-----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, Q6Fe/ZcfwrTuM2O6cU4zoWYktpxSGlSUl2tAKEopMFOWd9zKpN+HIkelmagl1LEq /9fhF+BWiJ74tvCdRpVtIQ== 0001021408-03-000447.txt : 20030117 0001021408-03-000447.hdr.sgml : 20030117 20030117122144 ACCESSION NUMBER: 0001021408-03-000447 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20030117 GROUP MEMBERS: SCP PRIVATE EQUITY II, LLC SUBJECT COMPANY: 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: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-49134 FILM NUMBER: 03517335 BUSINESS ADDRESS: STREET 1: 2435 NORTH CENTRAL EXPRESSWAY CITY: RICHARDSON STATE: TX ZIP: 75080 BUSINESS PHONE: 9726809700 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SCP PRIVATE EQUITY PARTNERS II LP CENTRAL INDEX KEY: 0001118995 IRS NUMBER: 233037972 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 435 DEVON PARK DRIVE STREET 2: BLDG 300 CITY: WAYNE STATE: PA ZIP: 19087 BUSINESS PHONE: 6109952900 MAIL ADDRESS: STREET 1: BUILDING 300 435 DEVON PARK DRIVE CITY: WAYNE STATE: PA ZIP: 19087 SC 13D/A 1 dsc13da.txt SCHEDULE 13D AMENDMENT #4 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. 4)* USDATA Corporation - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, $0.01 Par Value Per Share - -------------------------------------------------------------------------------- (Title of Class of Securities) 917294 10 0 - -------------------------------------------------------------------------------- (CUSIP Number) Charles C. Freyer, Esquire - -------------------------------------------------------------------------------- General Counsel - -------------------------------------------------------------------------------- SCP Private Equity Partners II, L.P. - -------------------------------------------------------------------------------- 435 Devon Park Drive, Building 300 - -------------------------------------------------------------------------------- Wayne, PA 19087 - -------------------------------------------------------------------------------- 610-254-4242 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) copy to: Spencer W. Franck, Jr. - -------------------------------------------------------------------------------- Saul Ewing LLP - -------------------------------------------------------------------------------- 1200 Liberty Ridge Drive, Suite 200 - -------------------------------------------------------------------------------- Wayne, PA 19087-5055 - -------------------------------------------------------------------------------- January 15, 2003 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of (SS)240.13d-1(e), (SS)240.13d-1(f) or (SS)240.13d-1(g), check the following box [_] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. CUSIP No. 917294 10 0 - -------------------------------------------------------------------------------- The information required in the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 917294 10 0 Page 1 of 9 - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) SCP Private Equity Partners II, L.P. 23-3037972 - ------------------------------------------------------------------------------ 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [_] (b) [_] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS (SEE INSTRUCTIONS) WC - -------------------------------------------------------------------------------- 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- Number of Shares 7. Sole Voting Power Beneficially Owned By 0 Each Reporting Person 8. Shared Voting Power With 7,337,904 9. Sole Dispositive Power 0 10. Shared Dispositive Power 7,337,904 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,337,904 - -------------------------------------------------------------------------------- 12. CHECK IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [_] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 83.6%* - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) PN - -------------------------------------------------------------------------------- CUSIP NO. 917294 10 0 Page 2 of 9 - -------------------------------------------------------------------------------- * Based on 3,089,332 shares of the Issuer's common stock, $0.01 par value per share, outstanding as of January 15, 2003. CUSIP No. 917294 10 0 Page 3 of 9 - -------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSONS. I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY) SCP Private Equity II, LLC 23-3047235 - -------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) (a) [_] (b) [_] - -------------------------------------------------------------------------------- 3. SEC USE ONLY - -------------------------------------------------------------------------------- 4. SOURCE OF FUNDS (SEE INSTRUCTIONS) AF - -------------------------------------------------------------------------------- 5. CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [_] - -------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- Number of Shares 7. Sole Voting Power Beneficially Owned By 0 Each Reporting Person 8. Shared Voting Power With 7,337,904 9. Sole Dispositive Power 0 10. Shared Dispositive Power 7,337,904 - -------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 7,337,904 - -------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) [_] - -------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 83.6% - -------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) CO - -------------------------------------------------------------------------------- CUSIP No. 917294 10 0 Page 4 of 9 - -------------------------------------------------------------------------------- * Based on 3,089,332 shares of the Issuer's common stock, $0.01 par value per share, outstanding as of January 15, 2003. CUSIP No. 917294 10 0 Page 5 of 9 - -------------------------------------------------------------------------------- This Amendment No. 4 to Schedule 13D ("Amendment No. 4") relates to a Schedule 13D filed with the Securities and Exchange Commission ("SEC") on April 9, 2001 (the "Schedule 13D"), Amendment No. 1 to the Schedule 13D ("Amendment No. 1") filed with the SEC on May 10, 2002, Amendment No. 2 to the Schedule 13D filed with the SEC on September 4, 2002 ("Amendment No. 2") and Amendment No. 3 to the Schedule 13D filed with the SEC on October 3, 2002 ("Amendment No. 3"). This Amendment No. 4 amends and supplements Amendment No. 3. Information in the Schedule 13D, Amendment No. 1, Amendment No. 2 and Amendment No. 3 remains in effect except to the extent that it is superceded by the information contained in this Amendment No. 4. Information given in response to each item shall be deemed to be incorporated by reference in all other items. Capitalized terms used but not defined in this Amendment No. 4 shall have the meanings ascribed to such terms in the Schedule 13D, Amendment No. 1, Amendment No. 2 and Amendment No. 3. Item 1. Security and Issuer This Amendment No. 4 relates to the common stock, $0.01 par value per share of the Issuer (the "Common Stock"). Item 3. Source and Amount of Funds or Other Consideration SCP Private Equity Partners II, L.P. ("SCP L.P.") entered into the Series C Preferred Stock Purchase Agreement (the "Stock Purchase Agreement") dated as of January 14, 2003 with the Issuer (which is attached hereto as Exhibit 1 and the terms of which are incorporated herein by reference), pursuant to which it acquired on January 15, 2003, for an aggregate purchase price of $1,500,000, (1) 37,500 shares of the Series C-1 Preferred Stock, $0.01 par value per share of the Issuer (the "Series C-1 Preferred"); (2) a warrant from the Issuer to purchase 18,750 shares of the Series C-2 Preferred Stock, $0.01 par value per share of the Issuer (the "Series C-2 Preferred") at an initial exercise price of $40.00 per share, subject to adjustment upon the occurrence of certain events (the "Third USDATA Warrant", which is attached hereto as Exhibit 2 and the terms of which are incorporated herein by reference); and (3) 619,186 shares of Common Stock of the Issuer (the "Common Stock"). SCP L.P. funded the purchases described above with its working capital. Item 4. Purpose of Transaction Except as set forth above and in the Schedule 13D, Amendment No. 1, Amendment No. 2 and Amendment No. 3, none of the Reporting Persons, the General Partner or any of the Members, have formulated any plans or proposals of the types referred to in clauses (a) through (j) of Item 4 of Schedule 13D. However, all of SCP L.P.'s investments are made with the intention of exiting within a matter of a few years. Accordingly, a future CUSIP No. 917294 10 0 Page 6 of 9 - -------------------------------------------------------------------------------- proposal or plan for the sale of the Issuer or of SCP L.P.'s interest in the Issuer by the Reporting Persons is possible. The Reporting Persons reserve the right to change their plans at any time. Item 5. Interest in the Securities of the Issuer (a)-(b) Both Reporting Persons may be deemed to be the beneficial owners with shared power to vote and dispose of a total of 7,337,904 shares of the Issuer's Common Stock (or 83.6% of the outstanding Common Stock). SCP LLC is deemed to be such a beneficial owner as described herein because of an agreement with SCP L.P. granting SCP LLC the power to make voting and investment decisions regarding the securities held by SCP L.P. The calculations of beneficial ownership herein assume the conversion of the (1) Series A Preferred Stock, $0.01 par value per share of the Company (the "Series A Preferred") held by SCP L.P. (including accrued dividends up to January 15, 2003) into 272,401 shares of the Common Stock; (2) Series B Preferred Stock, $0.01 par value per share of the Company (the "Series B Preferred") held by SCP L.P. (including accrued dividends up to January 15, 2003) into 1,003,722 shares of the Common Stock; (3) Series C-1 Preferred held by SCP L.P. (including accrued dividends up to January 15, 2003) into 2,325,167 shares of the Common Stock; (4) total number of Series C-2 Preferred purchasable under the USDATA Warrant into 1,500,000 shares of the Common Stock; (5) total number of Series C-2 Preferred purchasable under the Second USDATA Warrant into 212,500 shares of the Common Stock; and (6) total number of Series C-2 Preferred purchasable under the Third USDATA Warrant into 375,000 shares of the Common Stock. (c) Not applicable. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer In connection with the Stock Purchase Agreement, SCP L.P. and the Issuer executed an amendment dated as of January 14, 2003 (which is attached hereto as Exhibit 3 and the terms of which are incorporated herein by reference) to the Second Amended and Restated Investors' Rights Agreement, dated March 30, 2001 (the "March 30th Investors' Rights Agreement") by and among the Issuer and the other parties set forth therein, pursuant to which the Common Stock purchased under the Stock Purchase Agreement and the Common Stock issuable upon conversion of the (1) Series C-1 Preferred purchased under the Stock Purchase Agreement and (2) the Series C-2 Preferred issuable upon exercise of the Third USDATA Warrant, were included as "Registrable Securities" (as that term is defined in the March 30th Investors' Rights Agreement). CUSIP No. 917294 10 0 Page 7 of 9 - -------------------------------------------------------------------------------- In connection with the Stock Purchase Agreement, SCP L.P. also executed a Written Consent of Preferred Stockholders dated as of January 14, 2003 (the "Preferred Consent") (which is attached hereto as Exhibit 5 and the terms of which are incorporated herein by reference), pursuant to which it consented to the transactions contemplated by the Stock Purchase Agreement and waived any anti-dilution adjustment with respect to the conversion prices of the Series A Preferred, the Series B Preferred, the Series C-1 Preferred or the Series C-2 Preferred that would result from the issuance of securities pursuant to the Stock Purchase Agreement, the issuance of Series C-2 Preferred upon exercise of the Third USDATA Warrant, or the payment of additional shares of Series C-1 Preferred or Series C-2 Preferred as dividends with respect to the securities purchased pursuant to the Stock Purchase Agreement or issued upon exercise of the Third USDATA Warrant. The waiver set forth in the Preferred Consent is effective against SCP L.P. only if it is effective against all holders of the Series B Preferred. Except as otherwise described in this Amendment No. 4, in the Schedule 13D, in Amendment No. 1, in Amendment No. 2 and in Amendment No. 3, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the Reporting Persons, the General Partner or any of the Members, or between the Reporting Persons, the General Partner or any of the Members and any other person with respect to any securities of the Issuer, including but not limited to transfer or voting of any securities of the Issuer, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. Item 7. Material to be Filed as Exhibits The following documents are filed as exhibits to this Amendment No. 4: 1. Series C Preferred Stock Purchase Agreement by and between SCP Private Equity Partners II, L.P. and USDATA Corporation dated as of January 14, 2003. 2. USDATA Corporation Series C-2 Preferred Stock Purchase Warrant dated January 14, 2003. 3. Amendment to Second Amended and Restated Investors' Rights Agreement by and between SCP Private Equity Partners II, L.P. and USDATA Corporation dated as of January 14, 2003. 4. Written Consent of Preferred Stockholders dated as of January 14, 2003. CUSIP No. 917294 10 0 Page 8 of 9 - -------------------------------------------------------------------------------- SIGNATURES After reasonable inquiry and to the best of our knowledge and belief, we certify that the information set forth in this statement is true, complete and correct. SCP Private Equity Partners II, L.P. By: SCP Private Equity II General Partner, L.P., its General Partner By: SCP Private Equity II, LLC By: /s/ Winston J. Churchill -------------------------------- Name: Winston J. Churchill Title: A manager SCP Private Equity II, LLC By: /s/ Winston J. Churchill -------------------------------- Name: Winston J. Churchill Title: A manager CUSIP No. 917294 10 0 Page 9 of 9 - -------------------------------------------------------------------------------- EXHIBIT INDEX Exhibit 1 Series C Preferred Stock Purchase Agreement by and between SCP Private Equity Partners II, L.P. and USDATA Corporation dated as of January 14, 2003. Exhibit 2 USDATA Corporation Series C-2 Preferred Stock Purchase Warrant dated January 14, 2003. Exhibit 3 Amendment to Second Amended and Restated Investors' Rights Agreement by and between SCP Private Equity Partners II, L.P. and USDATA Corporation dated as of January 14, 2003. Exhibit 4 Written Consent of Preferred Stockholders dated as of January 14, 2003. EX-1 3 dex1.txt SERIES C PREFERRED STOCK PURCHASE AGREEMENT EXHIBIT 1 SERIES C PREFERRED STOCK PURCHASE AGREEMENT THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT is made as of the 14th day of January, 2003, by and among USDATA Corporation, a Delaware corporation (the "Company") and SCP Private Equity Partners II, L.P., a Delaware limited partnership (the "Investor"). In consideration of the mutual promises hereinafter set forth, the parties hereto, each intending to be legally bound hereby, agree as follows: 1. Purchase and Sale. 1.1 Sale and Issuance of Series C Preferred Stock. Subject to the terms and conditions of this Agreement, the Investor agrees to purchase at the Closing, and the Company agrees to sell and issue to the Investor at the Closing, (i) 37,500 shares of the Company's Series C-1 Preferred Stock, par value $0.01 per share (the "Series C-1 Preferred Stock"), (ii) a warrant (the "Warrant") to purchase up to 18,750 shares of the Company's Series C-2 Preferred Stock, par value $0.01 per share (the "Series C-2 Preferred Stock") (at an initial exercise price of $40.00 per share), and (iii) 619,186 shares of the Company's Common Stock, $0.01 par value per share (the "Common Stock") for an aggregate purchase price of $1,500,000. The Series C-1 Preferred Stock and the Series C-2 Preferred Stock are sometimes collectively and individually referred to as "Series C Preferred Stock". The rights, privileges and preferences of the Series C Preferred Stock shall be as stated in the Company's Certificate of Designation for Series C-1 Preferred Stock and Series C-2 Preferred Stock, and the Warrant shall be substantially in the form attached hereto as Exhibit A. As used herein, the term "Securities" means the shares of Series C Preferred Stock, the Warrant and the Common Stock to be issued and sold hereunder. 1.2 Closing. The purchase, sale and issuance of the Securities shall take place at the offices of Saul Ewing LLP, Centre Square West, 1500 Market Street, 38/th/ Floor, Philadelphia PA 19102-2186 at 10:00 a.m. on January 14, 2003, or at such other place and time as the Company and the Investor mutually agree upon (which time is designated as the "Closing"). 1.3 Consideration. At the Closing, the Company shall deliver to the Investor, certificates representing the Securities being sold to the Investor hereunder pursuant to Section 1.1(b) against payment of $1,500,000 by the Investor of the purchase price therefor by wire transfer in immediately available funds. 2. Representations and Warranties of the Company. The Company hereby represents and warrants to the Investor that, except as set forth on the Disclosure Schedule attached hereto as Schedule A (the "Disclosure Schedule") furnished to the Investor, which exceptions shall be deemed to be representations and warranties as if made hereunder: 2.1 Organization, Good Standing and Qualification. The Company and each of its subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the state of its formation and has all requisite corporate power and authority to carry on its business as now conducted and as proposed to be conducted. The Company and each of its subsidiaries is duly qualified to transact business and is in good standing in each jurisdiction in which the failure to so qualify would have a material adverse effect on its business, properties, results of operation or financial condition. 2.2 SEC Reports; Financial Statements. The Company's Common Stock, $0.01 par value per share (the "Common Stock") is registered under Section 12(b) or (g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the Company is in compliance with its reporting and filing obligations under the Exchange Act. The Company has made available to the Investor (a) its annual reports to stockholders and its Annual Reports on Form 10-K for its last two fiscal years and (b) all of its Quarterly Reports on Form 10-Q and each other report, registration statement or definitive proxy statement filed with the Securities and Exchange Commission (the "SEC") since the beginning of such two fiscal years (collectively, the "SEC Reports"). The SEC Reports do not (as of their respective dates) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The audited and unaudited financial statements of the Company included in the SEC Reports (the "Financial Statements") have been prepared in accordance with generally accepted accounting principles applied on a consistent basis (except as stated in such Financial Statements or the notes thereto) and fairly present, subject, in the case of the unaudited Financial Statements, to normal recurring and year-end adjustments, the financial position of the Company and its consolidated subsidiaries as of the dates thereof and the results of their operations and changes in financial position for the periods then ended. Except as disclosed by the Company in the SEC Reports, since the end of the most recent of such fiscal years, there has been no material adverse change in the business, properties, financial condition or results of operations of the Company and its subsidiaries taken together, and there is no existing condition, event or series of events which reasonably would be expected to have a material adverse effect on the business, properties, financial condition or results of operations of the Company and its subsidiaries taken together, or the ability of the Company to perform its obligations under this Agreement, the Warrant, or the Second Amended and Restated Investors' Rights Agreement, dated as of March 30, 2001, by and among the Company, the Investor and certain other investors in the Company and as amended as of the date hereof (the "Second Amended and Restated Investors' Rights Agreement"). 2.3 Capitalization and Voting Rights (a) As of the date hereof, unless otherwise specified herein, the authorized capital of the Company consists of: (i) 2,200,000 shares of Preferred Stock, par value $0.01 per share (the "Preferred Stock"), of which (x) 100,000 shares have been designated as "Series A Preferred Stock," of which 50,000 currently are issued or outstanding; (y) 800,000 shares have been designated as "Series B Preferred Stock," of which 281,800 currently are issued or outstanding; and (z) 125,000 shares have been designated as "Series C-1 Preferred Stock," of which 75,000 2 are currently issued or outstanding and 125,000 shares have been designated as "Series C-2 Preferred Stock," of which none are currently issued or outstanding. (ii) 40,000,000 shares of Company Common Stock, of which, as of the date hereof, 3,089,332 shares are issued and outstanding. (b) Except for the ownership of shares and warrants in eMake Corporation by the parties to the Second Amended and Restated Investors' Rights Agreement, all outstanding shares of capital stock of the Company's subsidiaries are owned beneficially and of record by the Company, free and clear of any liens, security interests, encumbrances or other adverse claims other than (i) such liens set forth on Schedule 2.21, (ii) mechanics', carriers', workmens' or other like kind liens arising or incurred in the ordinary cause of business, (iii) liens for taxes that are not due and payable and (iv) other imperfections of title or encumbrances, if any, that individually or in the aggregate do not have a material adverse effect on the business, properties, results of operation or financial condition of the Company or any of its subsidiaries (collectively, the "Permitted Liens"). Except as described in the Disclosure Schedule, the Company and its subsidiaries do not presently own or control, directly or indirectly, any interest in any other corporation, association or other business entity. Except as set forth in Section 2.3(b) of the Disclosure Schedule, neither the Company nor its subsidiaries are participants in any joint venture, partnership, or similar arrangement. (c) All outstanding shares of capital stock of the Company and its subsidiaries have been duly and validly authorized and issued, are fully paid and nonassessable and were issued in accordance with the registration or qualification provisions of the Securities Act of 1933, as amended (the "Securities Act"), and any relevant state securities laws or pursuant to valid exemptions therefrom. (d) Except (i) as disclosed in the SEC Reports, (ii) for warrants, options and rights in eMake Corporation held by the parties to the Second Amended and Restated Investors' Rights Agreement, (iii) except for the rights provided for in the Second Amended and Restated Investors' Rights Agreement and this Agreement, and (iv) as set forth on Schedule 2.3 of the Disclosure Schedule, there are no outstanding options, warrants, rights (including conversion or preemptive rights) or agreements for the purchase or acquisition from the Company or any of its subsidiaries of any shares of their capital stock. 2.4 Authorization. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery by the Company of this Agreement and the Warrant, the performance of all obligations of the Company hereunder and thereunder, and the authorization, issuance (or reservation for issuance) and delivery of the Securities being sold hereunder, the Series C Preferred Stock issuable upon exercise of the Warrant and the Common Stock issuable upon conversion of the Series C Preferred Stock, has been taken, and this Agreement and the Warrant constitute the valid and legally binding obligations of the Company, enforceable in accordance with their respective terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies. 3 2.5 Stockholder Approval. Approval by the common stockholders of the Company is not required for the authorization, execution and delivery of this Agreement and the Warrant, the performance of all obligations of the Company hereunder and thereunder, and the authorization, issuance (or reservation for issuance) and delivery of the Securities being sold hereunder, the Series C Preferred Stock issuable upon exercise of the Warrant and the Common Stock issuable upon conversion of the Series C Preferred Stock. 2.6 Valid Issuance of Stock. The shares of Series C Preferred Stock and the shares of Common Stock that are being issued to the Investor hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement, the Second Amended and Restated Investors' Rights Agreement, any agreement between the Investor and a third party of which the Company has no knowledge and under applicable state and federal securities laws. The Series C Preferred Stock issuable upon exercise of the Warrant has been duly and validly reserved for issuance and, upon issuance in accordance with the terms of the Warrant, will be duly and validly issued, fully paid and nonassessable, and will be free of restrictions on transfers other than restrictions on transfer under this Agreement, the Second Amended and Restated Investors' Rights Agreement, any agreement between the Investor and a third party of which the Company has no knowledge and under applicable state and federal securities laws. The Common Stock issuable upon conversion of the Series C Preferred Stock purchased under this Agreement or issuable upon the exercise of the Warrant has been duly and validly reserved for issuance and upon issuance will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer under this Agreement, the Second Amended and Restated Investors' Rights Agreement, any agreement between the Investor and a third party of which the Company has no knowledge and under applicable state and federal securities laws. 2.7 Governmental Consents. Except as set forth on Schedule 2.7, other than those that have been duly obtained or filings which are required under applicable securities laws, which filings, if any, will be made within the applicable periods required by such laws, no consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority, including the National Association of Securities Dealers, Inc. (the "NASD"), on the part of the Company is required in connection with the consummation of the transactions contemplated by this Agreement, the Warrant and the Second Amended and Restated Investors' Rights Agreement. 2.8 Offering. Subject in part to the truth and accuracy of the Investor representations set forth in Section 3 of this Agreement, the offer, sale and issuance of the Securities as contemplated by this Agreement are exempt from the registration requirements of the Securities Act and applicable state securities laws, and neither the Company nor any authorized agent acting on its behalf will take any action hereafter that would cause the loss of such exemption. The issuance of shares of Series C Preferred Stock upon the exercise of the Warrant and the issuance of shares of Common Stock upon the conversion of shares of Series C Preferred Stock will be exempt from the registration requirement of the Securities Act and applicable state securities laws. 4 2.9 Compliance with Certain Matters. Neither the Company nor any of its subsidiaries is in violation or default under or in breach of any material provision of its Certificate of Incorporation or Bylaws, any material agreement, instrument, contract, document, judgment, order, writ or decree to which it is a party or by which it is bound or any federal or state statute, rule or regulation applicable to it. The execution, delivery and performance of this Agreement and the Warrant and the consummation of the transactions contemplated hereby and thereby will not result in any such violation or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such material provision, agreement, instrument, contract, document, judgment, order, writ, decree, statute, rule or regulation or an event that results in the creation of any lien, charge or encumbrance upon any assets of the Company or any of its subsidiaries or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license, authorization, or approval applicable to the Company or any of its subsidiaries, their business or operations or any of their assets or properties. 2.10 Litigation. There is no action, suit, proceeding or investigation pending or, to the best of the Company's knowledge, currently threatened against the Company or any of its subsidiaries that questions the validity of this Agreement, the Warrant or the Second Amended and Restated Investors' Rights Agreement or the right of the Company to enter into such agreements, or to consummate the transactions contemplated hereby or thereby, or that might result, either individually or in the aggregate, in any material adverse changes in the assets, condition, affairs or prospects of the Company or any of its subsidiaries, financially or otherwise, or any change in the current equity ownership of the Company or any of its subsidiaries. The foregoing includes, without limitation, actions, suits, proceedings or investigations pending or, to the best of the Company's knowledge, threatened involving the prior employment of any of the Company's or any of its subsidiaries' employees or consultants, their use in connection with the Company's or any of its subsidiaries' business of any information or techniques allegedly proprietary to any of their former employers, or their obligations under any agreements with prior employers. Neither the Company nor any of its subsidiaries is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company or any of its subsidiaries currently pending or that the Company or any of its subsidiaries intends to initiate. 2.11 Non-Disclosure and Proprietary Rights Agreements. Except as described in the Disclosure Schedule, each employee, officer and consultant of the Company or any of its subsidiaries has executed a Non-Disclosure and Proprietary Rights Agreement in the form attached as Exhibit B hereto. The Company, after reasonable investigation, is not aware that any of the Company's or its subsidiaries' key employees, officers or consultants are in violation of the agreements specified in this Section 2.11, and the Company and its subsidiaries will use their reasonable efforts to prevent any such violation. 2.12 Patents and Trademarks. The Disclosure Schedule contains a complete and accurate list of all (i) patented or registered Intellectual Property Rights (as defined below) owned or used by the Company or any of its subsidiaries, (ii) pending patent applications and applications for registrations of other Intellectual Property Rights filed by the Company or any its subsidiaries and (iii) unregistered trade names and corporate names owned or used by the 5 Company or any of its subsidiaries. The Disclosure Schedule also contains a complete and accurate list of all licenses and other rights granted by the Company or any of its subsidiaries to any third party with respect to any Intellectual Property Rights and all licenses and other rights granted by any third party to the Company or any of its subsidiaries with respect to any Intellectual Property Rights, in each case identifying the subject Intellectual Property Rights but not including licenses arising from the purchase of standard "off the shelf" products. The Company or a subsidiary of the Company owns all right, title and interest in and to all of the Intellectual Property Rights listed on the Disclosure Schedule free and clear of all liens, encumbrances or claims of others except liens, encumbrances and claims of others with respect to third-party licenses and Permitted Liens. Except as set forth on the Disclosure Schedule, the Company or a subsidiary of the Company owns all right, title and interest to, or has the right to use pursuant to a valid license, all Intellectual Property Rights, as they currently exist, necessary for the operation of the business of the Company and its subsidiaries as presently conducted and as presently proposed to be conducted, free and clear of all liens, encumbrances or claims of others except liens, encumbrances and claims of others with respect to third-party licenses. The Company and its subsidiaries have taken all necessary actions to maintain and protect the Intellectual Property Rights that each of them own. To the best of the Company's knowledge, the owners of any Intellectual Property Rights licensed to the Company or any of its subsidiaries have taken all necessary and desirable actions to maintain and protect the Intellectual Property Rights that are subject to such licenses. There have been no claims made against the Company or any of its subsidiaries asserting the invalidity, misuse or unenforceability of any of such Intellectual Property Rights, and to the best of the Company's knowledge, there are no valid grounds for the same. Neither the Company nor any of its subsidiaries has received any notices of, and the Company is not aware of any facts which indicate a likelihood of, any infringement or misappropriation by, or conflict with, any third party with respect to such Intellectual Property Rights (including, without limitation, any demand or request that the Company or any of its subsidiaries license any rights from a third party). To the best of the Company's knowledge, the conduct of the Company's and each of its subsidiaries' business has not infringed, misappropriated or conflicted with and does not infringe, misappropriate or conflict with any Intellectual Property Rights of others, nor to the best of the Company's belief would any future conduct as presently contemplated infringe, misappropriate or conflict with any Intellectual Property Rights of others. To the best of the Company's knowledge, the Intellectual Property Rights owned by or licensed to the Company or any of its subsidiaries have not been infringed upon, or misappropriated by or conflict with others. The transactions contemplated by this Agreement will have no material adverse effect on the Company's or any of its subsidiaries' right, title and interest in and to the Intellectual Property Rights listed on the Disclosure Schedule. To the best of the Company's knowledge, none of the Company's nor any of its subsidiaries' employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with the use of his or her best efforts to promote the interests of the Company or any of its subsidiaries or that would conflict with the Company's or any of its subsidiaries' business as presently conducted and to the best of the Company's belief as presently proposed to be conducted. Neither the execution of this Agreement nor the transactions contemplated by this Agreement nor the carrying on of the Company's or each of its subsidiaries' business by the employees of the Company and each of its subsidiaries, nor the conduct of the Company's or each of its subsidiaries' business as presently 6 conducted or presently proposed to be conducted, will, to the best of the Company's knowledge, conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such employees is now obligated. The Company does not believe it is or will be necessary for the Company or any of its subsidiaries to utilize any inventions of any of the Company's or any of its subsidiaries' employees (or people it currently intends to hire) made prior to their employment by the Company or any of its subsidiaries, as applicable. For purposes of this Agreement, "Intellectual Property Rights" means all (i) patents, patent applications, patent disclosures and inventions, (ii) trademarks, service marks, trade dress, trade names, logos and corporate names and registrations and applications for registration thereof together with all of the goodwill associated therewith, (iii) copyrights (registered and unregistered) and copyrightable works and registrations and applications for registration thereof, (iv) mask works and registrations and applications for registration thereof, (v) computer software, data, data bases and documentation thereof, (vi) trade secrets and other confidential information (including, without limitation, ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how, manufacturing and production processes and techniques, research and development information, drawings, specifications, designs, plans, proposals, technical data, financial and marketing plans and customer and supplier lists and information), (vii) other intellectual property rights and (viii) copies and tangible embodiments thereof (in whatever form or medium). 2.13 Agreements; Action. (a) The SEC Reports list all material agreements, understandings, instruments and contracts, whether written or oral, to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or its assets and properties are bound that are required to be so disclosed. (b) Except as set forth in the SEC Reports or the Disclosure Schedule, there are no agreements, understandings or proposed transactions between the Company or any of its subsidiaries and any of its officers, directors, affiliates or any affiliate thereof. (c) Except as set forth in the SEC Reports, this Agreement or as described in the Disclosure Schedule, there are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company or any of its subsidiaries is a party or by which it is bound that may involve (i) obligations (contingent or otherwise) of, or payments to, the Company or any of its subsidiaries in excess of $25,000, (ii) the license of any patent, copyright, trade secret or other proprietary right to or from the Company or any of its subsidiaries, other than licenses arising from the purchase of "off the shelf" or other standard products, (iii) provisions restricting or affecting the development, manufacture or distribution of the Company's or any of its subsidiaries' products or services, (iv) a warranty with respect to its services rendered or its products sold or leased other than in the ordinary course of business, or (v) indemnification by the Company or any of its subsidiaries with respect to infringements of proprietary rights. (d) Except as set forth in the SEC Reports, neither the Company nor any of its subsidiaries has (i) declared or paid any dividends or authorized or made any distribution upon or 7 with respect to any class or series of its capital stock, (ii) incurred any material indebtedness for money borrowed or any other liabilities, (iii) made any material loans or advances to any person, other than advances for travel expenses and other customary employment-related advances made in the ordinary course of business, or (iv) sold, exchanged or otherwise disposed of any material amount of its assets or rights, other than the sale of its inventory in the ordinary course of business. (e) For the purposes of subsections (c) and (d) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections. (f) All of the contracts, agreements and instruments set forth on the Disclosure Schedule pursuant to this Section 2.13 are valid, binding and enforceable in accordance with their respective terms and there has been no material change to or amendment to a material contract by which the Company or any of its subsidiaries or any of their respective assets or properties is bound or subject. Each of the Company and its subsidiaries has performed all material obligations required to be performed by it and is not in material default under or in material breach of nor in receipt of any claim of default or breach under any contract, agreement or instrument and neither the Company nor any of its subsidiaries have any present expectation or intention of not fully performing all such obligations. No event has occurred which with the passage of time or the giving of notice or both would result in a material default, breach or event of noncompliance by the Company or any of its subsidiaries under any contract, agreement or instrument. None of the Company nor any of its subsidiaries have knowledge of any breach or anticipated breach by the other parties to any contract, agreement, instrument or commitment. (g) Neither the Company nor any of its subsidiaries is a party to or is bound by any contract, agreement or instrument, that materially adversely affects its business as now conducted or as proposed to be conducted, its properties or its financial condition. 2.14 Related-Party Transactions. Except as disclosed in the SEC Reports, no employee, consultant, officer, or director of the Company or any of its subsidiaries, or member of his or her immediate family is indebted to the Company or any of its the subsidiaries, nor is the Company or any of its subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of them except for compensation, wages and benefits and travel and customary expenses. Except for employment agreements, benefit plans, insurance policies and similar matters, no employee, consultant, officer, or director of the Company or any of its subsidiaries, or member of the immediate family of any officer or director of the Company or any of its subsidiaries is directly or indirectly interested in any material contract with the Company or any of its subsidiaries. 2.15 Permits. Each of the Company and each of its subsidiaries has all franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could materially and adversely affect its business, properties, prospects, results of operation, or financial condition, and the Company believes that each of the Company and its subsidiaries can obtain, without undue burden or expense, any 8 similar authority for the conduct of its business as planned to be conducted. Neither the Company nor any of its subsidiaries is in default in any material respect under any of such franchises, permits, licenses or other similar authority. 2.16 Environmental and Safety Laws. To the Company's knowledge, neither the Company nor any of its subsidiaries is in violation of any applicable statute, law or regulation relating to the environment or occupational health and safety, and to the Company's knowledge, no material expenditures are or will be required in order to comply with any such existing statute, law or regulation. 2.17 Manufacturing and Marketing Rights. Except in the ordinary course of business or as disclosed in the SEC Reports, neither the Company nor any of its subsidiaries has granted rights to manufacture, produce, assemble, license, market, or sell its products to any other person and is not bound by any agreement that affects its exclusive right to develop, manufacture, assemble, distribute, market or sell its products. 2.18 Disclosure. The Company has fully provided the Investor with all the information that the Investor has requested for deciding whether to purchase the Securities and to consummate the transactions contemplated by this Agreement. None of this Agreement, the Warrant, the Second Amended and Restated Investors' Rights Agreement, any other statements or certificates made or delivered in connection herewith or therewith or any other information supplied by the Company with respect to the transactions contemplated hereby, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements herein or therein not misleading. 2.19 Registration Rights. Except as (a) provided in the Second Amended and Restated Investors' Rights Agreement, (b) provided in the Investors' Rights Agreement dated as of September 12, 2000 by and among eMake Corporation and the other parties named therein, (c) as disclosed in the SEC Reports or (d) as set forth on Schedule 2. 19, neither the Company nor any of its subsidiaries has granted or agreed to grant any registration rights, including piggyback rights, to any person or entity. 2.20 Corporate Documents. Except as contemplated by this Agreement, the Company's Certificate of Incorporation and Bylaws and each of its subsidiaries' Certificates of Incorporation or Articles of Incorporation, as applicable, and Bylaws are in the form previously provided to the Investor. 2.21 Title to Property and Assets. Except as set forth on Schedule 2.21, Each of the Company and its subsidiaries owns its property and assets free and clear of all mortgages, liens, loans and encumbrances, except such encumbrances and liens that arise in the ordinary course of business and do not materially impair its ownership or use of such property or assets and Permitted Liens. With respect to the property and assets it leases, each of the Company and each of its subsidiaries is in compliance with such leases and holds a valid leasehold interest free of any liens, claims or encumbrances. 2.22 Tax Returns, Payments and Elections. Each of the Company and each of its subsidiaries has filed all tax returns and reports as required by law. These returns and reports 9 are true and correct in all material respects. Each of the Company and each of its subsidiaries has paid all taxes and other assessments due, except those contested by it in good faith that are listed in the Disclosure Schedule. 2.23 Insurance. As set forth on Schedule 2.23, each of the Company and each of its subsidiaries has in full force and effect or will obtain in a reasonable amount of time after the Closing, fire and casualty insurance policies and products liability and errors and omissions insurance. Each of the Company and each of its subsidiaries shall have or will obtain in a reasonable amount of time after the Closing, directors' and officers' insurance in amounts satisfactory to the Investor. 2.24 Minute Books. The minute books of the Company and each of its subsidiaries made available to the Investor contain a complete summary of all meetings of directors and stockholders since the time of incorporation and reflect all transactions referred to in such minutes accurately in all material respects. 2.25 Labor Agreements and Actions. Except as set forth on Schedule 2.25, neither the Company nor any of its subsidiaries is bound by or subject to (and none of its assets or properties is bound by or subject to) any written or oral, express or implied, contract, commitment or arrangement with any labor union, and no labor union has requested or, to the Company's knowledge, requested or sought to represent any of its employees, consultants, representatives or agents. There is no strike or other labor dispute involving the Company or any of its subsidiaries pending, or to the Company's knowledge, threatened, that could have a material adverse effect on the assets, properties, financial condition, operating results, or business of the Company or any of its subsidiaries (as such business is presently conducted and as it is proposed to be conducted), nor is the Company aware of any labor organization activity involving the employees or consultants of the Company or any of its subsidiaries. The Company is not aware that any officer or key employee or key consultant, or that any group of key employees or key consultants, intends to terminate their employment or consulting relationship with the Company or any of its subsidiaries, nor does the Company or any of its subsidiaries have a present intention to terminate the employment or consulting relationship of any of the foregoing nor has there been any material change in any compensation arrangement or agreement with any employee or consultant. With the exception of those officers and employees that have executed employment contracts with the Company or any subsidiary of the Company as listed in the Disclosure Schedule, the employment of each officer and employee of the Company and each of its subsidiaries is terminable at the will of the Company or a subsidiary of the Company, as applicable, and without any required severance payment. With the exception of the Company's consulting arrangement with Phoenix Management, Inc., the consulting relationship of each consultant of the Company or any of its subsidiaries is terminable at the will of the Company or a subsidiary of the Company, as applicable, and without any required severance payment. To the knowledge of the Company, each of the Company and each of its subsidiaries have complied in all material respects with all applicable state and federal equal employment opportunity and other laws related to employment. 2.26 Damage; Loss. Neither the Company nor any of its subsidiaries has experienced any damage, destruction or loss, whether or not covered by insurance, that would materially and adversely affect the assets, properties, financial condition, operating results, 10 prospects or business of the Company (as such business is presently conducted and as it is proposed to be conducted). 2.27 Liens; Claims. There has not been any satisfaction or discharge of any lien, claim or encumbrance or payment of any obligation by the Company or any of its subsidiaries, except in the ordinary course of business and that is material to its assets, properties, financial condition, operating results or business (as such business is presently conducted and as it is proposed to be conducted). 2.28 Real Property Holding Company. Neither the Company nor any of its subsidiaries is a real property holding company within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended. 3. Representations and Warranties of the Investor. The Investor hereby represents and warrants to the Company that: 3.1 Authorization. The Investor has full power and authority to enter into this Agreement, and this Agreement constitutes the valid and legally binding obligation of the Investor enforceable against the Investor in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies. 3.2 Purchase Entirely for Own Account. The Securities to be purchased by the Investor hereunder, the Series C Preferred Stock issuable upon exercise of the Warrant to be issued to the Investor hereunder and the Common Stock issuable upon conversion of the Series C Preferred Stock issued or issuable to the Investor hereunder or under the Warrant issued to the Investor hereunder, are being acquired for investment for the Investor's own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. The Investor does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to any of the Securities to be purchased by the Investor hereunder, the Series C Preferred Stock issuable upon exercise of the Warrant to be issued to the Investor hereunder, and the Common Stock issuable upon conversion of the Series C Preferred Stock issued or issuable to the Investor hereunder or under the Warrant issued to the Investor hereunder. 3.3 Disclosure of Information. The Investor has received all the information it considers necessary or appropriate for deciding whether to purchase the Securities. The Investor further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities and the business, properties, prospects and financial condition of the Company. The foregoing, however, does not limit or modify the representations and warranties in Section 2 of this Agreement or the right of the Investor to rely thereon. 3.4 Investment Experience. The Investor is an investor in securities of companies in the development stage and acknowledges that it is able to fend for itself, can bear 11 the economic risk of its investment, and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the Securities. The Investor also represents it has not been organized for the purpose of acquiring the Securities. 3.5 Accredited Investor. The Investor is an "accredited investor" within the meaning of Rule 501 of Regulation D promulgated under the Securities Act, as presently in effect. 3.6 Restricted Securities. The Investor understands that the Securities it is purchasing are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act, only in certain limited circumstances. In this connection, the Investor represents that it is familiar with Rule 144 promulgated under the Securities Act, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act. 3.7 Further Limitations on Disposition. Without in any way limiting the representations set forth above, the Investor further agrees not to make any disposition of all or any portion of the Securities to be purchased by the Investor hereunder, the Series C Preferred Stock issuable upon exercise of the Warrant to be issued to the Investor hereunder, and the Common Stock issuable upon conversion of the Series C Preferred Stock issued or issuable to the Investor hereunder or under the Warrant to be issued to the Investor hereunder unless and until the transferee has agreed in writing for the benefit of the Company to be bound by this Section 3 and the applicable provisions of the Second Amended and Restated Investors' Rights Agreement and: (a) There is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is made in accordance with such registration statement; or (b) Such Investor shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition and, if requested by the Company, such Investor shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company that such disposition will not require registration of such shares under the Act. It is agreed that the Company will not require opinions of counsel for transactions made pursuant to Rule 144 except in unusual circumstances or unless required by a transfer agent. Notwithstanding the provisions of subsections (a) and (b) above, no such registration statement or opinion of counsel shall be necessary for a transfer by an Investor that is a partnership to a partner of such partnership or a retired partner of such partnership who retires after the date hereof, or to the estate of any such partner or retired partner or the transfer by gift, will or intestate succession of any partner to his or her spouse or to the siblings, lineal descendants or ancestors of such partner or his or her spouse, if the transferee agrees in writing to be subject to the terms hereof to the same extent as if he or she were the original Investor hereunder. 12 3.8 Legends. It is understood that the certificates evidencing the Securities, the Series C Preferred Stock issuable upon exercise of the Warrant and the Common Stock issuable upon conversion of the Series C Preferred Stock issued or issuable to the Investor hereunder or under the Warrant to be issued to the Investor hereunder, may bear one or all of the following legends: (a) "These securities have not been registered under the Securities Act of 1933, as amended. They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the securities under such Act or an opinion of counsel satisfactory to the issuer thereof that such registration is not required or unless sold pursuant to Rule 144 of such Act." (b) The Company will furnish without charge upon request by any shareholder, the powers, designations, preferences and relative, participating, optional or other special rights and the qualifications, limitations or restrictions of the Series C-1 Preferred and the Series C-2 Preferred Stock. (c) Any legend required by the securities laws of any applicable jurisdictions. (d) Any legend required by the Second Amended and Restated Investors' Rights Agreement or other applicable agreement. 4. Conditions of Investor's Obligations at Closing. The obligations of the Investor under Sections 1.1 and 1.2 of this Agreement are subject to the fulfillment on or before the Closing of each of the conditions hereinafter set forth. 4.1 Representations and Warranties. The representations and warranties of the Company contained in Section 2 shall be true in all material respects on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing, unless another date is specified therein. 4.2 Performance. The Company shall have performed and complied in all material respects with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing. 4.3 Compliance Certificate. The President of the Company shall deliver to the Investor at the Closing a certificate on behalf of the Company, stating that the conditions specified in Sections 4.1 and 4.2 have been fulfilled. 4.4 Qualifications. All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Securities and the other transactions contemplated by this Agreement shall be duly obtained and effective as of the Closing. 4.5 Proceedings and Documents. All corporate approvals, stockholder approvals and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the 13 Investor and their counsel, and they shall have received all such counterpart original and certified or other copies of such documents as they may reasonably request. 4.6 Stock Certificates; Warrant. The Company shall have delivered to the Investor executed certificates representing the Series C Preferred Stock, the Common Stock, and the Warrant to be purchased at the Closing. 4.7 Confidentiality Agreements. Each employee, officer and consultant of the Company or any of its subsidiaries shall have entered into the applicable confidentiality agreement as specified in Section 2.11 hereof. 4.8 Extension of Working Capital Line. The Company's current working capital line with JP Morgan Chase shall have been extended for one year, on terms substantially similar to those in the current agreement with such bank. 4.9 Legal Opinion. The Investor shall have received an opinion of counsel to the Company, in the form attached hereto as Exhibit C. 4.10 NASD Matters. The Company shall have given or made all notices to or filings with the NASD, and shall have complied with all rules and regulations of the NASD, required in connection with the transactions contemplated hereby. 4.11 Amendment of Second Amended and Restated Investors' Rights Agreement. The Company shall have entered into the Amendment of Second Amended and Restated Investors' Rights Agreement in the form attached hereto as Exhibit D. 4.12 Written Consent of Preferred Stockholders. All holders of Preferred Stock shall have entered into the Written Consent of Preferred Stockholders in the form attached hereto as Exhibit E (the "Written Consent"). 5. Conditions of the Company's Obligations at Closing. The obligations of the Company to the Investor under this Agreement are subject to the fulfillment on or before the Closing of each of the following conditions by the Investor: 5.1 Representations and Warranties. The representations and warranties of the Investor contained in Section 3 shall be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing. 5.2 Performance. The Investor shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing. 5.3 Proceedings and Documents. All corporate approvals, stockholder approvals and other proceedings in connection with the transactions contemplated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the 14 Company's counsel, and they shall have received all such counterpart original and certified or other copies of such documents as they may reasonably request. 5.4 Payment of Purchase Price. The Investor shall have delivered to the Company the purchase price payable at the Closing pursuant to Section 1.3. 5.5 Qualifications. All authorizations, approvals, or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Securities and the other transactions contemplated by this Agreement shall be duly obtained and effective as of the Closing. 5.6 Written Consent of Preferred Stockholders. All holders of Preferred Stock shall have entered into the Written Consent. 6. Miscellaneous. 6.1 Survival of Warranties. The warranties, representations and covenants of the Company and the Investor contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing for a period of two years, and shall in no way be affected by any investigation of the subject matter thereof made by or on behalf of the Investor or the Company; provided, however, that there shall be no limitation period for those matters addressed in Section 2.3(a) or (b) hereof. 6.2 Use of Proceeds. The Company shall use the proceeds from the sale of the Securities to the Investor hereunder for working capital and general corporate purposes. 6.3 Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any Securities, any Series C Preferred Stock issuable upon exercise of the Warrant or any Common Stock issuable upon conversion of the Series C Preferred Stock). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 6.4 Governing Law. The construction, validity and interpretation of this Agreement will be governed by the internal laws of the State of Delaware without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. 6.5 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 15 6.6 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 6.7 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial overnight courier (with confirmation of receipt) or sent via facsimile (with confirmation of receipt), (a) in case of the Company, to the Company at 2345 North Central Expressway, Richardson, Texas 75080 (Fax: (972) 669-9557), Attention: Chief Financial Officer and (b) in the case of SCP Private Equity Partners II, L.P., to SCP Private Equity Partners II, L.P. at 435 Devon Park Drive, Building 300, Wayne, Pennsylvania 19087, (Fax: (610) 293-0601), Attention: Chief Financial Officer (or at such other address for a party as shall be specified by like notice). Notice given by facsimile shall be confirmed by appropriate answer back and shall be effective upon actual receipt if received during the recipient's normal business hours, or at the beginning of the recipient's next business day after receipt if not received during the recipient's normal business hours. All notices by facsimile shall be confirmed promptly after transmission in writing by certified mail or personal delivery. Any party may change any address to which notice is to be given to it by giving notice as provided above of such change of address. 6.8 Finder's Fee. Each party represents that it neither is nor will be obligated for any finders' fee or commission in connection with this transaction. The Investor agrees to indemnify and to hold harmless the Company from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or asserted liability) for which the Investor or any of its officers, partners, employees, or representatives is responsible. The Company agrees to indemnify and hold harmless the Investor from any liability for any commission or compensation in the nature of a finders' fee (and the costs and expenses of defending against such liability or asserted liability) for which the Company or any of its respective officers, employees, consultants or representatives is responsible. 6.9 Expenses. Upon the Closing of this transaction, the Company shall pay all reasonable costs and expenses incurred by the Investor with respect to the negotiation, execution, delivery and performance of this Agreement and any schedules or exhibits hereto. 16 6.10 Dispute Resolution. (a) If any dispute arising out of or relating to this Agreement, the Warrant, the Second Amended and Restated Investors' Rights Agreement or any other agreement executed in connection herewith or the breach, termination or validity thereof (a "Dispute") is not settled promptly in the ordinary course of business, the parties shall seek to resolve any such Dispute between them, first, by negotiating promptly with each other in good faith in face-to-face negotiations. These face-to-face negotiations shall be conducted by the respective designated senior management representative of each party. If the parties are unable to resolve the Dispute between them through these face-to-face negotiations, within 20 business days (or such period as the parties shall otherwise agree) following the date of notification (the "Notice Date") by one party to the others of the existence of such Dispute, then any such Dispute shall be resolved in the following manner. (b) The parties shall endeavor to resolve any such Dispute by mediation under the CPR Mediation Procedures for Business Disputes. Unless otherwise agreed, the parties will select a mediator from the CPR Panels of Neutrals and shall notify CPR to initiate the selection process. (c) Any action, suit or proceeding where the amount in controversy as to at least one party, exclusive of interest and costs, exceeds $100,000 ("Summary Proceeding"), arising out of or relating to a Dispute which has not been resolved by mediation as provided herein within 90 days of the Notice Date, shall be litigated exclusively in the Superior Court of the State of Delaware (the "Delaware Superior Court") as a summary proceeding pursuant to Rules 124-131 of the Delaware Superior Court, or any successor rules (the "Summary Proceeding Rules"). Each of the parties hereto hereby irrevocably and unconditionally (A) submits to the jurisdiction of the Delaware Superior Court for any Summary Proceeding, (B) agrees not to commence any Summary Proceeding except in the Delaware Superior Court, (C) waives, and agrees not to plead or to make, any objection to the venue of any Summary Proceeding in the Delaware Superior Court, (D) waives, and agrees not to plead or to make any claim that any Summary Proceeding brought in the Delaware Superior Court has been brought in an improper or otherwise inconvenient forum, (E) waives, and agrees not to plead or to make, any claim that the Delaware Superior Court lacks personal jurisdiction over it, (F) waives its right to remove any Summary Proceeding to the federal courts except where such courts are vested with sole and exclusive jurisdiction by statute, and (G) understands and agrees that it shall not seek a jury trial or punitive damages in any Summary Proceeding based upon or arising out of a Dispute, and waives any and all rights to any such jury trial or to seek punitive damages. (d) In the event any action, suit or proceeding where the amount in controversy as to at least one party, exclusive of interest and costs, does not exceed $100,000 (a "Proceeding"), arising out of or relating to a Dispute is brought, the parties to such Proceeding agree to make application to the Delaware Superior Court to proceed under the Summary Proceeding Rules. Until such time as such application is rejected, such Proceeding shall be treated as a Summary Proceeding and all of the foregoing provisions of Section 6.10(c) relating to Summary Proceedings shall apply to such Proceeding. 17 (e) If a Summary Proceeding is not available to resolve any Dispute hereunder, the controversy or claim shall be settled by arbitration conducted on a confidential basis, under the U.S. Arbitration Act, if applicable, and the then current Commercial Arbitration Rules of the American Arbitration Association (the "Association") strictly in accordance with the terms of this Agreement and the substantive law of the State of Delaware including law in respect of any statute of limitations. The arbitration shall be conducted at the Association's regional office located in Philadelphia, Pennsylvania by three arbitrators, at least one of whom shall be knowledgeable in the industry in which the Company is engaged in business, one of whom shall be an attorney and one of whom shall be a member of a "Big Four" accounting firm familiar with the industry in which the Company is engaged in business. Absent mutual agreement of the parties, the arbitrators specified in the preceding sentence shall be appointed pursuant to the Commercial Arbitration Rules of the Association. The arbitrators are not empowered to award damages in excess of compensatory damages and each party hereby irrevocably waives any right to recover damages in excess of compensatory damages with respect to any such Dispute. Judgment upon the arbitrators' award may be entered and enforced in any court of competent jurisdiction. (f) No party shall be precluded hereby from securing equitable remedies in courts of any jurisdiction, including, but not limited to, temporary restraining orders and preliminary injunctions to protect its rights and interests but shall not be sought as a means to avoid or stay arbitration or Summary Proceeding. (g) Each party is required to continue to perform its obligations under this contract pending final resolution of any Dispute, unless to do so would be impossible or impracticable under the circumstances. 6.11 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Investor. Any amendment or waiver effected in accordance with this paragraph shall be binding upon each holder of any Securities purchased under this Agreement at the time outstanding, any securities into or for which such Securities are convertible or exchangeable, each future holder of all such securities, and the Company. 6.12 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. 6.13 Publicity. Neither the Company nor the Investor shall take any action, or permit any of its employees, consultants, officers, directors or stockholders to take any action, which may result in the public disclosure of the transactions effected hereby or the identity of the Investor, except pursuant to the Company's filing obligations under applicable securities laws or unless otherwise required by law. Other than with respect to filing obligations under applicable securities laws, if the Company determines that it is required by law to disclose these transactions or the identity of the Investor, it shall, at a reasonable time before making any such disclosure, consult with the Investor regarding such disclosure. 18 6.14 Entire Agreement. This Agreement and the documents referred to herein constitute the entire agreement among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations, or covenants except as specifically set forth herein or therein. 6.15 Press Release. Notwithstanding anything set forth above, the parties hereto may release a statement, press release or other announcement regarding the execution and delivery of this Agreement, to be issued immediately following the Closing announcing the consummation of the transactions contemplated by this Agreement and the related documents, with the prior written consent of the other party hereto. [Signature Page Follows] 19 IN WITNESS WHEREOF, the parties have executed this Series C Preferred Stock Purchase Agreement as of the date first above written. COMPANY: USDATA CORPORATION By: /s/ James E. Fleet --------------------------------------- Name: James E. Fleet Title: Chief Executive Officer and President INVESTOR: SCP PRIVATE EQUITY PARTNERS II, L.P. By: SCP Private Equity II General Partner, L.P., its General Partner By: SCP Private Equity II, LLC By: /s/ Winston J. Churchill --------------------------------------- Name: Winston J. Churchill ------------------------------------- Title: a manager [SIGNATURE PAGE--SERIES C PREFERRED STOCK PURCHASE AGREEMENT] EX-2 4 dex2.txt SERIES C-2 PREFERRED STOCK PURCHASE WARRANT EXHIBIT 2 NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NO TRANSFER OF THIS WARRANT OR OF THE SECURITIES ISSUABLE UPON EXERCISE HEREOF SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS OR (B) THE HOLDER HEREOF SHALL DELIVER TO THE COMPANY AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. Warrant No. C-2-3 January 14, 2003 USDATA CORPORATION SERIES C-2 PREFERRED STOCK PURCHASE WARRANT Subject to the terms and conditions set forth herein, USDATA Corporation, a Delaware corporation (the "Company"), hereby grants to SCP Private Equity Partners II, L.P. ("SCP"), a Delaware limited partnership, or its registered assigns or transferees (SCP and each such assign or transferee being referred to herein as a "Holder" and collectively as the "Holders") the right to purchase, at any time and from time to time after the date hereof and until 5:00 p.m. (Eastern Standard Time) on January 14, 2013 (the "Expiration Date"), 18,750 fully paid and non-assessable shares of the Company's Series C-2 Preferred Stock, par value $0.01 per share (the "Series C Shares"), at a purchase price per share of $40.00 (the "Exercise Price"). 1. Exercise of Warrant. 1.1 Exercise. Subject to adjustment as provided in Section 3 hereof, the rights represented by this Warrant are exercisable, in whole or in part, on any business day (the "Exercise Date") and on or before the Expiration Date, at the Exercise Price per share of the Series C Shares issuable hereunder (hereinafter, "Warrant Shares"). Unless this Warrant is exercised in accordance with Section 1.2 hereof, the Exercise Price shall be payable in cash, or by certified or official bank check. 1.2 Net Issue Election. The Holder may elect to receive, without the payment by the Holder of any additional consideration, either (x) in the event of any liquidation, dissolution or winding up of the Company (whether actual or deemed to have occurred pursuant to Section 3.c of the Company's Certificate of Designation for Series C-1 Preferred Stock and Series C-2 Preferred Stock), the Net Liquidation Value (as hereinafter defined) of this Warrant or (y) shares equal to the Net Value (as hereinafter defined) of this Warrant, or in either case any portion hereof, by the surrender of this Warrant or such portion to the Company, with the Notice of Net Issue Election in the form of Annex C hereto duly executed, at the principal executive office of the Company. Thereupon, the Company shall issue to the Holder the Net Liquidation Value of this Warrant (or portion thereof), in the case of a net exercise pursuant to clause (x) or such number of fully paid and nonassessable Series C Shares as is computed using the following formula, in the case of a net exercise pursuant to clause (y): X = Y(A-B) ------ A where X = the number of shares to be issued to the Holder pursuant to this Section 1.2. Y = the number of shares covered by this Warrant in respect of which the net issue election is made pursuant to this Section 1.2. A = the fair market value of one Series C Share, which shall be deemed to equal the fair market value of one share of the Company's Common Stock, as determined in accordance with the provisions of this Section 1.2; provided, however, that if each Series C Share is then convertible into more than or less than one share of the Company's Common Stock, then the fair market value of each Series C Share shall be deemed to equal the fair market value of one share of the Company's Common Stock multiplied by the number of shares of the Company's Common Stock into which each Series C Share is then convertible. B = the Exercise Price in effect under this Warrant at the time the net issue election is made pursuant to this Section 1.2. For purposes of this Section 1.2, the "fair market value" per share of the Company's Common Stock shall mean: (a) If the Company's Common Stock is traded on a national securities exchange or admitted to unlisted trading privileges on such an exchange, or is listed on the National Market (the "National Market") of the National Association of Securities Dealers Automated Quotations System (the "NASDAQ"), the fair market value shall be the average of the last reported sale prices of the Company's Common Stock on such exchange or on the National Market over the five (5) consecutive trading days immediately preceding the effective date of exercise of the net issue election or if the last reported sale price information is not available for such days, the average of the mean of the closing bid and asked prices for such days on such exchange or on the National Market; (b) If the Company's Common Stock is not listed or admitted to unlisted trading privileges, the fair market value shall be the average of the mean of the last bid and asked prices reported over the five (5) consecutive Business Days immediately preceding the effective date of exercise of the net issue election (1) by the NASDAQ or (2) if reports are unavailable under clause (1) above, by the National Quotation Bureau Incorporated; and (c) If the Company's Common Stock is not so listed or admitted to unlisted trading privileges and bid and ask prices are not reported, the fair market value shall be 2 the price per share which the Company could obtain from a willing buyer for shares sold by the Company from authorized but unissued shares, as such price shall be determined by mutual agreement of the Company and the Holder of this Warrant. If the Holder of this Warrant and the Company are unable to agree on such fair market value, the holder of this Warrant and the Company shall each select an independent and nationally-recognized investment banking firm and such selected firms shall select another such firm to appraise the fair market value of the Warrant and to perform the computations involved. The determination of such investment banking firm shall be binding upon the Company, the Holder of this Warrant and any other holder of Warrants or Warrant Shares in connection with any transaction occurring at the time of such determination. All expenses of such investment banking firm shall be borne equally by the Company and the Holder of this Warrant. In all cases, the determination of fair market value shall be made without consideration of the lack of a liquid public market for the Common Stock and without consideration of any "control premium" or any discount for holding less than a majority or controlling interest of the outstanding Common Stock. For purposes of this Section 1.2, the term "Net Liquidation Value" of this Warrant, or portion thereof, shall mean the amount payable to the holders of Series C Shares (with respect to the number of Series C Shares covered by this Warrant in respect of which the net issue election is made pursuant to clause (x) of Section 1.2, and assuming, for purposes of calculating the "Net Liquidation Value", that such Series C Shares are issued and outstanding) as a result of or in connection with any liquidation, dissolution or winding up of the Company pursuant to Section 3 of the Company's Certificate of Designation for Series C-1 Preferred Stock and Series C-2 Preferred Stock (whether actual or deemed to have occurred pursuant to Section 3.c thereof) less the Exercise Price of such Series C Shares. 1.3 Automatic Exercise Prior to Expiration. If not earlier exercised, this Warrant shall be deemed to have been exercised in full pursuant to Section 1.2 immediately prior to the expiration hereof, and upon such deemed exercise, and without any further act or deed of the Holder hereof or any other person or entity, the Company shall issue to the Holder hereof the number of fully paid and non-assessable Series C Shares to which such Holder would be entitled under Section 1.2. 1.4 Delivery of Certificate. Upon surrender of this Warrant with (a) a duly executed Notice of Exercise in the form of Annex A attached hereto, together with payment of the Exercise Price for the Warrant Shares purchased, or (b) a duly executed Notice of Net Issue Election in the form of Annex C hereto, at the Company's principal executive offices presently located at 2435 North Central Expressway, Richardson, Texas, 75080, or at such other address as the Company shall have advised the Holder in writing (the "Designated Office"), the Holder shall be entitled to receive a certificate or certificates for the Warrant Shares so purchased. The Company agrees that the Warrant Shares shall be deemed to have been issued to the Holder as of the close of business on the date on which this Warrant shall have been surrendered together with (x) the Notice of Exercise and payment for such Warrant Shares or (y) the Notice of Net Issue Election. 3 2. Transfer; Issuance of Stock Certificates; Restrictive Legends. 2.1 Transfer. Subject to compliance with the restrictions on transfer set forth in this Section 2, each transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the Designated Office, together with a written assignment of this Warrant in the form of Annex B attached hereto duly executed by the Holder or its agent or attorney. Upon such surrender and delivery, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, if any. A Warrant, if properly assigned in compliance with the provisions hereof, may be exercised by the new holder for the purchase of Warrant Shares without having a new Warrant issued. Prior to due presentment for registration of transfer thereof, the Company may deem and treat the registered holder of this Warrant as the absolute owner hereof (notwithstanding any notations of ownership or writing thereon made by anyone other than a duly authorized officer of the Company) for all purposes and shall not be affected by any notice to the contrary. All Warrants issued upon any assignment of Warrants shall be the valid obligations of the Company, evidencing the same rights, and entitled to the same benefits as the Warrants surrendered upon such registration of transfer or exchange. 2.2 Stock Certificates. Certificates for the Warrant Shares shall be delivered to the Holder within a reasonable time after the rights represented by this Warrant shall have been exercised pursuant to Section 1, and a new Warrant representing the Series C Shares, if any, with respect to which this Warrant shall not then have been exercised shall also be issued to the Holder within such time. The issuance of certificates for Warrant Shares upon the exercise of this Warrant shall be made without charge to the Holder hereof including, without limitation, any documentary, stamp or similar tax that may be payable in respect thereof; provided, however, that the Company shall not be required to pay any income tax to which the Holder hereof may be subject in connection with the issuance of this Warrant or the Warrant Shares; and provided further, that if Warrant Shares are to be delivered in a name other than the name of the Holder hereof representing any Warrant being exercised, then no such delivery shall be made unless the person requiring the same has paid to the Company the amount of transfer taxes or charges incident thereto, if any. 2.3 Restrictive Legends. (a) Except as otherwise provided in this Section 2, each certificate for Warrant Shares initially issued upon the exercise of this Warrant, and each certificate for Warrant Shares issued to any subsequent transferee of any such certificate, shall be stamped or otherwise imprinted with a legend in substantially the following form: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW. NO TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE OR ISSUED UPON CONVERSION OF SUCH SHARES SHALL BE 4 VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (B) THE HOLDER SHALL DELIVER TO THE COMPANY AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH PROPOSED TRANSFER IS EXEMPT FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS." (b) Except as otherwise provided in this Section 2, each Warrant shall be stamped or otherwise imprinted with a legend in substantially the following form: "NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NO TRANSFER OF THIS WARRANT OR OF THE SECURITIES ISSUABLE UPON EXERCISE HEREOF SHALL BE VALID OR EFFECTIVE UNLESS (A) SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND IN COMPLIANCE WITH ANY APPLICABLE STATE SECURITIES LAWS, OR (B) THE HOLDER SHALL DELIVER TO THE COMPANY AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS EXEMPT FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS." Notwithstanding the foregoing, the legend requirements of this Section 2.3 shall terminate as to any particular Warrant or Warrant Share when the Company shall have received from the Holder thereof an opinion of counsel in form and substance reasonably acceptable to the Company that such legend is not required in order to ensure compliance with the Securities Act and applicable state securities laws. Whenever the restrictions imposed by this Section 2.3 shall terminate, the holder hereof or of Warrant Shares, as the case may be, shall be entitled to receive from the Company without cost to such holder a new Warrant or certificate for Warrant Shares of like tenor, as the case may be, without such restrictive legend. 5 3. Adjustment of Number of Shares; Exercise Price; Nature of Securities Issuable Upon Exercise of Warrants. 3.1 Exercise Price; Adjustment of Number of Shares. The Exercise Price set forth in Section 1 hereof and the number of shares purchasable hereunder shall be subject to adjustment from time to time as hereinafter provided. 3.1.1 Merger, Sale of Assets, etc. If at any time while this Warrant, or any portion thereof, is outstanding and unexpired there shall be a reorganization (other than a combination, reclassification, exchange, or subdivision of shares as provided in Sections 3.1.2 and 3.1.3), merger or consolidation of the Company with or into another corporation in which the Company is not the surviving entity, or a merger in which the Company is the surviving entity but the shares of the Company's capital stock outstanding immediately prior to the merger are converted by virtue of the merger into other property, whether in the form of securities, cash, or otherwise, or a sale or transfer of the Company's properties and assets as, or substantially as, an entirety to any other person, then, as a part of such reorganization, merger, consolidation, sale or transfer, lawful provision shall be made so that the Holder of this Warrant shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the Exercise Price then in effect, the number of shares of stock or other securities or cash or property of the successor corporation resulting from such reorganization, merger, consolidation, sale or transfer that a holder of the shares deliverable upon exercise of this Warrant would have been entitled to receive in such reorganization, consolidation, merger, sale or transfer if this Warrant had been exercised immediately before such reorganization, consolidation, merger, sale or transfer, all subject to further adjustment as provided in this Section 3. The foregoing provisions of this Section 3.1.1 shall similarly apply to successive reorganizations, consolidations, mergers, sales and transfers and to the stock and securities of any other corporation that are at the time receivable upon the exercise of this Warrant. If the per share consideration payable to the Holder hereof for shares in connection with any such transaction is in a form other than cash or securities, then the value of such consideration shall be determined in good faith by the Company's Board of Directors. In all events, appropriate adjustment shall be made in the application of the provisions of this Warrant with respect to the rights and interests of the Holder hereof after the transaction, to the end that the provisions of this Warrant shall be applicable after that event, as near as reasonably may be, in relation to any shares or other property deliverable after that event upon exercise of this Warrant. 3.1.2 Reclassification, etc. If the Company, at any time while this Warrant, or any portion thereof, remains outstanding and unexpired, shall, by the reclassification or exchange of securities or otherwise, change any of the securities as to which purchase rights under this Warrant exist into the same or a different number of securities of any other class or classes, this Warrant shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities that were subject to the purchase rights under this Warrant immediately prior to such reclassification, exchange, or other change and the Exercise Price therefor shall be appropriately adjusted, all subject to further adjustment as provided in this Section 3. 6 3.1.3 Stock Splits, Stock Dividends and Reverse Stock Splits. In case at any time the Company shall split or subdivide the outstanding shares of Series C Shares into a greater number of shares, or shall declare and pay any stock dividend with respect to its outstanding stock that has the effect of increasing the number of outstanding shares of Series C Shares, the Exercise Price in effect immediately prior to such subdivision or stock dividend shall be proportionately reduced and the number of Warrant Shares purchasable pursuant to this Warrant immediately prior to such subdivision or stock dividend shall be proportionately increased, and conversely, in case at any time the Company shall combine its outstanding shares of Series C Shares into a smaller number of shares, the Exercise Price in effect immediately prior to such combination shall be proportionately increased and the number of Warrant Shares purchasable upon the exercise of this Warrant immediately prior to such combination shall be proportionately reduced. 3.1.4 Adjustments for Dividends in Stock or Other Securities of Property. If while this Warrant, or any portion hereof, remains outstanding and unexpired the holders of Series C Shares shall have received, or, on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive, without payment therefor, other or additional stock or other securities or property (other than cash) of the Company by way of dividend, then and in each case, this Warrant shall represent the right to acquire, in addition to the number of shares of the security receivable upon exercise of this Warrant, and without payment of any additional consideration therefor, the amount of such other or additional stock or other securities or property of the Company that such holder would hold on the date of such exercise had it been the holder of record of the security receivable upon exercise of this Warrant on the date hereof and had thereafter, during the period from the date hereof to and including the date of such exercise, retained such shares and/or all other additional stock available by it as aforesaid during such period, giving effect to all adjustments called for during such period by the provisions of this Section 3. 3.2 Timing of Exercise Price Adjustment. No adjustment of the Exercise Price shall be made unless such adjustment would require an increase or decrease of at least $0.0001 in such price; provided that any adjustments which by reason of this Section 3.2 are not required to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment(s) so carried forward, shall require an increase or decrease of at least $0.0001 in the Exercise Price then in effect hereunder. 3.3 Adjustment Certificate. In each case of an adjustment in the Exercise Price, number of Warrant Shares or other stock, securities or property receivable upon the exercise of this Warrant, the Company shall compute and prepare a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based, including a statement of (i) the number of Series C Shares outstanding or deemed to be outstanding, (ii) the adjusted Exercise Price and (iii) the number of Warrant Shares issuable upon exercise of this Warrant. The Company will forthwith mail a copy of each such certificate to the holder hereof. 4. Registration; Exchange and Replacement of Warrant; Reservation of Shares. The Company shall keep at the Designated Office a register in which the Company shall provide for the registration, transfer and exchange of this Warrant. The Company shall not at any time, 7 except upon the dissolution, liquidation or winding-up of the Company, close such register so as to result in preventing or delaying the exercise or transfer of this Warrant. The Company may deem and treat the person in whose name this Warrant is registered as the holder and owner hereof for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration or transfer as provided in this Section 4. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant and (in case of loss, theft or destruction) of indemnity by the Holder satisfactory to it, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will (in the absence of notice to the Company that the Warrant has been acquired by a bona fide purchaser) make and deliver a new Warrant of like tenor, in lieu of this Warrant without requiring the posting of any bond or the giving of any security. The Company shall at all times reserve and keep available out of its authorized shares of Series C Shares, solely for the purpose of issuance upon the exercise of this Warrant, such number of shares of Series C Shares as shall be issuable upon the exercise hereof. The Company covenants and agrees that, upon exercise of this Warrant and payment of the Exercise Price therefor, if applicable, all Warrant Shares issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable. 5. Fractional Warrants and Fractional Shares. If the number of Warrant Shares purchasable upon the exercise of this Warrant is adjusted pursuant to Section 3 hereof, the Company shall nevertheless not be required to issue fractions of shares, upon exercise of this Warrant or otherwise, or to distribute certificates that evidence fractional shares. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the holder an amount in cash equal to such fraction multiplied by the current fair market value of such fractional share as may be prescribed by the Board of Directors of the Company. 6. Warrant Holders Not Deemed Stockholders. No holder of this Warrant shall, as such, be entitled to vote or to receive dividends or be deemed the holder of Warrant Shares that may at any time be issuable upon exercise of this Warrant for any purpose whatsoever, nor shall anything contained herein be construed to confer upon the holder of this Warrant, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issue or reclassification of stock, change of par value or change of stock to no par value, consolidation, merger or conveyance or otherwise), or to receive notice of meetings, or to receive dividends or subscription rights, until such holder shall have exercised this Warrant and been issued Warrant Shares in accordance with the provisions hereof. 7. Notices. All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been duly made when delivered personally, or mailed by registered or certified mail, return receipt requested, or telecopied or telexed and confirmed in writing and delivered personally or mailed by registered or certified mail, return 8 receipt requested (a) if to the Holder of this Warrant, to the address of such Holder as shown on the books of the Company, or (b) if to the Company, to the address set forth in Section 1.4 of this Warrant; or at such other address as the Holder or the Company may hereafter have advised the other. 8. Successors. All the covenants, agreements, representations and warranties contained in this Warrant shall bind the parties hereto and their respective heirs, executors, administrators, distributees, successors, assigns and transferees. 9. Governing Law. This Warrant shall be construed and enforced in accordance with, and governed by, the laws of the State of Delaware (not including the choice of law rules thereof) regardless of the jurisdiction of creation or domicile of the Company or its successors or of the holder at any time hereof. 10. Entire Agreement; Amendments and Waivers. This Warrant sets forth the entire understanding of the parties with respect to the transactions contemplated hereby. The failure of any party to seek redress for the violation or to insist upon the strict performance of any term of this Warrant shall not constitute a waiver of such term and such party shall be entitled to enforce such term without regard to such forbearance. This Warrant may be amended, and any breach of or compliance with any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or written waiver of the Holder, and then such consent or waiver shall be effective only in the specific instance and for the specific purpose for which given. 11. Severability; Headings. If any term of this Warrant as applied to any person or to any circumstance is prohibited, void, invalid or unenforceable in any jurisdiction, such term shall, as to such jurisdiction, be ineffective to the extent of such prohibition or invalidity without in any way affecting any other term of this Warrant or affecting the validity or enforceability of this Warrant or of such provision in any other jurisdiction. The Section headings in this Warrant have been inserted for purposes of convenience only and shall have no substantive effect. [Signature page follows.] 9 IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed as of the date first written above. USDATA CORPORATION By: /s/ Jennifer P. Dooley ---------------------------------------------- Name: Jennifer P. Dooley Title: Chief Financial Officer [Signature Page - Series C Preferred Stock Purchase Warrant] ANNEX A NOTICE OF EXERCISE (To be executed upon partial or full exercise of the within Warrant) The undersigned hereby irrevocably elects to exercise the right to purchase ________ shares of Series C-2 Preferred Stock of USDATA Corporation covered by the within Warrant according to the conditions hereof, herewith makes payment of the Exercise Price of such shares in full in the amount of $______________, and requests that a certificate for such number of shares be issued in the name of, and delivered to _______________, whose address is set forth below. Dated: _________________________ _____________________________________________ (Signature must conform to name of holder as specified on the face of the Warrant) _____________________________________________ _____________________________________________ (Address) ANNEX B ASSIGNMENT FORM FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant, with respect to the number of shares of Series C-2 Preferred Stock set forth below: - -------------------------------------------------------------------------------- No. of Shares of Series C-2 Name and Address of Assignee Preferred Stock - ---------------------------- --------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- and does hereby irrevocably constitute and appoint _______________________ attorney-in-fact to register such transfer onto the books of USDATA Corporation maintained for the purpose, with full power of substitution in the premises. Dated: __________________________ Print Name: _______________________________ Signature: ________________________________ Witness: __________________________________ NOTICE: The signature on this assignment must correspond with the name as written upon the face of this Warrant in every particular, without alteration or enlargement or any change whatsoever. ANNEX C NOTICE OF NET ISSUE ELECTION (To be signed only on net issue exercise of the Warrant) The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise this Warrant with respect to __________ shares of Series C-2 Preferred Stock of USDATA Corporation, pursuant to the net issuance provisions set forth in Section 1.2 of this Warrant, and requests that a certificate for the number of shares of Series C-2 Preferred Stock issuable pursuant to said Section 1.2 after application of the net issuance formula to such shares to be issued in the name of, and delivered to _______________________, whose address is set forth below. Dated: _______________________ ______________________________________________ (Signature must conform to name of holder as specified on the face of the Warrant) ______________________________________________ ______________________________________________ (Address) EX-3 5 dex3.txt AMENDMENT TO INVESTOR RIGHTS AGREEMENT EXHIBIT 3 AMENDMENT TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT THIS AMENDMENT TO SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT ("Amendment") is made and entered into as of the 14th day of January, 2003, by and between USDATA Corporation, a Delaware corporation (the "Company") and SCP Private Equity Partners II, L.P., a Delaware limited partnership. ("SCP"). BACKGROUND WHEREAS, the Company and SCP are parties to that certain Second Amended and Restated Investors' Rights Agreement dated as of March 30, 2001, by and among the Company, SCP and certain parties as set forth therein (the "Investors' Rights Agreement"); and WHEREAS, pursuant to that certain Series C Preferred Stock Purchase Agreement dated as of January 14, 2003, by and between the Company and SCP (the "Stock Purchase Agreement"), SCP will purchase (i) up to 37,500 shares of the Company's $0.01 par value per share Series C-1 preferred stock (the "Series C-1 Preferred Stock"), (ii) a warrant (the "Series C Warrant") to purchase up to 18,750 shares of the Company's $0.01 par value per share Series C-2 preferred stock (the "Series C-2 Preferred Stock"), and (iii) 619,186 shares of the Company's $0.01 par value per share common stock (the "Common Stock"); WHEREAS, as a condition of closing the transactions contemplated by the Stock Purchase Agreement, SCP desires the Investors' Rights Agreement to be amended to include as Series C Registrable Securities, as such term is defined in Section 1.1 of the Investors' Rights Agreement, (i) the Common Stock purchased by SCP under the Stock Purchase Agreement; (ii) the Common Stock issued or issuable upon conversion of the Series C-1 Preferred Stock purchased by SCP under the Stock Purchase Agreement; (iii) the Common Stock issued or issuable upon conversion of the Series C-2 Preferred Stock issued pursuant to the exercise of the Series C Warrant; and (iv) any Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of the securities referenced under (i), (ii) and (iii) above; WHEREAS, Section 5.7 of the Investors' Rights Agreement provides that Section 1.1 of the Investors' Rights Agreement may be amended with the written consent of the Company, the holders of a majority of the shares of the Series C Registrable Securities (as defined in the Investors' Rights Agreement) and the holders of a majority of the Series A and B Registrable Securities (as defined in the Investors' Rights Agreement). WHEREAS, SCP holds a majority of the Series C Registrable Securities and a majority of the Series A and B Registrable Securities. NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Section 1.1(m) of the Investors' Rights Agreement is hereby amended to read in its entirety as follows: (m) the term "Series C Registrable Securities" means the Common Stock issuable or issued upon conversion of (i) the Series C-1 Preferred Stock issued and sold to SCP pursuant to the Purchase Agreement and/or that certain Series C Preferred Stock Purchase Agreement dated as of January 14, 2003 by and between the Company and SCP and/or (ii) the Series C-2 Preferred Stock issued to SCP upon its exercise of the Warrant (as defined in the Purchase Agreement) and/or that certain Warrant dated as of January 14, 2003 to purchase up to 18,750 shares of the Series C-2 Preferred Stock, held by SCP. 2. Except as expressly set forth herein, all of the terms and conditions of the Investors' Rights Agreement shall continue in full force and effect. -2- IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first set forth above. COMPANY: USDATA CORPORATION By: /s/ James E. Fleet ------------------------------------------ Name: James E. Fleet Title: Chief Executive Officer and President-Interim SCP: SCP PRIVATE EQUITY PARTNERS II, L.P. By: SCP Private Equity II General Partner, L.P., its General Partner By: SCP Private Equity II, LLC By: /s/ Winston J. Churchill ------------------------------------------ Name: Winston J. Churchill Title: a manager -3- EX-4 6 dex4.txt WRITTEN CONSENT OF PREFERRED STOCKHOLDERS EXHIBIT 4 USDATA CORPORATION WRITTEN CONSENT OF PREFERRED STOCKHOLDERS January 14, 2003 Pursuant to Section 228(a) of the General Corporation Law of the State of Delaware (the "DGCL"), the undersigned being a holder of preferred stock of USDATA Corporation, a corporation organized and existing under the laws of the State of Delaware (the "Company"), does hereby waive all notice of the time, place and purposes of a meeting and consent to the adoption of the following preambles and resolutions: WHEREAS, the Board has reviewed the terms and conditions of that certain Series C Preferred Stock Purchase Agreement with SCP Private Equity Partners II, L.P. ("SCP") in which the Company will sell, and SCP will purchase (i) up to 37,500 shares of the Company's $0.01 par value per share Series C-1 preferred stock (the "Series C-1 Preferred Stock"), (ii) a warrant (the "Warrant") to SCP to purchase up to 18,750 shares of the Company's $0.01 par value per share Series C-2 preferred stock (the "Series C-2 Preferred Stock" and collectively with the Series C-1 Preferred Stock, the "Series C Preferred Stock") and (iii) 619,186 shares of the Company's $0.01 par value per share common stock (the "Common Stock") for an aggregate purchase price of $1,500,000 (the "Investment Agreement"); and WHEREAS, the Board of Directors of the Company has deemed it advisable and in the best interests of the Company to execute and deliver the Investment Agreement, the Series C-1 Preferred Stock, Warrant and the issuance of 619,186 shares of the Company's Common Stock and the related documents thereto (the "Transaction"); and WHEREAS, pursuant to the Company's Certificate of Designation, as amended, for the Company's $0.01 par value per share Series A Preferred Stock (the "Series A Preferred Stock") and the $0.01 par value per share Series B Preferred Stock (the "Series B Preferred Stock") and the Company's Certificate of Designation as amended for the Series C Preferred Stock (the Series C Preferred Stock collectively with the Series A Preferred Stock and Series B Preferred Stock, the "Preferred Stock"), the conversion price of the Series A Preferred Stock, Series B Preferred Stock and the Series C Preferred Stock is subject to anti-dilution adjustments in the event the Company issues shares of its capital stock below the current conversion price of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock; and WHEREAS, Section 7(iii) of the Certificate of Designation for the Series A Preferred Stock and Series B Preferred Stock, requires the Company to obtain the vote or written consent or written agreement of the holder(s) of at least a majority of the then outstanding shares of Series A Preferred Stock, voting as a separate class, as to certain matters, including, without limitation, the issuance of any equity securities of the Company senior to or on a parity with the Series A Preferred Stock, so long as any shares of Series A Preferred Stock remain outstanding; and WHEREAS, Section 8(iii) of the Certificate of Designation for the Series A Preferred Stock and Series B Preferred Stock, requires the Company to obtain the vote or written consent or written agreement of the holder(s) of at least two-thirds of the then outstanding shares of Series B Preferred Stock, voting as a separate class, as to certain matters, including, without limitation, the issuance of any equity securities of the Company senior to or on a parity with the Series B Preferred Stock, so long as any shares of Series B Preferred Stock remain outstanding; and WHEREAS, Section 7(ii) of the Certificate of Designation for the Series C Preferred Stock, requires the Company to obtain the vote or written consent or written agreement of the holder(s) of at least a majority of the then outstanding shares of Series C Preferred Stock, voting as a separate class, as to certain matters, including, without limitation, the issuance of additional shares of Series C Preferred Stock other than shares issued in payment of dividends on the outstanding shares of Series C Preferred Stock, so long as any shares of Series C Preferred Stock remain outstanding; and WHEREAS, pursuant to the terms of the Investment Agreement, the 37,500 shares of Series C-1 Preferred Stock, the shares of Series C-2 Preferred Stock issuable upon exercise in whole or in part of the Warrant and the 619,186 shares of Common Stock issuable in exchange for the aggregate purchase price of $1,500,000 represent a conversion price of $0.86 per share of Common Stock which would trigger an anti-dilution adjustment to the current conversion price of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock; and WHEREAS, the issuance of shares of Series C Preferred Stock as cumulative dividends with respect to the securities acquired by SCP in connection with the Transaction may trigger an anti-dilution adjustment to the current conversion price of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock. NOW, THEREFORE, the undersigned holder of Preferred Stock of the Company, hereby consents and agrees to the following: 1. to the issuance, pursuant to the Investment Agreement, of (a) up to 37,500 shares of the Series C-1 Preferred Stock, (b) the Warrant and the Series C-2 Preferred Stock issuable upon exercise of the Warrant (the "Warrant Shares") and (c) 619,186 shares of the Company's Common Stock, in connection with the consummation of the Transaction, in accordance with the terms and provisions of the Certificate of Designation of the Series A Preferred Stock and the Series B Preferred Stock and the Certificate of Designation of the Series C Preferred Stock, as applicable; and 2. that the issuance, pursuant to the Investment Agreement, of (a) up to 37,500 shares of the Series C-1 Preferred Stock, (b) the Warrant and the Warrant Shares and (c) 619,186 shares of the Company's Common Stock, in connection with the consummation of the Transaction shall not trigger any anti-dilution adjustment to the conversion price of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, as applicable; and 3. that the issuance of any shares of Series C Preferred Stock as cumulative dividends under the Certificate of Designation of the Series C Preferred Stock with respect to the Series C Preferred Stock acquired by SCP in connection with the Transaction and upon exercise of the Warrant shall not trigger any anti-dilution adjustment to the conversion price of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock, as applicable; and 4. that all actions heretofore taken consistent with the purposes and intents of the foregoing resolutions be and each of them is in all respects hereby ratified, approved, confirmed and adopted; and 5. that the waiver of the trigger of any anti-dilution adjustment to the conversion price of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock in paragraphs 2 and 3 above shall only be effective against the undersigned holder of Preferred Stock of the Company if such waiver is effective against all of the holders of the Series B Preferred Stock of the Company. This Written Consent of Preferred Stockholders may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned has caused this Written Consent of Preferred Stockholders to be duly executed as of the date set forth above. SERIES A PREFERRED STOCKHOLDERS SCP PRIVATE EQUITY PARTNERS II, L.P. By: SCP Private Equity II General Partner, L.P., its general partner By: SCP Private Equity II, LLC By: /s/ Winston J. Churchill ------------------------------------- Name: Winston J. Churchill Title: a manager SERIES B PREFERRED STOCKHOLDERS SCP PRIVATE EQUITY PARTNERS II, L.P. By: SCP Private Equity II General Partner, L.P., its general partner By: SCP Private Equity II, LLC By: /s/ Winston J. Churchill ------------------------------------- Name: Winston J. Churchill Title: a manager ____________________________ David Moody ____________________________ J. Adrian Wise SERIES C PREFERRED STOCKHOLDERS SCP PRIVATE EQUITY PARTNERS II, L.P. By: SCP Private Equity II General Partner, L.P., its general partner By: SCP Private Equity II, LLC By: /s/ Winston J. Churchill ------------------------------------- Name: Winston J. Churchill Title: a manager -----END PRIVACY-ENHANCED MESSAGE-----