-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CIPBiXmdkFk1czxqbWtEDWBy50adHxUAvCArhz5Kh9BK5II2l7jWOc5vDGBkO57j A5j37xfxPbI+56TK1nJI1g== /in/edgar/work/20000920/0000893220-00-001080/0000893220-00-001080.txt : 20000924 0000893220-00-001080.hdr.sgml : 20000924 ACCESSION NUMBER: 0000893220-00-001080 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20000920 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: USDATA CORP CENTRAL INDEX KEY: 0000943895 STANDARD INDUSTRIAL CLASSIFICATION: [7372 ] IRS NUMBER: 752405152 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-49721 FILM NUMBER: 725549 BUSINESS ADDRESS: STREET 1: 2435 NORTH CENTRAL EXPRESSWAY CITY: RICHARDSON STATE: TX ZIP: 75080 BUSINESS PHONE: 9726809700 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SAFEGUARD SCIENTIFICS INC ET AL CENTRAL INDEX KEY: 0000086115 STANDARD INDUSTRIAL CLASSIFICATION: [5045 ] IRS NUMBER: 231609753 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 435 DEVON PARK DR STREET 2: 800 THE SAFEGUARD BLDG CITY: WAYNE STATE: PA ZIP: 19087 BUSINESS PHONE: 6102930600 FORMER COMPANY: FORMER CONFORMED NAME: SAFEGUARD INDUSTRIES INC DATE OF NAME CHANGE: 19810525 FORMER COMPANY: FORMER CONFORMED NAME: SAFEGUARD CORP DATE OF NAME CHANGE: 19690521 SC 13D 1 w40490sc13d.txt SCHEDULE 13D USDATA CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO___________)* USDATA Corporation ------------------ (Name of Issuer) Common Stock, $0.01 Par Value Per Share --------------------------------------- (Title of Class of Securities) 917294 10 0 ----------- (CUSIP Number) Diana Wechsler Kerekes, Esq. 800 The Safeguard Building, 435 Devon Park Drive Wayne, PA 19087-1945 (610) 293-0600 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) September 12, 2000 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box / /. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (continued on following pages) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities of that section of the Exchange Act but shall be subject to all other provisions of the Exchange Act. 2 CUSIP No. 917294 10 0 1 NAME OF REPORTING PERSON Safeguard Scientifics, Inc. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 23-1609753 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION Pennsylvania NUMBER OF 7 SOLE VOTING POWER SHARES -0- BENEFICIALLY OWNED BY 8 SHARED VOTING POWER EACH 10,442,579 REPORTING PERSON WITH 9 SOLE DISPOSITIVE POWER -0- 10 SHARED DISPOSITIVE POWER 10,442,579 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 10,442,579 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* /x/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 53.83% 14 TYPE OF REPORTING PERSON CO * Excludes an aggregate of 250,927 shares of common stock held by certain executive officers and directors of Safeguard Scientifics, Inc. and 501(c)(3) foundations controlled by them. Safeguard Scientifics, Inc. disclaims beneficial ownership of such shares. Also excludes exercisable options to purchase 18,000 shares of common stock held by Jack Messman, a director of Safeguard Scientifics, Inc., of which Safeguard Scientifics, Inc. disclaims beneficial ownership. 3 CUSIP No. 917294 10 0 1 NAME OF REPORTING PERSON Safeguard Delaware, Inc. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 52-2081181 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7 SOLE VOTING POWER SHARES -0- BENEFICIALLY OWNED BY 8 SHARED VOTING POWER EACH 7,042,498 REPORTING PERSON 9 SOLE DISPOSITIVE POWER -0- 10 SHARED DISPOSITIVE POWER 7,042,498 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,042,498 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 36.30% 14 TYPE OF REPORTING PERSON CO 4 CUSIP No. 917294 10 0 1 NAME OF REPORTING PERSON Safeguard Scientifics (Delaware), Inc. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 51-0291171 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7 SOLE VOTING POWER SHARES -0- BENEFICIALLY OWNED BY 8 SHARED VOTING POWER EACH 3,400,081 REPORTING PERSON 9 SOLE DISPOSITIVE POWER -0- 10 SHARED DISPOSITIVE POWER 3,400,081 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,400,081 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 24.33% 14 TYPE OF REPORTING PERSON CO 5 CUSIP No. 917294 10 0 1 NAME OF REPORTING PERSON Safeguard 2000 Capital, L.P. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 23-3026167 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7 SOLE VOTING POWER SHARES -0- BENEFICIALLY OWNED BY 8 SHARED VOTING POWER EACH -0- REPORTING PERSON 9 SOLE DISPOSITIVE POWER -0- 10 SHARED DISPOSITIVE POWER -0- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON -0- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% 14 TYPE OF REPORTING PERSON PN 6 CUSIP No. 917294 10 0 1 NAME OF REPORTING PERSON Safeguard Fund Management, Inc. S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON 23-3045546 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS OO 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF 7 SOLE VOTING POWER SHARES -0- BENEFICIALLY OWNED BY 8 SHARED VOTING POWER EACH 2,175,703 REPORTING PERSON 9 SOLE DISPOSITIVE POWER -0- 10 SHARED DISPOSITIVE POWER 2,175,703 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,175,703 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13.48% 14 TYPE OF REPORTING PERSON CO 7 ITEM 1. SECURITY AND ISSUER This statement on Schedule 13D relates to the common stock, $0.01 par value per share, of USDATA Corporation, a Delaware corporation (the "Company"). The principal executive offices of the Company are located at 2435 North Central Expressway, Richardson, TX 75080-2722. According to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2000, the number of shares of the Company's common stock, $.01 par value, outstanding as of July 31, 2000,was 13,974,596. ITEM 2. IDENTITY AND BACKGROUND (a) - (c) This Schedule 13D is being filed by Safeguard Scientifics, Inc. ("Safeguard"), Safeguard Delaware, Inc. ("SDI"), Safeguard Scientifics (Delaware), Inc. ("SSD"), Safeguard 2000 Capital L.P. ("Safeguard 2000"), and Safeguard Fund Management, Inc. ("SFMI") (collectively, the "Reporting Persons" and, individually, a "Reporting Person"). Safeguard is a leader in developing and operating premier Internet Infrastructure companies. SSD and SDI are wholly owned subsidiaries of Safeguard. SFMI is a wholly owned subsidiary of SDI. SDI is the general partner of Safeguard 2000, a limited partnership organized under the laws of Delaware, and has sole voting and dispositive power over the securities owned by Safeguard 2000. SFMI is the sole general partner of Safeguard Fund Management, L.P., a Delaware limited partnership which is the sole general partner of SCP Management II, L.P., the general partner of SCP Private Equity II General Partner, L.P., the general partner of SCP Private Equity Partners II, L.P. SFMI holds a membership interest in SCP Private Equity II, LLC, the investment manager of SCP Private Equity Partners II, L.P. ("SCP"). SFMI shares voting and dispositive power over the securities owned by SCP. Set forth in Schedule I annexed hereto are the name, identity and background of each Reporting Person and set forth in Schedules II, III, IV and V are the information required by Item 2 of Schedule 13D about the identity and background of each Reporting Person's directors, executive officers and controlling persons, if any. (d) and (e) During the past five years, no Reporting Person nor, to the best of each Reporting Person's knowledge, no person named in Schedules II through V to this Schedule 13D, has (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which such person was or is subject to a judgment, decree or final order enjoining future violations of or prohibiting or mandating activity subject to federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION Pursuant to the terms of the Securities Purchase Agreement dated September 12, 2000 among eMake Corporation, the Company, Safeguard 2000 and SCP, Safeguard 2000 and SCP each acquired 5,300,000 shares of Series A Preferred Stock of eMake Corporation for an aggregate purchase price by each entity of $13,250,000. Each share of Series A Preferred Stock of eMake Corporation is potentially convertible into 0.025 shares of Series B Preferred Stock of the Company pursuant to the terms of the Exchange Agreement dated September 12, 2000. Safeguard 2000 and SCP also each received a warrant to purchase additional shares of Series A Preferred Stock at a per share exercise price of $0.01. The number of shares for which the warrants may be exercised is based on performance criteria for eMake's software products as of June 30, 2001. The funds used in making such purchases came from the committed capital of each limited partnership. On August 6, 1999, SDI purchased 50,000 shares of Series A Preferred Stock of the Company for a purchase price of $5,000,000. SDI paid the purchase price from its existing working capital. ITEM 4. PURPOSE OF TRANSACTION The shares were acquired pursuant to the Securities Purchase Agreement described in Item 3 of this statement on Schedule 13D. SCP entered into the above mentioned transaction to acquire the shares for investment purposes. Safeguard acquired the shares as part of its operating strategy to integrate its partner companies into a collaborative network that leverages its collective knowledge and resources. With the goal of holding its partner company interests for the long term, Safeguard uses these collective resources to actively develop the business strategies, 8 operations and management teams of the Company and its other partner companies. Safeguard intends to review, from time to time, its interest in the Company's business, financial condition, results of operations and prospects, economic and industry conditions, as well as other developments and other acquisition opportunities. Based upon these considerations, Safeguard may seek to acquire additional shares of common stock of the Company on the open market or in privately negotiated transactions, or to dispose of all of a portion of its shares of the Company. Safeguard has a strategic relationship with the Company and, accordingly, one representative of Safeguard is currently a member of the Board of Directors of the Company. Safeguard anticipates that this strategic relationship will continue. SCP has the right to propose one director for election to the Company's board and the Company's management has agreed to nominate the proposed director. This right continues as long as SCP owns at least 5% of the outstanding common stock of the Company (on an as-converted basis). Other than as set forth in Item 3 or Item 4 of this statement on Schedule 13D, each Reporting Person currently has no plan or proposal which relates to, or may result in, any of the matters listed in Items 4(a) - (i) of Schedule 13D (although each Reporting Person reserves the right to develop such plans). ITEM 5. INTEREST IN SECURITIES OF THE ISSUER The table below sets forth the aggregate number of shares and percentage of the Company's outstanding shares beneficially owned by each Reporting Person. Except as otherwise noted, each person listed has sole voting and dispositive power over all shares listed opposite its name. Any of the aforementioned persons whose names do not appear in the table below do not, to the best of each Reporting Person's knowledge, beneficially own any shares of the Company. Unless otherwise indicated in Schedule VI annexed hereto, no Reporting Person or director or executive officer of a Reporting Person listed on Schedules II through V annexed hereto has consummated any transaction in the Company's shares during the past sixty days other than as set forth herein.
Beneficial Ownership -------------------- Number of Percentage Shares of Total(1) ---------- -------------- Safeguard Scientifics, Inc. (2) 10,442,579 53.83% Safeguard Delaware, Inc. 7,042,498 36.30% Safeguard Scientifics (Delaware), Inc. 3,400,081 24.33% Safeguard Fund Management, Inc. 2,175,703 13.48% Safeguard 2000 Capital L.P. 0 0.00%
(1) Calculations based upon 13,974,596 shares outstanding on July 31, 2000 and assumes, where applicable, the conversion of the Series A Preferred Stock into 1,075,268 shares and the conversion of the Series B Preferred Stock (that may potentially be issued upon the exchange of shares of Series A Preferred Stock of eMake Corporation) into 4,351,406 shares. (2) Includes the 7,042,498 shares beneficially owned by Safeguard Delaware, Inc., the 3,400,081 shares beneficially owned by Safeguard Scientifics (Delaware), Inc., and the 2,175,703 shares beneficially owned by Safeguard Fund Management, Inc. Safeguard is the sole stockholder of each of SDI and SSD, and SDI is the sole stockholder of SFMI. Safeguard and each of SDI, SSD, and SFMI have reported that Safeguard, together with each of SDI, SSD and SFMI, respectively, have shared voting and dispositive power with respect to the shares beneficially owned by each of SDI, SSD and SFMI, respectively, and SDI and SFMI have reported that SDI, together with SFMI, has shared voting and dispositive power with respect to the shares beneficially owned by SFMI. Excludes an aggregate of 250,927 shares of common stock held by certain executive officers and directors of Safeguard Scientifics, Inc. and 501(c)(3) foundations controlled by them. Safeguard Scientifics, Inc. disclaims beneficial ownership of such shares. Also excludes exercisable options to purchase 18,000 shares of common stock held by Jack Messman, a director of Safeguard Scientifics, Inc., of which Safeguard Scientifics, Inc. disclaims beneficial ownership. 9 ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER Other than as described in Item 4 of this statement on Schedule 13D, to each Reporting Person's knowledge, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 and between such persons and any person with respect to any securities of the Company, including but not limited to transfer or voting of any of the securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. Item 7. MATERIAL TO BE FILED AS EXHIBITS EXHIBIT NO. DESCRIPTION - ----------- ----------- 99.1 Securities Purchase Agreement dated as of September 12, 2000 99.2 Exchange Agreement dated as of September 12, 2000 SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information named in this schedule is true, complete and correct. Date: September 20, 2000 Safeguard Scientifics, Inc. By: /s/ James A. Ounsworth ------------------------------------ James A. Ounsworth Sr. Vice President, General Counsel and Secretary Date: September 20, 2000 Safeguard Delaware, Inc. By: /s/ James A. Ounsworth ------------------------------------ James A. Ounsworth Vice President and Secretary Date: September 20, 2000 Safeguard Scientifics (Delaware), Inc. By: /s/ James A. Ounsworth ------------------------------------ James A. Ounsworth Vice President and Secretary Date: September 20, 2000 Safeguard Fund Management, Inc. By: /s/ James A. Ounsworth ------------------------------------ James A. Ounsworth Vice President and Secretary Date: September 20, 2000 Safeguard 2000 Capital L.P. By: Safeguard Delaware, Inc. Its: General Partner By: /s/ James A. Ounsworth ------------------------------------ James A. Ounsworth Vice President and Secretary 10 SCHEDULE I 1. Safeguard Scientifics, Inc. Safeguard Scientifics, Inc., a Pennsylvania corporation ("Safeguard"), owns all of the outstanding capital stock of Safeguard Delaware, Inc., a Delaware corporation ("SDI"), and Safeguard Scientifics (Delaware), Inc., a Delaware corporation ("SSD"). Safeguard has an address at 800 The Safeguard Building, 435 Devon Park Drive, Wayne, PA 19087-1945. Safeguard is a leader in developing and operating premier Internet Infrastructure companies. See Schedule II with respect to the executive officers and directors of Safeguard as of the date of this Schedule 13D. 2. Safeguard Delaware, Inc. SDI is a wholly owned subsidiary of Safeguard. SDI is a holding company and has an office at 103 Springer Building, 3411 Silverside Road, P.O. Box 7048, Wilmington, DE 19803. SDI is the general partner of Safeguard 2000 Capital L.P. ("Safeguard 2000"), a Delaware limited partnership, and owns all of the outstanding capital stock of Safeguard Fund Management, Inc., a Delaware corporation ("SFMI"). Schedule III provides information about the executive officers and directors of SDI as of the date of this Schedule 13D. 3. Safeguard Scientifics (Delaware), Inc. SSD is a wholly owned subsidiary of Safeguard. SSD is a holding company and has an office at 103 Springer Building, 3411 Silverside Road, P.O. Box 7048, Wilmington, DE 19803. Schedule IV provides information about the executive officers and directors of SSD as of the date of this Schedule 13D. 4. Safeguard Fund Management, Inc. SFMI is a wholly owned subsidiary of SDI. SFMI is the sole general partner of Safeguard Fund Management, L.P., a Delaware limited partnership which is the sole general partner of SCP Management II, L.P., the general partner of SCP Private Equity II General Partner, L.P., the general partner of SCP Private Equity Partners II, L.P. SFMI holds a membership interest in SCP Private Equity II, LLC, the investment manager of SCP Private Equity Partners II, L.P. ("SCP"). SFMI is a holding company and has an office at 103 Springer Building, 3411 Silverside Road, P.O. Box 7048, Wilmington, DE 19803. Schedule V provides information about the executive officers and directors of SFMI as of the date of this Schedule 13D. 5. Safeguard 2000 Capital L.P. Safeguard 2000 is a Delaware limited partnership with a principal place of business at 1013 Centre Road, Suite 350, Wilmington, DE 19095. 11 SCHEDULE II DIRECTORS AND EXECUTIVE OFFICERS OF SAFEGUARD SCIENTIFICS, INC. Set forth below are the name, business address, present principal occupation or employment of each director and executive officer of Safeguard Scientifics, Inc.
Name Present Principal Employment Business Address ---- ---------------------------- ---------------- EXECUTIVE OFFICERS* Warren V. Musser Chairman of the Board and Chief Executive Officer Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Harry Wallaesa President and Chief Operating Officer Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Jerry L. Johnson Executive Vice President, Operations Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Stephen J. Andriole Sr. Vice President and Chief Technology Officer Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Gerald A. Blitstein Sr. Vice President and Chief Financial Officer Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Michael G. Bolton Sr. Vice President Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 John K. Halvey Sr. Vice President Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 N. Jeffrey Klauder Sr. Vice President Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Thomas C. Lynch Sr. Vice President Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 James A. Ounsworth Sr. Vice President, General Counsel and Secretary Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087
12
DIRECTORS* Vincent G. Bell Jr. President and Chief Executive Officer, Verus Verus Corporation Corporation 5 Radnor Corporate Center Suite 520 Radnor, PA 19087 Walter W. Buckley III President & CEO, Internet Capital Internet Capital Group Group, Inc. 435 Devon Park Drive Building 600 Wayne, PA 19087 Robert A. Fox President, R.A.F. Industries R.A.F. Industries One Pitcairn Pl, Suite 2100 165 Township Line Road Jenkintown, PA 19046-3593 Robert E. Keith Jr. Managing Director of TL Ventures and President TL Ventures and CEO, Technology Leaders Management, Inc. 700 Building 435 Devon Park Drive Wayne, PA 19087 Michael Emmi Chairman, President and CEO, Systems & Computer Systems & Computer Technology Corporation Technology Corporation 4 Country View Road Malvern, PA 19355 Jack L. Messman President and CEO, Cambridge Technology Cambridge Technology Partners Partners (Massachusetts), Inc. 8 Cambridge Center Cambridge, MA 02142 Warren V. Musser (Same as above) (Same as above) Russell E. Palmer Chairman and CEO, The Palmer Group The Palmer Group 3600 Market Street Suite 530 Philadelphia, PA 19104 John W. Poduska Sr. Chairman of the Board, Advanced Visual Systems, Advanced Visual Systems, Inc. Inc. 300 Fifth Avenue Waltham, MA 02154 Heinz Schimmelbusch President, Safeguard International Group, Inc., Safeguard International Chairman, Allied Resource Corporation, Chairman, Group, Inc. Metallurg, Inc. and Managing Director, Safeguard 800 The Safeguard Building International Fund, L.P. 435 Devon Park Drive Wayne, PA 19087 Hubert J.P. Schoemaker Chairman of the Board and CEO, Neuronyx, Inc. Neuronyx, Inc. 200 Great Valley Parkway Malvern, PA 19355 Harry Wallaesa (Same as above) (Same as above) Carl J. Yankowski President and CEO, Palm Computing, Inc. Palm Computing, Inc. 5400 Bayfront Plaza, MS9208 Santa Clara, CA 95054
* All Executive Officers and Directors are U.S. citizens, except Heinz Schimmelbusch, who is a citizen of Austria, and Hubert J.P. Schoemaker, who is a citizen of the Netherlands. 13 SCHEDULE III DIRECTORS AND EXECUTIVE OFFICERS OF SAFEGUARD DELAWARE, INC. Set forth below are the name, business address, present principal occupation or employment of each director and executive officer of Safeguard Delaware, Inc.
Name Present Principal Employment Business Address ---- ---------------------------- ---------------- EXECUTIVE OFFICERS* Harry Wallaesa President and CEO, Safeguard Scientifics, Inc., Safeguard Scientifics, Inc. 800 The Safeguard Building President, Safeguard Delaware, Inc. 435 Devon Park Drive Wayne, PA 19087 Jerry L. Johnson Executive Vice President, Operations, Safeguard Safeguard Scientifics, Inc. Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Vice President, Safeguard Delaware, Inc. Wayne, PA 19087 Stephen J. Andriole Sr. Vice President and Chief Technology Officer, Safeguard Scientifics, Inc. Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Vice President, Safeguard Delaware, Inc. Wayne, PA 19087 Gerald A. Blitstein Sr. Vice President and CFO, Safeguard Safeguard Scientifics, Inc. Scientifics, Inc. 800 The Safeguard Building Vice President and Treasurer, Safeguard Delaware, 435 Devon Park Drive Inc. Wayne, PA 19087 Michael G. Bolton Sr. Vice President, Safeguard Scientifics, Inc. Safeguard Scientifics, Inc. 800 The Safeguard Building Vice President, Safeguard Delaware, Inc. 435 Devon Park Drive Wayne, PA 19087 John K. Halvey Sr. Vice President, Safeguard Scientifics, Inc. Safeguard Scientifics, Inc. 800 The Safeguard Building Vice President, Safeguard Delaware, Inc. 435 Devon Park Drive Wayne, PA 19087 N. Jeffrey Klauder Sr. Vice President Safeguard Scientifics, Inc. 800 The Safeguard Building Vice President and Assistant Secretary, Safeguard 435 Devon Park Drive Delaware, Inc. Wayne, PA 19087 James A. Ounsworth Sr. Vice President, General Counsel and Safeguard Scientifics, Inc. Secretary, Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Vice President and Secretary, Safeguard Delaware, Wayne, PA 19087 Inc. DIRECTORS* James A. Ounsworth (Same as above) (Same as above)
* All Executive Officers and Directors are U.S. Citizens. 14 SCHEDULE IV DIRECTORS AND EXECUTIVE OFFICERS OF SAFEGUARD SCIENTIFICS (DELAWARE), INC. Set forth below are the name, business address, present principal occupation or employment of each director and executive officer of Safeguard Scientifics (Delaware), Inc.
Name Present Principal Employment Business Address ---- ---------------------------- ---------------- EXECUTIVE OFFICERS* Harry Wallaesa President and CEO, Safeguard Scientifics, Inc., Safeguard Scientifics, Inc. 800 The Safeguard Building President, Safeguard Scientifics (Delaware), Inc. 435 Devon Park Drive Wayne, PA 19087 Jerry L. Johnson Executive Vice President, Operations, Safeguard Safeguard Scientifics, Inc. Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Vice President, Safeguard Scientifics (Delaware), Wayne, PA 19087 Inc. Stephen J. Andriole Sr. Vice President and Chief Technology Officer, Safeguard Scientifics, Inc. Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Vice President, Safeguard Scientifics (Delaware), Wayne, PA 19087 Inc. Gerald A. Blitstein Sr. Vice President and CFO, Safeguard Safeguard Scientifics, Inc. Scientifics, Inc. 800 The Safeguard Building Vice President and Treasurer, Safeguard 435 Devon Park Drive Scientifics (Delaware), Inc. Wayne, PA 19087 Michael G. Bolton Sr. Vice President, Safeguard Scientifics, Inc. Safeguard Scientifics, Inc. 800 The Safeguard Building Vice President, Safeguard Scientifics (Delaware), 435 Devon Park Drive Inc. Wayne, PA 19087 John K. Halvey Sr. Vice President, Safeguard Scientifics, Inc. Safeguard Scientifics, Inc. 800 The Safeguard Building Vice President, Safeguard Scientifics (Delaware), 435 Devon Park Drive Inc. Wayne, PA 19087 N. Jeffrey Klauder Sr. Vice President Safeguard Scientifics, Inc. 800 The Safeguard Building Vice President and Assistant Secretary, Safeguard 435 Devon Park Drive Scientifics (Delaware), Inc. Wayne, PA 19087 James A. Ounsworth Sr. Vice President, General Counsel and Safeguard Scientifics, Inc. Secretary, Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Vice President and Secretary, Safeguard Wayne, PA 19087 Scientifics (Delaware), Inc. DIRECTORS* James A. Ounsworth (Same as above) (Same as above)
* All Executive Officers and Directors are U.S. Citizens. 15 SCHEDULE V DIRECTORS AND EXECUTIVE OFFICERS OF SAFEGUARD FUND MANAGEMENT, INC. Set forth below are the name, business address, present principal occupation or employment of each director and executive officer of Safeguard Fund Management, Inc.
Name Present Principal Employment Business Address ---- ---------------------------- ---------------- EXECUTIVE OFFICERS* Warren V. Musser Chairman of the Board and Chief Executive Safeguard Scientifics, Inc. Officer, Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Chairman of the Board and Chief Executive Wayne, PA 19087 Officer, Safeguard Fund Management, Inc. Harry Wallaesa President and CEO, Safeguard Scientifics, Inc., Safeguard Scientifics, Inc. 800 The Safeguard Building President, Safeguard Fund Management, Inc. 435 Devon Park Drive Wayne, PA 19087 Jerry L. Johnson Executive Vice President, Operations, Safeguard Safeguard Scientifics, Inc. Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Vice President, Safeguard Fund Management, Inc. Wayne, PA 19087 Stephen J. Andriole Sr. Vice President and Chief Technology Officer, Safeguard Scientifics, Inc. Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Vice President, Safeguard Fund Management, Inc. Wayne, PA 19087 Gerald A. Blitstein Sr. Vice President and CFO, Safeguard Safeguard Scientifics, Inc. Scientifics, Inc. 800 The Safeguard Building Vice President and Treasurer, Safeguard Fund 435 Devon Park Drive Management, Inc. Wayne, PA 19087 Michael G. Bolton Sr. Vice President, Safeguard Scientifics, Inc. Safeguard Scientifics, Inc. 800 The Safeguard Building Vice President, Safeguard Fund Management, Inc. 435 Devon Park Drive Wayne, PA 19087 John K. Halvey Sr. Vice President, Safeguard Scientifics, Inc. Safeguard Scientifics, Inc. 800 The Safeguard Building Vice President, Safeguard Fund Management, Inc. 435 Devon Park Drive Wayne, PA 19087 N. Jeffrey Klauder Sr. Vice President Safeguard Scientifics, Inc. 800 The Safeguard Building Vice President and Assistant Secretary, Safeguard 435 Devon Park Drive Fund Management, Inc. Wayne, PA 19087 James A. Ounsworth Sr. Vice President, General Counsel and Safeguard Scientifics, Inc. Secretary, Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Vice President and Secretary, Safeguard Fund Wayne, PA 19087 Management, Inc. DIRECTORS* James A. Ounsworth (Same as above) (Same as above)
* All Executive Officers and Directors are U.S. Citizens. 16 SCHEDULE VI All of the following transactions were effected by the executive officers and directors of the Reporting Persons listed below, in brokers' transactions in the Nasdaq National Market.
Name Transaction Date Type of Transaction Shares Price Per Share - ---- ---------------- ------------------- ------ ---------------
17 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION - ----------- ----------- 99.1 Securities Purchase Agreement dated as of September 12, 2000 99.2 Exchange Agreement dated as of September 12, 2000 EX-99.1 2 w40490ex99-1.txt SECURITIES PURCHASE AGREEMENT DATED 9-12-2000 1 EXHIBIT 99.1 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 ------------------- i 3 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 -------------------------------- 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 --------------------- ii 4 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 ------------------------------------------------------------------- iii 5 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 -------------------- 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 ---------------- iv 6 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 v 7 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. 1. 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"). 2. 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. (a) 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. (b) 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 8 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 Brobeck, Phleger & Harrison LLP, 301 Congress Avenue, Suite 1200, Austin, Texas 78701 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 9 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. 3. 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. 4. 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 10 of 1933, as amended (the "Securities Act"), and any relevant state securities laws or pursuant to valid exemptions therefrom. 5. 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 11 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 12 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 13 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 14 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. 6. 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. 7. 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. 8. 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 15 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. 9. 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. 10. 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. 11. 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 16 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 17 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 18 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 19 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). 12. 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. 13. 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 20 14. 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 21 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 22 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 23 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: (c) "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." 15. Any legend required by the securities laws of any applicable jurisdictions. 16. 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 24 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 25 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 & Gilchrist, 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 26 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 27 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 2345 North Central Expressway, Richardson, Texas 75080 (Fax: (972) 669-9557), Attention: President, (b) in case of the Parent, to the Parent at 2345 North Central Expressway, Richardson, Texas 75080 (Fax: (972) 669-9557), Attention: President, (c) in the case of Safeguard Scientifics, Inc., to Safeguard Scientifics, Inc. at 800 The Safeguard Building, 435 Devon Park Drive, Wayne, Pennsylvania 19087, (Fax: (610) 293-0601), 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 435 Devon Park Drive, Building 300, Wayne, Pennsylvania 19087, (Fax: (610) 293-0601), 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 28 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. 17. 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. 18. 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 29 19. 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. 20. 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. 21. 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 30 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. 22. 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. 23. 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 31 24. 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. 25. 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 32 IN WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement as of the date first above written. COMPANY: eMAKE CORPORATION By:____________________________________ Robert L. Drury, Chief Financial Officer PARENT: USDATA CORPORATION By:____________________________________ Robert L. Drury, Chief Financial Officer INVESTORS: SAFEGUARD 2000 CAPITAL, L.P. By: Safeguard Delaware, Inc., its General Partner By:____________________________________ 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:____________________________________ Name:__________________________________ Title:_________________________________ EX-99.2 3 w40490ex99-2.txt EXCHANGE AGREEMENT DATED AS OF SEPTEMBER 12, 2000 1 EXHIBIT 99.2 NEITHER THE EXCHANGE RIGHT GRANTED HEREIN NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE OF SUCH EXCHANGE RIGHT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NO TRANSFER OF SUCH EXCHANGE RIGHT OR OF THE SECURITIES ISSUABLE UPON EXERCISE OF SUCH EXCHANGE RIGHT SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR (B) THE HOLDER HEREOF SHALL DELIVER TO THE COMPANY AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. EXCHANGE AGREEMENT This Exchange Agreement (this "Exchange Agreement") is entered into on this 12th day of September, 2000, by and between USDATA Corporation, a Delaware corporation (the "Company"), and Safeguard 2000 Capital, L.P. ("Safeguard," and together with each of its assignees and transferees, individually, a "Holder" and, collectively, the "Holders"). Subject to the terms and conditions set forth herein, including, without limitation, Section 3 hereof, the Company hereby grants to the Holder the right to exchange (the "Exchange Right") shares of the Series A-2 Convertible Preferred Stock, par value $0.01 per share (the "eMake Preferred Stock"), of eMake Corporation, a Delaware corporation ("eMake"), owned by the Holder for fully paid and non-assessable shares of the Company's Series B Convertible Preferred Stock, par value $0.01 per share (the "Company Preferred Stock"). ITEM 1. Exercise of Exchange Right. (a) Exchange Rate. Subject to adjustment as provided in Section 3 hereof, 0.025 of a share of Company Preferred Stock (the "Exchange Rate") shall be issuable hereunder (the "Exchange Shares") for each share of eMake Preferred Stock owned by the Holder tendered for exchange pursuant to the Exchange Right. (b) Exerciseability. The Exchange Right shall be exercisable, in whole or in part, from time to time and at any time on and after the date hereof until 5:00 p.m., eastern time, on the Expiration Date (as hereinafter defined), in accordance with Section 1.3 hereof. As used herein, the term "Expiration Date" means the earlier of (i) June 30, 2006, or (ii) the date on which the Holder no longer owns any shares of eMake Preferred Stock (or other securities obtained as a result of changes or reclassifications of eMake Preferred Stock pursuant to Section 3.1.5 hereof). 2 2 (c) Exercise. Upon tender of a duly executed Notice of Exercise in the form of Annex A attached hereto, together with the original certificate(s) representing the shares of eMake Preferred Stock being exchanged for the Exchange Shares to be acquired, at the Company's principal executive offices presently located at 2345 North Central Expressway, Richardson, Texas, 75080, Attention: President, or at such other address as the Company shall have advised the Holder in writing (the "Designated Office"), the Holder shall be entitled to receive a certificate or certificates for the Exchange Shares so acquired. The Company agrees that the Exchange Shares shall be deemed to have been issued to the Holder as of the close of business on the date on which the Company receives a duly executed Notice of Exercise covering such Exchange Shares and the related certificates representing the shares of eMake Preferred Stock being exchanged therefor as described above. ITEM 2. Transfer; Issuance of Stock Certificates; Restrictive Legends. (a) Transfer. Subject to compliance with the restrictions on transfer set forth in this Section 2, the Exchange Right granted hereunder with respect to any shares of eMake Preferred Stock may be transferred or assigned to any transferee or assignee of such shares of eMake Preferred Stock, upon delivery to the Company of a written assignment with respect thereto in the form of Annex B attached hereto duly executed by the Holder or its agent or attorney. Upon such delivery, the Company shall execute and deliver a new Exchange Agreement or Exchange Agreements in the name of the assignee or assignees. An Exchange Right, if properly assigned in compliance with the provisions hereof, may be exercised by the new Holder for the acquisition of Exchange Shares without having a new Exchange Agreement issued. Prior to due presentment for registration of transfer thereof, the Company may deem and treat the registered Holder of the Exchange Right as the absolute owner hereof (notwithstanding any notations of ownership or writing thereon made by anyone other than a duly authorized officer of the Company) for all purposes and shall not be affected by any notice to the contrary. All Exchange Agreements issued upon any assignment of the Exchange Right shall be the valid obligations of the Company, evidencing the same rights, and entitled to the same benefits as this Exchange Agreement with respect to the portion of the Exchange Right transferred or assigned, upon registration of transfer or exchange. (b) Stock Certificates. Certificates for the Exchange Shares shall be delivered to the Holder within a reasonable time after the Exchange Right shall have been exercised pursuant to Section 1. The issuance of certificates for Exchange Shares upon the exercise of the Exchange Right shall be made without charge to the Holder hereof including, without limitation, any documentary, stamp or similar tax that may be payable in respect thereof; provided, however, that the Company shall not be required to pay any income tax to which the Holder hereof may be subject in connection with the issuance of this Exchange Agreement or the Exchange Shares; and provided further, that if Exchange Shares are to be delivered in a name other than the name of the Holder hereof representing any Exchange Right being exercised, then no such delivery shall be made unless the person requiring the same has paid to the Company the amount of transfer taxes or charges incident thereto, if any. 3 3 (c) Restrictive Legends. Except as otherwise provided in this Section 2, each certificate for Exchange Shares initially issued upon the exercise of the Exchange Right, and each certificate for Exchange Shares issued to any subsequent transferee of any such certificate, shall be stamped or otherwise imprinted with a legend in substantially the following form: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW. NO TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE OR ISSUED UPON CONVERSION OF SUCH SHARES SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (B) THE HOLDER SHALL DELIVER TO THE COMPANY AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH PROPOSED TRANSFER IS EXEMPT FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS." Except as otherwise provided in this Section 2, each Exchange Agreement shall be stamped or otherwise imprinted with a legend in substantially the following form: "NEITHER THE EXCHANGE RIGHT GRANTED HEREIN NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE OF SUCH EXCHANGE RIGHT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NO TRANSFER OF SUCH EXCHANGE RIGHT OR OF THE SECURITIES ISSUABLE UPON EXERCISE OF SUCH EXCHANGE RIGHT SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR (B) THE HOLDER HEREOF SHALL DELIVER TO THE COMPANY AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION OR QUALIFICATION 4 4 REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS." Notwithstanding the foregoing, the legend requirements of this Section 2.3 shall terminate as to any particular Exchange Agreement or Exchange Share when the Company shall have received from the Holder thereof an opinion of counsel in form and substance reasonably acceptable to the Company that such legend is not required in order to ensure compliance with the Securities Act and applicable state securities laws. Whenever the restrictions imposed by this Section 2.3 shall terminate, the holder hereof or of Exchange Shares, as the case may be, shall be entitled to receive from the Company without cost to such holder a new Exchange Agreement or certificate for Exchange Shares of like tenor, as the case may be, without such restrictive legend. ITEM 3. Adjustment of Exchange Rate; Nature of Securities Issuable Upon Exercise of Exchange Right. (a) Exchange Rate; Adjustment of Number of Shares. The Exchange Rate set forth in Section 1 hereof shall be subject to adjustment from time to time as hereinafter provided. Merger, Sale of Assets, etc. If at any time while the Exchange Right, or any portion thereof, is outstanding and unexpired there shall be a reorganization (other than a combination, reclassification, exchange, or subdivision of shares as provided in Sections 3.1.2 and 3.1.3), merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity, or a merger in which the Company is the surviving entity but the shares of the Company's capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise, or a sale or transfer of the Company's properties and assets as, or substantially as, an entirety to any other person, then, as a part of such reorganization, merger, consolidation, sale or transfer, lawful provision shall be made so that the holder of this Exchange Agreement shall thereafter be entitled to receive upon exercise of the Exchange Right, during the period specified herein and upon delivery of the shares of eMake Preferred Stock being exchanged pursuant hereto, the number of shares of stock or other securities or cash or property of the successor corporation resulting from such reorganization, merger, consolidation, sale or transfer that a holder of the shares deliverable upon exercise of the Exchange Right would have been entitled to receive in such reorganization, consolidation, merger, sale or transfer if the Exchange Right had been exercised immediately before such reorganization, consolidation, merger, sale or transfer, all subject to further adjustment as provided in this Section 3. The foregoing provisions of this Section 3.1.1 shall similarly apply to successive reorganizations, consolidations, mergers, sales and transfers and to 5 5 the stock and securities of any other corporation that are at the time receivable upon the exercise of the Exchange Right. If the per share consideration payable to the Holder hereof for shares in connection with any such transaction is in a form other than cash or securities, then the value of such consideration shall be determined in good faith by the Company's Board of Directors. In all events, appropriate adjustment shall be made in the application of the provisions of this Exchange Agreement with respect to the rights and interests of the Holder hereof after the transaction, to the end that the provisions of this Exchange Agreement shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of the Exchange Right. Reclassification, etc. If the Company, at any time while the Exchange Right, or any portion thereof, remains outstanding and unexpired, shall, by the reclassification or exchange of securities or otherwise, change any of the securities issuable upon exercise of the Exchange Right into the same or a different number of securities of any other class or classes, this Exchange Agreement shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities issuable upon exercise of the Exchange Right immediately prior to such reclassification, exchange, or other change and the Exchange Rate therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 3. Stock Splits, Stock Dividends and Reverse Stock Splits. In case at any time the Company shall split or subdivide the outstanding shares of Company Preferred Stock into a greater number of shares, or shall declare and pay any stock dividend with respect to its outstanding stock that has the effect of increasing the number of outstanding shares of Company Preferred Stock, the Exchange Rate in effect immediately prior to such subdivision or stock dividend shall be proportionately increased, and conversely, in case at any time the Company shall combine its outstanding shares of Company Preferred Stock into a smaller number of shares, the Exchange Rate in effect immediately prior to such combination shall be proportionately reduced. Adjustments for Dividends in Stock or Other Securities of Property. If while the Exchange Right, or any portion hereof, remains outstanding and unexpired the holders of Company Preferred Stock shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or 6 6 other securities or property (other than cash) of the Company by way of dividend, then and in each case, this Exchange Agreement shall represent the right to acquire, in addition to the number of shares of the security receivable upon exercise of the Exchange Right, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property of the Company that such holder would hold on the date of such exercise had it been the holder of record of the security receivable upon exercise of the Exchange Right on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 3. eMake Reclassification, etc. If eMake, at any time while the Exchange Right, or any portion thereof, remains outstanding and unexpired, shall, by the reclassification or exchange of securities or otherwise, change the eMake Preferred Stock into the same or a different number of securities of any other class or classes, this Exchange Agreement shall thereafter represent the right to exchange the securities into or for which the eMake Preferred Stock is reclassified, exchanged or changed and the Exchange Rate therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 3. eMake Stock Splits, Stock Dividends and Reverse Stock Splits. In case at any time eMake shall split or subdivide the outstanding shares of eMake Preferred Stock into a greater number of shares, or shall declare and pay any stock dividend with respect to its outstanding stock that has the effect of increasing the number of outstanding shares of eMake Preferred Stock, the Exchange Rate in effect immediately prior to such subdivision or stock dividend shall be proportionately reduced, and conversely, in case at any time eMake shall combine its outstanding shares of eMake Preferred Stock into a smaller number of shares, the Exchange Rate in effect immediately prior to such combination shall be proportionately increased. Adjustments for Dividends in eMake Stock or Other Securities of Property. If while the Exchange Right, or any portion hereof, remains outstanding and unexpired, the holders of eMake Preferred Stock shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of eMake by way of dividend, then and in each case, upon exercise of the 7 7 Exchange Right, in addition to the number of shares of eMake Preferred Stock deliverable hereunder, the Holder shall also deliver to the Company such other or additional stock or other securities or property of eMake that such Holder received with respect to the eMake Preferred Stock being exchanged during such period, giving effect to all adjustments called for during such period by the provisions of this Section 3. (b) Timing of Exchange Rate Adjustment. No adjustment of the Exchange Rate shall be made unless such adjustment would require an increase or decrease of at least 0.0001 in such rate; provided, however, that any adjustments which by reason of this Section 3.2 are not required to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall require an increase or decrease of at least 0.0001 in the Exchange Rate then in effect hereunder. (c) Adjustment Certificate. In each case of an adjustment in the Exchange Rate, the Company shall compute and prepare a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based, including a statement of (i) the number of Company Preferred Stock outstanding or deemed to be outstanding, (ii) the adjusted Exchange Rate and (iii) the number of Exchange Shares issuable upon exercise of this Exchange Right. The Company will forthwith mail a copy of each such certificate to the holder hereof. ITEM 4. Registration; Exchange and Replacement of Exchange Agreement; Reservation of Shares. The Company shall keep at the Designated Office a register in which the Company shall provide for the registration, transfer and exchange of the Exchange Right. The Company shall not at any time, except upon the dissolution, liquidation or winding-up of the Company, close such register so as to result in preventing or delaying the exercise or transfer of the Exchange Right. The Company may deem and treat the person in whose name the Exchange Right is registered as the holder and owner hereof for all purposes and shall not be affected by any notice to the contrary, until registration of any transfer as provided in this Section 4. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Exchange Agreement and (in case of loss, theft or destruction) of indemnity satisfactory to it, and (in the case of mutilation) upon surrender and cancellation of this Exchange Agreement, the Company will (in the absence of notice to the Company that the Exchange Agreement has been acquired by a bona fide purchaser) make and deliver a new Exchange Agreement of like tenor, in lieu of this Exchange Agreement without requiring the posting of any bond or the giving of any security. The Company shall at all times reserve and keep available out of its authorized shares of Company Preferred Stock, solely for the purpose of issuance upon the exercise of the Exchange Right, such number of shares of Company Preferred Stock as shall be issuable upon the exercise hereof. The Company covenants and agrees that, upon exercise of the Exchange 8 8 Right and receipt of the shares of eMake Preferred Stock therefor, all Exchange Shares issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable. ITEM 5. Fractional Shares. The Company shall not be required to issue fractions of shares, upon exercise of the Exchange Right or otherwise, or to distribute certificates that evidence fractional shares. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of such fractional share as may be prescribed by the Board of Directors of the Company. ITEM 6. Holders Not Deemed Stockholders. No holder of the Exchange Right shall, as such, be entitled to vote or to receive dividends or be deemed the holder of Exchange Shares that may at any time be issuable upon exercise of the Exchange Right for any purpose whatsoever, nor shall anything contained herein be construed to confer upon any Holder of the Exchange Right, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issue or reclassification of stock, change of par value or change of stock to no par value, consolidation, merger or conveyance or otherwise), or to receive notice of meetings, or to receive dividends or subscription rights, until such holder shall have exercised the Exchange Right and been issued Exchange Shares in accordance with the provisions hereof. ITEM 7. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been duly made when delivered personally, or mailed by registered or certified mail, return receipt requested, or telecopied or telexed and confirmed in writing and delivered personally or mailed by registered or certified mail, return receipt requested (a) if to the holder of the Exchange Right, to the address of such Holder as shown on the books of the Company, or (b) if to the Company, to the address set forth in Section 1.3 of this Exchange Agreement; or at such other address as the Holder or the Company may hereafter have advised the other. ITEM 8. Successors. All the covenants, agreements, representations and warranties contained in this Exchange Agreement shall bind the parties hereto and their respective heirs, executors, administrators, distributees, successors, assigns and transferees. ITEM 9. Law Governing. This Exchange Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of Delaware (not including the choice of law rules thereof) regardless of the jurisdiction of creation or domicile of the Company or its successors or of the holder at any time hereof. ITEM 10. Entire Agreement; Amendments and Waivers. This Exchange Agreement sets forth the entire understanding of the parties with respect to the transactions contemplated 9 9 hereby. The failure of any party to seek redress for the violation or to insist upon the strict performance of any term of this Exchange Agreement shall not constitute a waiver of such term and such party shall be entitled to enforce such term without regard to such forbearance. This Exchange Agreement may be amended, and any breach of or compliance with any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or written waiver of the Holder, and then such consent or waiver shall be effective only in the specific instance and for the specific purpose for which given. ITEM 11. Severability; Headings. If any term of this Exchange Agreement as applied to any person or to any circumstance is prohibited, void, invalid or unenforceable in any jurisdiction, such term shall, as to such jurisdiction, be ineffective to the extent of such prohibition or invalidity without in any way affecting any other term of this Exchange Agreement or affecting the validity or enforceability of this Exchange Agreement or of such provision in any other jurisdiction. The Section headings in this Exchange Agreement have been inserted for purposes of convenience only and shall have no substantive effect. [Signature page follows.] 10 10 IN WITNESS WHEREOF, the Company and the Holder have caused this Exchange Agreement to be duly executed as of the date first written above. USDATA CORPORATION By:_____________________________________ Name:______________________________ Title:_____________________________ SAFEGUARD 2000 CAPITAL, L.P. By: Safeguard Delaware, Inc., its General Partner By:_____________________________________ Name:______________________________ Title:_____________________________ 11 ANNEX A NOTICE OF EXERCISE (TO BE EXECUTED UPON PARTIAL OR FULL EXERCISE OF THE EXCHANGE RIGHT DESCRIBED IN THE WITHIN EXCHANGE AGREEMENT) The undersigned hereby irrevocably elects to exercise the right to acquire __________ shares of Series B Convertible Preferred Stock of USDATA Corporation covered by the within Exchange Agreement according to the conditions hereof, herewith surrenders the original stock certificate(s) representing ______________ shares of eMake Corporation Series A-2 Convertible Preferred Stock, and requests that a certificate for such number of shares of USDATA Corporation Series B Convertible Preferred Stock be issued in the name of, and delivered to _______________________, whose address is set forth below. Dated:_______________________ ________________________________________________ (Signature must conform to name of holder as specified on the face of the Exchange Agreement) ________________________________________________ ________________________________________________ (Address) 12 ANNEX B ASSIGNMENT FORM FOR VALUE RECEIVED the undersigned has sold, assigned and transferred unto the Assignee named below ____ shares of the Series B Preferred Stock covered by the within Exchange Agreement and hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Exchange Agreement, including the Exchange Right, with respect to such shares of Series B Convertible Preferred Stock set forth below: - ----------------------------------------------------------------------------- No. of Shares of Series B Name and Address of Assignee Preferred Stock - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- and does hereby irrevocably constitute and appoint _______________________ attorney-in-fact to register such transfer onto the books of USDATA Corporation maintained for the purpose, with full power of substitution in the premises. Dated:____________________________ Print Name:___________________________ Signature:_______________________ Witness:_________________________ NOTICE: THE SIGNATURE ON THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THIS EXCHANGE AGREEMENT IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. -----END PRIVACY-ENHANCED MESSAGE-----