Stock Purchase Agreement - Safeguard Scientifics Inc. and Internet Capital Group Inc.
STOCK PURCHASE AGREEMENT
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THIS IS A STOCK PURCHASE AGREEMENT (the "Agreement") dated August 4,
1999, by and between SAFEGUARD SCIENTIFICS, INC., a Pennsylvania corporation
("Safeguard"), and INTERNET CAPITAL GROUP, INC., a Delaware corporation (the
"Company").
Background
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A. The Company is contemplating an initial public offering (the
"Public Offering") of its common stock, par value $.001 per share (the "Common
Stock").
B. As part of the Public Offering, the Company will offer 2,200,000
shares of Common Stock (the "Offered Common Stock") to certain shareholders of
Safeguard pursuant to a directed share subscription program (the "Directed Share
Subscription Program").
C. In the event that any of the shares of Offered Common Stock are
not subscribed for or, if subscribed for, are not purchased by the shareholders
of Safeguard under the Directed Share Subscription Program, Safeguard and the
Company wish to provide for Safeguard's purchase of these remaining shares.
D. In the event that the shareholders of Safeguard subscribe for more
shares of Common Stock than the number of shares of Offered Common Stock,
Safeguard will make an offer of up to 1,300,000 shares of common stock of the
Company, par value $.001 per share, owned by it prior to the Public Offering
(the "Safeguard ICG Stock"), and the Safeguard ICG Stock shall be included in
the Directed Share Subscription Program.
E. ChaseMellon Shareholders Services, L.L.C. will act as the offering
agent (the "Offering Agent") for the Directed Share Subscription Program and as
the Company's transfer agent. The Offering Agent will determine the record date
shareholders eligible to participate in the Directed Share Subscription Program
and will collect subscriptions and subscriptions payments from the eligible
shareholders until 5:00 p.m. on the fourth business day following the date the
Company determines the initial public offering price of its shares.
Terms
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In consideration of the mutual covenants contained herein and
intending to be legally bound hereby, the parties hereto agree as follows:
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ARTICLE 1
THE TRANSACTION
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1.1. Purchase Price.
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(a) Purchase Price. The purchase price for the Common Stock (the
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"Purchase Price") shall be equal to the product of (i) the aggregate number of
shares of Offered Common Stock, and (ii) the price per share of Common Stock
sold pursuant to the Public Offering.
(b) Advance of Amount Equal to Purchase Price. Safeguard, on behalf
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of its shareholders participating in the Directed Share Subscription Program,
shall transfer, or cause the Offering Agent to pay out of subscription funds
received, to the Company an amount equal to the Purchase Price on the day of the
closing of the Public Offering by wire transfer.
1.2. Closing.
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(a) Time and Place. The closing under this Agreement (the "Closing")
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will take place at 10:00 a.m., Philadelphia, Pennsylvania time, on the day of
the closing of the Public Offering, at the offices of Dechert Price & Rhoads, 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. On the Closing Date, the Company
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shall instruct the transfer agent 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;
(ii) delivery of the shares of Offered Common Stock purchased in
the Directed Share Subscription Program;
(iii) delivery to Safeguard of shares of Offered Common Stock not
purchased by Safeguard shareholders; and
(iv) the return to Safeguard of any shares of Safeguard ICG
Stock that were not purchased in the Directed Share Subscription Program.
<PAGE>
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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The Company hereby represents and warrants to Safeguard as follows:
2.1. Organization. The Company is a corporation duly incorporated,
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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
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authority to make, execute, deliver and perform this Agreement.
2.3. Authorization and Enforceability. The execution, delivery and
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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
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Safeguard represents and warrants to Sellers as follows:
3.1. Organization. Safeguard is a corporation duly incorporated, validly
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existing and in good standing under the laws of the State of Delaware.
3.2. Power and Authority. Safeguard has full corporate power and
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authority to make, execute, deliver and perform this Agreement.
3.3. Authorization and Enforceability. The execution, delivery and
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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.
ARTICLE 4
CONDITIONS TO CLOSING; TERMINATION
4.1. Conditions Precedent to Obligations of Safeguard. The obligations of
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Safeguard to proceed with the Closing under this Agreement 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
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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
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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
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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 an executive officer of
the Company, to such effect.
(c) Public Offering. The closing of the Public Offering shall have
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occurred.
4.2. Conditions Precedent to the Obligations of the Company. The
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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
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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
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
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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 an executive officer of
Safeguard, to such effect.
(c) Public Offering. The closing of the Public Offering shall have
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occurred.
4.3. Termination.
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(a) When Agreement May Be Terminated. This Agreement may be
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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. 333-78193).
(b) Effect of Termination. In the event of termination of this
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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
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forth in Article 5 hereof shall survive such termination.
<PAGE>
ARTICLE 5
CERTAIN ADDITIONAL COVENANTS
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5.1. Indemnification.
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(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 Directed Share
Subscription Program, including, without limitation, (i) costs and expenses
associated with the failure of any shareholders of Safeguard to consummate
purchases of Offered Common Stock for which they have subscribed, (ii) any
claims by shareholders of Safeguard or other persons arising from the Directed
Share Subscription Program, and (iii) other costs and expenses, including
printing costs and legal fees and expenses, arising from the establishment,
execution and performance of the Directed Share Subscription Program.
Notwithstanding the foregoing, Safeguard shall not indemnify the Company
against, and the term "Losses" shall not include, 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. 333-78193) (the "Prospectus"), except for statements or
omissions regarding the Directed Share Subscription Program and except for any
materials related to the Directed Share Subscription Program 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 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
<PAGE>
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
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 Directed Share Subscription Program 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
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6.1. Nature and Survival of Representations. The representations, warranties,
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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.
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6.2. Notices. All notices, requests, demands and other
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communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered 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.
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(b) If to the Company, to:
Internet Capital Group, Inc.
800 The Safeguard Building
435 Devon Park Drive
Wayne, PA 19087
Attention: Henry N. Nassau, Esq.
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With a required copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103-2793
Attention: Christopher G. Karras, Esq.
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6.3. Third Party Beneficiaries. Safeguard acknowledges that each of
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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
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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
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construed in accordance with the internal laws of the Commonwealth of
Pennsylvania, without giving effect to principles of conflicts of laws.
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6.6. Headings. The headings preceding the text of the sections and
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subsections hereof are inserted solely for convenience of reference, and shall
not 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
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counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
6.8. Further Assurances. Each party shall cooperate and take such
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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
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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,
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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
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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: /s/ James A. Ounsworth
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Name: James A. Ounsworth
Title: SVP
INTERNET CAPITAL GROUP, INC.
By: /s/ John N. Nickolas
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Name: John N. Nickolas
Title: Managing Director