-----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, LP6gXXzNtXO6yrkU9Dj4flV/4gRnsqthrUO9RHa0ro8oD96u1uR/Rna5WZK63gGu Fafhflv6+syZuSlZvbQBew== 0000950134-00-004683.txt : 20000516 0000950134-00-004683.hdr.sgml : 20000516 ACCESSION NUMBER: 0000950134-00-004683 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: USDATA CORP CENTRAL INDEX KEY: 0000943895 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 752405152 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-25936 FILM NUMBER: 635299 BUSINESS ADDRESS: STREET 1: 2435 NORTH CENTRAL EXPRESSWAY CITY: RICHARDSON STATE: TX ZIP: 75080 BUSINESS PHONE: 9726809700 10-Q 1 FORM 10-Q FOR QUARTER ENDED MARCH 31, 2000 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2000 [ ] Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from to . ---------- ---------- Commission file number 0-25936 USDATA Corporation (Exact Name of Registrant as Specified in Its Charter) DELAWARE 75-2405152 - ------------------------------------------------------------------------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 2435 N. Central Expressway, Richardson, TX 75080 - ------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (972) 680-9700 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days. Yes [X] No [ ] ------------------------------------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of May 3, 2000 Number of Shares Class Outstanding Common Stock, Par Value $.01 Per Share 13,264,145 shares 2 USDATA CORPORATION AND SUBSIDIARIES FORM 10-Q QUARTER ENDED MARCH 31, 2000 TABLE OF CONTENTS
Page Number PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets at March 31, 2000 and December 31, 1999 3 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended March 31, 2000 and 1999 4 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2000 and 1999 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3. Quantitative and Qualitative Disclosures about Market Risk 13 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13 Signatures 14
2 3 USDATA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
MARCH 31, DECEMBER 31, 2000 1999 ---------- ---------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 2,128 $ 2,962 Accounts receivable, net of allowance for doubtful accounts of $430 and $453, respectively 3,234 6,626 Other current assets 1,094 727 ---------- ---------- Total current assets 6,456 10,315 ---------- ---------- Property and equipment, net 3,448 2,162 Computer software development costs, net 8,462 6,645 Software held for resale, net 1,014 1,079 Cost in excess of fair value of tangible net assets purchased, net 4,483 4,742 Intangible and other assets 2,020 1,924 ---------- ---------- Total assets $ 25,883 $ 26,867 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,220 $ 1,746 Deferred revenue 2,484 2,170 Accrued compensation and benefits 1,294 2,226 Convertible shareholder note payable 5,000 - Short-term and current portion of long-term debt 67 62 Other accrued liabilities 1,488 1,021 ---------- ---------- Total current liabilities 12,553 7,225 ---------- ---------- Long-term debt, less current portion 368 388 ---------- ---------- Total liabilities 12,921 7,613 ---------- ---------- Commitments and contingencies Redeemable Convertible Preferred Stock, Series A, $.01 par value, with a redemption and liquidation value of $106 per share and $103 per share in 2000 and 1999, respectively; 100,000 shares authorized; 50,000 shares issued and outstanding 5,275 5,167 Stockholders' equity: Preferred stock, $.01 par value, 2,200,000 shares authorized; none issued - - Common stock, $.01 par value, 22,000,000 shares authorized; 15,625,951 issued in 2000 and 1999 156 156 Additional paid-in capital 22,207 21,952 Deferred compensation (990) (1,278) Retained earnings(accumulated deficit) (4,649) 2,523 Treasury stock at cost, 2,368,241 shares in 2000 and 2,452,316 shares in 1999 (8,136) (8,434) Accumulated other comprehensive loss (901) (832) ---------- ---------- Total stockholders' equity 7,687 14,087 ---------- ---------- Total liabilities and stockholders' equity $ 25,883 $ 26,867 ========== ==========
See accompanying notes to condensed consolidated financial statements. 3 4 USDATA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, -------------------------- 2000 1999 ---------- ---------- Revenues: Product license $ 3,017 $ 5,515 Services 1,049 763 ---------- ---------- Total revenues 4,066 6,278 ---------- ---------- Operating expenses: Selling and product materials 7,050 3,855 Product development 1,524 610 General and administrative 1,882 1,382 Non-cash stock compensation 288 - Amortization of intangible assets 360 - ---------- ---------- Total operating expenses 11,104 5,847 ---------- ---------- Income (loss) from operations (7,038) 431 Other income (expense), net (26) 20 ---------- ---------- Income (loss) before income taxes (7,064) 451 Income tax provision - (50) ---------- ---------- Net income (loss) (7,064) 401 Dividends on preferred stock (108) - ---------- ---------- Net income (loss) applicable to common stockholders $ (7,172) $ 401 ========== ========== Other comprehensive income (loss): Foreign currency translation adjustment (69) 24 ---------- ---------- Comprehensive income (loss) $ (7,241) $ 425 ========== ========== Net income (loss) per common share: Basic and diluted $ (0.56) $ 0.04 ========== ========== Weighted average shares outstanding: Basic 12,789 11,261 Diluted 12,789 11,327 ========== ==========
See accompanying notes to condensed consolidated financial statements. 4 5 USDATA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
THREE MONTHS ENDED MARCH 31, -------------------------- 2000 1999 ---------- ---------- Cash flows from operating activities: Net income (loss) $ (7,064) $ 401 Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 689 272 Non-cash stock compensation 288 - Changes in assets and liabilities: Accounts receivable, net 3,392 13 Other assets, net (619) (173) Accounts payable and other accrued liabilities 941 (587) Accrued compensation and benefits (932) (348) Deferred revenue 314 310 ---------- ---------- Net cash used in operating activities (2,991) (112) ---------- ---------- Cash flows from investing activities: Capital expenditures (1,495) (96) Capitalized software development costs (1,817) (230) ---------- ---------- Net cash used in investing activities (3,312) (326) ---------- ---------- Cash flows from financing activities: Proceeds from stock option exercises 553 - Proceeds from convertible shareholder note payable 5,000 - Payments on long-term debt (15) - ---------- ---------- Net cash provided by financing activities 5,538 - ---------- ---------- Translation adjustments and effect of exchange rate changes on cash (69) 24 ---------- ---------- Net decrease in cash and cash equivalents (834) (414) Cash and cash equivalents, beginning of period 2,962 1,980 ---------- ---------- Cash and cash equivalents, end of period $ 2,128 $ 1,566 ========== ==========
See accompanying notes to condensed consolidated financial statements. 5 6 USDATA CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements of USDATA Corporation and its subsidiaries (the "Company") for the three-month periods ended March 31, 2000 and 1999 have been prepared in accordance with generally accepted accounting principles. Significant accounting policies followed by the Company were disclosed in the notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. In the opinion of the Company's management, the accompanying consolidated financial statements contain the adjustments, consisting of normal recurring accruals, necessary to present fairly the consolidated financial position of the Company at March 31, 2000 and the consolidated results of its operations and comprehensive income (loss), and cash flows for the periods ended March 31, 2000 and 1999. Operating results for the three months ended March 31, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. 2. CONVERTIBLE SHAREHOLDER NOTES PAYABLE On February 8, 2000 and March 24, 2000, the Company entered into two convertible promissory note agreements with a subsidiary of Safeguard Scientifics, Inc. ("Safeguard"), the Company's primary stockholder, for $2.5 million each, totaling $5.0 million in borrowings. The promissory notes bear interest at a rate of 12% per annum and are due in full on February 8, 2001 and March 24, 2001, respectively. The outstanding principal balances of these notes are convertible at any time into shares of common stock of a wholly-owned subsidiary of the Company at an initial conversion price of $4.00 per share. The conversion price is equal to the estimated fair value of the subsidiary's common stock at the dates of the issuance of the promissory notes. If the notes payable are paid in full at maturity, interest will be forgiven. 3. INCOME (LOSS) PER SHARE Net income (loss) per share of common stock is presented in accordance with the provisions of SFAS No. 128, Earnings Per Share. Under SFAS No. 128, basic income (loss) per share excludes dilution for potentially dilutive securities and is computed by dividing income or loss available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Potentially dilutive securities are excluded from the computation of diluted income (loss) per share when their inclusion would be antidilutive. Options and warrants to acquire a total of 2,459,000 shares have been excluded from the computation of diluted loss per share for the three months ended March 31, 2000, as their inclusion would be antidilutive.
THREE MONTHS ENDED MARCH 31, --------------------------- 2000 1999 (in thousands, except per share data) ----------- ------------ Net income (loss) applicable to common stockholders $ (7,172) $ 401 =========== ========== Weighted average common shares outstanding 12,789 11,261 Effect of dilutive securities: Common stock options and warrants - 66 ---------- ---------- Weighted average common shares and common share equivalents (if dilutive) outstanding 12,789 11,327 ========== ========== Net income (loss) per common share: Basic and diluted $ (0.56) $ 0.04 ========== ==========
6 7 USDATA CORPORATION AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - -------------------------------------------------------------------------------- 4. SEGMENT INFORMATION The Company defines operating segments based on two distinct product divisions - the USDATA Products Division, which includes its FactoryLink and Xfactory product lines, and the eMake Division, which develops and distributes internet applications that deliver integrated production solutions and real-time visibility across the supply chain and includes the Company's Smart Shop unit. The Company uses revenues and income (loss) from operations, which consists of revenues less operating expenses, to measure segment operations. The following summarizes information related to the Company's segments. All significant intersegment activity has been eliminated. Assets are the owned or allocated assets used by each operating segment
THREE MONTHS ENDED MARCH 31, -------------------------- (in thousands) 2000 1999 ---------- ---------- Revenues: USDATA Division $ 3,545 $ 6,278 eMake Division 521 - ---------- ---------- $ 4,066 $ 6,278 ========== ========== Income (loss) from operations: USDATA Division $ (2,375) $ 431 eMake Division (4,663) - ---------- ---------- (7,038) 431 Other income (expense), net (26) 20 ---------- ---------- Income (loss) before income taxes $ (7,064) $ 451 ========== ========== Depreciation and amortization: USDATA Division $ 276 $ 272 eMake Division 413 - ---------- ---------- $ 689 $ 272 ========== ========== Total assets: USDATA Division $ 17,203 $ 16,201 eMake Division 8,680 - ---------- ---------- $ 25,883 $ 16,201 ========== ==========
5. SUBSEQUENT EVENT On April 26, 2000, Safeguard provided $5.0 million in financing to the Company in exchange for a demand note due the earlier of one year from the date of the note or 60 days following the date of demand for payment. The note bears interest at a specified bank prime rate plus one percent. 7 8 USDATA CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- OVERVIEW USDATA Corporation (the "Company") is a global supplier of real-time component-based production software and Internet-based production applications, eBusiness and supply chain portals. These products and services are designed to help customers manage their business in real time, reduce operating costs, shorten cycle times, and improve quality in their manufacturing operations. Now in its 25th year, the Company has a strong global presence with more than 45,000 installs located in more than 60 countries throughout the world, 19 offices worldwide and a global network of distribution and support partners. The Company conducts its operations in two operating divisions, the USDATA Products Division and the eMake Division. Each division has its own sales, marketing, customer support and service, product development and selected general management and administrative functions. Certain general and administrative functions (such as corporate management, accounting, human resources and information technology) provide services to both divisions with the costs of these shared services allocated between the two divisions. USDATA Products Division The USDATA Products Division ("USDATA") is a global supplier of component-based production software that is designed to help customers reduce operating costs, shorten cycle times and improve product quality in their manufacturing operations. USDATA's software enables manufacturers to access more accurate and timely information - whether they are on the plant floor, in the office, or around the globe. USDATA's solutions span a wide range of manufacturing processes, from monitoring equipment to tracking product flow, and are designed to integrate seamlessly with customers' existing manufacturing and business software. This combination of product breadth and ease of integration is intended to provide a total plant solution that defines new levels of manufacturing performance and gives customers a distinct competitive advantage. Revenues have been generated primarily from licenses of USDATA's FactoryLink and Xfactory software and secondarily from technical support and service agreements, training classes and product related services. The support and service agreements are generally one-year, renewable contracts entitling a customer to certain software upgrades and technical support. Support and service revenue represented approximately 15% and 10% of revenues during the three months ended March 31, 2000 and 1999, respectively. Included in the FactoryLink family of products are versions 6.5 and 6.6, real-time information Windows NT and Windows 98/95 platforms, supporting powerful client access environments and technologies and providing Year 2000 ("Y2K") readiness. In addition, USDATA offers FactoryLink WebClient, which provides the ability to view and control any FactoryLink server running Microsoft Windows NT using a simple web browser. Xfactory is a manufacturing execution software ("MES") product that incorporates Microsoft's newest technologies and is built on Microsoft's Distributed Internet Applications ("DNA") architecture. Xfactory enables manufacturing plants to more easily and quickly automate their production processes and is the first visual object modeling MES. The Xfactory software product enables customers to develop versatile and flexible MES applications for production management, product tracking, product scheduling and genealogy tracking for manufacturing and production processes. 8 9 USDATA CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- In December 1999, USDATA released Xfactory version 1.4, which gives manufacturers of all sizes the ability to track and improve production processes "on the fly." Version 1.4 is intended to deliver unparalleled performance and reliability for even the most demanding large-scale production processes. USDATA focuses its sales efforts through selected distributors capable of providing the level of support and expertise required in the real-time manufacturing and process control application market. The division currently has seven channel support locations in the United States and six internationally to support its sales efforts through its network of distributors. eMake Division The eMake Division ("eMake") was created to reinvent the way manufacturers do business, by providing Internet-based, real-time production applications, eBusiness and supply chain portals. eMake's services enables customers to more efficiently manage their business in real time, using Internet technologies to tap into a community of ideas, information and applications uniquely tailored to fit the needs of the discrete make-to-order manufacturer. eMake was formed in July 1999 by combining the Company's recently acquired Smart Shop Software with a team of USDATA personnel with expertise in real time production and Internet technologies. eMake's services are uniquely designed for make-to-order manufacturers responding to changing orders, demanding customers, shorter production cycles and increasing technology needs. eMake's services are intended to provide a cost-effective, easy-to-implement business and production solution with secure, real-time visibility through the Internet to customers, suppliers and partners. In mid-April 2000, eMake launched the first components of a suite of Internet applications that include integrated product solutions and real-time visibility across the supply chain. eMake's strategy is to leverage its extensive manufacturing knowledge through Internet applications to help companies maximize their back office production and create the eMake portal for front office visibility into the production operations of the supply chain. The Company anticipates that eMake initially will focus on horizontal make-to-order solutions for smaller manufacturers eMake focuses its sales efforts through the Internet, a direct sales force, and telemarketing. RESULTS OF OPERATIONS The following table presents selected financial information relating to the financial condition and results of operations of the Company and should be read in conjunction with the consolidated financial statements and notes included herein. The table sets forth, for the periods indicated, the Company's statement of operations as a percentage of revenues. 9 10 USDATA CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - --------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, --------------------------- 2000 1999 ---------- ---------- Revenues: Product license 74.2% 87.8% Services 25.8% 12.2% ---------- ---------- Total revenues 100.0% 100.0% ---------- ---------- Operating expenses: Selling and product materials 173.4% 61.4% Product development 37.5% 9.7% General and administrative 46.3% 22.0% Non-cash compensation 7.1% - Amortization of intangible assets 8.8% - ---------- ---------- Total operating expenses 273.1% 93.1% ---------- ---------- Income (loss) from operations (173.1)% 6.9% Other income (expense), net (0.6)% 0.3% ---------- ---------- Income (loss) before income taxes (173.7)% 7.2% Income tax provision - (0.8)% ---------- ---------- Net income (loss) (173.7)% 6.4% Dividends on preferred stock (2.7)% - ---------- ---------- Net income (loss) applicable to common stockholders (176.4)% 6.4% ========== ==========
Total revenues for the quarter ended March 31, 2000, were $4.1 million, a decrease of $2.2 million or 35% compared to the same period in 1999. The decrease was primarily a result of $2.5 million in lower software licensing revenues, partially offset by increases in support services and training revenues. The decrease in software licensing revenues was primarily due to a delay in the release of FactoryLink 7.0. In addition, the Company believes that a temporary industry-wide decline in new projects was experienced as businesses expected unforeseen Year 2000 related problems at the start of the year. While the Company anticipates an improvement in USDATA revenues going forward, these market dynamics could affect buying decisions for another two or three quarters, making revenues and operating results more difficult to forecast. Selling and product materials expenses increased $3.2 million from $3.9 million for the quarter ended March 31, 1999 to $7.1 million for the same period in 2000. The increase was a result of eMake's selling and product materials expenses of $3.5 million, offset by a decrease in USDATA's selling and product materials expenses of $.3 million, due to decreases in marketing and software support expenses. Selling and product materials expenses as a percentage of revenues increased to 173.4% for the quarter ended March 31, 2000 from 61.4% for the same period in 1999 primarily resulting from the increase in selling expenses from eMake in addition to the decrease in revenues. Product development expenses (net of capitalized software development costs), which consisted primarily of labor costs, increased $.9 million from $.6 million for the quarter ended March 31, 1999 to $1.5 million for the same period in 2000. Compared to the first quarter 1999, the Company increased its engineering development activities related to the FactoryLink and Xfactory product lines. The Company capitalized $1.8 million and $.2 million of development costs in the quarters ended March 31, 2000 and March 31, 1999, respectively, primarily related to the next major version of the FactoryLink product line and development efforts related to eMake. 10 11 USDATA CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- General and administrative expenses increased $.5 million from $1.4 million for the quarter ended March 31, 1999 to $1.9 million for the same period in 2000. The increase is primarily due to Smart Shop's general and administrative expenses of $.3 million, which are included in the eMake Division. General and administrative expenses as a percentage of revenues increased to 46.3% for the quarter ended March 31, 2000 from 22.0% for the same period in 1999, primarily due to the decrease in revenues in the first quarter of 2000 combined with the fixed cost nature of a majority of general and administrative costs. In connection with the acquisition of Smart Shop, the Company recorded $.6 million in charges for the quarter ended March 31, 2000 related to non-cash compensation and amortization of acquired intangible assets. The Company experienced a loss from operations of $7.0 million for the quarter ended March 31, 2000 compared to income from operations of $.4 million for the same period in 1999. The decrease in income from operations was primarily the result of a decrease in revenues of $2.2 million, acquisition related charges of $.6 million and eMake related costs associated with developing technology, building the infrastructure, start-up and Smart Shop operating expenses. LIQUIDITY AND CAPITAL RESOURCES The Company's operating activities used $3.0 million of cash for the quarter ended March 31, 2000 compared to $.1 million for the same period in 1999, primarily due to a loss from operations in the first quarter of 2000, partially offset by improved collections on accounts receivable in 2000. Cash used in investing activities was $3.3 million for the quarter ended March 31, 2000 resulting from capital expenditures of $1.5 million and software development costs of $1.8 million. The capital expenditures were primarily attributable to $1.1 million in costs for computer equipment and software development related to the internet applications for eMake and $.4 million in computers and equipment for USDATA. On February 8, 2000 and March 24, 2000, the Company entered into two convertible promissory note agreements with a subsidiary of Safeguard Scientifics, Inc. ("Safeguard"), the Company's primary stockholder, for $2.5 million each, totaling $5.0 million in borrowings. The promissory notes bear interest at a rate of 12% per annum and are due in full on February 8, 2001 and March 24, 2001, respectively. The outstanding principal balances of these notes are convertible at any time into shares of common stock of a wholly-owned subsidiary of the Company at an initial conversion price of $4.00 per share. The conversion price is equal to the estimated fair value of the subsidiary's common stock at dates of the issuance of the promissory notes. If the notes payable are paid in full at maturity, interest will be forgiven. On April 26, 2000, Safeguard provided an additional $5.0 million in financing to the Company in exchange for a demand note due the earlier of one year from the date of the note or 60 days following the date of demand for payment. The note bears interest at a specified bank prime rate plus one percent. The development and launch of the Company's new eMake Division has significantly increased its operating expenses and cash requirements. To date, the Company has been able to satisfy these incremental cash requirements through the aforementioned convertible promissory and demand notes with Safeguard. In order for the Company to continue its promotion and launch of eMake, additional cash investments will be required. The Company is in the process of seeking additional public or private debt or equity financing to fund these future growth opportunities as well as potential acquisitions. No assurance can be given, however, that such debt or equity financing will be available to the Company on terms and conditions acceptable to the Company, if at all. 11 12 USDATA CORPORATION AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- YEAR 2000 The Company has not encountered any material problems in its critical systems or products subsequent to December 31, 1999 related to the Year 2000 ("Y2K") issue and has not encountered any material problems with its third party vendors and suppliers. The Company will continue to monitor new issues or concerns relative to Y2K. Although the Company to date has not experienced any significant problems associated with Y2K, the Company cannot be certain that unexpected Y2K compliance problems of its products, computer systems or the systems of its vendors, customers and service providers, will not occur. Any such problems could have a material adverse affect on the Company's business, financial condition or operating results. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board released Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), as amended by SFAS No. 137, which is effective for fiscal years beginning after June 15, 2000. Earlier application for certain provisions of this standard is permitted. SFAS 133 establishes accounting and reporting standards for derivative instruments. The Statement requires that an entity recognize all derivatives as either assets or liabilities in the financial statements and measure those instruments at fair value, and it defines the accounting for changes in the fair value of the derivatives depending on the intended use of the derivative. SFAS 133 is not expected to have a material impact on the Company's consolidated results of operations, financial position or cash flows. In December 1999, the SEC staff issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 summarizes certain of the staff's views in applying General Accepted Accounting Principles to revenue recognition and accounting for deferred costs in the financial statements. Based on our current revenue recognition policies, SAB 101 is not expected to materially impact our financial position, results of operations or cash flows. FORWARD LOOKING STATEMENTS This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 regarding revenues, margins, operating expenses, earnings, growth rates and certain business trends that are subject to risks and uncertainties that could cause actual results to differ materially from the results described herein. Specifically, the ability to grow product and service revenues may not continue and the Company may not be successful in developing new products, product enhancements or services on a timely basis or in a manner that satisfies customers needs or achieves market acceptance. Other factors that could cause actual results to differ materially are: competitive pricing and supply, market acceptance and success for service offerings similar to eMake, short-term interest rate fluctuations, general economic conditions, employee turnover, possible future litigation, the impact of Y2K and the related uncertainties may have on future revenue and earnings as well as the risks and uncertainties set forth from time to time in the Company's other public reports and filings and public statements. Recipients of this document are cautioned to consider these risks and uncertainties and to not place undue reliance on these forward-looking statements. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. 12 13 USDATA CORPORATION AND SUBSIDIARIES ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's exposure to market risk associated with changes in interest rates relates to its variable rate bank note payable of $261,000. Interest rate risk is estimated as the potential impact on the Company's results of operations or financial position due to a hypothetical change of 50 basis points in quoted market prices. This hypothetical change would not have a material effect on the Company's results of operations and financial position. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (filed as part of this report). Number Description ------ ----------- 10.12 Convertible Promissory Note dated February 8, 2000 10.13 Convertible Promissory Note dated March 24, 2000 10.14 Demand Note dated April 26, 2000 27 Financial Data Schedule (EDGAR Version only) (b) Reports on Form 8-K No reports on Form 8-K have been filed by the Registrant during the quarter ended March 31, 2000. 13 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on behalf by the undersigned thereunto duly authorized. USDATA CORPORATION Date: May 15, 2000 /s/ Robert A. Merry ----------------------------------------------- Robert A. Merry President, Chief Executive Officer and Director Date: May 15, 2000 /s/ Robert L. Drury ----------------------------------------------- Robert L. Drury Vice President Finance, Chief Financial Officer Treasurer and Secretary (Principal Financial and Accounting Officer) 14 15 INDEX TO EXHIBITS
Number Description - ------ ----------- 10.12 Convertible Promissory Note dated February 8, 2000 10.13 Convertible Promissory Note dated March 24, 2000 10.14 Demand Note dated April 26, 2000 27 Financial Data Schedule
EX-10.12 2 CONVERTIBLE PROMISSORY NOTE - FEBRUARY 8, 2000 1 EXHIBIT 10.12 THIS PROMISSORY NOTE AND THE SHARES, IF ANY, ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS (COLLECTIVELY, THE "ACTS"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, OR DISPOSED OF EXCEPT PURSUANT TO REGISTRATION UNDER SUCH ACTS OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED. CONVERTIBLE PROMISSORY NOTE $2,500,000 February 8, 2000 FOR VALUE RECEIVED, eMake Corporation, a Delaware Company (the "Company"), hereby promises to pay to the order of Safeguard 2000 Capital, L.P. (together with its successors and assigns hereunder the "Holder") the principal amount of $2,500,000 at the time and in the manner provided for herein. The Company hereby agrees as follows for the benefit of the Holder: 1. Payment. The outstanding principal balance of this Note shall be due and payable in full on February 8, 2001 (the "Maturity Date") or upon the earlier acceleration thereof pursuant hereto. No interest shall accrue on the outstanding principal balance of this Note if the principal balance of this Note is paid in full at the Maturity Date or immediately upon the earlier acceleration thereof pursuant hereto. Any principal not paid when due, either at the Maturity Date or upon any earlier acceleration, shall bear interest at the rate of 12% per annum until paid. Payments hereunder shall be made by wire transfer or check in immediately available United States funds sent to the Holder at the address furnished to the Company for that purpose. The principal amount of this Note may not be prepaid in whole or in part prior to the Maturity Date, except with the prior written consent of the Holder. 2. Transfers. This Note shall be registered on the books of the Company or its agent as to principal and interest. Any transfer of this Note may be effected only by surrender of this Note to the Company and reissuance of a new note to the transferee. 3. Default. The happening of any one or more of the following specified events shall constitute an Event of Default hereunder: (a) failure to pay any amount as herein set forth within ten (10) days after such amount becomes due in accordance herewith; 2 (b) default in the performance by the Company of any other obligation to the Holder, which default is not cured within thirty (30) days after written notice of such default from the holder; (c) insolvency (however evidenced) of the Company or the commission by the Company of any act of insolvency; (d) the making by the Company of a general assignment for the benefit of creditors; (e) the filing of any petition or the commencement of any proceeding by the Company or any endorser or guarantor of this Note for any relief under any bankruptcy or insolvency laws, or any laws relating to the relief of debtors, readjustment of indebtedness, reorganizations, compositions, or extensions; (f) the filing of any petition or the commencement of any proceeding against the Company or any endorser or guarantor of this Note for any relief under any bankruptcy or insolvency laws, or any laws relating to the relief of debtors, readjustment of indebtedness, reorganizations, compositions, or extensions, which proceeding is not dismissed within sixty (60) days; (g) suspension of the transaction of the usual business of the Company; or (h) the past or future making of a false representation or warranty by the Company in connection with this Note. Upon the occurrence of an Event of Default described in clause (e) or (f) above, all amounts owed by the Company to the Holder hereunder shall thereupon be immediately due and payable, without demand, presentment, notice of demand or of dishonor and nonpayment, or any other notice or declaration of any kind, all of which are hereby expressly waived by the Company. During the continuation of any other Event of Default, the Holder, at any time and from time to time, may declare any or all of the amounts owing by the Company to the Holder hereunder immediately due and payable, all without notice, demand, presentment, notice of demand or of dishonor and nonpayment, or any notice or declaration of any kind, all of which are hereby expressly waived by the Company. 4. Conversion. The Holder shall have the right to convert the outstanding principal balance of this Note as follows: (a) At the option of the Holder, at any time at the office of the Company, the outstanding principal balance of this Note shall be convertible into such number of fully paid and nonassessable shares of Class B Common Stock of the Company (the "Class B Common Stock") as is determined by dividing the outstanding principal of this Note by the conversion price then applicable (the "Conversion Price"), determined as hereinafter provided, in effect on the date this Note is surrendered for conversion. The Conversion 2 3 Price at which shares of Class B Common Stock shall be deliverable upon conversion of this Note initially shall be $4.00 per share of Class B Common Stock. Such initial Conversion Price shall be adjusted as hereinafter provided. (b) Before the Holder shall be entitled to convert this Note into shares of Class B Common Stock, the holder shall surrender this Note, duly endorsed, at the office of the Company and shall give written notice to the Company at such office that the Holder elects to convert the same and shall state therein the name or names in which the Holder wishes the certificate or certificates for shares of Class B Common Stock to be issued. The Company shall, as soon as practicable thereafter, issue and deliver at such office to the Holder, a certificate or certificates for the number of shares of Class B Common Stock to which the Holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of surrender of this Note for conversion, and the person or persons entitled to receive the shares of Class B Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Class B Common Stock on such date. (c) (i) Special Definitions. For purposes of this Section 4.c., the following definitions apply: "Options" shall mean rights, options, or warrants to subscribe for, purchase or otherwise acquire either Common Stock of the Company or Convertible Securities (defined below) other than any such right, option, or warrants covered by Section 4.c.4(B) below. "Original Issue Date" shall mean the date this Note was first issued. "Convertible Securities" shall mean any evidences of indebtedness, shares (other than Common Stock) or other securities convertible into or exchangeable for Common Stock. "Additional Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to Section 4.c.(iii), deemed to be issued) by the Company after the Original Issue Date, other than shares of Common Stock issued (or deemed issued): (A) to outside directors, officers, employees and consultants of the Company and/or USDATA Corporation, a Delaware corporation ("USDATA") pursuant to the Company's 2000 Equity Compensation Plan or other employee stock plan (the "Employee Stock"), provided that (i) the issuance of such shares is or has been approved by a majority of the members of the Board of Directors or any duly constituted 3 4 committee thereof and (ii) the number of shares of Employee Stock does not exceed an aggregate of 5,650,000 shares (as adjusted for any stock dividends, combinations, splits or similar events) regardless of whether issued by the Company prior to the date hereof; (B) for which adjustment of the Conversion Price is made pursuant to Section 4.d. (C) pursuant to the transactions contemplated in that certain Securities Purchase Agreement by and between the Company, USDATA and the Holder (the "Purchase Agreement"). (ii) Any provision herein to the contrary notwithstanding, no adjustment in the Conversion Price shall be made in respect of the issuance of Additional Shares of Common Stock unless the consideration per share (determined pursuant to Section 4.c.(v) hereof) for an Additional Share of Common Stock issued or deemed to be issued by the Company is less than the Conversion Price in effect on the date of, and immediately prior to such issue. In computing each adjusted Conversion Price, the result shall be rounded to five decimal places, and such adjustment shall be made separately in each instance, and in the event the adjustment therefrom results in a change of the Conversion Price of less than $0.01, no adjustment to the then Conversion Price shall be made, but the amount of said adjustment calculated thereby shall be carried forward to successive occasions until such adjustments in the aggregate equal or exceed $0.01. (iii) In the event the Company at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities then entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein designed to protect against dilution) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued: (1) no further adjustments in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities; (2) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Company, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof, the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be 4 5 recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities; (3) no readjustment pursuant to clause (1) or (2) above shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (a) the Conversion Price on the original adjustment date, or (b) the Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date. (iv) In the event the Company, at any time after the Original Issue Date, shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 4.c.(iii)) without consideration or for a consideration per share less than the Conversion Price in effect on the date of and immediately prior to such issue, then and in such event, the Conversion Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest cent) determined by multiplying the Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of shares of Common Stock which the aggregate consideration received by the Company for the total number of Additional Shares of Common Stock so issued would purchase at the Conversion Price in effect immediately prior to such issuance, and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Common Stock so issued. For the purpose of the above calculation, the number of shares of Common Stock outstanding immediately prior to such issue shall be calculated on a fully diluted basis, as if all Convertible Securities had been fully converted into shares of Common Stock and any outstanding Options or other Convertible Securities had been fully exercised (and the resulting securities fully converted into shares of Common Stock, if so convertible) as of such date. (v) For purposes of this Section 4.c., the consideration received by the Company for the issue of any Additional Shares of Common Stock shall be computed as follows: (1) Such consideration shall: (A) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Company; (B) insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in good faith by the Board of Directors; and (C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received in exchange 5 6 for the Additional Shares of Common Stock, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors. (2) The consideration per share received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to Section 4.c.(iii), relating to Options and Convertible Securities shall be determined by dividing (A) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein designed to protect against dilution) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by (B) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein designed to protect against the dilution) issuable upon the exercise of such Options or conversion or exchange of such Convertible Securities. (d) In the event that the Company at any time or from time to time after the Original Issue Date shall effect a (i) subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by stock dividend, stock split, reclassification or otherwise), or (ii) combination or consolidation of the outstanding shares of Common Stock into a lesser number of shares of Common Stock (by reclassification or otherwise), then the Conversion Price in effect immediately prior to such event shall, concurrently with the effectiveness of such event, be proportionately decreased or increased, as appropriate. In the event that the Company shall declare or pay, without consideration, any dividend on the Common Stock payable in Common Stock or in any right to acquire Common Stock for no consideration, then the Company shall be deemed to have subdivided the outstanding shares of Common Stock by an amount of shares equal to the maximum number of shares issuable through such dividend and/or upon exercise of such rights to acquire Common Stock. (e) If the Common Stock issuable upon conversion of this Note shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than as provided for in Section 4.d. above), the Conversion Price then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be proportionately adjusted so that this Note shall be convertible into, in lieu of the number of shares of Common Stock which the holders would otherwise have been entitled to receive, a number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock that would have been subject to receipt by the holders upon conversion of this Note immediately before that change. 6 7 (f) The Company shall not, by amendment of its Certificate of Incorporation, through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but shall at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Holder against impairment. (g) Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 4, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to the Holder a certificate executed by the Company's President or Chief Financial Officer setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of the Holder, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price at the time in effect, and (iii) the number of shares of Class B Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of this Note. (h) In the event that the Company shall propose at any time to effect any reclassification or recapitalization, to merge or consolidate with or into any other entity, or sell, lease or convey all or substantially all of its assets, or to liquidate, dissolve or wind up, then, in connection with each such event, the Company shall send to the Holders: (1) at least 20 days prior written notice of the date on which a record shall be taken for such event and specifying the date on which such event shall occur; and (2) at least 20 days prior written notice of the record date for determining rights to vote, if any, in respect of such event. (i) The Company shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Class B Common Stock on conversion of this Note pursuant hereto; provided, however, that the Company shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion. (j) Following the execution of the Purchase Agreement, the Company shall at all times reserve and keep available out of its authorized but unissued shares of Class B Common Stock, solely for the purpose of effecting the conversion of the shares of this Note, such number of its shares of Class B Common Stock as shall from time to time be sufficient to effect the conversion of the entire outstanding principal balance of this Note; and if at any time the number of authorized but unissued shares of Class B Common Stock shall not be sufficient to effect the conversion of the entire outstanding principal balance of this Note, the Company shall take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Class B 7 8 Common Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Company's Certificate of Incorporation. (k) No fractional share shall be issued upon the conversion of this Note. If the conversion would result in the issuance of a fraction of a share of Class B Common Stock, the Company shall, in lieu of issuing any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the fair market value of such fraction on the date of conversion (as determined in good faith by the Board of Directors). 5. Expenses of Collection. The Company agrees to pay the Holder's reasonable costs in collecting and enforcing this Note, including reasonable attorney's fees. 6. Waiver by Holder. No waiver of any obligation of the Company under this Note shall be effective unless it is in a writing signed by the Holder. A waiver by the holder of any right or remedy under this Note on any occasion shall not be a bar to exercise of the same right or remedy on any subsequent occasion or of any other right or remedy at any time. 7. Notice. Any notice required or permitted under this Note shall be in writing and shall be deemed to have been given on the date of delivery, if personally delivered to the party to whom notice is to be given, or on the fifth business day after mailing, if mailed to the party to whom notice is to be given, by certified mail, return receipt requested, postage prepaid, and addressed as follows: if to the Company, at: eMake Corporation 2435 North Central Expressway Richardson, Texas 75080 Attention: Chief Financial Officer if to the Holder, at the most recent address provided to the Company by the Holder for such purpose; or, in each case, to the most recent address, specified by written notice, given to the sender pursuant to this paragraph. 8. Waiver by Company. The Company hereby expressly waives presentment, demand, and protest, notice of demand, dishonor and nonpayment of this Note, and all other notices or demands of any kind in connection with the delivery, acceptance, performance, default or enforcement hereof, and hereby consents to any delays, extensions of time, renewals, waivers or modifications that may be granted or consented to by the Holder hereof with respect to the time of payment or any other provision hereof. 9. Severability. In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal or unenforceable, in whole or in part or in any respect, or in the event that any one or more of the provisions of this Note operate or would prospectively 8 9 operate to invalidate this Note, then and in any such event, such provision(s) only shall be deemed null and void and shall not affect any other provision of this Note and the remaining provisions of this Note shall remain operative and in full force and effect and in no way shall be affected, prejudiced, or disturbed thereby. 10. Savings Clause. Should any interest or other charges paid hereunder result in the computation or earning of interest in excess of the maximum rate or amount of interest permitted by applicable law, such excess interest and charges shall be and hereby are waived by the Holder, and the amount of such excess interest and charges shall be automatically credited against, and be deemed to have been payments in reduction of, the principal then due hereunder, and any portion of such excess which exceeds the principal then due hereunder shall be paid by the Holder to the Company. 11. Governing Law. This Note shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania. [SIGNATURE FOLLOWS ON NEXT PAGE] 9 10 EXECUTED effective as of February 8, 2000 eMake CORPORATION By: /s/ ROBERT L. DRURY ------------------------------------ Robert L. Drury Chief Financial Officer EX-10.13 3 CONVERTIBLE PROMISSORY NOTE - MARCH 24, 2000 1 EXHIBIT 10.13 THIS PROMISSORY NOTE AND THE SHARES, IF ANY, ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS (COLLECTIVELY, THE "ACTS"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, OR DISPOSED OF EXCEPT PURSUANT TO REGISTRATION UNDER SUCH ACTS OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED. CONVERTIBLE PROMISSORY NOTE $2,500,000 March 24, 2000 FOR VALUE RECEIVED, eMake Corporation, a Delaware Company (the "Company"), hereby promises to pay to the order of Safeguard 2000 Capital, L.P. (together with its successors and assigns hereunder the "Holder") the principal amount of $2,500,000 at the time and in the manner provided for herein. The Company hereby agrees as follows for the benefit of the Holder: 1. Payment. The outstanding principal balance of this Note shall be due and payable in full on March 24, 2001 (the "Maturity Date") or upon the earlier acceleration thereof pursuant hereto. No interest shall accrue on the outstanding principal balance of this Note if the principal balance of this Note is paid in full at the Maturity Date or immediately upon the earlier acceleration thereof pursuant hereto. Any principal not paid when due, either at the Maturity Date or upon any earlier acceleration, shall bear interest at the rate of 12% per annum until paid. Payments hereunder shall be made by wire transfer or check in immediately available United States funds sent to the Holder at the address furnished to the Company for that purpose. The principal amount of this Note may not be prepaid in whole or in part prior to the Maturity Date, except with the prior written consent of the Holder. 2. Transfers. This Note shall be registered on the books of the Company or its agent as to principal and interest. Any transfer of this Note may be effected only by surrender of this Note to the Company and reissuance of a new note to the transferee. 3. Default. The happening of any one or more of the following specified events shall constitute an Event of Default hereunder: (a) failure to pay any amount as herein set forth within ten (10) days after such amount becomes due in accordance herewith; 2 (b) default in the performance by the Company of any other obligation to the Holder, which default is not cured within thirty (30) days after written notice of such default from the holder; (c) insolvency (however evidenced) of the Company or the commission by the Company of any act of insolvency; (d) the making by the Company of a general assignment for the benefit of creditors; (e) the filing of any petition or the commencement of any proceeding by the Company or any endorser or guarantor of this Note for any relief under any bankruptcy or insolvency laws, or any laws relating to the relief of debtors, readjustment of indebtedness, reorganizations, compositions, or extensions; (f) the filing of any petition or the commencement of any proceeding against the Company or any endorser or guarantor of this Note for any relief under any bankruptcy or insolvency laws, or any laws relating to the relief of debtors, readjustment of indebtedness, reorganizations, compositions, or extensions, which proceeding is not dismissed within sixty (60) days; (g) suspension of the transaction of the usual business of the Company; or (h) the past or future making of a false representation or warranty by the Company in connection with this Note. Upon the occurrence of an Event of Default described in clause (e) or (f) above, all amounts owed by the Company to the Holder hereunder shall thereupon be immediately due and payable, without demand, presentment, notice of demand or of dishonor and nonpayment, or any other notice or declaration of any kind, all of which are hereby expressly waived by the Company. During the continuation of any other Event of Default, the Holder, at any time and from time to time, may declare any or all of the amounts owing by the Company to the Holder hereunder immediately due and payable, all without notice, demand, presentment, notice of demand or of dishonor and nonpayment, or any notice or declaration of any kind, all of which are hereby expressly waived by the Company. 4. Conversion. The Holder shall have the right to convert the outstanding principal balance of this Note as follows: (a) At the option of the Holder, at any time at the office of the Company, the outstanding principal balance of this Note shall be convertible into such number of fully paid and nonassessable shares of Class B Common Stock of the Company (the "Class B Common Stock") as is determined by dividing the outstanding principal of this Note by the conversion price then applicable (the "Conversion Price"), determined as hereinafter provided, in effect on the date this Note is surrendered for conversion. The Conversion 2 3 Price at which shares of Class B Common Stock shall be deliverable upon conversion of this Note initially shall be $4.00 per share of Class B Common Stock. Such initial Conversion Price shall be adjusted as hereinafter provided. (b) Before the Holder shall be entitled to convert this Note into shares of Class B Common Stock, the holder shall surrender this Note, duly endorsed, at the office of the Company and shall give written notice to the Company at such office that the Holder elects to convert the same and shall state therein the name or names in which the Holder wishes the certificate or certificates for shares of Class B Common Stock to be issued. The Company shall, as soon as practicable thereafter, issue and deliver at such office to the Holder, a certificate or certificates for the number of shares of Class B Common Stock to which the Holder shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior to the close of business on the date of surrender of this Note for conversion, and the person or persons entitled to receive the shares of Class B Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Class B Common Stock on such date. (c) (i) Special Definitions. For purposes of this Section 4.c., the following definitions apply: "Options" shall mean rights, options, or warrants to subscribe for, purchase or otherwise acquire either Common Stock of the Company or Convertible Securities (defined below) other than any such right, option, or warrants covered by Section 4.c.4(B) below. "Original Issue Date" shall mean the date this Note was first issued. "Convertible Securities" shall mean any evidences of indebtedness, shares (other than Common Stock) or other securities convertible into or exchangeable for Common Stock. "Additional Shares of Common Stock" shall mean all shares of Common Stock issued (or, pursuant to Section 4.c.(iii), deemed to be issued) by the Company after the Original Issue Date, other than shares of Common Stock issued (or deemed issued): (A) to outside directors, officers, employees and consultants of the Company and/or USDATA Corporation ("USDATA"), a Delaware corporation, pursuant to the Company's 2000 Equity Compensation Plan or other employee stock plan (the "Employee Stock"), provided that (i) the issuance of such shares is or has been approved by a majority of the members of the Board of Directors or any duly constituted 3 4 committee thereof and (ii) the number of shares of Employee Stock does not exceed an aggregate of 5,650,000 shares (as adjusted for any stock dividends, combinations, splits or similar events) regardless of whether issued by the Company prior to the date hereof; (B) for which adjustment of the Conversion Price is made pursuant to Section 4.d; (C) pursuant to the transactions contemplated in that certain Securities Purchase Agreement by and between the Company, USDATA and the Holder (the "Purchase Agreement"). (ii) Any provision herein to the contrary notwithstanding, no adjustment in the Conversion Price shall be made in respect of the issuance of Additional Shares of Common Stock unless the consideration per share (determined pursuant to Section 4.c.(v) hereof) for an Additional Share of Common Stock issued or deemed to be issued by the Company is less than the Conversion Price in effect on the date of, and immediately prior to such issue. In computing each adjusted Conversion Price, the result shall be rounded to five decimal places, and such adjustment shall be made separately in each instance, and in the event the adjustment therefrom results in a change of the Conversion Price of less than $0.01, no adjustment to the then Conversion Price shall be made, but the amount of said adjustment calculated thereby shall be carried forward to successive occasions until such adjustments in the aggregate equal or exceed $0.01. (iii) In the event the Company at any time or from time to time after the Original Issue Date shall issue any Options or Convertible Securities or shall fix a record date for the determination of holders of any class of securities then entitled to receive any such Options or Convertible Securities, then the maximum number of shares (as set forth in the instrument relating thereto without regard to any provisions contained therein designed to protect against dilution) of Common Stock issuable upon the exercise of such Options or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shall be deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have been fixed, as of the close of business on such record date, provided further that in any such case in which Additional Shares of Common Stock are deemed to be issued: (1) no further adjustments in the Conversion Price shall be made upon the subsequent issue of Convertible Securities or shares of Common Stock upon the exercise of such Options or conversion or exchange of such Convertible Securities; (2) if such Options or Convertible Securities by their terms provide, with the passage of time or otherwise, for any increase in the consideration payable to the Company, or decrease in the number of shares of Common Stock issuable, upon the exercise, conversion or exchange thereof; the Conversion Price computed upon the original issue thereof (or upon the occurrence of a record date with respect thereto), and any subsequent adjustments based thereon, shall, upon any such increase or decrease becoming effective, be 4 5 recomputed to reflect such increase or decrease insofar as it affects such Options or the rights of conversion or exchange under such Convertible Securities; (3) no readjustment pursuant to clause (1) or (2) above shall have the effect of increasing the Conversion Price to an amount which exceeds the lower of (a) the Conversion Price on the original adjustment date, or (b) the Conversion Price that would have resulted from any issuance of Additional Shares of Common Stock between the original adjustment date and such readjustment date. (iv) In the event the Company, at any time after the Original Issue Date, shall issue Additional Shares of Common Stock (including Additional Shares of Common Stock deemed to be issued pursuant to Section 4.c.(iii)) without consideration or for a consideration per share less than the Conversion Price in effect on the date of and immediately prior to such issue, then and in such event, the Conversion Price shall be reduced, concurrently with such issue, to a price (calculated to the nearest cent) determined by multiplying the Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of shares of Common Stock which the aggregate consideration received by the Company for the total number of Additional Shares of Common Stock so issued would purchase at the Conversion Price in effect immediately prior to such issuance, and the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to such issue plus the number of such Additional Shares of Common Stock so issued. For the purpose of the above calculation, the number of shares of Common Stock outstanding immediately prior to such issue shall be calculated on a fully diluted basis, as if all Convertible Securities had been fully converted into shares of Common Stock and any outstanding Options or other Convertible Securities had been fully exercised (and the resulting securities fully converted into shares of Common Stock, if so convertible) as of such date. (v) For purposes of this Section 4.c., the consideration received by the Company for the issue of any Additional Shares of Common Stock shall be computed as follows: (1) Such consideration shall: (A) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Company; (B) insofar as it consists of property other than cash, be computed at the fair value thereof at the time of such issue, as determined in good faith by the Board of Directors; and (C) in the event Additional Shares of Common Stock are issued together with other shares or securities or other assets of the Company for consideration which covers both, be the proportion of such consideration so received in exchange 5 6 for the Additional Shares of Common Stock, computed as provided in clauses (A) and (B) above, as determined in good faith by the Board of Directors. (2) The consideration per share received by the Company for Additional Shares of Common Stock deemed to have been issued pursuant to Section 4.c.(iii), relating to Options and Convertible Securities shall be determined by dividing (A) the total amount, if any, received or receivable by the Company as consideration for the issue of such Options or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in the instruments relating thereto, without regard to any provision contained therein designed to protect against dilution) payable to the Company upon the exercise of such Options or the conversion or exchange of such Convertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for Convertible Securities and the conversion or exchange of such Convertible Securities, by (B) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, without regard to any provision contained therein designed to protect against the dilution) issuable upon the exercise of such Options or conversion or exchange of such Convertible Securities. (d) In the event that the Company at any time or from time to time after the Original Issue Date shall effect a (i) subdivision of the outstanding shares of Common Stock into a greater number of shares of Common Stock (by stock dividend, stock split, reclassification or otherwise), or (ii) combination or consolidation of the outstanding shares of Common Stock into a lesser number of shares of Common Stock (by reclassification or otherwise), then the Conversion Price in effect immediately prior to such event shall, concurrently with the effectiveness of such event, be proportionately decreased or increased, as appropriate. In the event that the Company shall declare or pay, without consideration, any dividend on the Common Stock payable in Common Stock or in any right to acquire Common Stock for no consideration, then the Company shall be deemed to have subdivided the outstanding shares of Common Stock by an amount of shares equal to the maximum number of shares issuable through such dividend and/or upon exercise of such rights to acquire Common Stock. (e) If the Common Stock issuable upon conversion of this Note shall be changed into the same or a different number of shares of any other class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than as provided for in Section 4.d. above), the Conversion Price then in effect shall, concurrently with the effectiveness of such reorganization or reclassification, be proportionately adjusted so that this Note shall be convertible into, in lieu of the number of shares of Common Stock which the holders would otherwise have been entitled to receive, a number of shares of such other class or classes of stock equivalent to the number of shares of Common Stock that would have been subject to receipt by the holders upon conversion of this Note immediately before that change. 6 7 (f) The Company shall not, by amendment of its Certificate of Incorporation, through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but shall at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Holder against impairment. (g) Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section 4, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to the Holder a certificate executed by the Company's President or Chief Financial Officer setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of the Holder, furnish or cause to be furnished to such holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Conversion Price at the time in effect, and (iii) the number of shares of Class B Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of this Note. (h) In the event that the Company shall propose at any time to effect any reclassification or recapitalization, to merge or consolidate with or into any other entity, or sell, lease or convey all or substantially all of its assets, or to liquidate, dissolve or wind up, then, in connection with each such event, the Company shall send to the Holders: (1) at least 20 days prior written notice of the date on which a record shall be taken for such event and specifying the date on which such event shall occur; and (2) at least 20 days prior written notice of the record date for determining rights to vote, if any, in respect of such event. (i) The Company shall pay any and all issue and other taxes that may be payable in respect of any issue or delivery of shares of Class B Common Stock on conversion of this Note pursuant hereto; provided, however, that the Company shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion. (j) Following the execution of the Purchase Agreement, the Company shall at all times reserve and keep available out of its authorized but unissued shares of Class B Common Stock, solely for the purpose of effecting the conversion of the shares of this Note, such number of its shares of Class B Common Stock as shall from time to time be sufficient to effect the conversion of the entire outstanding principal balance of this Note; and if at any time the number of authorized but unissued shares of Class B Common Stock shall not be sufficient to effect the conversion of the entire outstanding principal balance of this Note, the Company shall take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Class B 7 8 Common Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Company's Certificate of Incorporation. (k) No fractional share shall be issued upon the conversion of this Note. If the conversion would result in the issuance of a fraction of a share of Class B Common Stock, the Company shall, in lieu of issuing any fractional share, pay the Holder otherwise entitled to such fraction a sum in cash equal to the fair market value of such fraction on the date of conversion (as determined in good faith by the Board of Directors). 5. Expenses of Collection. The Company agrees to pay the Holder's reasonable costs in collecting and enforcing this Note, including reasonable attorney's fees. 6. Waiver by Holder. No waiver of any obligation of the Company under this Note shall be effective unless it is in a writing signed by the Holder. A waiver by the holder of any right or remedy under this Note on any occasion shall not be a bar to exercise of the same right or remedy on any subsequent occasion or of any other right or remedy at any time. 7. Notice. Any notice required or permitted under this Note shall be in writing and shall be deemed to have been given on the date of delivery, if personally delivered to the party to whom notice is to be given, or on the fifth business day after mailing, if mailed to the party to whom notice is to be given, by certified mail, return receipt requested, postage prepaid, and addressed as follows: if to the Company, at: eMake Corporation 2435 North Central Expressway Richardson, Texas 75080 Attention: Chief Financial Officer if to the Holder, at the most recent address provided to the Company by the Holder for such purpose; or, in each case, to the most recent address, specified by written notice, given to the sender pursuant to this paragraph. 8. Waiver by Company. The Company hereby expressly waives presentment, demand, and protest, notice of demand, dishonor and nonpayment of this Note, and all other notices or demands of any kind in connection with the delivery, acceptance, performance, default or enforcement hereof; and hereby consents to any delays, extensions of time, renewals, waivers or modifications that may be granted or consented to by the Holder hereof with respect to the time of payment or any other provision hereof. 9. Severability. In the event any one or more of the provisions of this Note shall for any reason be held to be invalid, illegal or unenforceable, in whole or in part or in any respect, or in the event that any one or more of the provisions of this Note operate or would prospectively 8 9 operate to invalidate this Note, then and in any such event, such provision(s) only shall be deemed null and void and shall not affect any other provision of this Note and the remaining provisions of this Note shall remain operative and in full force and effect and in no way shall be affected, prejudiced, or disturbed thereby. 10. Savings Clause. Should any interest or other charges paid hereunder result in the computation or earning of interest in excess of the maximum rate or amount of interest permitted by applicable law, such excess interest and charges shall be and hereby are waived by the Holder, and the amount of such excess interest and charges shall be automatically credited against, and be deemed to have been payments in reduction of, the principal then due hereunder, and any portion of such excess which exceeds the principal then due hereunder shall be paid by the Holder to the Company. 11. Governing Law. This Note shall be governed by and construed and enforced in accordance with the laws of the Commonwealth of Pennsylvania. [SIGNATURE FOLLOWS ON NEXT PAGE] 9 10 EXECUTED effective as of March 24, 2000 eMake CORPORATION By: /s/ Robert L. Drury ------------------------------------ Robert L. Drury Chief Financial Officer EX-10.14 4 DEMAND NOTE - APRIL 26, 2000 1 EXHIBIT 10.14 DEMAND NOTE USDATA CORPORATION $5,000,000 APRIL 26, 2000 In consideration of the loan (hereinafter referred to as a "Loan") Safeguard Delaware, Inc., a Delaware corporation (the "Lender"), has made to USDATA Corporation, a Delaware corporation (the "Borrower"), and for value received, the Borrower hereby promises to pay to the order of the Lender or its assigns, at the Lender's office located at 103 Springer Building, 3411 Silverside Road, Wilmington, DE 19810, or at such other place in the continental United States as the Lender may designate in writing, in lawful money of the United States, and in immediately available funds, the principal sum of FIVE MILLION DOLLARS ($5,000,000). The unpaid principal balance of the Note shall be paid on the date which is 60 days after the date of demand for payment by the Lender, or the date which is one year from the date hereof, whichever first occurs. The Borrower hereby further promises to pay to the order of the Lender or its assigns interest on the outstanding principal amount from the date hereof, at an annual rate equal to the announced prime rate of the PNC Bank, N.A. (the "Prime Rate") plus one percent (1%). Such interest rate shall be changed when and as the Prime Rate changes. In addition, the Borrower shall pay on demand interest on any overdue payment of principal and interest (to the extent legally enforceable) at the fluctuating Prime Rate plus three percent (3%). Interest shall be payable when the unpaid principal balance of the Note is paid. All payments made on this Note (including, without limitation, prepayments) shall be applied, at the option of the Lender, first to late charges and collection costs, if any, then to accrued interest and then to principal. Interest payable hereunder shall be calculated for actual days elapsed on the basis of a 360-day year. Accrued and unpaid interest shall be due and payable upon maturity of this Note. After maturity or in the event of default, interest shall continue to accrue on the Note at the rate set forth above and shall be payable on demand of the Lender. The outstanding principal amount of this Note may be prepaid by the Borrower upon notice to the Lender in whole at any time or in part from time to time without any prepayment penalty or premium; provided, that upon such payment any interest due to the date of such prepayment on such prepaid amount shall also be paid. Notwithstanding anything in this Note, the interest rate charged hereon shall not exceed the maximum rate allowable by applicable law. If any stated interest rate herein exceeds the maximum allowable rate, then the interest rate shall be reduced to the maximum allowable rate, and any excess payment of interest made by the Borrower at any time shall be applied to the unpaid balance of any outstanding principal of this Note. 2 An event of default hereunder shall consist of: (i) a default in the payment by the Borrower to the Lender of principal or interest under this Note as and when the same shall become due and payable; or (ii) an event of default by the Borrower under any other obligation, instrument, note or agreement for borrowed money, beyond any applicable notice and/or grace period; or (iii) institution of any proceeding by or against the Borrower under any present or future bankruptcy or insolvency statute or similar law and, if involuntary, if the same are not stayed or dismissed within sixty (60) days, or the Borrower's assignment for the benefit of creditors or the appointment of a receiver, trustee, conservator or other judicial representative for the Borrower or the Borrower's property or the Borrower's being adjudicated a bankrupt or insolvent; or (iv) the admission in writing by Borrower of its inability to pay its debts as they become due. Upon the occurrence of any event of default, interest shall accrue on the outstanding balance of this Note at the Prime Rate plus three percent (3%), the entire unpaid principal amount of this Note and all unpaid interest accrued thereon shall, at the sole option of the Lender, without notice, become immediately due and payable, and the Lender shall thereupon have all the rights and remedies provided hereunder or now or hereafter available at law or in equity. 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 this Note, or the breach, termination or validity thereof, 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 (i) submits to the jurisdiction of the Delaware Supreme Court for any Summary Proceeding, (ii) agrees not to commence any Summary Proceeding except in the Delaware Superior court, (iii) waives, and agrees not to plead or to make, any objection to the venue of any Summary Proceeding in the Delaware Superior Court, (iv) 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, (v) waives, and agrees not to plead or to make, any claim that the Delaware Superior Court lacks personal jurisdiction over it, (vi) 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 (vii) understands and agrees that it shall not seek a jury trial or punitive damages in any Summary Proceeding based upon or arising out of or otherwise related to this Note and waives any and all rights to any such jury trial or to seek punitive damages. 3 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 this Note or the breach, termination or validity thereof 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 this Section relating to Summary Proceedings shall apply to such Proceeding. 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 Note and the substantive law of the State of Delaware. The arbitration shall be conducted at the Association's regional office located closest to the Lender's principal place of business by three arbitrators, at least one of whom shall be knowledgeable in general business matters and one of whom shall be an attorney. Judgment upon the arbitrators' award may be entered and enforced in any court of competent jurisdiction. Neither party shall institute a proceeding hereunder unless at least 60 days prior thereto such party shall have given written notice to the other party of its intent to do so. Neither 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 protects its rights and interests but such remedies shall not be sought as a means to avoid or stay arbitration or a Summary Proceeding. The Borrower hereby waives presentment, demand, protest and notice of dishonor and protest, and also waives all other exemptions; and agrees that extension or extensions of the time of payment of this Note or any installment or part thereof must be made before, at or after maturity by agreement by the Lender. Upon default hereunder the Lender shall have the right to offset the amount owed by the Borrower against any amounts owed by the Lender in any capacity to the Borrower, whether or not due, and the Lender shall be deemed to have exercised such right of offset and to have made a charge against any such account or amounts immediately upon the occurrence of any event of default hereunder even though such charge is made or entered on the books of the Lender subsequent thereto. The Borrower shall pay to the Lender, upon demand, all costs and expenses, including, without limitation, attorney's fees and legal expenses, that may be incurred by the Lender in connection with the enforcement of this Note. Notices required to be given hereunder shall be deemed validly given (i) three business days after sent, postage prepaid, by certified mail, return receipt requested, (ii) one business day after sent, charges paid by the sender, by Federal Express Next Day Delivery or other guaranteed delivery service, (iii) when sent by facsimile transmission, or (iv) when delivered by hand: If to the Lender: Safeguard Delaware, Inc. 800 The Safeguard Building 435 Devon Park Drive 4 Wayne, PA 19087 Attn: Chief Financial Officer If to the Borrower: USDATA Corporation 2435 North Central Expressway Richardson, TX 75080-2722 Attn: Chief Financial Officer or to such other address, or in care of such other person, as the holder or the Borrower shall hereafter specify to the other from time to time by due notice. Any failure by the Lender to exercise any right hereunder shall not be construed as a waiver of the right to exercise the same or any other right at any time. No amendment to or modification of this Note shall be binding upon the Lender unless in writing and signed by it. Any provision hereof found to be illegal, invalid or unenforceable for any reason whatsoever shall not affect the validity, legality or enforceability of the remainder hereof. This Note shall apply to and bind the successors of the Borrower and shall inure to the benefit of the Lender, its successors and assigns. The Note shall be governed by and interpreted in accordance with the laws of the State of Delaware. IN WITNESS WHEREOF, the Borrower, by its duly authorized officer intending to be legally bound hereby, has duly executed this Demand Note as of the date first written above. USDATA CORPORATION By: /s/ ROBERT L. DRURY ---------------------------------------- Robert L. Drury, Chief Financial Officer EX-27 5 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S MARCH 31, 2000 CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 2,128 0 3,664 430 249 6,456 9,746 6,298 25,883 12,553 368 0 0 156 7,531 25,883 4,066 4,066 0 11,104 26 0 0 (7,064) 0 (7,064) 0 0 0 (7,172) (56.00) (56.00)
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