding the
terms and conditions of the offering of the Securities and the business,
properties, prospects and financial condition of the Company. The foregoing,
however, does not limit or modify the representations and warranties in Section
2 of this Agreement or the right of the Investor to rely thereon.
3.4 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.
3.5 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.
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3.6 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 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.
3.7 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 C Preferred Stock issuable upon exercise of the
Warrant to be issued to the Investor hereunder, and the Common Stock issuable
upon conversion of the Series C Preferred Stock issued or issuable to the
Investor hereunder or under the Warrant to be issued to the Investor hereunder
unless and until the transferee has agreed in writing for the benefit of the
Company to be bound by this Section 3 and the applicable provisions of the
Second Amended and Restated 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.
3.8 Legends. It is understood that the certificates evidencing the
Securities, the Series C Preferred Stock issuable upon exercise of the Warrant
and the Common Stock issuable upon conversion of the Series C Preferred Stock
issued or issuable to the Investor hereunder or under the Warrant to be issued
to the Investor hereunder, 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 Second Amended and Restated Investors'
Rights Agreement or other applicable agreement.
4. Conditions of Investor's Obligations at Closing. The obligations of
the Investor under Sections 1.1 and 1.2 of this Agreement are subject to the
fulfillment on or before the Closing of each of the conditions hereinafter set
forth.
4.1 Representations and Warranties. The representations and warranties
of the Company contained in Section 2 shall be true in all material respects on
and as of the Closing with the same effect as though
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such representations and warranties had been made on and as of the date of the
Closing, unless another date is specified therein.
4.2 Performance. The Company 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 it on or
before the Closing.
4.3 Compliance Certificate. The President of the Company shall deliver
to the Investor at the Closing a certificate on behalf of the Company, stating
that the conditions specified in Sections 4.1 and 4.2 have been fulfilled.
4.4 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.
4.5 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 Investor 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.
4.6 Second Amended and Restated Investors' Rights Agreement. The
Company, the Investor, Safeguard 2000 Capital, L.P. ("Safeguard"), Safeguard
Delaware, Inc. and Safeguard Scientifics, Inc. shall have entered into the
Second Amended and Restated Investors' Rights Agreement.
4.7 Stock Certificates; Warrant. The Company shall have delivered to
the Investor executed certificates representing the Series C Preferred Stock and
the Warrant to be purchased at the Closing.
4.8 Confidentiality Agreements. Each employee, officer and consultant
of the Company or any of its subsidiaries shall have entered into the applicable
confidentiality agreement as specified in Section 2.11 hereof.
4.9 Board of Directors. Effective as of the Closing, the Company's
Board of Directors shall be increased to seven members, one of which shall have
been designated by the Investor.
4.10 Legal Opinion. The Investor shall have received an opinion of
counsel to the Company, in the form attached hereto as Exhibit F.
4.11 Designation. The Company shall have adopted and filed with the
Secretary of State of Delaware the Designation.
4.12 NASD Matters. The Company shall have given or made all notices to
or filings with the NASD, and shall have complied with all rules and regulations
of the NASD, required in connection with the transactions contemplated hereby.
4.13 Safeguard Agreements. The Company, the Investor and Safeguard
shall have entered into the Warrant Agreement in the form attached hereto as
Exhibit G. The Investor, Safeguard and Safeguard Delaware, Inc. shall have
entered into the Waiver of Anti-Dilution Rights for Series A Preferred Stock and
Series B Preferred Stock (the "Investor Waiver") in the form attached hereto as
Exhibit H.
5. Conditions of the Company's Obligations at Closing. The obligations
of the Company to the Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by the
Investor:
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5.1 Representations and Warranties. The representations and warranties
of the Investor contained in Section 3 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.
5.2 Performance. The Investor 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.
5.3 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 Company's counsel, and they shall have
received all such counterpart original and certified or other copies of such
documents as they may reasonably request.
5.4 Payment of Purchase Price. The Investor shall have delivered to the
Company the purchase price payable at the Closing pursuant to Section 1.3.
5.5 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. Miscellaneous.
6.1 Survival of Warranties. The warranties, representations and
covenants of the Company and the Investor 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 Investor
or the Company; provided, however, that there shall be no limitation period for
those matters addressed in Section 2.3(a) or (b) hereof.
6.2 Use of Proceeds. The Company shall use the proceeds from the sale
of the Securities to the Investor hereunder for general corporate purposes.
6.3 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 C Preferred Stock issuable upon
exercise of the Warrant or any Common Stock issuable upon conversion of the
Series C 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.
6.4 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.
6.5 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.
6.6 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.
6.7 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 ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇
▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (Fax: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: General
Counsel and (b) in the case of SCP Private Equity Partners II, L.P., to SCP
Private Equity Partners II, L.P. at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (Fax: (▇▇▇) ▇▇▇-▇▇▇▇), Attention: Chief Financial Officer
(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.
6.8 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. The Investor agrees to indemnify and to hold harmless the Company
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 Investor or any of its officers, partners,
employees, or representatives is responsible. The Company agrees to indemnify
and hold harmless the Investor 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
any of its respective officers, employees, consultants or representatives is
responsible.
6.9 Expenses. Irrespective of whether the Closing is effected, the
Company shall pay all costs and expenses incurred by the Investor with respect
to the negotiation, execution, delivery and performance of this Agreement and
any schedules or exhibits hereto. The Company shall also reimburse the Investor
for all unreimbursed expenses of the Investor related to the Company's offer and
sale of its Series B Preferred Stock and negotiation, execution, delivery and
performance of the Exchange Agreement, dated September 12, 2000 by and between
the Company and the Investor.
6.10 Dispute Resolution.
(a) If any dispute arising out of or relating to this Agreement, the
Warrant, the Second Amended and Restated Investors' Rights 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
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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 6.10(c)
relating to Summary Proceedings shall apply to such Proceeding.
(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.
6.11 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 and the Investor. 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, and the Company.
6.12 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.
6.13 Publicity. Neither the Company nor the Investor 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 Investor, except
pursuant to the Company'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 determines that it is required
by law to disclose
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19
these transactions or the identity of the Investor, it shall, at a reasonable
time before making any such disclosure, consult with the Investor regarding such
disclosure.
6.14 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]
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IN WITNESS WHEREOF, the parties have executed this Series C Preferred Stock
Purchase Agreement as of the date first above written.
COMPANY:
USDATA CORPORATION
By:
--------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇,
Chief Executive Officer
INVESTOR:
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:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
[SIGNATURE PAGE - SERIES C PREFERRED STOCK PURCHASE AGREEMENT]
21
SCHEDULE A
DISCLOSURE SCHEDULE
22
EXHIBIT A
CERTIFICATE OF DESIGNATION
[ATTACHED]
23
EXHIBIT B
WARRANT
24
EXHIBIT C
BUDGET AND FINANCIAL MANAGEMENT PLAN
[ATTACHED]
25
EXHIBIT D
SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
[ATTACHED]
26
EXHIBIT E
FORM OF NON-DISCLOSURE AND PROPRIETARY RIGHTS AGREEMENT
[ATTACHED]
27
EXHIBIT F
OPINION OF COUNSEL
[ATTACHED]
28
EXHIBIT G
WARRANT AGREEMENT
[ATTACHED]
29
EXHIBIT H
INVESTOR WAIVER
[ATTACHED]