Standby Stock Purchase Agreement - Safeguard Scientifics Inc. and eMerge Interactive Inc.
STANDBY STOCK PURCHASE AGREEMENT
BY AND BETWEEN
SAFEGUARD SCIENTIFICS, INC.
AND
EMERGE INTERACTIVE, INC.
DATED JANUARY ________, 2000
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STANDBY STOCK PURCHASE AGREEMENT
THIS STANDBY STOCK PURCHASE AGREEMENT (the "Agreement") is made and
entered into on this January _______, 2000 between SAFEGUARD SCIENTIFICS, INC.,
a Pennsylvania corporation ("Safeguard"), and eMERGE INTERACTIVE, INC., a
Delaware corporation (the "Company").
BACKGROUND
A. The Company is contemplating an initial public offering (the "Public
Offering") of its class A common stock, par value $.008 per share (the "Common
Stock"), through an underwritten public offering lead by Adams Harkness & Hill,
Inc. as the representative of the several underwriters (the "Underwriters").
B. In connection with the Public Offering the Company will offer
2,806,000 shares of its class A common stock (the "SSP Shares") directly to the
shareholders of Safeguard pursuant to a share subscription program (the "SSP").
C. If and to the extent any of the SSP Shares are not subscribed for
or, if subscribed for, are not purchased by the shareholders of Safeguard under
the SSP, Safeguard has agreed to purchase all such SSP Shares directly from the
Company for its own account for investment purposes only on the terms and
subject to the conditions set forth herein.
D. In the event that the shareholders of Safeguard subscribe for more
shares of Common Stock than the number of SSP Shares, Safeguard will make an
offer of up to 694,000 shares of Common Stock owned by it prior to the Public
Offering (the "Safeguard eMerge Stock"), and the Safeguard eMerge Stock shall be
included in the SSP.
E. Chase Mellon Shareholder Services, L.L.C. ("Chase") will act as the
offering agent for the SSP and as the Company's transfer agent. The offering
agent will determine the record date shareholders eligible to participate in the
SSP and will collect subscriptions and subscription payments from eligible
Safeguard shareholders until 6:00 p.m. on the third business day following the
date the Company determines the initial public offering price for the Common
Stock.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, intending to be legally bound hereby, the parties
hereto hereby agree as follows:
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ARTICLE 1
THE TRANSACTION
1.1. Purchase and Purchase Price.
(a) In the event that any of the SSP Shares are not subscribed for
or, if subscribed for are not purchased by the shareholders of
Safeguard under the SSP, Safeguard shall, or shall cause its
wholly owned subsidiary Safeguard Delaware, Inc. to, purchase
these remaining shares.
(b) The purchase price for the SSP Shares (the "Purchase Price")
shall be equal to the product of multiplying (i) the aggregate
number of SSP Shares, by (ii) the price per share of Common
Stock sold pursuant to the Public Offering (the "IPO Price").
(c) Safeguard shall transfer, or Safeguard shall cause Safeguard
Delaware, Inc. to transfer, or shall cause Chase to pay out of
subscription funds received on behalf of Safeguard's
shareholders participating in the SSP, to the Company, an
amount equal to the Purchase Price on the day of the closing
of the Public Offering by wire transfer.
(d) In the event that the shareholders of Safeguard subscribe for
more shares of Common Stock than the number of SSP Shares,
Safeguard shall make an offer of the shares of Safeguard
eMerge Stock, and the shares of Safeguard eMerge Stock shall
be included in the SSP.
1.2. Closing.
(a) Time and Place. The closing under this Agreement (the
"Closing") will take place at _________, EST time, at the time
of the closing of the Public Offering, at the offices of
Morgan, Lewis & Bockius LLP, or at such other time, date or
place as the parties shall mutually agree. The date on which
the Closing occurs is sometimes referred to herein as the
"Closing Date."
(b) Deliveries and Proceedings to Offering Agent. On the Closing
Date, the Company shall instruct Chase to accept instructions
from Deirdre Blackburn, or her designee at Safeguard, for:
(i) delivery of the subscription funds collected by the
offering agent to the extent not paid to the Company at the
Closing.
(c) Deliveries and Proceedings to Transfer Agent. On the Closing
Date, the Company shall instruct Chase to accept instructions
from Deirdre Blackburn, or her designee at Safeguard, for:
(i) delivery of the shares of SSP Shares purchased in the
SSP;
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(ii) delivery to Safeguard of the SSP Shares not purchased
by Safeguard shareholders; and
(iii) the return to Safeguard of any shares of Safeguard
eMerge Stock that were not purchased in the SSP.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Safeguard as follows:
2.1 Organization. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
2.2. Power and Authority. The Company has full corporate power and authority
to make, execute, deliver and perform this Agreement and the
transactions contemplated hereby.
2.3. Authorization and Enforceability. The execution, delivery and
performance of this Agreement by the Company have been duly authorized
by all necessary corporate action on the part of the Company, and this
Agreement constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
ARTICLE 3
REPRESENTATION AND WARRANTIES OF SAFEGUARD
Safeguard represents and warrants to the Company as follows:
3.1 Organization. Safeguard is a corporation duly incorporated, validly
existing and in good standing under the laws of the Commonwealth of
Pennsylvania.
3.2. Power and Authority. Safeguard has full corporate power and authority
to make, execute, deliver and perform this Agreement and the
transactions contemplated hereby.
3.3. Authorization and Enforceability. The execution, delivery and
performance of this Agreement by Safeguard have been duly authorized by
all necessary corporate action on the part of Safeguard, and this
Agreement constitutes the legal, valid and binding obligation of
Safeguard, enforceable against Safeguard in accordance with its terms.
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3.4 Authorization and Approvals. All consents, approvals, authorizations
and orders necessary for the execution and delivery of this Agreement
and the sale and delivery of the shares of Safeguard eMerge Stock have
been obtained; and Safeguard, or an affiliate have full rights, power
and authority to enter into this Agreement and to sell the shares of
Safeguard eMerge Stock as provided hereunder.
3.5 Investment Intent. Safeguard represents, warrants and covenants that it
is acquiring the SSP Shares for its own account, as a long-term
investment, and not with the view to resale or redistribution. To that
end, Safeguard agrees it will retain and not sell, pledge, hypothecate
or otherwise transfer, directly or indirectly, any interest (beneficial
or otherwise) in the SSP Shares for a period of one year from the date
of the Closing.
ARTICLE 4
CONDITIONS TO CLOSING; TERMINATION
4.1 Conditions Precedent to Obligations of Safeguard. The obligations of
Safeguard to proceed with the Closing are subject to the fulfillment
prior to or at Closing of the following conditions (any one or more of
which may be waived in whole or in part by Safeguard at Safeguard's
option):
(a) Bringdown of Representations and Warranties. The
representations and warranties of the Company contained in
this Agreement shall be true and correct on and as of the time
of Closing, with the same force and effect as though such
representations and warranties had been made on, as of and
with reference to such time, and Safeguard shall have received
a certificate, signed by an executive officer of the Company,
to such effect.
(b) Performance and Compliance. The Company shall have performed
all of the covenants and complied with all of the provisions
required by this Agreement to be performed or complied with by
it on or before the Closing, and Safeguard shall have received
a certificate, signed by any vice president of the Company, to
such effect.
(c) Public Offering. The Closing of the Public Offering shall have
occurred.
4.2. Conditions Precedent to the Obligations of the Company. The obligations
of the Company to proceed with the Closing hereunder are subject to the
fulfillment prior to or at Closing of the following conditions (any one
or more of which may be waived in whole or in part by the Company at
the Company's option):
(a) Bringdown of Representations and Warranties. The
representations and warranties of Safeguard contained in this
Agreement shall be true and correct on and as of the time of
Closing, with the same force and effect as
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though such representations and warranties had been made on,
as of and with reference to such time, and Safeguard shall
have delivered to the Company a certificate, signed by an
executive officer of Safeguard, to such effect.
(b) Performance and Compliance. Safeguard shall have performed all
of the covenants and complied with all the provisions required
by this Agreement to be performed or complied with by it on or
before the Closing and Safeguard shall have delivered to the
Company a certificate, signed by any vice president of
Safeguard, to such effect.
(c) Public Offering. The closing of the Public Offering shall have
occurred.
4.3. Termination.
(a) When Agreement May Be Terminated. This Agreement may be
terminated at any time prior to Closing:
(i) by mutual consent of Safeguard and the Company; or
(ii) by Safeguard or the Company, if the Company shall
have withdrawn its Registration Statement on Form S-1
relating to the Public Offering (Reg. No. 333-89815).
(b) Effect of Termination. In the event of termination of this
Agreement by either Safeguard or the Company, as provided
above, this Agreement shall forthwith terminate and there
shall be no liability on the part of either Safeguard or the
Company, except for liabilities arising from a breach of this
Agreement prior to such termination; provided, however, that
the obligations set forth in Article 5 hereof shall survive
such termination.
ARTICLE 5
CERTAIN ADDITIONAL COVENANTS
5.1 Indemnification.
(a) Safeguard hereby agrees to indemnify the Company and its
underwriters, affiliates, officers, employees, representatives
and directors (the "Indemnified Persons") against, and hold
them harmless from, any loss, liability, claim, damage or
expense, joint or several ("Losses"), arising directly or
indirectly, out of or in connection with, the SSP, including,
without limitation, (i) costs and expenses associated with the
failure of any shareholders of Safeguard to consummate
purchases of SSP Shares for which they have subscribed and
(ii) any claims by shareholders of Safeguard or other persons
arising
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from the SSP, and expenses, arising from the establishment,
execution and performance of the SSP. Notwithstanding the
foregoing, Safeguard shall not indemnify the Company against
liabilities arising from any untrue or allegedly untrue
statement of a material fact, or omission or alleged omission
of a material fact required to be stated to make the
statements not misleading, in the prospectus contained in the
Company's Registration Statement on Form S-1 (Reg. No.
333-89815) (the "Prospectus"), except for statements or
omissions regarding the SSP and except for any materials
related to the SSP delivered to Safeguard's shareholders and
not to other recipients of the Prospectus generally. Safeguard
agrees to reimburse the Indemnified Persons, as incurred, for
any reasonable legal or other expenses reasonably incurred by
them in connection with investigating or defending any Losses.
(b) Promptly after receipt by an Indemnified Person of notice of
the commencement of any action for which indemnification or
contribution may be sought hereunder, such Indemnified Person
will notify Safeguard in writing of the commencement thereof.
The failure to so notify Safeguard will not relieve Safeguard
from liability under Section 5.1(a) above unless and to the
extent that Safeguard did not otherwise learn of such action
and such failure results in the forfeiture of substantial
rights and defenses. Safeguard shall be entitled to appoint
counsel at Safeguard's expense to represent the Indemnified
Person in any action for which indemnification is sought (in
which case Safeguard shall not thereafter be liable for the
fees and expenses of separate counsel retained by the
Indemnified Person except as set forth below); provided,
however, that such counsel shall be reasonably satisfactory to
the Indemnified Person. Notwithstanding Safeguard's election
to appoint counsel to represent the Indemnified Person in an
action, the Indemnified Person shall have the right to employ
separate counsel (including local counsel), and Safeguard
shall bear the reasonable fees, costs and expenses of such
counsel if (i) the use of counsel chosen by Safeguard to
represent the Indemnified Person would present such counsel
with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both
Safeguard and the Indemnified Person and the Indemnified
Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in
addition to those available to Safeguard, (iii) Safeguard
shall not have employed counsel reasonably satisfactory to the
Indemnified Person within a reasonable time after notification
of the commencement of such action or (iv) Safeguard shall
have authorized the Indemnified Person to employ separate
counsel at the expense of Safeguard.
(c) Safeguard shall not, without the prior written consent of the
relevant Indemnified Person, settle or compromise or consent
to the entry of any judgment with respect to any pending or
threatened claim, action, suit or
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proceeding in respect of which indemnification or contribution
may be sought hereunder unless such settlement, compromise or
consent includes an unconditional release of such Indemnified
Person from all liability arising from such claim, action,
suit or proceeding. An Indemnified Person may not settle or
compromise or consent to the entry of any judgment with
respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution
may be sought hereunder without the consent of Safeguard, such
consent not to be unreasonably withheld.
(d) In the event that the indemnity provided for in this Article 5
is unavailable to or insufficient to hold harmless an
Indemnified Person for any reason, the Indemnified Persons and
Safeguard shall contribute to the Losses (including the legal
and other expenses attributable to investigating or defending
same) to which the Indemnified Person may be subject in such
proportion as is appropriate to reflect the relative fault of
the Indemnified Person and Safeguard in connection with the
statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations, including that
the Company performed the SSP as an accommodation to Safeguard
without any legal obligation to do so. Relative fault shall be
determined by reference to, among other things, whether any
untrue or allegedly untrue statement of a material fact or the
omission or alleged omission to state a material fact relates
to information provided by the Indemnified Person or
Safeguard, the intent of the Indemnified Person and Safeguard,
and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement or
omission. The parties agree that it would not be just and
equitable if contribution was determined by any method of
allocation that does not take into account the equitable
considerations discussed above.
ARTICLE 6
MISCELLANEOUS
6.1. Nature and Survival of Representations. The representations,
warranties, covenants and agreements of Safeguard and the Company
contained in this Agreement, and all statements contained in this
Agreement or any exhibit hereto or any certificate or other document
delivered pursuant to this Agreement or in connection with the
transactions contemplated hereby, shall be deemed to constitute
representations, warranties, covenants and agreements of the respective
party delivering the same. All such representations, warranties,
covenants and agreements shall survive the Closing.
6.2. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered
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or, if mailed, when mailed by United States first-class, certified or
registered mail, postage prepaid, to the other party at the following
addresses (or at such other address as shall be given in writing by any
party to the other):
(a) If to Safeguard, to:
Safeguard Scientifics, Inc.
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
Attention: James A. Ounsworth, Esq.
(b) If to the Company, to:
eMerge Interactive, Inc.
10315 102nd Terrace
Sebastian, FL 32958
Attention: T. Michael Janney
With a required copy to:
Morgan, Lewis & Bockius LLP
1701 Market St.
Philadelphia, PA 19103-2921
Attention: Michael Shim, Esquire
6.3. Third Party Beneficiaries. Safeguard acknowledges that each of the
Underwriters of the Public Offering shall be a third party beneficiary
entitled to exercise the rights and remedies provided for herein
directly against Safeguard. The Company shall cooperate with and assist
each of the Underwriters of the Public Offering with respect to any
action such Underwriters take to exercise such rights and remedies
directly against Safeguard.
6.4. Successors and Assigns. This Agreement, and all rights and powers
granted hereby, will bind and inure to the benefit of the parties
hereto and their respective successors and permitted assigns but shall
not be assignable or delegable by any party without the prior written
consent of the other party.
6.5. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of Pennsylvania, without giving
effect to its principles of conflicts of laws or choice of forum.
6.6. Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference,
and shall not
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constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
6.7. Counterparts. This Agreement may be executed in two counterparts, each
of which shall be deemed an original, but which together shall
constitute one and the same instrument. Each such copy shall be deemed
an original and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
6.8. Further Assurances. Each party shall cooperate and take such action as
may be reasonably requested by the other party in order to carry out
the provisions and purposes of this Agreement and the transactions
contemplated hereby.
6.9. Amendment and Waiver. The parties may by mutual agreement amend this
Agreement in any respect, and either party, as to such party, may (a)
extend the time for the performance of any of the obligations of the
other party, (b) waive any inaccuracies in representations by the other
party, (c) waive compliance by the other party with any of the
agreements contained herein and performance of any obligations by the
other party, and (d) waive the fulfillment of any condition that is
precedent to the performance by such party of any of its obligations
under this Agreement. To be effective, any such amendment or waiver
must be in writing and be signed by the party against whom enforcement
of the same is sought.
6.10. Entire Agreement. This Agreement sets forth all of the promises,
covenants, agreements, conditions and undertakings between the parties
hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written.
6.11. Interpretations. No party to this Agreement shall be considered the
draftsman. This Agreement has been reviewed, negotiated and accepted by
all parties and their attorneys and shall be construed and interpreted
according to the ordinary meaning of the words used so as fairly to
accomplish the purposes and intentions of all parties hereto.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
SAFEGUARD SCIENTIFICS, INC.
By:______________________________________________
Name:
Title:
eMERGE INTERACTIVE, INC.
By:______________________________________________
Name:
Title: