-----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, H0HcrLb3+pBaWrMH7eMkHwiZz6++fsbjZ7Sd91G3Xb4lTN//zH2B4M+c76H3gJzM fLr2P0P0KsEvpQJXGq+8RQ== 0000950134-99-007692.txt : 19990820 0000950134-99-007692.hdr.sgml : 19990820 ACCESSION NUMBER: 0000950134-99-007692 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19990806 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19990819 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: 8-K SEC ACT: SEC FILE NUMBER: 000-25936 FILM NUMBER: 99696195 BUSINESS ADDRESS: STREET 1: 2435 NORTH CENTRAL EXPRESSWAY CITY: RICHARDSON STATE: TX ZIP: 75080 BUSINESS PHONE: 2146809700 8-K 1 FORM 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Earliest Event Reported: August 6, 1999 USDATA CORPORATION - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 0-25936 75-2405152 (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation or organization) Identification No.) 2435 North Central Expressway Richardson, Texas 75080-2722 - ---------------------------------------- ----------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (972) 680-9700 2 ITEM 2. ACQUISITION OF ASSETS. On August 6, 1999, USDATA Corporation ("USDATA"), through its newly formed wholly owned subsidiary Smart Shop Software, Inc. (Delaware) (the "Buyer"), completed the purchase of substantially all of the assets and the assumption of certain liabilities of Smart Shop Software, Inc. (Idaho) (the "Seller") for an aggregate consideration of approximately $8.2 million. The purchase was conducted pursuant to an Asset Purchase Agreement (the "Agreement"), dated as of July 29, 1999 and effective as of July 1, 1999, and entered into by and among USDATA, the Buyer, the Seller and James Dickman, Michael Maloof and Michelle Dickman (the "Shareholders"). A copy of the Agreement is attached as Exhibit 2.1. Under the terms of the Agreement, the Buyer purchased certain intellectual property rights, fixed assets, personal property and other general assets of the Seller. These assets were used by the Seller in connection with providing business software to "make-to-order" small and medium sized manufacturers. USDATA intends to continue these operations following the completion of the asset purchase. In exchange for purchasing these assets and assuming these liabilities, USDATA paid to the Seller cash in the amount of $6.4 million and issued an aggregate of 500,000 shares of USDATA's common stock to the Shareholders, which in the aggregate had a value of approximately $1.8 million, based on the closing price of USDATA's common stock on July 1, 1999. On August 6, 1999, USDATA sold 50,000 shares of convertible Series A preferred stock and 1,204,819 shares of common stock to Safeguard Delaware, Inc., a wholly owned subsidiary of Safeguard Scientifics, Inc. and USDATA's largest stockholder, for an aggregate purchase price of $10,000,000 in cash. The purpose of this investment was to create and expand certain of USDATA's business operations, which will include in part the purchased assets and assumed liabilities. The purchase price for the assets was determined through negotiations conducted by representatives of USDATA and the Seller. There are no material relationships known to USDATA between the Seller, the Shareholders and USDATA or any of its affiliates, any director or any officer of USDATA or any associate of any such director or officer. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) (b) The financial statements required by Item 7(a) and Item 7(b) of Form 8-K will be filed pursuant to an amendment to Form 8-K no later than 75 days following the date of acquisition of the assets on August 6, 1999. (c) Exhibits 2.1 Asset Purchase Agreement, dated as of July 29, 1999, by and among USDATA Corporation, Smart Shop Software, Inc. (Delaware), Smart Shop Software, Inc. (Idaho) and James Dickman, Michael Maloof and Michelle Dickman. 99.1 Press Release, dated August 2, 1999, relating to the announcement of the transaction between USDATA Corporation, Smart Shop Software, Inc. (Delaware), Smart Shop Software, Inc. (Idaho) and James Dickman, Michael Maloof and Michelle Dickman. 2 3 99.2 Press Release, dated August 6, 1999, relating to the completion of the transaction between USDATA Corporation, Smart Shop Software, Inc. (Delaware), Smart Shop Software, Inc. (Idaho) and James Dickman, Michael Maloof and Michelle Dickman. 99.3 Press Release, dated August 10, 1999, announcing a $10 million investment in USDATA Corporation by Safeguard Scientifics, Inc. 3 4 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: August 16, 1999 USDATA Corporation By: /s/ Robert Drury ---------------------------- Name: Robert Drury Title: Chief Financial Officer 5 EXHIBIT INDEX
Exhibit Number Description - ------- ----------- 2.1 Asset Purchase Agreement, dated as of July 29, 1999, by and among USDATA Corporation, Smart Shop Software, Inc. (Delaware), Smart Shop Software, Inc. (Idaho) and James Dickman, Michael Maloof and Michelle Dickman. 99.1 Press Release, dated August 2, 1999, relating to the announcement of the transaction between USDATA Corporation, Smart Shop Software, Inc. (Delaware), Smart Shop Software, Inc. (Idaho) and James Dickman, Michael Maloof and Michelle Dickman. 99.2 Press Release, dated August 6, 1999, relating to the completion of the transaction between USDATA Corporation, Smart Shop Software, Inc. (Delaware), Smart Shop Software, Inc. (Idaho) and James Dickman, Michael Maloof and Michelle Dickman. 99.3 Press Release, dated August 10, 1999, announcing a $10 million investment in USDATA Corporation by Safeguard Scientifics, Inc.
EX-2.1 2 ASSET PURCHASE AGREEMENT DATED JULY 29, 1999 1 EXHIBIT 2.1 ASSET PURCHASE AGREEMENT THIS ASSET PURCHASE AGREEMENT, dated as of July 29, 1999 and effective as of July 1, 1999 (this "Agreement"), is made by and among SMART SHOP SOFTWARE, INC., an Idaho corporation ("Seller"), JAMES DICKMAN, MICHAEL MALOOF, MICHELLE DICKMAN (the "Shareholders"), USDATA CORPORATION, a Delaware corporation ("USDATA"), and Smart Shop Software, Inc., a Delaware corporation and wholly-owned subsidiary of United States Data Corporation, which is a wholly-owned subsidiary of USDATA ("Buyer"). W I T N E S S E T H: WHEREAS, Seller owns assets relating to its business as a software development company (the "Business"); and WHEREAS, Seller desires to sell and Buyer desires tt purchase, effective as of 12:01 a.m. July 1, 1999 (the "Effective Time"), substantially all of the tangible and intangible assets on the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the mutual promises, covenants and conditions contained in this Agreement, and intending to be legally bound, and on the terms and subject to the conditions set forth in this Agreement, the parties agree as follows: ARTICLE I DEFINITIONS 1.1 Defined Terms. When used in this Agreement, the following terms shall have the meanings specified: "Agreement" shall mean this Asset Purchase Agreement, together with all schedules and exhibits attached hereto, as the same may be amended from time to time in accordance with the terms of this Agreement. "Closing Date" shall mean the date that is the first business day after satisfaction or waiver of the latest to occur of the conditions set forth in Articles VII and VIII of this Agreement, unless a different date is agreed to in writing by the parties. "Closing Time" shall mean 12:01 a.m. on the Closing Date. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. 2 "Effective Time" shall mean 12:01 a.m. on July 1, 1999. "Employee Benefit Plan" shall mean any plan, fund, program, policy, arrangement, contract or commitment, whether or not qualified for federal income tax purposes, whether or not funded, whether formal or informal, and whether for the benefit of a single individual or more than one individual. "Financial Statements" shall mean (a) Seller's audited balance sheets and statements of income, changes in shareholders' equity and cash flow as of and for the fiscal years ended December 31, 1997 and 1998, and (b) Seller's unaudited balance sheet and statements of income, changes in shareholders' equity, and cash flow as of and for the six months ended June 30, 1999. "GAAP" shall mean those generally accepted accounting principles which are recognized as such by the American Institute of Certified Public Accountants acting through its Accounting Principles Board or the Financial Accounting Standards Board or through other appropriate boards or committees thereof and which are consistently applied. "Law" shall mean any federal, state, local or other law or governmental requirement of any kind, whether legislatively, judicially or administratively promulgated, and any rules, regulations and orders promulgated thereunder. "Material Adverse Effect" shall mean a material and adverse effect on the financial condition, assets, liabilities, business, property or prospects of Seller, the Purchased Assets, the Contracts, Buyer and/or USDATA, as applicable. "Shareholders" shall mean Michael Maloof, Michelle Dickman and James Dickman, who are the sole shareholders of Seller. ARTICLE II PURCHASE AND SALE 2.1 Commitment to Sell and Assign. Upon the terms and subject to the conditions set forth in this Agreement, Seller shall sell, transfer, assign, convey and deliver to Buyer all of the assets, properties, interests, business, goodwill, claims and other rights of Seller (other than the Excluded Assets (as defined below)) relating to the Business of every kind and nature whatsoever, tangible or intangible, vested or unvested, contingent or otherwise, real, personal or mixed, and wherever located, whether or not reflected on the books and records of Seller and whether or not described in this Agreement or in any of the schedules hereto, as such existed as of the date hereof, together with additional assets acquired from the date hereof to the Closing Date, including, without limitation, all right, title and interest of Seller in and to the following specified assets, properties and rights (collectively, the "Purchased Assets"): 2 3 (a) All Intellectual Property (as defined in Section 4.11), including, but not limited to, that set forth on Schedule 2.1(a) and the use of the name "Smart Shop Software Inc.," including the goodwill attached to such name, and the trade names and marks descriptive and associated with such name. (b) All of Seller's rights to use the Third Party Intellectual Property (as defined in Section 4.11), including, but not limited to, those set forth on Schedule 2.1(b). (c) All cash held by Seller. (d) All leases, including capitalized leases, for real property leased or used by Seller in connection with the Business, including those set forth on Schedule 2.1(d) (the "Real Property Leases"). (e) All fixed assets, furniture, property, equipment, fixtures, leasehold improvements, tools, machinery, office equipment, plant and other tangible personal property related to or used in connection with the Business or located at Seller's place of business, including, without limitation, those set forth on Schedule 2.1(e) (the "Equipment"). (f) Seller's interest under those certain equipment leases pertaining to the Business and set forth on Schedule 2.1(f) (the "Equipment Leases"). (g) Seller's interest in all personal property leases, rental agreements, sales and purchase orders and acknowledgments, permits, customer license and maintenance agreements, third party product agreements, third party supply agreements and any and all other contracts or binding agreements relating to the Business, including, but not limited to, those set forth on Schedule 2.1(g) (the "Contracts") and all of Seller's interests (including rights to refund and offset), privileges, claims, causes of action and options relating to the Contracts or any portion thereof; provided, however, that each of the Excluded Contracts (as defined below) shall be retained by Seller and shall not be considered a "Contract" hereunder, but shall constitute an Excluded Asset, as defined below. (h) All of Seller's accounts receivable, notes, claims and other amounts receivable by Seller as a result of Seller's ownership of the Purchased Assets or arising out of the Business, as of the Closing Time, including, but not limited to, amounts due from customers and vendors, whether or not arising in the ordinary course of business (the "Accounts Receivable"). (i) Prepaid expenses or advances to third parties relating to the Business, including, but not limited to, lease deposits and maintenance agreements as set forth on Schedule 2.1(i). 3 4 (j) Except as set forth below, all business, accounting and financial records, property records, contract records, personnel records, correspondence, files, books and documents of Seller relating to the Business, including, but not limited to, sales, marketing and advertising data and materials, customer and mailing lists of any and all types, vendor and customer invoices, credit reports, billing records, service records, software and related documentation, artwork, photographs, manuals and teaching aids, engineering, maintenance and production records (the "Records"). (k) All of Seller's backlog related to the conduct of the business or operations of the Business, as of the Closing Time, of unfilled firm orders for products manufactured or sold or services provided by Seller related to the business or operations of the Business, including, but not limited to, that set forth on Schedule 2.1(k) (the "Backlog"). (l) All of Seller's licenses and permits required for the operation of the Business and the operation of the Purchased Assets or used by Seller, including, but not limited to, those set forth on Schedule 2.1(l) (the "Licenses and Permits"). Notwithstanding the foregoing, however, the Purchased Assets shall not include any contract or agreement relating to the Business designated on Schedule 2.1(m) which USDATA and Buyer are unwilling to assume (the "Excluded Contracts") and general books of account and books of original entry that comprise Seller's or the Business' permanent accounting or tax records and books and records that Seller is required to retain pursuant to any statute, rule or regulation; provided, however, Buyer shall be entitled to copies of the foregoing; all of the foregoing (collectively referred to as the "Excluded Assets"). All Excluded Assets are listed on Schedule 2.1(n). 2.2 Non-Assignable Contracts. In the case of any Real Property Leases, Contracts or Equipment Leases which by their terms or by virtue of their subject matter are not assignable without the consent of a third party (collectively, the "Non-Assignable Contracts," all of which are listed on Schedule 2.2), Seller will use its best efforts to obtain, prior to the Closing Time, any written consents necessary to convey to Buyer the benefit thereof. Buyer shall cooperate with Seller, in such manner as may be reasonably requested and at Seller's expense, in connection therewith, provided that Buyer shall not be obligated to agree to pay any consideration or increase the consideration payable under any such Non-Assignable Contract or to make any other agreement that would affect adversely in any other way the economics for Buyer under such Non-Assignable Contract, or would make the obligations intended to be assumed by Buyer thereunder more burdensome. Seller shall inform Buyer from time to time prior to the Closing Time of Seller's receipt from any such third party of confirmation of such third party's refusal to grant its consent to any such assignment. Nothing in this Agreement shall be construed as an attempt or an agreement to assign or cause the assignment of any Non-Assignable Contract included in the Purchased Assets which is in law nonassignable without the consent of the other party or parties 4 5 thereto, unless such consent shall have been given. Notwithstanding the foregoing, in the event that any third party to a Non-Assignable Contract has not consented to an assignment thereof to Buyer for any reason, then Buyer shall have no liability or obligation to Seller, such third party or any other party with respect to such Non-Assignable Contract, and if any Non-Assignable Contract is not assigned to Buyer for any reason and Buyer considers in its sole judgment that such Non-Assignable Contract is material to the business to be conducted by Buyer after the Closing Date then, at Buyer's option, Buyer shall have no obligation to consummate its purchase hereunder. In the event that Buyer consummates its purchase hereunder and any Non-Assignable Contract has not been assigned to Buyer for any reason then either (i) Buyer and Seller shall negotiate in good faith to adjust the Purchase Price (as defined herein) based on such event and/or (ii) Buyer and Seller shall cooperate in good faith with the other party in any reasonable arrangement necessary or desirable to provide Buyer the benefits of such Non-Assignable Contract. 2.3 Commitment to Purchase and Accept. Upon the terms and subject to the conditions set forth in this Agreement, Buyer shall purchase, accept and acquire the Purchased Assets, free and clear of all liens, claims and encumbrances whatsoever (except as set forth in Section 2.5(a)(viii) and Section 4.4), and in full payment for such purchase shall pay, or cause to be paid, to Seller the purchase price pursuant to Section 2.4. 2.4 Purchase Price. The purchase price for the Purchased Assets (the "Purchase Price") shall be an amount equal to the sum of: (i) $6,400,000 (the "Closing Cash Amount"); plus (ii) 500,000 shares of the common stock, par value $0.01 per share, of USDATA (the "USDATA Stock"). At the Closing (as defined below), the Note Payable by Seller to the Shareholders shall be modified to be payable on the date which is three years following the Closing Date. The Purchase Price shall be payable to Seller as follows: (a) At the Closing, Buyer or USDATA shall pay to Seller the Closing Cash Amount by wire transfer. The Closing Cash Amount shall be paid in immediately available funds. (b) At the Closing, Buyer and USDATA shall issue an aggregate of 500,000 shares of the USDATA Stock to the Shareholders, all of which shares will be deposited in escrow pursuant to the terms and conditions of Section 2.4(c). (c) At the Closing, Buyer and USDATA shall issue to the Shareholders, and shall deliver to Bank One, N.A., or any other mutually acceptable escrow agent (the "Escrow Agent"), pursuant to the terms of an escrow agreement mutually satisfactory to the parties, as collateral for performance of the matters contained herein, all of the shares of the USDATA Stock payable under this Agreement (the "Escrow"). Such shares shall be allocated to the Shareholders as follows: 100,000 to James Dickman; 200,000 to Michelle Dickman; and 200,000 to Michael Maloof. 5 6 Subject to the provisions of Section 9.2(c) and the Employment Agreements (as defined in Section 10.3), the Escrow shall be disbursed to the Shareholders in the amount of one-sixth of such shares allocated to such Shareholder each six (6) months following the Closing Date, subject to such Shareholder remaining in compliance with the Employment Agreements (as defined in Section 10.3) entered into in connection with this Agreement and subject to the disbursement conditions contained in the Employment Agreements and the provisions of Section 9.2. Seller and USDATA shall each bear one-half of all fees and costs incurred by USDATA in connection with the Escrow. If Seller has not reimbursed the Escrow Agent for its one-half of the reimbursable expenses within 30 days of written notice to Seller, USDATA may liquidate or sell a sufficient portion of the assets in the Escrow to reimburse such expenses. The agreements contained in this Section shall survive any termination of the duties of USDATA hereunder. 2.5 Liabilities. (a) Buyer shall assume the liabilities of Seller shown on the unaudited balance sheet of Seller as of June 30, 1999, including but not limited to the following, but in no event in an aggregate amount of in excess of the aggregate value of such liabilities shown on such balance sheet, and except for those items set forth in Section 2.5(b) or incurred by Seller thereafter in the ordinary course of business consistent with past practice (the "Assumed Obligations"): (i) obligations under the Contracts; (ii) obligations under the terms of any outstanding product warranty (except those relating to any Excluded Asset); (iii) liabilities arising on and after the Closing Date (except as otherwise set forth in this Agreement) under the Contracts, the Real Property Leases, the Personal Property Leases and other assets included in the Purchased Assets; (iv) liabilities for accounts payable and accrued and unpaid expenses of the Business incurred in the ordinary course of business, including, with respect to Buyer Employees (as defined below), employment costs relating to facts and circumstances arising on or after the Closing Date; (v) insurance claims made on or after the Effective Time relating to the Purchased Assets or Assumed Obligations; (vi) liabilities arising from the ownership of the Purchased Assets on and after the Closing Date; (vii) liabilities relating to all causes of action and other claims which a third party may assert in respect of any of the Purchased Assets (but only to 6 7 the extent such causes of action or claims relate to liabilities assumed hereunder); and (viii) the bank debt owing from the Seller to Firstbank Northwest, as evidenced by that certain Business Loan Agreement and Promissory Note, both between Seller and Firstbank Northwest and dated as of January 8, 1998. (b) Seller shall retain and Buyer shall not assume any liabilities or obligations (other than the Assumed Obligations) of Seller with respect to the Business, whether known or unknown, fixed or contingent, including without limitation the following obligations or liabilities (the "Excluded Obligations"): (i) obligations and liabilities arising out of or relating to the Excluded Assets; (ii) liabilities of Seller for Taxes (as defined in Section 4.19) not shown on the Financial Statements accruing prior to the Effective Time and Taxes relating to the conduct of the Business prior to the Effective Time; (iii) liabilities of Seller relating to any Employee (as defined in Section 4.15) not shown on the Financial Statements or arising under or pursuant to any Employee Plan or Employee Agreement (as such terms are defined in Section 4.16), including without limitation all liabilities relating to the employment by Seller of any employee, agent, contractor or consultant, or the termination of such employment prior to the Closing Date and all liabilities and responsibilities for compliance with the requirements of Section 4980B of the Code (COBRA) through the Closing Date, which includes any terminations of employment that occur on such date as a result of this transaction; (iv) other liabilities of the Business not expressly included in the Assumed Obligations, including without limitation all liabilities of Seller in connection with the Business arising under or pursuant to Environmental Laws (as defined in Section 4.20) arising from events occurring prior to the Closing Date; (v) all overdrafts; and (vi) the liabilities set forth on Schedule 2.5(b). 2.6 Power of Attorney. Effective on the Closing Date, Seller hereby constitutes and appoints Buyer and its successors, legal representatives and assigns the true and lawful attorneys of Seller, with full power of substitution, in the name of Seller or Buyer, but on behalf of and for the benefit of Buyer and its successors, legal representatives and assigns: (a) to demand and receive from time to time any and all of the Purchased Assets and to make endorsements and give receipts and releases for and in respect of the same and any part thereof; (b) to institute, prosecute, compromise and settle any and all proceedings at law, in equity or otherwise that Buyer and its 7 8 successors, legal representatives or assigns may deem proper in order to collect, assert or enforce any claim, right or title of any kind in or to the Purchased Assets; (c) to defend any or all actions, suits or proceedings in respect of any of the Purchased Assets; and (d) to do all such acts and things in relation to the matters set forth in the preceding clauses (a) through (c) as Buyer and its successors, legal representatives or assigns shall deem desirable. Seller hereby agrees that the appointment hereby made and the powers hereby granted are coupled with an interest and are and shall be irrevocable by it in any manner or for any reason. After the Closing Date, Buyer shall have the right to receive and open all mail, packages and other communications addressed to Seller and relating to the Purchased Assets, and Seller agrees promptly to deliver to Buyer any such mail, packages or other communications received directly or indirectly by Seller. Buyer shall promptly deliver to Seller all mail, packages and other communications received by it which relate to Seller but do not relate to the Purchased Assets. 2.7 USDATA Stock. The USDATA Stock shall not be registered under the Securities Act of 1933, as amended (the "Act"), and as such shall constitute "restricted securities" within the meaning of Rule 144 under the Act and the USDATA Stock shall be available for sale in the public market only in compliance with Rule 144. The USDATA Stock shall bear a legend substantially as follows: THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS"), HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND QUALIFICATION UNDER THE STATE ACTS OR EXEMPTIONS FROM SUCH REGISTRATION OR QUALIFICATION REQUIREMENTS (INCLUDING, IN THE CASE OF THE SECURITIES ACT, THE EXEMPTION AFFORDED BY RULE 144). UNLESS WAIVED BY USDATA CORPORATION, USDATA CORPORATION SHALL BE FURNISHED WITH AN OPINION OF COUNSEL OPINING AS TO THE AVAILABILITY OF EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION AS A PRECONDITION TO ANY SUCH TRANSFER. ARTICLE III CLOSING 3.1 Closing. The consummation and closing of the transactions contemplated in this Agreement (the "Closing") shall be held at 9:00 a.m. local time on the Closing Date at the offices of Jenkens & Gilchrist, a Professional Corporation, 1445 Ross Avenue, Suite 3200, Dallas, Texas unless the parties otherwise agree. All transactions occurring at the Closing shall be deemed to have occurred simultaneously as of the 8 9 Closing Time, and no one transaction shall be complete until all transactions have been completed. 3.2 Seller's Deliveries at Closing. Seller and the Shareholders, as applicable, shall at the Closing execute and deliver, or cause to be executed and delivered, to Buyer and/or USDATA, as appropriate, the following: (a) a Bill of Sale conveying in the aggregate all of the Equipment, Intellectual Property and Records, and any other personal property included in the Purchased Assets, in the form attached as Exhibit 3.2(a); (b) an Assignment and Assumption Agreement, substantially in the form attached as Exhibit 3.2(b), with respect to the Equipment Leases and Contracts; (c) an estoppel and consent certificate (dated not more than 30 days prior to the Closing Date) from each landlord under a Real Property Lease reasonably acceptable in form to Buyer; (d) a nondisturbance agreement and an assignment of each Real Property Lease conveying title to each Real Property Lease in accordance with this Agreement in a form reasonably acceptable to Buyer; (e) assignments, each in form satisfactory to Buyer, of all Intellectual Property from Seller to Buyer and rights to all Third Party Intellectual Property (together with written consents of the owners thereof to such assignment and use) (other than the Excluded Contracts); (f) all consents that are required from parties to the Non-Assignable Contracts; (g) true, correct and complete copies of Seller's Certificate of Incorporation and all amendments thereto, duly certified as of a recent date by the Secretary of State of Idaho; (h) a certificate of the Secretary of State of Idaho, dated as of a recent date, duly certifying as to the existence and good standing of Seller as a corporation under the laws of Idaho; (i) a certificate duly executed by an officer of Seller that certifies (i) the due adoption by the directors and by the Shareholders of Seller of corporate resolutions attached to such certificate authorizing the transactions and the execution and delivery of this Agreement and the other agreements and documents contemplated hereby and the taking of all actions contemplated hereby and thereby; and (ii) that the copy of the Bylaws (as defined in Section 4.3) of Seller attached to such certificate is a true and correct copy of such Bylaws and that such Bylaws have not been amended except as reflected in such copy; 9 10 (j) a certificate duly executed by an officer of Seller, dated as of the Closing Date, that certifies that the representations and warranties of Seller contained in this Agreement are true and correct as of the Closing Date and that Seller has performed and complied with all covenants and conditions required by this Agreement to be performed and complied with by any of them at or prior to Closing; (k) original copies of all Real Property Leases, Contracts and Equipment Leases and all amendments, supplements or modifications thereto; (l) all of Seller's books and records constituting a part of the Purchased Assets, including, without limitation, the Records; (m) possession or constructive possession of the Purchased Assets; (n) such documents necessary to release the Purchased Assets from all liens, claims and encumbrances not expressly assumed hereunder; (o) supplements to the Schedules hereto showing any changes thereto which have occurred between the date of this Agreement and the Closing Date; (p) the opinion of Seller's counsel substantially in the form of Exhibit 3.2(p); (q) such other agreements, documents and/or instruments, including such specific releases, assignments, bills of sale and other instruments of conveyance and transfer, in form and substance acceptable to Buyer, USDATA and their counsel, as may be necessary to transfer, convey and deliver the Purchased Assets from Seller to Buyer and to vest in Buyer title thereto free and clear of all liens, claims and encumbrances (except as set forth in Section 2.5(a)(viii) and Section 4.4); (r) the Employment Agreements relating to the Shareholders referred to in Section 10.3(1) through (3), as applicable, and employment agreements with those individuals set forth on Schedule 3.2(r), in substantially the form of Exhibit 10.3(4), including in each case the related Exhibit A; (s) the consent of Firstbank Northwest to assign and transfer the existing credit obligations of Seller to Buyer on terms that are satisfactory to Buyer, in its sole discretion and the release of the related personal guarantees of the Shareholders. 3.3 USDATA and Buyer's Deliveries. Buyer and USDATA, as applicable, shall at the Closing execute and deliver to Seller (or to the Escrow Agent, in the case of the shares of USDATA Stock) the following: (a) the Closing Cash Amount; 10 11 (b) the USDATA Stock; (c) the opinion of Buyer's counsel substantially in the form of Exhibit 3.3(c); (d) the Employment Agreements referred to in Section 3.2(r); (e) certificates duly executed by the Secretary or Assistant Secretary of both USDATA and Buyer that certify to the extent necessary (i) the due adoption of the Board of Directors of both of corporate resolutions attached to such certificate authorizing the transactions and the execution and delivery of this Agreement and the other agreements and documents contemplated hereby and the taking of all actions contemplated hereby and thereby; and (ii) that the copy of the Bylaws of both attached to such certificate is a true and correct copy of such Bylaws and that such Bylaws have not been amended except as reflected in such copy; (f) certificates duly executed by the Secretary or Assistant Secretary of Buyer and USDATA, dated as of the Closing Date, that certifies that the representations and warranties of Buyer and USDATA contained in this Agreement are true and correct as of the Closing Date and that Buyer and USDATA have performed and complied with all covenants and conditions required by this Agreement to be performed and complied with by it at or prior to Closing; and (g) cash in the amount of $50,000 to be paid by Seller in satisfaction of indebtedness owing from Seller to F.K. Dickman, Jr. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS Seller and the Shareholders hereby jointly and severally represent and warrant to Buyer and USDATA as follows: 4.1 Organization and Authority of Seller. Seller is a corporation validly existing and in good standing under the laws of the State of Idaho and has full power to enter into and perform its obligations under this Agreement and under all other agreements, documents and/or instruments to be executed and/or delivered by Seller pursuant to or in connection with this Agreement. Seller has full power to own, operate and/or hold under lease the Purchased Assets as, and in the places where, such properties and assets now are owned, operated or held. 4.2 Authorization; Enforceability. The execution, delivery and performance by Seller of this Agreement and of all of the agreements, documents and/or instruments to be executed and/or delivered by Seller pursuant to or in connection with this Agreement have been duly authorized by all necessary action of Seller. This Agreement is, and the other agreements, documents and instruments required hereby will be, when executed and delivered by the parties hereto, the valid and binding 11 12 obligations of Seller and the Shareholders, enforceable against Seller and the Shareholders in accordance with their respective terms. 4.3 No Violation or Conflict by Seller. The execution, delivery and performance of this Agreement by Seller and the Shareholders does not and will not violate, conflict with or result in the creation or imposition of any lien, charge or encumbrance under any Law, judgment, order or decree binding on Seller or the Articles of Incorporation or the Bylaws of Seller, or any contract or agreement to which Seller is a party or by which Seller or any of the Purchased Assets are bound. 4.4 Title to Assets. Seller has good and marketable title to all of the Purchased Assets owned or purported to be owned by Seller pursuant to the Schedules hereto and a good and valid leasehold interest in all property leased by Seller and used in connection with the Business, in each case free and clear of all liens, claims and encumbrances (except as set forth in Section 2.5(a)(viii) and this Section 4.4). Upon delivery of the Purchased Assets at the Closing, good and valid title to the Purchased Assets, free and clear of all mortgages, liens, claims, pledges, security interests or other encumbrances (except as set forth in Section 2.5(a)(viii)), will pass to Buyer. 4.5 Accounts Receivable. The description of the Accounts Receivable contained in Schedule 4.5 is complete and accurate as of July 1, 1999. Since July 1, 1999 there have been no material changes to the Accounts Receivable, other than changes in the ordinary course of business. The Accounts Receivable constitute, and on the Closing Date the Accounts Receivable will constitute, all of the Accounts Receivable of the Business related to the Purchased Assets. There is not and will not be any liability of Seller for any refunds, allowances or returns in respect of products imported, marketed, sold, distributed or shipped by or for the account of Seller on or prior to the Closing Date. 4.6 No Litigation. Except as described on Schedule 4.6, there are no actions at law or in equity, or arbitration proceedings, or claims or investigations of which Seller has received notice, pending or to Seller's knowledge threatened, or state of facts existing, which gives Seller any reasonable basis to anticipate any such action, proceeding, claim or investigation which could have a Material Adverse Effect. There are no proceedings, pending or to Seller's knowledge threatened, against Seller and related to the Business by or before any governmental board, department, commission, bureau, instrumentality or agency (including, but not limited to, any federal, state, or local governmental agency or body concerned with environmental protection or pollution control, civil rights, labor or discrimination, safety or health, zoning or land use), or state of facts existing which gives Seller any reasonable basis to anticipate any 12 13 such proceeding; and Seller's ownership and operation of the Business is not in violation of any order, decree or judgment of any court or arbitration tribunal or governmental board, department, commission, bureau, instrumentality or agency. 4.7 Financial Statements. The Financial Statements (a) were prepared in accordance with the books of account and records of Seller, (b) are true, correct and complete and present fairly the financial position and results of operations of the Business as of the dates and for the periods indicated therein, (c) make full and adequate disclosure of, and provision for, all obligations and liabilities of the Business as of the dates thereof, and (d) except as to the unaudited financial statements of Seller for the period from January 1, 1999 to June 30, 1999, and as of such date, were prepared in conformity with generally accepted accounting principles applied on a consistent basis. The unaudited financial statements of Seller for the period from January 1, 1999 to June 30, 1999, and as of such date, have been prepared in accordance with Seller's past accounting practices. 4.8 Liabilities and Obligations. The Financial Statements reflect all liabilities of Seller relating to the Business, accrued, contingent or otherwise (known or unknown and asserted or unasserted), arising out of transactions effected or events occurring on or prior to the date of such Financial Statements. All reserves shown in the Financial Statements are appropriate, reasonable and sufficient to provide for the losses contemplated thereby. Seller is not liable upon or with respect to, or obligated in any other way to provide funds in respect of or to guarantee or assume in any manner, any debt, obligation or dividend of any person, corporation, association, partnership, joint venture, trust or other entity which relates to or effects the Business. 4.9 Real Property Leases. Seller does not own any real property. The Real Property Leases listed on Schedule 2.1(d) are the only property of similar type used by Seller in the Business. Seller's interest in the Real Property Leases is subject to no liens, claims or encumbrances, except for those set forth in Schedule 4.9. True and correct copies of the Real Property Leases have been delivered to Buyer by Seller. Subject to the terms of the respective Real Property Leases, Seller has a valid and subsisting leasehold estate in and the right to quiet enjoyment to the property subject thereto for the full term of the respective Real Property Lease. The Real Property Leases are in full force and effect and are enforceable in accordance with their respective terms, except as such enforceability may be subject to or limited by bankruptcy, insolvency, reorganization or other similar Laws affecting the enforcement of creditors' rights generally. Seller has not assigned, pledged, mortgaged, hypothecated or otherwise transferred any Real Property Lease. Seller has not sublet all or any portion of any property subject to a Real Property Lease. Seller has not received any written notice of default under any Real Property Lease, and to Seller's 13 14 knowledge there is no material default by any tenant or landlord under any Real Property Lease, and no event has occurred or failed to occur which, with the giving of notice or the passage of time, or both, would constitute a material default under any Real Property Lease. No portion of any parcel of real property subject to a Real Property Lease is located in an area designated as a flood zone by any governmental entity. All facilities and improvements subject to any Real Property Lease are adequate and suitable for the conduct of the Business and are in good working order and condition, ordinary wear and tear excepted, and are supplied with utilities and other services necessary for their operation in connection with the Business. 4.10 Personal Property; Inventories. (a) Schedule 2.1(c) sets forth a description of all Equipment owned by Seller and used in connection with the Business, and separately sets forth all Equipment (other than Excluded Assets) (i) leased by Seller, (ii) which is in the possession of Seller and owned by other persons or (iii) owned by Seller and is in the possession of other persons. All Equipment owned, leased or used by Seller in connection with the Business is fit for operation in the usual course of business as currently conducted, ordinary wear and tear excepted, and all such Equipment is located on premises owned by Seller or covered by valid leaseholds. Seller has or will on the Closing Date have the right and authority to transfer all Equipment to Buyer and, upon such transfer, Buyer will have good and valid title to such Equipment free and clear of all liens (including, without limitation, liens for taxes), claims and encumbrances (except as set forth in Section 2.5(a)(viii)). Except as set forth on Schedule 2.1(c), each lease or agreement pursuant to which Seller leases any Equipment for use in connection with the Business may be assigned to Buyer without any restriction or required consent or other approval. (b) Seller does not own material quantities of any inventories of materials, spare parts, work-in-process or finished goods (whether located at or in transit to Seller) used in connection with the Business. 4.11 Intellectual Property Rights. (a) Seller owns, or is licensed or otherwise possesses legally sufficient rights to use, all patents, trademarks, trade names, service marks, copyrights, maskworks and any applications therefor, technology, know-how, video and audio compression algorithms, computer software programs or applications (in both source code and object code form) and tangible or intangible proprietary information or material that are used or proposed to be used in the Business of Seller as currently conducted. Schedule 2.1(a) lists all current patents, patent applications, registered and 14 15 material unregistered copyrights, maskworks, trade names and any applications therefor owned or licensed by Seller (the "Intellectual Property"), and specifies the jurisdictions in which each such Intellectual Property has been issued or registered or in which an application for such issuance and registration has been filed, including the respective registration or application numbers and the names of all registered owners. Schedule 2.1(b) includes and specifically identifies all material third-party patents, trademarks, copyrights (including software) and maskworks (the "Third Party Intellectual Property"), which are incorporated in, are, or form a part of, any Seller product, excluding any such intellectual property rights that are available on a commodity basis (such as "shrink wrap" licenses) and which are non-exclusive, terminable and available at a standard fee. Schedule 2.1(a) lists (i) all material licenses, sublicenses and other agreements as to which Seller is a party and pursuant to which any person is authorized to use any of Seller's Intellectual Property, or any trade secret material to Seller or any of its subsidiaries; and (ii) all material licenses, sublicenses and other agreements as to which Seller is a party and pursuant to which Seller is authorized to use any Third Party Intellectual Property, or other trade secret of a third party in or as any product, and includes the identity of all parties thereto, a description of the nature and subject matter thereof and the term thereof. (b) Seller is not, nor will it be as a result of the execution and delivery of this Agreement or the performance of its obligations hereunder, in violation of any license, sublicense or agreement described in Schedule 2.1(a) or Schedule 2.1(b). No claims with respect to Seller's Intellectual Property, any trade secret material to Seller, or Third Party Intellectual Property to the extent arising out of any use, reproduction or distribution of such Third Party Intellectual Property by or through Seller, are currently pending or to Seller's knowledge are threatened by any person, nor does Seller know of any valid grounds for any bona fide claims (i) to the effect that the manufacture, sale, licensing or use of any product as now used, sold or licensed or proposed for use, sale or license by Seller infringes on any copyright, maskwork, patent, trademark, service mark or trade secret; (ii) against the use by Seller of any trademarks, trade names, trade secrets, copyrights, maskworks, patents, technology, know-how, video and audio compression algorithms, or computer software programs and applications used in Seller's business as currently conducted; (iii) challenging the ownership, validity or effectiveness of any of the Seller's Intellectual Property or other trade secret material to the Seller; or (iv) challenging the Seller's license or legally enforceable right to use of the Third Party Intellectual Property. All material patents, registered trademarks, maskworks and copyrights held by the Seller are valid and subsisting. To Seller's knowledge, there is no material unauthorized use, infringement or misappropriation of any of the Seller's Intellectual Property by any third party, including any employee or former employee of the Seller or any of the its subsidiaries. Neither the Seller nor any of its subsidiaries (i) has been sued or charged in writing as a defendant in any claim, 15 16 suit, action or proceeding which involves a claim or infringement of trade secrets, any patents, trademarks, service marks, maskworks or copyrights and which has not been finally terminated prior to the date hereof or been informed or notified by any third party that the Seller may be engaged in such infringement or (ii) has knowledge of any infringement liability with respect to, or infringement by, the Seller or any of its subsidiaries of any trade secret, patent, trademark, service mark, maskwork or copyright of another. Seller has not taken any action to encourage adoption by any uniform standards board of any technology upon which Seller's Intellectual Property is based or with respect to any Third Party Intellectual Property which is incorporated in, are or form a part of any Seller product. 4.12 Entire Business. Seller has the complete and unrestricted power and the unqualified right to sell, transfer, convey, assign and deliver the Purchased Assets to Buyer. The sale of the Purchased Assets by Seller to Buyer pursuant to this Agreement will effectively convey to Buyer the entire Business (other than the Excluded Assets and the Excluded Contracts). The assets, properties and rights which will be owned or possessed by Buyer as of the Closing will constitute all of the tangible and intangible property used by Seller (whether owned by it or by any of its affiliates) in connection with the conduct of the Business as heretofore conducted by Seller, except for the Excluded Assets. 4.13 Contracts. (a) Schedule 2.1(g) contains a complete and accurate list of all Contracts to which Seller is a party and which in any way relate to the operations or properties of the Business or which are or will be binding upon the Business or the Purchased Assets. Except for the Contracts listed on Schedule 2.1(g) (true and complete copies of which agreements have been previously delivered to Buyer or, in the case of oral agreements, descriptions of which are set forth on Schedule 2.1(g)), there are no other Contracts to which Seller is party and which relate to the Business or to the Purchased Assets. (b) Except as set forth in Schedule 2.1(g), Seller has in all material respects performed all obligations required to be performed by it under all Contracts listed on Schedule 2.1(e); neither Seller nor any other party to a Contract with Seller, is in material default under any such Contract; and no event exists which with the giving of notice or the passage of time, or both, would create such a default; and Seller does not know of any basis for any claim of any such default. (c) Each of the Contracts listed on Schedule 2.1(g) has been lawfully entered into and is or will be valid and in full force and effect and is or will be enforceable in accordance with its terms for the period stated in such Contract. Except 16 17 as set forth in Schedule 2.1(g) relating to the Excluded Contracts, there are no currently threatened cancellations of, nor are there any outstanding disputes under, any Contracts which could have a Material Adverse Effect. (d) Except as set forth on Schedule 2.2, the consummation of the transactions contemplated by this Agreement does not require any consent under any Contract listed on Schedule 2.1(g) which will not have been obtained by the Closing (and copies of such consents will be given to Buyer on or prior to the Closing Date), and such consummation will not result in the termination of any right or privilege under any Contract listed on Schedule 2.1(g). Seller has not received notice that any party to any Contract listed on Schedule 2.1(g) intends to cancel such Contract nor has any party given Seller notice of any alleged breach of any Contract or of its intent to take any legal action in order to enforce its rights thereunder. All liabilities and obligations of Seller which are due and payable or which are to be performed on or before the Closing Date under such Contracts have been, or will be on the Closing Date, duly paid in full or performed in all material respects except as set forth on Schedule 2.2. (e) Except as set forth on Schedule 2.1(g), Seller does not have any Contract with any person (or group of affiliated persons) which accounted for more than five percent of Seller's gross revenues of the Business in any of the last two fiscal years. (f) Except as set forth in Schedule 2.1(g), Seller is not a party to nor is Seller or the Business bound by, any noncompetition agreement or arrangement or any other agreement or arrangement restricting or prohibiting the way in which the business of the Business is operated. (g) Schedule 2.1(g) contains a list of all noncompetition or similar agreements or arrangements which restrict any person or persons from competing with Seller or otherwise are for the benefit of Seller or the Business. 4.14 Certain Transactions. Except as set forth on Schedule 4.14, since December 31, 1998, Seller has conducted the Business only in the ordinary course consistent with past practices and has not, in each case with respect to the business and operations of the Business, (a) paid, or made any accrual or arrangement for the payment of, bonuses or special compensation of any kind or any severance or termination pay to any present or former officer or employee; (b) made any general wage or salary increases to its employees or increased or altered any other benefits or insurance provided to or maintained on behalf of any employee by it or declared or paid any bonus to any employee; (c) sold, assigned or transferred or agreed to sell, assign 17 18 or transfer any of its assets, properties or rights; (d) granted any rights or licenses under any Intellectual Property or entered into any licensing or distributorship arrangements; (e) canceled or agreed to cancel any debts; (f) waived or agreed to waive any rights; (g) made or permitted any amendment or termination of any Contracts; (h) effected any change in the accounting methods and principles used in connection with its books, records and financial statements; (i) entered into any transaction other than in the ordinary course of business, except transactions expressly permitted by the terms of this Agreement; (j) suffered any event or condition of any character; (k) suffered any default under, or suffered any event which with notice or lapse of time or both would constitute a default under, any Contract, debt instrument or other agreement to which Seller is a party or by which it or any of the Purchased Assets is bound; (l) lost or terminated any employees; or (m) terminated (excluding a termination in accordance with its terms) or amended, or suffered a termination or amendment of, any Contract, agreement, lease or license, except, in all such cases (a) through (m) individually or in the aggregate, where such events or actions did not since such date have a Material Adverse Effect. 4.15 Employees. (a) Schedule 4.15 contains a list setting forth, (i) the name and current annual salary and other compensation payable by Seller to each manager, employee, officer, independent contractor, agent or consultant of Seller employed or engaged in connection with the Business (an "Employee"); (ii) the profit sharing, bonus or other form of additional compensation paid or payable by Seller to or for the benefit of each such person for the current fiscal year; and (iii) any and all loans outstanding from Seller to any Employee. There are no oral or written contracts, agreements or arrangements relating to compensation or performance awards or obligating Seller to increase the compensation or benefits presently being paid or hereafter payable to any of its employees or other persons. There is not due or owing, and there will not be due and owing at the Closing, to any of Seller's Employees, any sick pay, severance pay (whether arising out of the termination of an Employee of Seller prior to or subsequent to the Closing), compensable time or pay, including but not limited to, salary, commission and bonuses, personal time or pay or vacation time or vacation pay attributable to service rendered on or prior to the Closing Date, other than set forth on Schedule 4.15. There is not now, and there will not be as of the Closing Date, any liability of, or claims against, Seller (including, without limitation, workers' compensation claims and claims or suits for contribution to, or indemnification of, third parties, occupational health and safety, environmental, consumer protection or equal employment matters) for injury, sickness, disease, discrimination, death or termination of employment of any Employee or other employment matter (including, without limitation, any Employee or former Employee or any contractor or subcontractor of Seller or any agent or distributor of Seller), to the extent attributable to an event 18 19 occurring or a state of facts existing prior to the Closing other than as set forth on Schedule 4.15; it being understood and agreed that Seller shall remain liable for, and indemnify and hold harmless Buyer and USDATA against, any and all claims, liabilities, damages, losses, costs or expenses, of any nature whatsoever, incurred by Seller, or resulting from or relating to any Employees (whether hourly or salaried) of Seller, including, but not limited to, those set forth on Schedule 4.15. (b) Seller is not a party to any collective bargaining agreements, written or oral, which cover any Employees of the Business. There have not been, and there are no, strikes, grievances, disputes or controversies pending or threatened between Seller and any of its Employees or any union or other organization claiming to represent such Employees' interests. There is no request for union representation pending and there is no present union organizing or election activities in progress or to Seller's knowledge threatened with respect to any Employees of Seller. There is no unfair labor practice complaint pending before the National Labor Relations Board or to Seller's knowledge threatened against or relating to Seller. (c) The purchase of the Purchased Assets by Buyer hereunder will not subject Buyer or USDATA to any absolute or contingent, direct or indirect liability to or claim by Seller's past, present or future Employees (except for obligations expressly assumed by Buyer hereunder with respect to the Buyer Employees). 4.16 Employee Benefit Plans. (a) Seller's employee handbook contains a true and complete list of each plan, program, policy, practice, contract, agreement or other arrangement providing for severance, termination pay, stock or stock-related awards, fringe benefits or other employee benefits of any kind, whether formal or informal, proposed or final, funded or unfunded and whether or not legally binding, including, without limitation, each "employee benefit plan" within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") ("Employee Plan") which is now or ever has been maintained, contributed to, or required to be contributed to, for the benefit of any current or former Employee, and each management, employment, severance or consulting agreement or contract between Seller and any Employee, including, without limitation, summaries of all oral employment or consulting or similar arrangements between Seller and any person which are not terminable without liability on thirty (30) days' or less prior notice (each, an "Employee Agreement"). Seller will provide to Buyer prior to the Closing true and complete copies of all documents, if any, embodying each Employee Plan and Employee Agreement, and all material communications, if any, to any Employee relating to each Employee Plan. Buyer shall have no liability with respect to any Employee Plan or Employee Agreement. 19 20 (b) Seller does not maintain or contribute to any Employee Plan which provides, or has any liability to provide, life insurance, medical or other employee welfare benefits to any Employee upon his retirement or termination of employment, except as may be required by statute, and Seller has never promised, represented to, or contracted with (orally or in writing) any Employee (individually or as a group) that life insurance, medical or other employee welfare benefits would be provided upon their retirement or termination of employment, except to the extent required by statute. (c) Except as set forth on Schedule 4.16, the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby will not (either alone or when taken together with any additional or subsequent events) constitute an event under any Employee Plan or Employee Agreement that will or may result in any payment, upon a change in control or otherwise, whether of severance, accrued vacation, or otherwise, acceleration, vesting, distribution, increase in benefits or obligations to fund benefits with respect to any Employee. (d) Seller (i) is in compliance with all applicable federal and state laws, rules and regulations respecting employment, employment practices, terms and conditions of employment and wages and hours, in each case, with respect to Employees, except where the failure to be in compliance would not, singularly or in the aggregate, have a Material Adverse Effect; (ii) has withheld all amounts required by law or by agreement to be withheld from the wages, salaries and other payments to Employees; (iii) is not liable for any arrearages of wages or any taxes or any penalty for failure to comply with any of the foregoing; and (iv) (other than routine payments not yet due which are to be made in the normal course of business and consistent with past practice and applicable laws) is not liable for any payment to any trust or other fund or to any governmental or administrative authority, with respect to unemployment compensation benefits, Social Security or other benefits for Employees, with the exception of back pay claims and back taxes which will be discharged by Seller immediately following Closing. 4.17 Licenses and Permits. Seller has all licenses or permits required for the operation of the Business and the operation and use of the Purchased Assets as presently operated or used by it. All licenses and permits held by Seller and material to the Business are valid and in full force and effect and no proceedings which could result in the termination or impairment of any such license or permit are pending or to Seller's knowledge threatened. Schedule 2.1(l) sets forth a description of all such licenses or permits. Seller is not in violation of, nor has Seller received any notice of any violation of, nor does any state of facts exist which could lead to a penalty or termination of, any license or permit which might reasonably be expected to have a Material Adverse Effect. 20 21 4.18 Insurance. Attached hereto as Schedule 4.18 is a true, correct and complete schedule which describes all insurance policies currently maintained by Seller in connection with the operation of the Business and the Purchased Assets transferred hereunder. All of said insurance policies which are now in effect shall continue to remain in full force and effect through the Closing Date in accordance with their respective terms. 4.19 Taxes. Except as set forth in Schedule 4.19, Seller has timely and properly filed all federal, state, local and foreign tax returns and reports and forms which it is or has been required to file, either on its own behalf or on behalf of its employees or other persons or entities, including but not limited to income, profits, franchise, sales, use, occupation, property, excise, ad valorem and payroll (including employee taxes withheld) taxes ("Taxes"), all such returns, reports and forms being true and complete in all material respects, and has paid all taxes, including penalties and interest, if any, which have become due pursuant to such returns or reports or forms or pursuant to assessments received by Seller. No tax deficiencies have been determined nor proposed tax assessments charged against Seller and there exists no basis for any such deficiencies. No Internal Revenue Service or other governmental taxing authority audit of Seller is pending or to Seller's knowledge threatened, and the results of any completed audits are properly reflected in the Financial Statements. Seller has not granted any extension to any taxing authority of the limitation period during which any tax liability may be asserted. 4.20 Environmental Matters. Seller is currently in compliance with and has not violated environmental laws applicable to the Business and/or the Purchased Assets has obtained all permits, licenses and other authorizations needed to operate the Purchased Assets in compliance with environmental laws and is unaware of any present requirements of any applicable environmental law which is due to be imposed upon it which will increase its cost of complying with environmental laws. All past on-site generation, treatment, storage and disposal of waste, if any (including hazardous waste), at the Business by Seller (or its predecessors at the Business), have been done in compliance with the currently applicable environmental laws, and all off-site treatment, storage and disposal of waste (including hazardous waste), if any, generated by Seller have been done in compliance with the currently applicable environmental laws. The term (a) "environmental laws" includes but is not limited to any federal, state or local law, statute, charter or ordinance, and any rule, regulation, binding interpretation, binding policy, permit, order, court order or consent decree issued pursuant to any of the foregoing, which pertains to, governs or otherwise regulates any of the following activities, including, without limitation, (i) the emission, 21 22 discharge, release or spilling of any substance into the air, surface water, groundwater, soil or substrata; and (ii) the manufacturing, processing, sale, generation, treatment, storage, disposal, labeling or other management of any waste, hazardous substance or hazardous waste, and (b) "waste," "hazardous substance," and "hazardous waste" include any substance defined as such by any applicable environmental laws. 4.21 Creditors. On or after the Closing Date, neither Buyer nor USDATA shall be subject to any claim of a creditor of Seller, or to any obligation to pay, discharge or satisfy in any manner Seller's liabilities or other obligations as a result of the sale and transfer of the Purchased Assets to Buyer under this Agreement, other than liabilities assumed by Buyer pursuant to Section 2.5. 4.22 Compliance with Laws. Seller has complied in all material respects with all laws, statutes, rules, regulations, orders and standards of any federal, state and local agencies and authorities applicable to the Business and the Purchased Assets (including, but not limited to, those concerned with civil rights, labor and discrimination, safety and health, zoning and land use and the environment). 4.23 Third Party Options. There are no existing contracts, options, commitments or rights with, to or in any third party to acquire the Purchased Assets or any interest therein or the Business (other than the Excluded Assets or Excluded Contracts). 4.24 Transactions with Certain Persons. Except as provided in this Agreement, at and as a result of the Closing, neither Buyer nor USDATA shall have any obligation or liability to any current or former member, manager or employee of Seller or any member of such person's immediate family or any entity in which such person has a direct or indirect ownership interest (other than ownership of less than five percent of the issued and outstanding stock of a corporation whose stock is publicly traded) (each, a "Related Party"), including, without limitation, any contract (a) providing for the furnishing of services by, (b) providing for the rental of real or personal property from, or (c) otherwise requiring payment to any such Related Party. 4.25 Accuracy of Information Furnished. All information furnished to Buyer and USDATA by Seller or the Shareholders herein or in any exhibit or schedule hereto is true, correct and complete. Such information states all facts required to be stated therein or necessary to make the statements therein, in light of the circumstances under which such statements are made, true, correct and complete. 4.26 Product Warranties. There is no agreement or obligation to which Seller is a party, or any claim against or liability of Seller, on account of product warranties or 22 23 with respect to the manufacture, sale or rental of defective products, and there is no basis for any such claim on account of defective products heretofore manufactured, sold or rented which is not fully covered by insurance. Neither Buyer nor USDATA shall have any liability with respect to any claim against or liability of Seller on account of product warranties or with respect to the manufacture, sale or rental of defective products except as expressly set forth on Schedule 4.26 setting forth the specific amount of the claims or liability as to each such matter, and except as assumed by Buyer pursuant to Section 2.5. 4.27 Questionable Payments. Neither Seller, nor any of Seller's current or former officers, directors, Shareholders, employees, agents, or representatives, have in connection with the business or operations of the Business (a) used any corporate funds for any contributions, gifts, entertainment or other expenses relating to political activity, or used any limited liability company funds to reimburse any person for any such payment in contravention of any laws, (b) used any corporate funds for any direct or indirect payments to any foreign or domestic government officials or employees, (c) violated any provision of the Foreign Corrupt Practices Act of 1977, (d) established or maintained any unrecorded fund of corporate monies or other assets, (e) made any false or fictitious entries on the books and records of Seller, (f) made any bribe, rebate, payoff, influence payment, kickback or other payment of any nature, (g) made any favor or gift which is not deductible for federal income tax purposes, or (h) violated the Arab boycott laws. 4.28 Burdensome Obligations. To Seller's knowledge, (a) Seller is not a party to or bound by any Contract which is so unusual or burdensome as in the foreseeable future could reasonably be expected to have a Material Adverse Effect and (b) Seller is not in violation of any law, ordinance, statute, code, rule, regulation, order or decree of the United States, any state, any county, any city, or any other political subdivision in which Seller operates (the "Legal Requirements") pertaining to occupational safety. 4.29 USDATA Stock. The Shareholders acquiring the USDATA Stock and the Buyer Employees (as defined in Section 10.1) are acquiring the Options solely for the purpose of investment and not with a view to, or for offer or sale in connection with, any distribution thereof, except as contemplated by this Agreement. The Shareholders acknowledge that neither the USDATA Stock nor the Options have been registered under the Act or under the securities or "blue sky" laws of any state. The Shareholders acknowledge receipt of those items listed in Section 5.4. 4.30 Books of Accounts. The books of account of Seller have been kept accurately in the ordinary course of its business, the transactions entered therein represent bona fide transactions and the revenues, expenses, assets and liabilities of Seller have been properly recorded in such books. 23 24 4.31 Consents. Except as set forth in Schedule 4.31, no authorization, consent, approval, permit or license of, or filing with, any governmental or public body or authority, any lender or lessor or any other person or entity is required to authorize, or is required in connection with, the execution, delivery and performance of this Agreement or the agreements contemplated hereby on the part of Seller. 4.32 Year 2000. No technology owned, developed or licensed by Seller that has been actively used or marketed by Seller within the past two (2) years and, except as set forth in Schedule 4.32 with respect to third party technology, no technology used by Seller in connection with the Business (including, but not limited to, information systems and technology, commercial and noncommercial hardware and software, firmware, mechanical or electrical products, embedded systems, or any other electro-mechanical or processor-based system, whether as part of a desktop system, office system, building system or otherwise) (collectively, the "Technology"), will experience any malfunctions, premature cancellation or expiration of contractual rights or deletion of data, or any other problems in connection with (i) the year 2000 (and all subsequent years) as distinguished from 1900 years, (ii) the date February 29, 2000, and all subsequent leap years, and (iii) the date September 9, 1999. ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER AND USDATA Buyer and USDATA jointly and severally represent and warrant to Seller and the Shareholders as follows: 5.1 Organization. Each of Buyer and USDATA is a corporation duly and validly existing and in good standing under the laws of its state of incorporation and has full corporate power to enter into and perform its respective obligations under this Agreement and under any other agreements, documents and/or instruments to be executed and/or delivered by each pursuant to or in connection with this Agreement. 5.2 Authorization; Enforceability. The execution, delivery and performance of this Agreement and of all of the agreements, documents and/or instruments to be executed and/or delivered by each of Buyer and USDATA pursuant to or in connection with this Agreement have been duly authorized by all necessary corporate action of each. This Agreement is, and the other agreements, documents and instruments required hereby will be, when executed and delivered by the parties hereto, enforceable against each of Buyer and USDATA in accordance with their respective terms. 24 25 5.3 No Violation or Conflict. The execution, delivery, and performance of this Agreement by each of Buyer and USDATA does not and will not violate or conflict with any Law, judgment, order, or decree binding on each of Buyer or USDATA, or the Certificate of Incorporation or Bylaws of either or any contract or agreement to which either is a party or by which either is bound. 5.4 Financial Condition. USDATA has delivered to Seller and the Shareholders copies of USDATA's most recent reports to the SEC on Forms 10-K and 10-Q, all of USDATA's annual reports, definitive proxy materials and all reports on Form 8-K since the filing of the Form 10-K with respect to fiscal year ended December 31, 1998. None of such reports contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances under which they were made. ARTICLE VI CERTAIN MATTERS PENDING CLOSING Seller and the Shareholders covenant to Buyer and USDATA, and Buyer and USDATA covenant to Seller, that from and after the Effective Time and until the Closing Date, without the other party's prior written consent: 6.1 Carry on in Regular Course. Seller shall carry on the business of the Business in a reasonable and prudent manner and only in the regular course and substantially in the same manner as heretofore carried on and use its good faith and reasonable efforts to preserve the Business's properties and existing business organization and retain good relationships with employees, customers, suppliers and others with whom it maintains a business relationship. Seller shall conduct its business in compliance with all applicable laws. Seller shall not engage in any extraordinary transactions without USDATA's prior written consent, including (a) not disposing of any assets of Seller, except in the ordinary course of business and (b) not causing assets of Seller to be distributed to any of its members. Nothing in this Agreement shall diminish Seller's sole title to the Business or shall be construed to limit Seller's discretion to operate the Business in the ordinary course, or shall give Buyer any ownership rights in or rights to the Purchased Assets before the Closing Date. 6.2 Employee Compensation. Seller shall not increase the rate of pay for any employee of the Business except pursuant to a regularly scheduled time schedule for increases and no bonus, profit sharing, retirement, insurance, death, fringe benefit or other extraordinary or indirect compensation shall accrue, be set aside or be paid to, 25 26 for or on behalf of any officers or employees of the Business other than as required by presently existing pension, profit sharing, bonus and similar benefit plans as presently constituted, and no agreement or plan other than those now in effect shall be adopted or committed for, except in amounts approved in writing by USDATA. Seller shall not increase, terminate, amend or otherwise modify any plan for the benefit of any employee without USDATA's prior written consent. 6.3 Hiring Employees. Prior to and at the Closing, Seller will cooperate with all reasonable requests made by Buyer for the purpose of allowing Buyer to hire those employees of Seller, as contemplated by Article X, such employment to be effective as of the Closing Date. 6.4 Access. Upon reasonable notice, Buyer, USDATA and their authorized agents, officers and representatives shall have complete access to the facilities, properties, books, records, contracts, information and documents of Seller as they relate to the Business to conduct such examinations and investigations of Seller as they deem necessary. Seller and its directors, officers, shareholders, employees, accountants and other agents and representatives shall cooperate fully with Buyer, USDATA and their authorized agents, officers and representatives in connection with Buyer's and USDATA's due diligence investigation of Seller and Seller's assets, contracts, liabilities, operations and other aspects of its Business. 6.5 Cooperation. As soon as practical after the date hereof, if they have not previously done so, Buyer, USDATA and Seller shall promptly and properly prepare and file all filings required by all Laws relating to the transactions contemplated hereby, and shall cooperate in all respects in connection with the giving of any notices to any governmental authority or securing the permission, approval, determination, consent or waiver of any governmental authority required by Law in connection with the consummation of this Agreement. 6.6 Confidentiality. Each party recognizes that it will receive confidential information regarding the other party during the course of the negotiations contemplated by this Agreement. Accordingly, each of and USDATA and Buyer, on the one hand, and Seller, on the other hand, agree to use its best efforts to prevent the unauthorized disclosure of any confidential information concerning the other party that has been disclosed previously or is disclosed during the course of the negotiations and investigations contemplated by this Agreement. The obligations of this paragraph do not apply to information that: (a) is or becomes part of the public domain (other than through breach of this Agreement or any other agreement between the parties relating to confidentiality), (b) is received by the receiving party from a third party without breach of a nondisclosure obligation of the third party, or (c) is independently developed. 26 27 6.7 Publicity. All notices, releases, statements and communications to employees, suppliers, distributors and customers and any person other than their respective officers, directors, stockholders, representatives or agents of Seller and Buyer and to the general public and the press relating to the transactions contemplated by this Agreement shall be made only at such times and in such manner as may be mutually agreed upon in writing by Seller and Buyer; provided, however, that any party shall be entitled to make a public announcement or statement or other public disclosure relating to the transactions contemplated hereby if, in the opinion of its legal counsel, such announcement or statement or other public disclosure is required to comply with any Law (including, without limitation, federal securities laws) or any subpoena or other process; provided, further, however, that such party gives prior written notice of its intention to make such disclosure, the content of such disclosure and the provision of Law, subpoena or process requiring such disclosure and further, provided, USDATA shall be permitted to file this Agreement and to describe the transactions contemplated hereby in a Current Report on Form 8-K or a Quarterly Report on Form 10-Q filed under the Securities Exchange Act of 1934, as amended. 6.8 Material Adverse Effect. Prior to the Closing, Seller shall promptly inform Buyer and USDATA in writing of the occurrence of any event or set of facts or circumstances of which it has or obtains knowledge that have resulted in, or with the passage of time could be expected to result in, a Material Adverse Effect or any event that renders the representations and warranties made in Article 4 to be inaccurate, or any failure of Seller to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by any of them under this Agreement. Any such disclosure shall not be deemed a waiver by Buyer or USDATA of any representation, warranty, covenant or agreement of Seller contained in this Agreement. 6.9 Approvals of Governmental Authorities and Third Parties. As soon as practicable after the execution of this Agreement, but in any event prior to the Closing Date, Seller, USDATA and Buyer will secure all necessary approvals and consents of all governmental authorities and other third parties required on the part of Seller, USDATA and Buyer for the consummation of the transactions contemplated by this Agreement. 6.10 Contracts. Prior to Closing, except with Buyer's prior written consent, (a) other than in the ordinary course of the business and operations of the Business and in a manner consistent with past business practices of the Business, Seller will not assume or enter into any contract, lease, license, obligation, indebtedness, commitment, purchase or sale relating to the business or operations of the Business involving more than $10,000 each, and (b) except as expressly contemplated hereby, 27 28 Seller will not modify, amend or waive any provisions of any Contract in a manner that would adversely affect Buyer's ownership or operation of the Purchased Assets or the Business after the Closing Date, or terminate any Contract listed on Schedule 2.1(g). 6.11 Capital Assets. Prior to Closing, except with Buyer's prior written consent, Seller will not acquire or dispose of any capital asset (other than Excluded Assets) relating to or used or to be used in the business or operations of the Business having an initial cost of $10,000 or more. 6.12 Mortgages; Liens. Prior to Closing, except with Buyer's prior written consent, Seller will not enter into or assume any mortgage, pledge, conditional sale or other title retention agreement, or permit any lien, encumbrance or claim of any kind to attach to any of its assets, whether now owned or hereafter acquired, relating to or used or to be used in the business or operations of the Business. 6.13 No Solicitation. From the date hereof through the later of (a) the date specified in Section 12.1(d); or (b) the Closing Date, or the earlier termination of this Agreement, Seller shall not and Seller will cause each of its officers, directors and shareholders and its legal and financial advisors and affiliates not to, directly or indirectly, make, solicit, encourage, initiate or enter into any agreement or agreement in principle, or announce any intention to do any of the foregoing, with respect to any offer or proposal to acquire all or part of the business or properties of the Business or the Purchased Assets (excluding the Excluded Assets) (whether through direct purchase, merger, consolidation, or other business combination, an "Alternative Transaction"). Seller shall not, and Seller will cause each of its officers, directors and shareholders and its legal and financial advisors and affiliates not to, directly or indirectly, participate in any negotiations or discussions regarding, or furnish any information (including, but not limited to, confidential or financial information) with respect to, or otherwise cooperate in any way in connection with, or assist or participate in, facilitate or encourage or respond to, any effort or attempt to effect or seek to effect an Alternative Transaction with or involving any corporation, partnership, person or other entity or group other than Buyer and USDATA, their employees, directors, representatives and agents concerning the sale of Seller or any merger, combination sales of assets, or similar transactions which would involve the assets and Business of Seller. Seller shall promptly communicate to Buyer and USDATA the terms of any proposal it may receive in respect of an Alternative Transaction and the identity of such other party and the nature of such proposal, offer or invitation. 6.14 Information for Tax Returns. Seller shall cooperate with Buyer and USDATA after the Closing Date by providing Buyer and USDATA, without any additional consideration but at the expense of Buyer and USDATA, promptly upon 28 29 request, such records and other information regarding the Purchased Assets and/or the Business as may reasonably be requested from time to time by Buyer and USDATA in connection with the preparation or audit of its federal, state and local income and other tax returns, and audits, disputes, refund claims or litigation relating thereto. In such connection, Seller will afford Buyer's and USDATA's independent tax advisors, and such other persons as may be mutually agreed upon, access to Seller's books and records or relating to the Purchased Assets; provided, however, that Buyer and USDATA shall cause its independent tax advisors and such other persons to hold in strict confidence all such information (except as required to be disclosed in connection with such tax returns and audits, disputes, refund claims and litigation relating thereto). 6.15 Supplements to Disclosure Schedules. From time to time prior to the Closing Date, Seller shall promptly provide to Buyer and USDATA proposed supplements or amendments to the schedules to this Agreement with respect to any matter arising or changing which, if existing or occurring as of the date of this Agreement, would have been required to be set forth or described in such schedules; provided, however, any such proposed supplements or amendments to the schedules to this Agreement shall not become part of this Agreement unless and until Buyer and USDATA shall execute an instrument evidencing their agreement thereto, and such proposals shall not be deemed a waiver by Buyer or USDATA of any representation or warranty of Seller contained in this Agreement other than as agreed upon in such instrument. 6.16 Payments by Seller. Seller shall have the right to pay the items listed on Schedule 2.5(b) prior to Closing. To the extent Seller possesses insufficient cash as of the Closing to make such payments, Seller shall pay such amounts upon Closing, and Buyer and/or USDATA shall pay the amount of such insufficiency to Seller in the form of a note payable with a maturity of thirty (30) days from the date of Closing, payable in full at maturity without interest. ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND USDATA Each and every obligation of Buyer and USDATA to be performed on the Closing Date shall be subject to the satisfaction prior to or at the Closing of the following express conditions precedent: 7.1 Compliance with Agreement. Seller and the Shareholders shall have performed and complied in all material respects with all of its obligations, covenants and agreements under this Agreement which are to be performed or complied with by it prior to the Closing. 29 30 7.2 No Litigation. (a) No third-party investigation, suit, action, or other proceeding that questions the validity or legality of the transactions contemplated hereby or that seeks restraint, prohibition, damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby shall be pending before any court or governmental agency or threatened. (b) There shall not be in effect any order, decree or injunction (whether preliminary, final or appealable) of a federal or state court of competent jurisdiction which (i) prohibits consummation of this Agreement or the transactions contemplated hereby, (ii) requires Buyer or USDATA to hold separate or dispose of any of the Purchased Assets or (iii) could have a Material Adverse Effect or materially impairs the ability of Buyer or USDATA to perform their obligations hereunder. 7.3 Representations and Warranties. The representations and warranties made by Seller and the Shareholders in this Agreement shall be true and correct in all material respects at and as of the date of this Agreement and as of the Closing Date with the same force and effect as though said representations and warranties had been made on the Closing Date. 7.4 Material Adverse Effect. Between the date hereof and the Closing Date, no event shall have occurred or set of facts or circumstances arisen which has resulted in, or with the passage of time could be expected to result in, a Material Adverse Effect. 7.5 Deliveries at Closing. Seller and the Shareholders shall have delivered to Buyer and/or USDATA, as appropriate, the documents and items specified in Section 3.2. 7.6 Financial Commitment. USDATA and Buyer shall have received a financing commitment to fund the transactions contemplated by this Agreement, and such financing commitment has terms and conditions as are acceptable to Buyer and USDATA in their sole discretion. ARTICLE VIII CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER AND THE SHAREHOLDERS Each and every obligation of Seller and the Shareholders to be performed on the Closing Date shall be subject to the satisfaction prior to or at the Closing of the following express conditions precedent: 30 31 8.1 Compliance with Agreement. Buyer and USDATA shall have performed and complied in all material respects with all of their obligations, covenants and agreements under this Agreement which are to be performed or complied with by either of them prior to or on the Closing Date. 8.2 No Litigation. (a) No third-party investigation, suit, action, or other proceeding that questions the validity or legality of the transactions contemplated hereby or that seeks restraint, prohibition, damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby shall be pending before any court or governmental agency or threatened. (b) There shall not be in effect any order, decree or injunction (whether preliminary, final or appealable) of a federal or state court of competent jurisdiction which prohibits consummation of this Agreement or the transactions contemplated hereby. 8.3 Representations and Warranties. The representations and warranties made by Buyer and USDATA in this Agreement shall be true and correct in all material respects at and as of the date of this Agreement and as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date. 8.4 Deliveries at Closing. Buyer and/or USDATA shall have joined in and shall have delivered to Seller and the Shareholders, as applicable, the documents and items specified in Section 3.3. ARTICLE IX SURVIVAL AND INDEMNIFICATION 9.1 Survival of Representations and Warranties. The representations and warranties contained herein, other than the representations and warranties contained in Section 4.19, shall survive the Closing for a period of two (2) years. The representations and warranties contained in Section 4.19 shall survive the Closing until the expiration of the applicable statute of limitations period specified pursuant to applicable Law. If written notice of a claim has been given prior to the expiration of the applicable representations and warranties by a party in whose favor such representations and warranties have been made to the party that made such representations and warranties, the relevant representations and warranties shall survive as to such claim until the claim has been finally resolved. 31 32 9.2 Indemnification by Seller and the Shareholders. (a) Seller and the Shareholders shall indemnify and hold harmless Buyer and USDATA and each director, officer, employee, agent and affiliate of Buyer and USDATA (each, a "Buyer Indemnified Party"), from and against, and agree promptly to defend each Buyer Indemnified Party from and reimburse each Buyer Indemnified Party for, any and all actions, suits, proceedings (including any investigations or inquiries), losses, damages, costs, expenses, liabilities, obligations and claims of any kind or nature whatsoever which may be incurred by or asserted against or involve a Buyer Indemnified Party, whether or not disclosed, including, without limitation, reasonable attorneys' fees and other legal costs and expenses ("Buyer's Losses"), arising out of or in any way relating to: (i) any breach by Seller or the Shareholders of any representation or warranty set forth in this Agreement or in any document delivered hereunder; (ii) any Excluded Obligations; or (iii) any failure by Seller or the Shareholders to carry out, perform, satisfy and discharge any covenants, agreements, undertakings, liabilities or obligations to be performed by any of them pursuant to the terms of this Agreement or any of the documents delivered by them pursuant to this Agreement. Notwithstanding any other provision of this Section 9.2, Seller and the Shareholders shall not have any liability to USDATA or Buyer for a breach of any representation, warranty or covenant (other than with respect to Excluded Obligations and the matters contained in Sections 4.16 and 4.19) unless and until the aggregate Buyer's Losses incurred by Seller for all breaches of such provisions total more than $100,000 (the "Seller's Floor"), and in the event that the Buyer's Losses exceed the Seller's Floor, Seller shall be liable to Buyer and USDATA for the entirety of the amount of the Buyer's Losses. (b) In the event a claim against a Buyer Indemnified Party arises to which the indemnity of Section 9.2(a) of this Agreement is applicable, notice shall be given promptly by the Buyer Indemnified Party to Seller and the Shareholders and Seller and the Shareholders shall have the right to control all settlements (unless the Buyer Indemnified Party agrees to assume the cost of settlement) and to select lead counsel to defend any and all such claims at the sole cost and expense of Seller and 32 33 the Shareholders. The Buyer Indemnified Party may select counsel to participate in any such defense at the sole cost and expense of the Buyer Indemnified Party. In connection with any such claim, action or proceeding, the parties shall cooperate with each other and provide each with access to relevant books and records in their possession, as well as necessary employees or other agents. (c) Except with respect to indemnification obligations of Seller and Shareholders relating to Taxes, the obligations of Seller and the Shareholders to indemnify Buyer and/or USDATA pursuant to the terms of this Agreement shall be recoverable solely from the Escrow or any other amounts or shares of USDATA Stock due to Seller hereunder if still in the possession of Buyer or USDATA. Indemnification obligations of Seller and Shareholders relating to Taxes shall be payable first from the Escrow and then by Seller and the Shareholders. The number of shares subject to any such withholding or set off shall be calculated using the then current market price of the USDATA Stock at the time of such set off. 9.3 Indemnification by Buyer and USDATA. (a) Buyer and USDATA hereby jointly and severally agree to indemnify and hold harmless Seller, the Shareholders and each officer, director, employee, agent and affiliate of Seller (each, a "Seller Indemnified Party") from and against, and agrees promptly to defend each Seller Indemnified Party from and reimburse each Seller Indemnified Party for any and all actions, suits, proceedings (including any investigation or inquiries), losses, damages, costs, expenses, liabilities, obligations, and claims of any kind or nature whatsoever, which may be incurred by or asserted against or involve a Seller Indemnified Party, including, without limitation, reasonable attorneys' fees and other legal costs and expenses ("Seller's Losses") arising out of or in any way relating to: (i) any breach by Buyer or USDATA of Buyer's and USDATA's representations or warranties set forth in this Agreement; or (ii) any failure by Buyer or USDATA to carry out, perform, satisfy and discharge any covenants, agreements, undertakings, liabilities or obligations to be performed by them pursuant to the terms of this Agreement or any of the documents delivered by Buyer or USDATA pursuant to this Agreement. (b) In the event a claim against a Seller Indemnified Party arises to which the indemnity of Section 9.3(a) of this Agreement is applicable, notice shall be given promptly by Seller to Buyer and USDATA, and Buyer and USDATA shall have the right to control all settlements (unless the Seller Indemnified Party agrees to assume 33 34 the cost of settlement) and to select lead counsel to defend any and all such claims at the sole cost and expense of Buyer and USDATA. The Seller Indemnified Party may select counsel to participate in any such defense at the sole cost and expense of the Seller Indemnified Party. In connection with any such claim, action or proceeding, the parties shall cooperate with each other and provide each other with access to relevant books and records in their possession. 9.4 Mediation and Arbitration. It is the intention of the parties to bring all disputes between them to an early, efficient and final resolution. Therefore, the parties agree that all disputes, claims and controversies between the parties, whether individual, joint in class in nature, or otherwise, shall be resolved as provided herein under the rules and auspices of the American Arbitration Association ("AAA"). (a) Any dispute between the parties as it relates to the terms of this Agreement or the behavior or practice of the parties as their rights or privileges may be affected in the future, shall be submitted to formal mediation using a mediator either appointed by the AAA or a mediator who conducts his practice under the rules followed by the AAA or any other mediator to which the parties may agree. Mediation must commence not later than two weeks after one party notifies the agreed-upon mediator or the AAA, in writing, of its request for mediation. Mediation shall be deemed to be in the nature of settlement negotiations and shall be subject to the AAA Mediation procedures. Any applicable statute of limitation shall be tolled until such time as the mediator or both parties have concluded that the dispute cannot reasonably be resolved through mediation. (b) Any dispute not otherwise satisfactorily resolved shall be submitted to binding arbitration through the AAA in Texas, Idaho or Washington. Arbitration must commence not later than sixty (60) days after either party submits a written demand for arbitration to the AAA, otherwise such demanding party shall be entitled to an order compelling arbitration as provided by law. (i) Statutes of limitations, estoppel, waiver, laches and similar doctrines which would otherwise be applicable in any action brought by a party hereto shall be applicable in arbitration proceeding hereunder, and the parties agree that the commencement of binding arbitration proceedings hereunder shall be deemed the commencement of an action for purposes of such doctrines, whether raised in court or arbitration. Arbitration is commenced on the date a notice of demand for binding arbitration is received by the AAA. (ii) Arbitration shall be conducted by a single arbitrator appointed by the AAA. Arbitration proceedings shall be conducted in accordance with 34 35 the AAA Arbitration Procedures unless otherwise agreed between the parties. The arbitrator shall have the power to award monetary and/or non-monetary relief but shall not have the power to award punitive damages. (iii) The decision by the arbitrator shall be final and binding upon the parties and/or their heirs, successors and assigns. Judgment upon the award rendered may be entered in any court for confirmation of the award and the entry of a judgment or for any other relief with respect to the award as provided by law. (iv) Notwithstanding the foregoing, any party to this Agreement may bring any action involving injunctive or extraordinary relief in any court of competent jurisdiction, and the requirement of arbitration shall not prohibit a party from seeking injunctive relief from a court of competent jurisdiction immediately following an alleged breach of this Agreement by the other party. (c) During mediation and arbitration proceedings, the parties shall continue performance of this Agreement unless doing so would unnecessarily increase damages. The parties agree to adhere to all warranties and covenants contained in this Agreement until such time as the arbitration process has been completed and the arbitrator has determined each party's post-arbitration obligations and responsibilities as they relate to such warranties and covenants. (d) The fees and costs of mediation shall be divided equally between the parties. The fees and costs of arbitration, including without limitation, arbitration fees, reasonable attorneys and accountants fees, witness expenses and other related expenses actually incurred, shall be awarded by the arbitrator to the prevailing party in such arbitration proceeding. ARTICLE X PERSONNEL 10.1 Buyer Employees. Buyer shall make offers of employment to Seller's employees of the Business listed on Schedule 10.1 immediately following the Closing (the "Buyer Employees"). Immediately prior to Closing, Seller shall terminate the employment of all of the Buyer Employees as of the Closing Date and Seller shall pay all obligations with respect to such Buyer Employees and fulfill all obligations and applicable employee benefit plans (including severance, wages, commissions, accrued vacation and other benefits) in respect of periods prior to the Closing. 10.2 Terms of Employment. Buyer's employment of Buyer Employees shall be 35 36 on terms and conditions as Buyer and Buyer Employees shall find mutually acceptable (and may include the requirement by the Buyer Employees to complete applications and customary nondisclosure or noncompetition agreements), and all Buyer Employees shall be eligible to participate in the employee benefit plans of Buyer (or USDATA as applicable) to the extent similarly situated employees of Buyer are eligible to participate in such plans. To the extent permitted by applicable Law, the Buyer Employees shall be given credit for previous employment with the Seller for purposes of determining eligibility (but not compensation levels) under such plans. Notwithstanding the foregoing, Buyer and USDATA shall have no obligation to provide to Buyer Employees any term, condition or benefit of employment that is the same as or similar to those provided by Seller to Buyer Employees prior to the Closing, including, but not limited, to those relating to commissions, bonus, profit sharing or other additional compensation, sick pay, severance pay, personal time or pay or pensions. Seller shall indemnify, defend and hold harmless Buyer and USDATA from and against any liability or obligation to Buyer Employees or any other employees of Seller, other than the obligations specifically undertaken by Buyer as set forth above. No provision of this Agreement shall create any third party beneficiary rights in any Buyer Employees or any beneficiary or dependent thereof with respect to the compensation, terms and conditions of employment and benefits that may be provided to any Buyer Employee. 10.3 Employment Agreements. On the Closing Date, the Shareholders, the key employees set forth on Schedule 3.2(r) and Buyer and/or USDATA shall enter into employment agreements in the forms of Exhibit 10.3(1) through (4), as applicable (the "Employment Agreements"). 10.4 Options. As soon as practical following the Closing, and subject to the execution of appropriate option agreements, USDATA shall make available to the Buyer Employees stock options (the "Options") to purchase up to an aggregate of 75,000 shares of USDATA Stock. The Options shall be allocated among employees as set forth on Schedule 3.2(r). The Options will have customary terms and conditions as other option holders under USDATA's 1994 Amended and Restated Equity Compensation Plan (the "Stock Option Plan"). The Options, and the shares of USDATA Stock issuable upon exercise of the Option, shall not be registered under the Act unless otherwise set forth in the Stock Option Plan. 10.5 WARN. Seller shall comply in all respects with the notice and other requirements of the Worker Adjustment Retraining and Notification Act, 19 U.S.C. `2101 et seq., and similar applicable state statutes. Neither Buyer nor USDATA shall not have any liability with respect to any employee of Seller arising out of such statutes. 10.6 Payroll Tax. Buyer, USDATA and Seller agree to follow the Standard 36 37 Procedure specified in Rev. Proc. 84-77, 1984-2 C.B. 753, whereby, among other things, each will be responsible for the reporting duties with respect to its own payments of wages and compensation to employees in connection with the operation of the Purchased Assets. In addition, Seller agrees to provide to Buyer all information reasonably requested by Buyer necessary for Buyer and Buyer Employees to receive credit for payroll tax items already paid by Seller or Buyer Employees for any periods prior to the Closing Date. ARTICLE XI ADDITIONAL COVENANTS 11.1 Taxes and Fees. Seller shall pay all applicable sales, transfer, documentary, use and filing fees and taxes that may become due or payable as a result of the sale, conveyance, assignment, transfer or delivery of any of the Purchased Assets. 11.2 Brokers. Except as set forth on Schedule 11.2, Seller, the Shareholders, USDATA and Buyer represent to each other that the transactions contemplated by this Agreement have been negotiated directly between them and their respective counsels, without intervention of any person as a result of any action by them in such a manner as to give rise to a valid claim against any of them for a brokerage commission, finder's fee, counseling or advisory fee, or like payment and each agrees to indemnify the opposite party against any such liability arising from or through it. The fees of Dominion & Company, Inc. shall be paid by Seller. Subject to such shares remaining in Escrow, Seller may transfer the ownership of shares of USDATA Stock to Dominion & Company, Inc. or its affiliates if, prior and as a condition to such transfer, USDATA receives documents acceptable to it, in its sole discretion, regarding the compliance of such transfer with all securities laws (including investor representation letters), regarding the transferee's written agreement to be bound by the terms of the Escrow and regarding any other matters USDATA deems appropriate. In any event, all shares shall be held in the Escrow and shall be subject to the terms and conditions of this Agreement and the Employment Agreements referred to in Section 10.3 on a pro rata basis with each of the Shareholders. In the event any Shareholder receives a disbursement of such USDATA Stock or if such USDATA Stock is forfeited pursuant to the terms of the Employment Agreements or set off against pursuant to terms of this Agreement, such shares of USDATA Stock allocable to such holder shall be disbursed, forfeited or set off against in the proportion that the USDATA Stock disbursed, forfeited or set off against under the Employment Agreements or this Agreement bears to the shares held by the Shareholders. 11.3 Books and Records; Personnel. Buyer and Seller shall make available to 37 38 each other for reasonable periods of time Buyer's or Seller's personnel to assist Seller or Buyer in locating and obtaining records and files maintained by Buyer or Seller and any of Buyer's or Seller's personnel whose assistance or participation is reasonably required by Seller or Buyer, in anticipation of, preparation for, or the conduct of any existing or future litigation, tax returns or other matters, in which Seller or Buyer is involved. ARTICLE XII TERMINATION 12.1 Termination. Time is of the essence of this Agreement. This Agreement may be terminated and the transactions contemplated hereby may be abandoned as follows: (a) at any time prior to the Closing by mutual written agreement of Seller, Buyer and USDATA; or (b) by Buyer and USDATA if there has been a material breach of the representations and warranties of Seller contained herein or if Seller shall have failed to comply in any material respect with any of its covenants or agreements contained in this Agreement; or (c) by Seller if there has been a material breach of the representations and warranties of Buyer and USDATA contained herein or if Buyer or USDATA shall have failed to comply in any material respects with any of their covenants or agreements contained in this Agreement; or (d) by Seller or by Buyer on or after August 6, 1999 if by that date the Closing has not taken place (provided, however, no party shall be entitled to terminate this Agreement pursuant to this clause (d) if such party is in breach of this Agreement at such time); or (e) by any party if any court of competent jurisdiction in the United States or other governmental body of the United States shall have issued an order, decree or ruling restraining, enjoining or otherwise prohibiting the purchase and sale of the Purchased Assets contemplated by this Agreement. 12.2 Rights on Termination; Waiver. If this Agreement is terminated pursuant to Section 12.1, all further obligations of the parties under or pursuant to this Agreement shall terminate without further liability of either party to the other, except for the obligations under Section 13.2; provided, however, that termination pursuant to clauses (b) or (c) of Section 12.1 shall not relieve any defaulting or breaching party 38 39 from liability to the other party. Upon any termination of this Agreement, each party will return all documents, work papers and other material (including all copies) of the other party relating to the transactions contemplated by this Agreement. ARTICLE XIII MISCELLANEOUS 13.1 Entire Agreement; Amendment. This Agreement and the documents referred to herein and to be delivered pursuant hereto constitute the entire agreement between the parties pertaining to the subject matter hereof, and supersede all prior and contemporaneous agreements, understandings, negotiations, and discussions of the parties, whether oral or written, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof, except as specifically set forth herein. This Agreement may only be amended or modified by an instrument in writing executed by Seller, the Shareholders, Buyer and USDATA. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provision of this Agreement, whether or not similar, nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. 13.2 Expenses. Whether or not the transactions contemplated by this Agreement are consummated, each of the parties shall pay the fees and expenses of their respective counsel, accountants and other experts incident to the negotiation and preparation of this Agreement, the filing of any reports or notifications required of that party by Law and the consummation of the transactions contemplated by this Agreement. 13.3 Governing Law. This Agreement shall be construed and interpreted according the laws of the State of Texas, without regard to the conflicts of laws provisions thereof. 13.4 Assignment. Neither party may assign any of its rights or delegate any of its duties under this Agreement; provided, however, that Buyer may transfer all of its rights and obligations hereunder to another wholly-owned direct or indirect subsidiary of USDATA. 13.5 Notices. All communications, notices and disclosures required or permitted by this Agreement shall be in writing and shall be deemed to have been given at the earlier of the time when actually delivered to an officer of the party to which notice is to be given or when sent by facsimile transmission, overnight courier service or by certified or registered first-class mail, postage prepaid, return receipt requested, addressed as follows, unless and until any party notifies the others in accordance with this Section 13.5 of a change of address: 39 40 If to Buyer or USDATA: USDATA Corporation 2435 North Central Expressway Richardson, Texas 75080 Attention: Robert Drury Facsimile: (972) 669-9557 With copies to: Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, Pennsylvania 19087 Attention: Diana Wechsler Kerekes Facsimile: (610) 293-0601 and: Jenkens & Gilchrist a Professional Corporation 1445 Ross Avenue, Suite 3200 Dallas, Texas 75202 Attention: Michael J. Pendleton Facsimile: (214) 855-4300 If to Seller: Smart Shop Software, Inc. 501 E. Clearwater Loop, Suite 3 Post Falls, Idaho 83854 Attention: Michelle Dickman With a copy to: Bradley & Riley, PC 2007 First Ave. SE Cedar Rapid, Iowa 52402 Attention: Bradley G. Hart or William T. McCartan Facsimile: (319) 363-9824 13.6 Counterparts; Headings. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but such counterparts shall together constitute one and the same Agreement. The Table of Contents and Article and Section headings in this Agreement are inserted for convenience of reference only and shall not constitute a part of this Agreement. 40 41 13.7 Interpretation. Unless the context requires otherwise, all words used in this Agreement in the singular number shall extend to and include the plural, all words in the plural number shall extend to and include the singular, and all words in any gender shall extend to and include all genders. 13.8 Severability. If any provision, clause, or part of this Agreement, or the application thereof under certain circumstances, is held invalid, the remainder of this Agreement, or the application of such provision, clause, or part under other circumstances, shall not be affected thereby. 13.9 No Reliance. Neither Buyer, USDATA nor Seller assume any liability to any person not a party to this Agreement because of any reliance on the representations, warranties, and agreements of Buyer, USDATA or Seller contained herein. 13.10 Specific Performance. Seller acknowledges that a refusal by Seller to consummate the transactions contemplated hereby, or a breach by Seller of the provisions of this Agreement, will cause irrevocable harm to Buyer and USDATA, for which there may be no adequate remedy at law and for which the ascertainment of damages would be difficult. Therefore, Buyer and USDATA shall be entitled, in addition to, and without having to prove the inadequacy of, other remedies at law, to specific performance of this Agreement, as well as injunctive relief (without being required to post bond or other security). 13.11 Further Assurances. Upon and subject to the conditions contained herein, each of the parties hereto agrees, both before and after the Closing, (a) to use all reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to consummate and make effective the transactions contemplated by this Agreement, (b) to execute any documents, instruments or conveyances of every kind which may be reasonably necessary or advisable to carry out any of the transactions contemplated hereby, and (c) to cooperate with each other in connection with the foregoing, including using their reasonable efforts (i) to obtain all consents from other parties required to permit consummation of the transactions contemplated hereby; provided, however, that neither USDATA nor Buyer shall be required to make any payments, commence litigation or agree to any modification of the terms thereof in order to obtain such consents, (ii) to obtain all necessary consents as are required to be obtained under any Law to permit consummation of the transactions contemplated hereby, (iii) to defend all litigation challenging this Agreement or other consummation of the transaction contemplated hereby, (iv) to lift or rescind any injunction or restraining order or other order adversely affecting the ability of the parties to consummate the transactions contemplated hereby, (v) to effect all necessary registrations and filings and (vi) to fulfill all conditions to this Agreement. 41 42 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written. SMART SHOP SOFTWARE, INC. (Idaho) By: ---------------------------------- Name: -------------------------------- Title: ------------------------------- USDATA CORPORATION By: ---------------------------------- Name: -------------------------------- Title: ------------------------------- SMART SHOP SOFTWARE, INC. (Delaware) By: ---------------------------------- Name: -------------------------------- Title: ------------------------------- 42 43 SHAREHOLDERS: ------------------------------------- James Dickman ------------------------------------- Michael Maloof ------------------------------------- Michelle Dickman 43 EX-99.1 3 PRESS RELEASE DATED AUGUST 2, 1999 1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE ACQUISITION EXTENDS PRODUCT FUNCTIONALITY TO PROVIDE ENTERPRISE APPLICATIONS FOR MANUFACTURING PRODUCTION AUGUST 2, 1999 -- RICHARDSON, TEXAS USDATA Corporation, a global manufacturing software solutions supplier, announced it has signed a definitive agreement to purchase essentially all of the assets of Smart Shop Software, Inc. The transaction is subject to a number of customary conditions including the receipt of third party consents. The acquisition is expected to be completed in August 1999. Smart Shop Software is a privately held software company located in Post Falls, ID that provides business software to make-to-order small and medium sized manufacturers. "With this acquisition, USDATA will have the enterprise application software to help manufacturers tie front office customer contact activities to efficient back office production processes," said Bob Merry, President and CEO of USDATA Corporation. "USDATA provides manufacturers the production extension to operate and manage internal operations effectively in the eCommerce world," Mr. Merry added. USDATA Corporation (NASDAQ: USDC) 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. The company's software enables manufacturers to access accurate and timely information -- whether they are on the plant-floor, in the office, or around the globe. USDATA's solutions span the full range of manufacturing, from monitoring equipment to tracking product flow, and are designed to integrate seamlessly with customer's existing manufacturing and business software. This combination of product breadth and ease of integration provide a total plant solution that defines new levels of manufacturing performance and gives customers a distinct competitive advantage. Now in its 25th year, USDATA has a strong global presence with more than 41,000 installs, in more than 50 countries throughout the world, 13 offices worldwide and a global network of distribution and support partners. The company is headquartered in Richardson, Texas. EX-99.2 4 PRESS RELEASE DATED AUGUST 6, 1999 1 EXHIBIT 99.2 FOR IMMEDIATE RELEASE USDATA COMPLETES SMART SHOP ACQUISITION AUGUST 9, 1999 -- Richardson, Texas USDATA Corporation announced today that it has completed its previously announced acquisition of the business of Smart Shop Software, Inc., located in Post Falls, Idaho. USDATA acquired substantially all of the assets and certain liabilities of Smart Shop Software in exchange for $6.4 million in cash and 500,000 shares of USDATA stock. Smart Shop Software provides business software to make-to-order small and medium sized manufacturers. "Smart Shop is experiencing significant growth and their products fit well with our strategy to provide software that enables manufacturers to succeed in the eCommerce world," said Bob Merry, USDATA president and CEO. "The founders of Smart Shop will continue with the business and represent a significant source of experience, knowledge and vision and we welcome all of Smart Shop's employees to USDATA." About USDATA USDATA Corporation (NASDAQ:USDC) 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. The company's software enables manufacturers to access accurate and timely information -- whether they are on the plant-floor, in the office, or around the globe. USDATA's solutions span the full range of manufacturing, from monitoring equipment to tracking product flow, and are designed to integrate seamlessly with customer's existing manufacturing and business software. This combination of product breadth and ease of integration provide a total plant solution that defines new levels of manufacturing performance and gives customers a distinct competitive advantage. Now in its 25th year, USDATA has a strong global presence with more than 41,000 installs, in more than 50 countries throughout the world, 13 offices worldwide and a global network of distribution and support partners. The company is headquartered in Richardson, Texas. This press release contains forward-looking statements with respect to financial results and certain other matters. These statements are made under the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, without limitation, fluctuations in demand, the quality and price of similar or comparable software products, access to sources of capital, general economic conditions in the company's market areas, and that future sales and growth rates for the industry and the company could be lower than anticipated. EX-99.3 5 PRESS RELEASE DATED AUGUST 10, 1999 1 EXHIBIT 99.3 FOR IMMEDIATE RELEASE SAFEGUARD SCIENTIFICS PROVIDES FUNDING FOR NEW INITIATIVE AUGUST 10, 1999 -- Richardson, Texas USDATA Creates New eMake Division to Develop Internet Applications for Manufacturing USDATA Corporation announced today that Safeguard Scientifics, Inc. (NYSE:SFE), USDATA's primary shareholder, has invested an additional $10,000,000 in USDATA to create and launch a new division, called eMake, focused on Internet applications for manufacturing. The funding package, which is in the form of a private placement, includes the purchase of 1,204,819 shares of the company's common stock for $5,000,000 and the purchase of 50,000 shares of the company's Series A Convertible Preferred stock for $5,000,000, increasing Safeguard's ownership to 40.9% on a fully diluted basis. The new eMake division is focused on the "make" or production area of manufacturing and will develop and distribute Internet applications that deliver integrated production solutions and real-time visibility across the supply chain. "USDATA's initiative will help companies capitalize on the manufacturing opportunities created through e-commerce by delivering Internet applications that tie into the manufacturing value chain in a real-time fashion. We are pleased to increase our ownership position in USDATA and help them in launching this new division to bring Internet enabled manufacturing solutions to market. This initiative is an excellent fit in our enterprise applications strategy. USDATA has made a tremendous turnaround in the past year and we are confident that the additional investment will accelerate their growth," said Warren V. Musser, Safeguard chairman and CEO. Commenting on the investment, Bob Merry USDATA president and CEO said, "Safeguard has shown a tremendous vote of confidence in USDATA's strategy and ability to execute. The Internet is radically changing the business environment. In the eBusiness world, front office systems will create revenue and profits will be generated through strong back office systems and processes. The focus of this new eMake division is to leverage our 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." Senior Analyst Greg Gorbach of ARC Advisory group said, "USDATA is on the move. On top of another profitable quarter, they are staking out a production-centric, integrated portfolio of internet applications for manufacturing. With the addition of SmartManager plant-level ERP, USDATA rounds out their offering as envisioned in ARC's Unified Enterprise Model. They've had the vision for some time -- now they have the funding, the focus, the channel, and the product base to deliver a strong value proposition to their customers." 2 Initial product availability is targeted for early in the year 2000 and the division will focus on horizontal make-to-order solutions for smaller manufacturers and industry solutions for larger-scale automotive and electronics assembly. The division plans to develop additional vertical market solutions in the future. About Safeguard Safeguard is an information technology holding company that identifies, acquires, operates, and manages Internet-related companies. Safeguard's Internet focus places particular emphasis on companies engaged in eCommerce, network infrastructure activities, and enterprise applications, including 4anything.com, eMERGE Interactive, Pac-West Telecomm, and Cambridge Technology Partners, among others. A thought leader in the technology industry, Safeguard has successfully identified and benefited from major technology shifts over the past 30 years. An active participant in its partnership companies' success, Safeguard works closely with their management to support internal and external operations that build value and help prepare for initial public offerings and beyond. Safeguard also assists in managing and working with seven venture capital funds, many of which are also Internet-related, including TL Ventures and PA Early Stage Partners. About USDATA USDATA Corporation (NASDAQ: USDC) 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. The company's software enables manufacturers to access accurate and timely information -- whether they are on the plant-floor, in the office, or around the globe. USDATA's solutions span the full range of manufacturing, from monitoring equipment to tracking product flow, and are designed to integrate seamlessly with customer's existing manufacturing and business software. This combination of product breadth and ease of integration provide a total plant solution that defines new levels of manufacturing performance and gives customers a distinct competitive advantage. Now in its 25th year, USDATA has a strong global presence with more than 41,000 installs, in more than 50 countries throughout the world, 13 offices worldwide and a global network of distribution and support partners. The company is headquartered in Richardson, Texas. -----END PRIVACY-ENHANCED MESSAGE-----