-----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, Chr+oEMLMozOLppDNf54KErqyM0dNbDkh7zOiYmWxUa3Fy/VbXtsCg9SpIQnMZSi t7YYMP5Y/1vr7ZFWKAZGdQ== 0000893220-01-000283.txt : 20010320 0000893220-01-000283.hdr.sgml : 20010320 ACCESSION NUMBER: 0000893220-01-000283 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20010319 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: EMERGE INTERACTIVE INC CENTRAL INDEX KEY: 0001092605 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 650534535 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-59039 FILM NUMBER: 1571506 BUSINESS ADDRESS: STREET 1: 10315 102ND TERRACE CITY: SEBASTIAN STATE: FL ZIP: 32958 BUSINESS PHONE: 5615897331 MAIL ADDRESS: STREET 1: 10315 102ND TERRACE CITY: SEBASTIAN STATE: FL ZIP: 32958 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SAFEGUARD SCIENTIFICS INC ET AL CENTRAL INDEX KEY: 0000086115 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 231609753 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 435 DEVON PARK DR STREET 2: 800 THE SAFEGUARD BLDG CITY: WAYNE STATE: PA ZIP: 19087 BUSINESS PHONE: 6102930600 FORMER COMPANY: FORMER CONFORMED NAME: SAFEGUARD INDUSTRIES INC DATE OF NAME CHANGE: 19810525 FORMER COMPANY: FORMER CONFORMED NAME: SAFEGUARD CORP DATE OF NAME CHANGE: 19690521 SC 13D/A 1 w46636sc13da.txt SC 13D/A - EMERGE INTERACTIVE, INC. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (RULE 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13D-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) Amendment No. 2 EMERGE INTERACTIVE, INC. (Name of Issuer) COMMON STOCK, PAR VALUE $0.008 PER SHARE (Title of Class of Securities) 29088W 10 3 (CUSIP Number) N. JEFFREY KLAUDER, ESQ. HENRY N. NASSAU, ESQ. SAFEGUARD SCIENTIFICS, INC. INTERNET CAPITAL GROUP, INC. 435 DEVON PARK DRIVE, BUILDING 800 435 DEVON PARK DRIVE, BUILDING 600 WAYNE, PA 19087 WAYNE, PA 19087 (610) 975-4984 (610) 989-0111 WITH COPIES TO: RICHARD B. ALDRIDGE, ESQ. CHRISTOPHER G. KARRAS, ESQ. MORGAN, LEWIS & BOCKIUS LLP DECHERT 1701 MARKET STREET 4000 BELL ATLANTIC TOWER PHILADELPHIA, PA 19103 1717 ARCH STREET (215) 963-4829 PHILADELPHIA, PA 19103-2793 (215) 994-4000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) December 21, 2000 (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 which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 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 13d-7(b) for other parties to whom copies are to be sent. (Continued on following pages) Page 1 of 20 2 CUSIP No. 29088W 10 3 Page 2 of 20 - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SAFEGUARD SCIENTIFICS, INC. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) 23-1609753 - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION PENNSYLVANIA - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER -0- SHARES --------------------------------------------------------- OF SHARES 8 SHARED VOTING POWER 9,171,857 SHARES OF CLASS A COMMON STOCK BENEFICIALLY 6,833,334 SHARES OF CLASS B COMMON STOCK --------------------------------------------------------- OWNED 9 SOLE DISPOSITIVE POWER -0- SHARES BY EACH --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER REPORTING 7,921,857 SHARES OF CLASS A COMMON STOCK -0- SHARES OF CLASS B COMMON STOCK PERSON WITH - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 16,005,191 SHARES - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 44.54% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ------------------------------------------------------------------------------- * Excludes an aggregate of 383,238 shares of Class A common stock held by certain executive officers and directors of Safeguard Scientifics, Inc., some of whom are directors of Internet Capital Group, Inc., and 501(c)(3) foundations controlled by them. Safeguard Scientifics, Inc. disclaims beneficial ownership of such shares. Also excludes options to purchase 100,000 shares of Class A common stock held by Douglas Alexander, a Managing Director of Internet Capital Group, Inc., 10,120 shares of Class A common stock held by Robert E. Keith, Jr., the Chairman of the Board of Internet Capital Group Inc. and a director of Safeguard Scientifics, Inc., and 5,000 shares of Class A common stock held by Dr. Thomas Gerrity, a director of Internet Capital Group, Inc. Safeguard Scientifics, Inc. disclaims beneficial ownership of such securities. 3 CUSIP No. 29088W 10 3 Page 3 of 20 - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SAFEGUARD DELAWARE, INC. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) 52-2081181 - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* WC - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER -0- SHARES --------------------------------------------------------- OF SHARES 8 SHARED VOTING POWER 3,767,936 SHARES OF CLASS A COMMON STOCK BENEFICIALLY -0- SHARES OF CLASS B COMMON STOCK --------------------------------------------------------- OWNED 9 SOLE DISPOSITIVE POWER -0- SHARES BY EACH --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER REPORTING 3,767,936 SHARES OF CLASS A COMMON STOCK -0- SHARES OF CLASS B COMMON STOCK PERSON WITH - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,767,936 SHARES - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 10.83% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ------------------------------------------------------------------------------- 4 CUSIP No. 29088W 10 3 Page 4 of 20 - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON SAFEGUARD SCIENTIFICS (DELAWARE), INC. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) 51-02911711 - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER -0- SHARES --------------------------------------------------------- OF SHARES 8 SHARED VOTING POWER 4,153,921 SHARES OF CLASS A COMMON STOCK BENEFICIALLY -0- SHARES OF CLASS B COMMON STOCK --------------------------------------------------------- OWNED 9 SOLE DISPOSITIVE POWER -0- SHARES BY EACH --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER REPORTING 4,153,921 SHARES OF CLASS A COMMON STOCK -0- SHARES OF CLASS B COMMON STOCK PERSON WITH - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 4,153,921 SHARES - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 11.94% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ------------------------------------------------------------------------------- 5 CUSIP No. 29088W 10 3 Page 5 of 20 - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON INTERNET CAPITAL GROUP, INC. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) 23-2996071 - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER -0- SHARES --------------------------------------------------------- OF SHARES 8 SHARED VOTING POWER 9,171,857 SHARES OF CLASS A COMMON STOCK BENEFICIALLY 6,833,334 SHARES OF CLASS B COMMON STOCK --------------------------------------------------------- OWNED 9 SOLE DISPOSITIVE POWER -0- SHARES BY EACH --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER REPORTING 1,250,000 SHARES OF CLASS A COMMON STOCK 6,833,334 SHARES OF CLASS B COMMON STOCK PERSON WITH - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 16,005,191 SHARES - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 44.54% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ------------------------------------------------------------------------------- * Excludes options to purchase 100,000 shares of Class A common stock held by Douglas Alexander, a Managing Director of Internet Capital Group, Inc., 10,120 shares of Class A common stock held by Robert E. Keith, Jr., the Chairman of the Board of Directors of Internet Capital Group, Inc. and a director of Safeguard Scientifics, Inc., and 5,000 shares of Class A common stock held by Dr. Thomas Gerrity, a director of Internet Capital Group, Inc. Internet Capital Group, Inc. disclaims beneficial ownership of such securities. Also excludes an aggregate of 383,238 shares of Class A common stock held by certain executive officers and directors of Safeguard Scientifics, Inc., some of whom are also directors of Internet Capital Group, Inc., and 501(c)(3) foundations controlled by them. Internet Capital Group, Inc. disclaims beneficial ownership of such securities. 6 CUSIP No. 29088W 10 3 Page 6 of 20 - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON ICG HOLDINGS, INC. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) 51-0396570 - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ------------------------------------------------------------------------------- NUMBER 7 SOLE VOTING POWER -0- SHARES OF SHARES --------------------------------------------------------- 8 SHARED VOTING POWER BENEFICIALLY 1,250,000 SHARES OF CLASS A COMMON STOCK 6,833,334 SHARES OF CLASS B COMMON STOCK OWNED --------------------------------------------------------- 9 SOLE DISPOSITIVE POWER BY EACH -0- SHARES --------------------------------------------------------- REPORTING 10 SHARED DISPOSITIVE POWER 1,250,000 SHARES OF CLASS A COMMON STOCK PERSON WITH 6,833,334 SHARES OF CLASS B COMMON STOCK - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,083,334 SHARES - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 22.50% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ------------------------------------------------------------------------------- 7 CUSIP No. 29088W 10 3 Page 7 of 20 - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON 1999 INTERNET CAPITAL L.P. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X] (b) [ ] - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER -0- SHARES --------------------------------------------------------- OF SHARES 8 SHARED VOTING POWER 1,250,000 SHARES OF CLASS A COMMON STOCK BENEFICIALLY 6,833,334 SHARES OF CLASS B COMMON STOCK --------------------------------------------------------- OWNED 9 SOLE DISPOSITIVE POWER -0- SHARES BY EACH --------------------------------------------------------- 10 SHARED DISPOSITIVE POWER REPORTING 1,250,000 SHARES OF CLASS A COMMON STOCK 6,833,334 SHARES OF CLASS B COMMON STOCK PERSON WITH - ------------------------------------------------------------------------------ 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 8,083,334 SHARES - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 22.50% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* PN - ------------------------------------------------------------------------------- 8 CUSIP No. 29088W 10 3 Page 8 of 20 The following information supplements and amends the information contained in the Schedule 13D, as amended, previously filed by the Reporting Persons relating to the common stock, $0.008 par value per share, of eMerge Interactive, Inc., a Delaware corporation (the "Company"), listed on the cover pages of this amendment. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATIONS. Add the following to the end of Item 3: On December 21, 2000, Safeguard Scientifics, Inc. ("Safeguard") purchased from XL Vision, Inc. 689,200 shares of the Company's Class A common stock for an aggregate purchase price of $2,237,074. The funds used in making these purchases came from the general working capital of Safeguard. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. The following replaces in its entirety the disclosure previously contained in Item 5: The table below sets forth the aggregate number of shares and percentage of the Company's outstanding shares beneficially owned by each Reporting Person. Except as otherwise noted, each person listed has sole voting and dispositive power over all shares listed opposite its name. Any of the aforementioned persons whose names do not appear in the table below do not, to the best of each Reporting Person's knowledge, beneficially own any shares of the Company. Unless otherwise indicated in Schedule VII annexed hereto, no Reporting Person or director or executive officer of a Reporting Person listed on Schedules II-VI annexed hereto has consummated any transaction in the Company's shares during the past sixty days other than as set forth herein.
Beneficial Ownership Number of Percentage Shares of Total Safeguard Scientifics, Inc. 16,005,191 (3) 44.54% (1) Safeguard Delaware, Inc. 3,767,936 (4) 10.83% (2) Safeguard Scientifics (Delaware), Inc. 4,153,921 11.94% (2) Safeguard 98 Capital, L.P. 340,000 (5) 0.98% (2) Internet Capital Group, Inc. 16,005,191 (6) 44.54% (1) ICG Holdings, Inc. 8,083,334 (7) 22.50% (1) 1999 Internet Capital L.P. 8,083,334 (7) 22.50% (1)
- -------------- (1) Calculations based upon 34,794,896 shares outstanding on November 7, 2000 and warrants to purchase 1,138,889 shares exercisable within 60 days of the date hereof. (2) Calculations based upon 34,794,896 shares outstanding on November 7, 2000. (3) Includes the 8,083,334 shares beneficially owned by ICG, the 3,767,936 shares beneficially owned by SDI, a wholly-owned subsidiary of Safeguard, and the 4,153,921 shares beneficially owned by SSDI, a wholly-owned subsidiary of Safeguard. Safeguard and each of SDI and SDII have reported that Safeguard together with each of SDI and SDII, respectively, have both shared voting and dispositive power with respect to the shares held by each of SDI and SDII, respectively, because Safeguard is the sole stockholder of each of SDI and SDII. Included in the 3,767,936 shares beneficially owned by SDI are 340,000 shares of the Company that Safeguard 98 (of which SDI serves as the general partner) has the option to acquire upon conversion of debt of XL Vision to Safeguard 98 and 120,721 shares of the Company which SDI will acquire upon conversion of debt of XL Vision to SDI. Safeguard and ICG have entered into a joint venture agreement that, among other things, governs how the shares of the Company's common stock that are beneficially owned by each of them will be voted. Excludes an aggregate of 383,238 shares of Class A common stock held by certain executive officers and directors of Safeguard, some of whom are directors of ICG, and 501(c)(3) foundations controlled by them. Safeguard disclaims beneficial 9 CUSIP No. 29088W 10 3 Page 9 of 20 ownership of such shares. Also excludes options to purchase 100,000 shares of Class A common stock held by Douglas Alexander, a Managing Director of ICG, 10,120 shares of Class A common stock held by Robert E. Keith, Jr., the Chairman of the Board of ICG and a director of Safeguard, and 5,000 shares of Class A common stock held by Dr. Thomas Gerrity, a director of ICG. Safeguard disclaims beneficial ownership of such securities. (4) SDI is a wholly-owned subsidiary of Safeguard and the general partner of 98 Capital. Includes an aggregate of 460,721 shares that SDI may acquire from XL Vision in connection with the conversion of debt of XL Vision to 98 Capital and SDI. (5) Represents 340,000 shares that reporting person may acquire from XL Vision in connection with the conversion of debt. (6) Includes 7,921,857 shares beneficially owned by Safeguard. Safeguard and ICG have entered into a joint venture agreement that, among other things, governs how the shares of the Company's common stock that are controlled by each of them will be voted. Also includes 5,694,445 shares of Class B common stock, a warrant to purchase 1,138,889 shares of Class B common stock, and 1,250,000 shares of Class A common stock held by ICG LP, a Delaware limited partnership of which ICG's wholly-owned subsidiary, ICG Holdings, is the sole general partner. ICG, ICG Holdings and ICG LP have reported that each of them has both shared voting and dispositive power with respect to the shares held by ICG LP because ICG is the sole stockholder of ICG Holdings and ICG Holdings is the sole general partner of ICG LP. ICG, ICG Holdings and ICG LP share dispositive power over such 8,083,334 shares. Excludes options to purchase 100,000 shares of Class A common stock held by Douglas Alexander, a Managing Director of ICG, 10,120 shares of Class A common stock held by Robert E. Keith, Jr., the Chairman of the Board of ICG and a director of Safeguard, and 5,000 shares of Class A common stock held by Dr. Thomas Gerrity, a director of ICG. ICG disclaims beneficial ownership of such securities. Also excludes an aggregate of 383,238 shares of Class A common stock held by certain executive officers and directors of Safeguard, some of whom are directors of ICG, and 501(c)(3) foundations controlled by them. ICG disclaims beneficial ownership of such securities. (7) Includes 5,694,445 shares of Class B common stock, a warrant to purchase 1,138,889 shares of Class B common stock and 1,250,000 shares of Class A common stock owned by ICG LP. The Schedule 13D previously filed included in Safeguard's beneficial ownership calculation the shares of Class A common stock of the Company owned by XL Vision, Inc. ("XL") and Technology Leaders L.P., Technology Leaders MI Corp., Technology Leaders II L.P. and Technology Leaders II Offshore, C.V. ("TL Funds"). Safeguard disclaims beneficial ownership of the shares of Class A common stock of the Company owned by XL or the TL Funds except as expressly described in Item 5 and such shares are excluded from all beneficial ownership calculations contained in this amendment. ITEM 6. CONTRACT, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Add the following to the end of Item 6: 98 Capital and XL Vision are parties to a Note Purchase Agreement dated as of May 14, 1999 pursuant to which 98 Capital has the option of converting a portion of the debt of XL Vision into 340,000 shares of the Company currently owned by XL Vision, at an initial per share conversion price of $11.25. Commencing August 9, 2001, XL Vision may require mandatory conversion of such debt as long as the closing price of a share of the Company's common stock has exceeded $22.50 for each of the previous 65 trading days. Commencing on the earlier of August 9, 2001 or 90 days after completion of a second public offering of common stock of the Company, XL Vision also may prepay up to $5 million of debt at a price equal to the lower of a 25% discount from the rolling 20-day average closing price or a 20% discount from the closing price on the day before prepayment, so long as the 20-day average closing price and the last day closing price exceeds $22.50 per share. SDI and XL Vision are parties to a Master Note Modification Agreement dated as of May 19, 2000 that provides that one-third of various outstanding notes of XL Vision held by SDI will become convertible into 120,721 shares of the Company owned by XL Vision. 10 CUSIP No. 29088W 10 3 Page 10 of 20 Safeguard and SDI are parties to a Purchase and Sale Agreement dated as of December 21, 2000 pursuant to which SDI purchased 689,200 shares of the Company from XL Vision as described in Item 3. The foregoing descriptions are qualified in their entirety by reference to the Note Purchase Agreement, the Master Note Modification Agreement, and the Purchase and Sale Agreement, copies of which are attached hereto as Exhibits 99.2, 99.3 and 99.4, respectively, and the terms of which are incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. Add the following to the end of Item 7: Agreement Regarding the Joint Filing of Schedule 13D attached hereto as Exhibit 99.1. Note Purchase Agreement, dated as of May 14, 1999, among XL Vision, Inc., Safeguard 98 Capital L.P., Wheatley Partners, L.P. (and each of its affiliates, "The Wheatley Group") attached hereto as Exhibit 99.2. Master Note Modification Agreement, dated as of May 19, 2000, by and among XL Vision, Inc., Safeguard Delaware, Inc., Technology Leaders L.P. and Technology Leaders MI Corp., attached hereto as Exhibit 99.3. Purchase and Sale Agreement dated as of December 21, 2000 by and among XL Vision, Inc., Safeguard Scientifics, Inc., Safeguard Delaware, Inc. and incuVest LLC, attached hereto as Exhibit 99.4. 11 CUSIP No. 29088W 10 3 Page 11 of 20 SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information named in this schedule is true, complete and correct. Date: March 15, 2001 Safeguard Scientifics, Inc. By: /s/ N. Jeffrey Klauder ------------------------------ N. Jeffrey Klauder Executive Vice President and General Counsel Date: March 15, 2001 Safeguard Delaware, Inc. By: /s/ N. Jeffrey Klauder ------------------------------- N. Jeffrey Klauder Vice President Date: March 15, 2001 Safeguard Scientifics (Delaware), Inc. By: /s/ N. Jeffrey Klauder ------------------------------- N. Jeffrey Klauder Vice President Date: March 15, 2001 Internet Capital Group, Inc. By: /s/ Henry N. Nassau ------------------------------- Henry N. Nassau Managing Director, General Counsel and Secretary Date: March 15, 2001 ICG Holdings, Inc. By: /s/ Henry N. Nassau ------------------------------- Henry N. Nassau Secretary Date: March 15, 2001 1999 Internet Capital L.P. By: ICG Holdings, Inc., its General Partner By: /s/ Henry N. Nassau ------------------------------- Henry N. Nassau Secretary 12 CUSIP No. 29088W 10 3 Page 12 of 20 SCHEDULE I 1. Safeguard Scientifics, Inc. Safeguard Scientifics, Inc. a Pennsylvania corporation ("Safeguard"), owns all of the outstanding capital stock of Safeguard Delaware, Inc., a Delaware corporation ("SDI"), Safeguard Scientifics (Delaware) Inc. ("SSDI")" and Technology Leaders Management, Inc., a Pennsylvania corporation ("TL Management"). Safeguard has an address at 800 The Safeguard Building, 435 Devon Park Drive, Wayne, PA 19087-1945. Safeguard is a leader in identifying, developing and operating premier technology companies with a focus on three sectors: software, communications, and eServices. See Schedule II with respect to the executive officers and directors of Safeguard as of the date of filing this Schedule 13D. 2. Safeguard Delaware, Inc. SDI is a wholly owned subsidiary of Safeguard. SDI is the sole general partner of Safeguard 98 Capital, L.P., a Delaware limited partnership. SDI is a holding company and has an office at 103 Springer Building, 3411 Silverside Road, P.O. Box 7048, Wilmington, DE 19803. Schedule III provides information about the executive officers and directors of SDI as of the date of filing this Schedule 13D. 3. Safeguard Scientifics (Delaware), Inc. SSDI is a wholly owned subsidiary of Safeguard. SSDI is a holding company and has an office at 103 Springer Building, 3411 Silverside Road, P.O. Box 7048, Wilmington, DE 19803. Schedule IV provides information about the executive officers and directors of SDI as of the date of filing this Schedule 13D. 13 CUSIP No. 29088W 10 3 Page 13 of 20 SCHEDULE I-A 1. Internet Capital Group, Inc. Internet Capital Group, Inc., a Delaware corporation ("ICG"), owns all of the outstanding capital stock of ICG Holdings, Inc., a Delaware corporation ("ICG Holdings"). ICG has an address at 435 Devon Park Drive, 600 Building, Wayne, PA 19087. See Schedule V with respect to the executive officers and directors of ICG as of the date of filing this Schedule 13D. 2. ICG Holdings, Inc. ICG Holdings is a wholly-owned subsidiary of ICG. ICG Holdings is a holding company with a principal place of business at Pencader Corporate Center, 100 Lake Drive, Suite 4, Newark, DE 19702. ICG Holdings is the sole General Partner of 1999 Internet Capital L.P., a Delaware limited partnership ("ICG LP"). See Schedule VI with respect to the executive officers and directors of ICG Holdings as of the date of filing this Schedule 13D. 3. 1999 Internet Capital L.P. ICG LP is a Delaware limited partnership with a principal place of business at Pencader Corporate Center, 100 Lake Drive, Suite 4, Newark, DE 19702. 14 CUSIP No. 29088W 10 3 Page 14 of 20 SCHEDULE II EXECUTIVE OFFICERS AND DIRECTORS OF SAFEGUARD SCIENTIFICS, INC.
Name Present Principal Employment Business Address ---- ---------------------------- ---------------- EXECUTIVE OFFICERS* Warren V. Musser Chairman of the Board and Chief Executive Safeguard Scientifics,Inc. Officer 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Harry Wallaesa President and Chief Operating Officer Safeguard Scientifics,Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Jerry L. Johnson Executive Vice President, Operations Safeguard Scientifics,Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Gerald A. Blitstein Executive Vice President and Chief Safeguard Scientifics,Inc. Financial Officer 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 John K. Halvey Executive Vice President Safeguard Scientifics,Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 N. Jeffrey Klauder Executive Vice President and General Safeguard Scientifics,Inc. Counsel 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 DIRECTORS* Vincent G. Bell Jr. President and Chief Executive Officer, Verus Corporation Verus Corporation 5 Radnor Corporate Center Suite 520 Radnor, PA 19087 Walter W. Buckley III President & CEO, Internet Capital Group, Internet Capital Group Inc. 435 Devon Park Drive Building 600 Wayne, PA 19087 Robert A. Fox President, R.A.F. Industries R.A.F. Industries One Pitcairn Pl, Suite 2100 165 Township Line Road Jenkintown, PA 19046-3593 Robert E. Keith Jr. Managing Director of TL Ventures and TL Ventures President and CEO, Technology Leaders 700 Building Management, Inc. 435 Devon Park Drive Wayne, PA 19087 Michael Emmi Chairman, President and CEO, Systems & Systems & Computer Technology Computer Technology Corporation Corporation 4 Country View Road Malvern, PA 19355 Jack L. Messman President and CEO, Cambridge Technology Cambridge Technology Partners Partners (Massachusetts) 8 Cambridge Center Cambridge, MA 02142 Warren V. Musser (Same as above) (Same as above) Russell E. Palmer Chairman and CEO, The Palmer Group The Palmer Group 3600 Market Street, Suite 530 Philadelphia, PA 19104 John W. Poduska Sr. Chairman of the Board, Advanced Visual Advanced Visual Systems, Inc. Systems, Inc. 300 Fifth Avenue Waltham, MA 02154
15 CUSIP No. 29088W 10 3 Page 15 of 20
Name Present Principal Employment Business Address ---- ---------------------------- ---------------- Heinz Schimmelbusch President, Safeguard International Group, Safeguard International Group Inc., Chairman, Allied Resource Building 400 Corporation, Chairman, Metallurg, Inc. and 435 Devon Park Drive Managing Director, Safeguard International Wayne, PA 19087 Fund, L.P. Hubert J.P. Schoemaker Chairman of the Board and CEO, Neuronyx, Neuronyx, Inc. Inc. 200 Great Valley Parkway Malvern, PA 19355 Harry Wallaesa (Same as above) (Same as above) Carl J. Yankowski President and CEO, Palm Computing, Inc. Palm Computing, Inc. 5400 Bayfront Plaza, MS9208 Santa Clara, CA 95054
* All Executive Officers and Directors are U.S. citizens, except Heinz Schimmelbusch, who is a citizen of Austria, and Hubert J.P. Schoemaker, who is a citizen of the Netherlands. 16 CUSIP No. 29088W 10 3 Page 16 of 20 SCHEDULE III EXECUTIVE OFFICERS AND DIRECTORS OF SAFEGUARD DELAWARE, INC.
Name Present Principal Employment Business Address ---- ---------------------------- ---------------- EXECUTIVE OFFICERS* Harry Wallaesa President Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Jerry L. Johnson Vice President Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Gerald A. Blitstein Vice President and Treasurer Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 John K. Halvey Vice President Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 N. Jeffrey Klauder Vice President and Assistant Safeguard Scientifics, Inc. Secretary 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 DIRECTORS* Joseph DeSanto Vice President, Safeguard Safeguard Scientifics, Inc. Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Tonya Zweier Vice President, Safeguard Safeguard Scientifics, Inc. Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Mary Alice Avery Assistant Secretary 103 Springer Building 3411 Silverside Road Wilmington, DE 19810
* All Executive Officers and Directors are U.S. Citizens. 17 CUSIP No. 29088W 10 3 Page 17 of 20 SCHEDULE IV EXECUTIVE OFFICERS AND DIRECTORS OF SAFEGUARD SCIENTIFICS (DELAWARE), INC.
Name Present Principal Employment Business Address ---- ---------------------------- ---------------- EXECUTIVE OFFICERS* Harry Wallaesa President Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Jerry L. Johnson Vice President Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Gerald A. Blitstein Vice President and Treasurer Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 John K. Halvey Vice President Safeguard Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 N. Jeffrey Klauder Vice President and Assistant Safeguard Scientifics, Inc. Secretary 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 DIRECTORS* Joseph DeSanto Vice President, Safeguard Safeguard Scientifics, Inc. Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Tonya Zweier Vice President, Safeguard Safeguard Scientifics, Inc. Scientifics, Inc. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Mary Alice Avery Assistant Secretary 103 Springer Building 3411 Silverside Road Wilmington, DE 19810
* All Executive Officers and Directors are U.S. Citizens. 18 CUSIP No. 29088W 10 3 Page 18 of 20 SCHEDULE V EXECUTIVE OFFICERS AND DIRECTORS OF INTERNET CAPITAL GROUP, INC.
Name Present Principal Employment Business Address ---- ---------------------------- ---------------- EXECUTIVE OFFICERS* Walter W. Buckley III President and CEO Internet Capital Group, Inc. 600 Building 435 Devon Park Drive Wayne, PA 19087 Kenneth A. Fox Managing Director, West Coast Internet Capital Group, Inc. Operations 600 Building 435 Devon Park Drive Wayne, PA 19087 Nigel T. Andrews Managing Director, Office of Internet Capital Group, Inc. the President 600 Building 435 Devon Park Drive Wayne, PA 19087 Henry N. Nassau Managing Director, General Internet Capital Group, Inc. Counsel and Secretary 600 Building 435 Devon Park Drive Wayne, PA 19087 Edward H. West Managing Director and Chief Internet Capital Group, Inc. Financial Officer 600 Building 435 Devon Park Drive Wayne, PA 19087 DIRECTORS* Robert E. Keith, Jr. Managing Director of TL TL Ventures Ventures and President and 700 Building CEO, Technology Leaders 435 Devon Park Drive Management, Inc. Wayne, PA 19087 Walter W. Buckley, III (Same as above) (Same as above) Kenneth A. Fox (Same as above) (Same as above) Julian A. Brodsky Vice Chairman, Comcast Comcast Corporation Corporation and Vice 1500 Market Street President and Director, Sural Philadelphia, PA 19102 Corporation Dr. Thomas P. Gerrity Professor and Director, The Wharton School Wharton School, Electronic University of Pennsylvania Commerce Forum 1000 Steinberg Hall-Dietrich Hall Philadelphia, PA 19104 Warren V. Musser Chairman of the Board and Safeguard Scientifics, Inc. Chief Executive Officer, 800 The Safeguard Building Safeguard Scientifics, Inc. 435 Devon Park Drive Wayne, PA 19087 Peter A. Solvik Senior Vice President and Cisco Systems, Inc. Chief Information Officer, 170 West Tasman Drive Cisco Systems, Inc. San Jose, CA 95134-1706
* All Executive Officers and Directors are U.S. Citizens, except Nigel T. Andrews, who is a citizen of the United Kingdom. 19 CUSIP No. 29088W 10 3 Page 19 of 20 SCHEDULE VI EXECUTIVE OFFICERS AND DIRECTORS OF ICG HOLDINGS, INC.
Name Present Principal Employment Business Address ---- ---------------------------- ---------------- EXECUTIVE OFFICERS* Walter W. Buckley III President Internet Capital Group, Inc. 600 Building 435 Devon Park Drive Wayne, PA 19087 Kenneth A. Fox Vice President Internet Capital Group, Inc. 600 Building 435 Devon Park Drive Wayne, PA 19087 Henry N. Nassau Vice President and Secretary Internet Capital Group, Inc. 600 Building 435 Devon Park Drive Wayne, PA 19087 Edward H. West Chief Financial Officer Internet Capital Group, Inc. 600 Building 435 Devon Park Drive Wayne, PA 19087 DIRECTORS* Walter W. Buckley, III (Same as above) (Same as above) Kenneth A. Fox (Same as above) (Same as above) Henry N. Nassau (Same as above) (Same as above) Edward H. West (Same as above) (Same as above)
*All Executive Officers and Directors are U.S. Citizens. 20 CUSIP No. 29088W 10 3 Page 20 of 20 SCHEDULE VII All of the transactions in the following table were effected in brokers' transactions in the Nasdaq National Market unless otherwise noted.
- ----------------------------------------------------------------------------------------------------------------------- TYPE OF PARTY TRANSACTION DATE TRANSACTION NUMBER OF SHARES PRICE PER SHARE - ----------------------------------------------------------------------------------------------------------------------- Vincent G. Bell 12/19/00 Sale 3,257 $3.7812 (foundation) - ----------------------------------------------------------------------------------------------------------------------- Vincent G. Bell 12/18/00 Sale 2,000 $3.875 (foundation) - ----------------------------------------------------------------------------------------------------------------------- Vincent G. Bell Jr. 12/26/00 Sale 4,000 $3.875 - ----------------------------------------------------------------------------------------------------------------------- Robert A. Fox 12/18/00 Private Purchase 500,000 $5.50 - ----------------------------------------------------------------------------------------------------------------------- Robert A. Fox 1/10/01 through Sale 160,100 $5.55 1/26/01 - -----------------------------------------------------------------------------------------------------------------------
EX-99.1 2 w46636ex99-1.txt JOINT FILING AGREEMENT 1 Exhibit 99.1 AGREEMENT REGARDING THE JOINT FILING OF SCHEDULE 13D Safeguard Scientifics, Inc., Safeguard Delaware, Inc., Safeguard Scientifics (Delaware), Inc., Internet Capital Group, Inc., ICG Holdings, Inc., and 1999 Internet Capital L.P. hereby agree that the Amendment to Statement on Schedule 13D to which this agreement is attached, as well as all future amendments to such statement, shall be filed jointly on behalf of each of them. This agreement is intended to satisfy the requirements of Rule 13d-1(k)(1)(iii) under the Securities Exchange Act of 1934, as amended. Date: March 15, 2001 Safeguard Scientifics, Inc. By: /s/ N. Jeffrey Klauder ------------------------------ N. Jeffrey Klauder Executive Vice President and General Counsel Date: March 15, 2001 Safeguard Delaware, Inc. By: /s/ N. Jeffrey Klauder ------------------------------- N. Jeffrey Klauder Vice President Date: March 15, 2001 Safeguard Scientifics (Delaware), Inc. By: /s/ N. Jeffrey Klauder ------------------------------- N. Jeffrey Klauder Vice President Date: March 15, 2001 Internet Capital Group, Inc. By: /s/ Henry N. Nassau ------------------------------- Henry N. Nassau Managing Director, General Counsel and Secretary Date: March 15, 2001 ICG Holdings, Inc. By: /s/ Henry N. Nassau ------------------------------ Henry N. Nassau Secretary Date: March 15, 2001 1999 Internet Capital L.P. By: ICG Holdings, Inc., its General Partner By: /s/ Henry N. Nassau ------------------------------- Henry N. Nassau Secretary EX-99.2 3 w46636ex99-2.txt NOTE PURCHASE AGREEMENT 1 Exhibit 99.2 NOTE PURCHASE AGREEMENT THIS NOTE PURCHASE AGREEMENT (this "AGREEMENT") is made and shall be effective as of the 14th day of May, 1999, by and among XL VISION, INC., a Delaware corporation (the "COMPANY"), SAFEGUARD 98 CAPITAL, L.P., a Delaware limited partnership ("SAFEGUARD"), WHEATLEY PARTNERS, L.P., a Delaware limited partnership ("WHEATLEY"), and each of the affiliates of Wheatley set forth on Exhibit A hereto (all of such affiliates, together with Wheatley and their respective transferees, are collectively referred to herein as the "WHEATLEY GROUP"). Unless otherwise provided in this Agreement, capitalized terms used herein shall have the meanings ascribed to them in Section 8.1 hereof. BACKGROUND The Company desires to issue certain Convertible Subordinated Notes due May 14, 2004, in the aggregate principal amount of $20,000,000, as more particularly described in Section 1.1 of this Agreement. Safeguard and each member of the Wheatley Group desire to purchase, and hereby subscribe for, a Note in the principal amount set forth next to its name on Schedule 1 hereto, pursuant to the terms and conditions set forth in this Agreement. SECTION 1. SALE AND PURCHASE OF THE NOTES; CLOSING. 1.1 Sale of Notes. (a) The Company shall authorize the issuance of its Convertible Subordinated Notes due May 14, 2004, in the aggregate principal amount of $20,000,000 (individually a "NOTE" and collectively the "NOTES"). Each Note originally issued hereunder will be dated the date of its issuance, will mature on May 14, 2004, will bear interest at the rate of 6% per annum from the date of issuance, payable at maturity, and will be subject to the other terms and conditions set forth herein and in the form of Note attached hereto as Exhibit B. (b) Subject to the terms and conditions set forth herein, the Company agrees to sell, issue and deliver to Safeguard and each member of the Wheatley Group (each a "PURCHASER," and together the "PURCHASERS"), and each Purchaser severally agrees to purchase from the Company, on the Closing Date (as defined in Section 1.3), for the Purchase Price (as defined in Section 1.2), a Note in the aggregate principal amount set forth next to its name on Schedule 1 hereto. (c) The Note to be delivered to each Purchaser on the Closing Date will be in typewritten form, and will be registered for each Purchaser's account in the Purchaser's name, or such nominee name as shall be specified by such Purchaser. The Company will bear all expenses arising in connection with the preparation and issuance to the Purchasers of the Notes. 1.2 Purchase Price. (a) The aggregate purchase price of the Notes to be issued and sold to the Purchasers on the Closing Date shall be Twenty Million Dollars (US$20,000,000) (the "PURCHASE PRICE"). 2 (b) The price for the Notes purchased by each Purchaser shall be as set forth on Schedule 1 and shall be paid by wire transfer of immediately available funds to an account designated by the Company. (c) The Purchasers and the Company shall prepare and file their respective Federal income tax returns in a manner which is consistent with the allocation of the Purchase Price to the Notes as provided in this Agreement and consistent with the treatment on the Federal income tax return of each other party of matters related to such allocation. 1.3 Closing. The closing of the issuance and sale of the Notes to the Purchasers hereunder shall be held at the offices of Safeguard located at 800 The Safeguard Building, 435 Devon Park Drive, Wayne, Pennsylvania, on May 14, 1999, subject to notification of satisfaction (or waiver) of the conditions to the Closing set forth in Sections 4 and 5 below, or such later date as is mutually agreed upon by the Company and the Purchasers. As used herein, "CLOSING" shall mean the closing of the issuance and sale of the Notes to the Purchasers hereunder and the "CLOSING DATE" shall mean the date on which such Closing takes place. 1.4 Nature of Purchasers' Obligations. In committing to purchase the Notes hereunder, each Purchaser is contracting severally (and not jointly) to purchase only the aggregate principal amount of Notes set forth next to its name on Schedule 1. SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to each of the Purchasers as follows: 2.1 Organization and Standing of the Company. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own and lease its properties and assets and to conduct its business as now conducted. The Company is qualified to do business as a foreign corporation and is in good standing in such states where the conduct of its business or its ownership or leasing of property requires such qualification or where the failure to so qualify would have a material adverse effect on the Company's financial condition. 2.2 Authorization. The Company has all requisite power and authority to execute and deliver this Agreement and to carry out the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Company have been duly authorized by all requisite corporate action, and this Agreement has been duly executed and delivered by the Company and constitutes its valid and binding obligation, enforceable against the Company in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to or affecting the enforcement of creditors, rights generally, and except that the availability of specific performance, injunctive relief or other equitable remedies is subject to the discretion of the court before which any such proceeding may be brought. 2.3 No Conflict with Law or Documents. The execution, delivery and performance of this Agreement by the Company will not violate any provision of law, any rule or regulation of any governmental authority, or any judgment, decree or order of any court binding on the Company, and will not conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the properties, assets or outstanding stock of the Company under its Certificate of Incorporation or bylaws or any indenture, mortgage, lease, agreement or other instrument to which the Company is a party or by which it or any of its properties is bound. 3 2.4 Capitalization; Capital Stock; Affiliate Stock. (a) As of the Closing, the Company will have an authorized capitalization consisting of 10,000,000 shares of common stock, $.0l par value ("COMMON STOCK"). As of the Closing, 6,178,792 shares of Common Stock will be issued and outstanding. All the outstanding shares of Common Stock of the Company have been duly authorized, and are validly issued, fully paid and non-assessable. (b) There are no restrictions on the transfer of shares of Common Stock other than those imposed by relevant federal and state securities laws and as otherwise contemplated by this Agreement. Except as set forth on Schedule 2.4(b) hereof, there are no agreements, written or oral, understandings, trusts or other collaborative arrangements or understandings concerning the voting or transfer of the Common Stock, or which obligate the Company to effect the registration of any of its securities under the 1933 Act, except as contemplated by this Agreement. (c) The Company currently owns the number of shares of Affiliate Stock (as defined in Section 8.1) set forth on Schedule 2.4(c) hereof, free and clear of any and all liens and encumbrances of any nature whatsoever, and all of such shares of Affiliate Stock are duly authorized, validly issued, fully paid and non-assessable shares of each respective Affiliate. None of such shares of Affiliate Stock owned by the Company are subject to any rights of redemption, repurchase, rights of first refusal, preemptive rights or other similar rights, whether contractual, statutory or otherwise, for the benefit of any Person. There are no restrictions on the transfer of shares of Affiliate Stock other than those imposed by relevant federal and state securities laws and as otherwise contemplated by this Agreement. Except as set forth on Schedule 2.4(c) hereof, there are no agreements, understandings, trusts or other collaborative arrangements or understandings concerning the voting or transfer of the Affiliate Stock , or which obligate the Company to effect the registration of any of its securities under the 1933 Act, except as contemplated by this Agreement. 2.5 The Notes and Conversion Shares. The Notes, when issued and delivered against payment therefor in accordance with this Agreement, will be duly authorized and executed by the Company and will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency, moratorium, reorganization and other similar laws relating to or affecting the enforcement of creditors, rights generally, and except that the availability of specific performance, injunctive relief or other equitable remedies is subject to the discretion of the court before which any such proceeding may be brought. The requisite number of shares of duly authorized and unissued Common Stock of the Company have been, or will be, duly authorized and reserved for issuance upon the conversion of the Notes in accordance with the terms of this Agreement, and no further corporate action is, or will be, required for the valid issuance of Common Stock of the Company upon the conversion of the Notes. The Company owns (or will own), will continue to own, free and clear of any and all liens and encumbrances of any nature whatsoever, and will not dispose of the requisite number of shares of duly authorized and validly issued stock of each Conversion Affiliate in order to satisfy any and all of the Company's obligations hereunder with respect to the conversion of the Notes into shares of Affiliate Stock. The Conversion Shares will, at the time of the Closing and thereafter, not be subject to preemptive or similar rights of any person and, when issued against payment therefor in accordance with the terms of this Agreement and the Notes, will be duly and validly issued, fully paid and non-assessable. 2.6 Consents and Approvals. Except for filings under Federal and applicable state securities laws, no permit, consent, approval or authorization of, or declaration to or filing with, any governmental or regulatory authority or other person, not made or obtained, is required in connection with the execution or delivery of this Agreement by the Company, the offer, issuance, sale or delivery of the 4 Notes or Conversion Shares, or the carrying out by the Company of the other transactions contemplated hereby. 2.7 Private Offering. The offer, issuance and delivery to the Purchasers pursuant to the terms of this Agreement of the Notes and, assuming compliance by the Purchasers with the terms of this Agreement and applicable law, the Conversion Shares, are exempt from registration under the Securities Act of 1933, as amended (the "1933 ACT"), and neither the registration of the Notes nor the qualification of an indenture with respect thereto under the Trust Indenture Act of 1939, as amended, is required in connection with such transaction. Based on the representations of the Purchasers contained in Section 3, it is not necessary, under the circumstances contemplated by this Agreement, to register the Notes or Conversion Shares under the 1933 Act. Neither this Agreement nor any representation or warranty made by the Company in this Agreement or in any document delivered to the Purchasers pursuant hereto contain an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading. 2.8 Use of Proceeds. The proceeds from the sale of the Notes will be used by the Company to satisfy, in part, certain indebtedness of the Company owing to PNC Bank, N.A. and to Safeguard Scientifics, Inc., and for various working capital needs. 2.9 Financial Statements. (a) The unaudited balance sheet and related statements of income, cash flow and stockholders' equity of the Company as at and for the year ended December 31, 1998, together with the notes thereto, copies of which have heretofore been furnished to the Purchasers, present fairly in all material respects the financial position of the Company at such dates and the results of its operations for the periods then ended, in conformity with generally accepted accounting principles, consistently applied ("GAAP"). (b) The unaudited balance sheet and related unaudited statements of income, cash flows and stockholders' equity of the Company, as at and for the three (3) months ended March 31, 1999, present fairly in all material respects the financial position of the Company at such dates and the results of its operations for the periods then ended, in conformity with GAAP. (c) Since December 31, 1998, there has been no material adverse change in the business, properties, assets or condition (financial or otherwise) or prospects of the Company. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law, nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings. 2.10 Absence of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its subsidiaries, threatened against or affecting the Company, its subsidiaries or any Conversion Affiliate or their respective directors or officers, or the Common Stock, wherein an unfavorable decision, ruling or finding would (i) have a material adverse effect on the transactions contemplated hereby, (ii) adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, this Agreement or any of the documents contemplated herein, or (iii) have a material adverse effect on the business, operations, properties, financial condition, results of operations or prospects of the Company and its subsidiaries taken as a whole. 2.11 Intellectual Property Rights. The Company and its subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, 5 service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights (collectively, "Intellectual Property Rights") necessary to conduct their respective businesses as now conducted. None of the Intellectual Property Rights have expired or terminated, or are expected to expire or terminate in the immediate future. The Company and its subsidiaries do not have any knowledge of any event, fact or circumstance relating to (i) any infringement by the Company or its subsidiaries or any Conversion Affiliate of any trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets or other similar rights of others, or of any such development of similar or identical trade secrets or technical information by others or (ii) any person or entity now infringing any Intellectual Property Rights or other similar rights or any such development of similar or identical trade secrets or technical information owned or used by the Company or any of its subsidiaries or any Conversion Affiliate and, there is no claim, action or proceeding being made or brought against, or to the Company's knowledge, being threatened against, the Company or its subsidiaries or any Conversion Affiliate regarding any trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets or other similar rights of others, or of any such development of similar or identical trade secrets or technical information by others or (ii) any person or entity now infringing any Intellectual Property Rights or other similar rights or any such development of similar or identical trade secrets or other infringement; and the Company and its subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and its subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights. 2.12 Regulatory Permits. The Company and its subsidiaries and, to the Company's knowledge the Conversion Affiliates, possess all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses, and neither the Company nor any such subsidiary has received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. 2.13 1934 Act Compliance. To the extent any Conversion Affiliate is subject to the reporting requirements of the Securities and Exchange Act of 1934, as amended (the "1934 ACT"), such Conversion Affiliate has timely filed any and all reports and documents required thereunder with the Securities and Exchange Commission and such reports are correct and complete in all material respects. 2.14 Disclosure. No representation by the Company in this Agreement, nor any statement contained in any certificate, schedule, list or other writing furnished or to be furnished by the Company to the Purchasers pursuant to this Agreement (a) contains or shall contain any untrue statement of a material fact, or (b) omits or shall omit to state a material fact necessary in order to make the statements contained herein or therein not misleading. SECTION 3. PURCHASERS' REPRESENTATIONS AND WARRANTIES. The Purchasers understand that the Notes and Conversion Shares will not be registered under the 1933 Act, on the grounds that the sales provided for in this Agreement are exempt pursuant to Section 4(2) of the 1933 Act and/or Regulation D promulgated under Section 3(b) and/or Section 4(2) of the 1933 Act, and that the reliance of the Company on such exemptions is predicated in part on the representations, warranties, covenants and acknowledgments of the Purchasers set forth in this Section 3. The representations and warranties of the Purchasers are made severally, and not jointly, and neither Purchaser is responsible for the accuracy of the other's representations and warranties hereunder. 6 3.1 Pre-Existing Entity. Each Purchaser represents and warrants to the Company that it was not organized for the specific purpose of purchasing the Note subscribed for by it hereunder. 3.2 Principal Place of Business. Each Purchaser represents and warrants to the Company that the address of its principal place of business is as set forth on Schedule 1 hereto. 3.3 Purchase Without View to Distribute. Each Purchaser represents and warrants to the Company that the Note to be purchased by such Purchaser is being, and any Conversion Shares acquired upon exercise of such Notes will be, acquired by such Purchaser for its own account, not as a nominee or agent, and not with a view to resale or distribution within the meaning of the 1933 Act, and the rules and regulations thereunder, and such Purchaser will not distribute the Note or Conversion Shares in violation of the 1933 Act. 3.4 Restrictions on Transfer. Each Purchaser (i) acknowledges that the Notes and Conversion Shares are not registered under the 1933 Act and that the Note and Conversion Shares (if any) to be acquired by it must be held indefinitely by it unless they are subsequently registered under the 1933 Act or an exemption from registration is available, (ii) is aware that any routine sales under Rule 144 of the Securities and Exchange Commission under the 1933 Act of Notes and Conversion Shares may be made only in limited amounts and in accordance with the terms and conditions of that Rule and that in such cases where the Rule is not applicable, compliance with some other registration exemption will be required, (iii) is aware that Rule 144 is not presently available for use by such Purchaser for resale of any such Notes and Conversion Shares, and (iv) is aware that, except as provided in Section 6.8, the Company is not obligated to register under the 1933 Act any sale, transfer or other disposition of the Notes or Conversion Shares. 3.5 Access to Information. Each Purchaser confirms that the Company has made available to it the opportunity to ask questions of and receive answers from the Company's officers and directors concerning the terms and conditions of the offering and the business and financial condition of the Company and the Conversion Affiliates, and to acquire, and the Purchaser has received to its satisfaction, such additional information, in addition to that set forth herein, about the business and financial condition of the Company and the Conversion Affiliates and the terms and conditions of the offering as it has requested. 3.6 Additional Representations of the Purchasers. (a) Each Purchaser represents that (i) it is an "accredited investor" as such term is defined in Rule 501 promulgated under the 1933 Act, (ii) its financial situation is such that it can afford to bear the economic risk of holding the Notes and Conversion Shares for an indefinite period of time and suffer complete loss of its investment in the Notes and Conversion Shares, (iii) its knowledge and experience in financial and business matters are such that it is capable of evaluating the merits and risks of its purchase of the Notes and Conversion Shares as contemplated by this Agreement, (iv) it understands that the Notes and Conversion Shares are a speculative investment, (v) it understands and has taken cognizance of all the risk factors related to the purchase of the Notes and Conversion Shares, (vi) in making its decision to purchase the Notes and Conversion Shares hereunder, the Purchaser has relied upon independent investigations made by it and, to the extent believed by it to be appropriate, the Purchaser's representatives, including the Purchaser's own professional tax and other advisors, (vii) no representations have been made to the Purchaser concerning the Notes, Conversion Shares or the Company except as set forth herein, in the Schedules hereto and the Exhibits hereto or in a document delivered pursuant hereto or thereto, (viii) the purchase of the Notes and Conversion Shares by it has been duly and properly authorized and this Agreement has been duly executed by it or on its behalf; (ix) the purchase of Notes and Conversion Shares does not violate its charter, Bylaws or any law, regulation or court order applicable to it; and (x) the purchase of Notes and 7 Conversion Shares does not impose any penalty or other onerous condition on such Purchaser under or pursuant to any applicable law or governmental regulation. 3.7 Blue Sky Requirements. Safeguard represents and warrants to the Company that it is an "institutional investor" within the meaning of the Pennsylvania Securities Act of 1972 and the regulations promulgated thereunder. SECTION 4. CONDITIONS PRECEDENT TO PURCHASERS' OBLIGATIONS. Each Purchaser's obligation to purchase and make payment for the Note subscribed for hereunder by it on the Closing Date is subject, at its option, to the satisfaction of each of the following conditions: 4.1 Proceedings and Certain Documents. All proceedings to be taken in connection with the transactions contemplated by this Agreement to be consummated on or prior to the Closing Date, and all documents incident thereto, shall be reasonably satisfactory in form and substance to each Purchaser. 4.2 Representations and Warranties. On the Closing Date, the representations and warranties contained in Section 2 hereof shall be true and correct in all material respects with the same effect as though made on and as of the Closing Date. 4.3 Performance. All the covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Company on or prior to the Closing Date shall have been performed or complied with in all material respects. 4.4 Pledge Agreement. (a) On or prior to the Closing Date, the Company shall have entered into a certain Pledge Agreement in the form attached hereto as Exhibit C with Safeguard, pursuant to which the Company shall pledge, assign and grant to Safeguard, as agent for the Purchasers, a first priority lien on, and security interest in and to, the Affiliate Stock and all additions, replacements and substitutions thereto as security for the full and faithful performance of all of Company's obligations to the Purchasers hereunder (the "PLEDGE AGREEMENT"). (b) Each Purchaser hereby irrevocably appoints and authorizes Safeguard to serve as its agent under the Pledge Agreement for the purposes described therein, and to take such action on its behalf and to exercise such powers as are delegated to Safeguard thereunder. The duties of Safeguard under the Pledge Agreement shall be mechanical and administrative in nature and it shall not be deemed a fiduciary or trustee for any Purchaser. As agent under the Pledge Agreement, Safeguard shall not be required to take any action or exercise any discretion, but shall be required to act or refrain from acting (and shall be fully protected in so acting or refraining) upon the election and instructions made by holders of a majority in aggregate principal amount of the Notes then outstanding, and such election and instructions shall be binding upon all Purchasers. Notwithstanding the foregoing, upon the occurrence and continuation of an Event of Default under Sections 12.1(a)(i) or 12.1(a)(ii) of this Agreement, Safeguard shall be required, as agent under the Pledge Agreement, to pursue the remedies set forth in Section 6 of the Pledge Agreement upon the written request of any holder of a Note, in the manner described and subject to the provisions of Section 12 of this Agreement. As agent under the Pledge Agreement, neither Safeguard nor any of its officers, directors, employees or agents shall be liable to any Purchaser for any action taken or omitted to be taken by it or them under or in connection with the Pledge Agreement, absent gross negligence or willful misconduct. Safeguard may resign as agent at any 8 time upon thirty (30) days prior written notice to the Purchasers, at which time the Purchasers shall have the right to appoint a successor agent thereunder. 4.5 Consent of PNC Bank, N.A. On or prior to the Closing Date, the Company shall have obtained from PNC Bank, N.A. (i) acknowledgement and consent as to the transactions contemplated by this Agreement, and (ii) documentation satisfactory to Purchasers with respect to the release of the Affiliate Stock of ChromaVision as collateral securing certain existing indebtedness of the Company. 4.6 Certified Copies. Each Purchaser shall have received such certified copies or other copies of such documents as it may reasonably request. 4.7 No Proceedings or Litigation. No suit, action, or other proceeding seeking to restrain, prevent or change the transactions contemplated hereby or otherwise questioning the validity or legality of such transactions shall have been instituted and be pending. 4.8 Legal Opinion/Board Resolutions. Each Purchaser shall have received an opinion of Company counsel dated as of the Closing Date, in form, scope and substance reasonably satisfactory to such Purchaser and in substantially the form set forth as Exhibit D hereto. In addition, Company shall provide Purchaser with a copy of the resolutions of the Board of Directors of the Company authorizing and approving the transactions contemplated by this Agreement, certified as true and correct by the Secretary or other authorized officer of the Company. SECTION 5. CONDITIONS PRECEDENT TO THE COMPANY'S OBLIGATIONS. The Company's obligation to sell the Notes subscribed for by the Purchasers on the Closing Date is subject, at the Company's option, to the satisfaction of each of the following conditions: 5.1 Representations and Warranties. On the Closing Date, the representations and warranties contained in Section 3 hereof shall be true and correct with the same effect as though made on and as of the Closing Date. 5.2 Performance. All the covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Purchasers on or prior to the Closing Date shall have been performed or complied with in all material respects. 5.3 No Proceeding or Litigation. No suit, action, or other proceeding seeking to restrain, prevent or change the transactions contemplated hereby or otherwise questioning the validity or legality of such transactions shall have been instituted and be pending. SECTION 6. COVENANTS OF THE COMPANY. 6.1 Rule 144. The Company covenants that (i) at all times after the Company first becomes subject to the reporting requirements of Section 13 or 15(d) of the 1934 Act, the Company will use its best efforts to comply with the current public information requirements of Rule 144(c)(1) under the 1933 Act; (ii) if prior to becoming subject to such reporting requirements an over-the-counter market develops for the Common Stock of the Company, the Company will use its best efforts to make publicly available the information required by Rule 144(c)(2); and (iii) at all such times as Rule 144 is available for use by the holders of the Notes or Conversion Shares, the Company will furnish each such holder upon request with all information within the possession of the Company required for the preparation and filing of Form 144. 9 6.2 Financial Statement; Budgets. Until such time as the Company is required to register its Common Stock pursuant to Section 12(g) of the 1934 Act, the Company shall furnish to the holders of the Notes and Conversion Shares of Common Stock then outstanding within sixty (60) days of the end of each fiscal year an unaudited, and within one hundred fifty (150) days of the end of each fiscal year an audited, consolidated balance sheet, and related, audited consolidated statements of income, cash flows, and stockholders', equity of the Company and its subsidiaries as at the end of and for such fiscal year prepared in accordance with generally accepted accounting principles, consistently applied, and accompanied by the opinion of an independent public accountant, and shall also furnish to the holders of the Notes and Conversion Shares of Common Stock then outstanding (i) within forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year, a consolidated balance sheet and consolidated statements of income, cash flow and stockholders' equity of the Company and its subsidiaries as at the end of and for such quarter and the year to date and as at the end of and for the corresponding periods of the preceding fiscal year; (ii) within thirty (30) days of the end of each calendar month, a consolidated statement of income for such month and a consolidated balance sheet as of the end of such month; (iii) no later than thirty (30) days before the commencement of each fiscal year, capital and operating expense budgets, projections of cash flows, balance sheets and profit and loss projections, all for such fiscal year, all itemized in reasonable detail, and any material revisions made in the budgets, projections or other information furnished pursuant to this subsection within ten (10) days after adoption of such revisions; and (iv) subject to the provision in Section 6.3 hereof, from time to time such other information concerning the Company and its subsidiaries as any of the holders of the Notes or Conversion Shares of Common Stock then outstanding may reasonably request. The interim statements described in clauses (i) and (ii) above shall be unaudited, but prepared in accordance with generally accepted accounting principles, consistently applied, subject only to normal year-end audit adjustments. 6.3 Inspection. Except to the extent prohibited by contracts with a governmental agency or body and by law, from and after the Closing Date, the Company shall permit each holder of the Notes or Conversion Shares of Common Stock then outstanding and its representatives, at such holder's expense, to visit and inspect the properties of the Company during normal business hours, to examine its books of account and records, and to discuss its affairs, finances, and accounts with its executive officers in each case for any purpose reasonably related to such holder's investment in the Company; provided, however, that the Company shall not be obligated to disclose any trade secret or other proprietary information unless such holder signs a non-disclosure agreement reasonably satisfactory to the Company. 6.4 Key-Man Insurance. The Company shall maintain in effect, for so long as there are any Notes outstanding, not less than $4,000,000 of key-man life insurance on the life of John Scott, $3,000,000 of the proceeds of which will be payable to the Company and $1,000,000 of the proceeds of which will be payable to a designee of John Scott. The Company represents and warrants to the Purchasers that to the best of the Company's knowledge, John Scott is insurable at regular rates on the date hereof. The Company shall at all times retain all the incidents of ownership of such insurance and shall not borrow upon or otherwise impair its right to receive the proceeds of such insurance. 6.5 Payment of Expenses. The Company shall (i) pay the expenses incurred by it in connection with the issuance and sale of the Notes and the execution, delivery and performance of this Agreement; and (ii) pay the legal fees incurred by the Purchasers in consulting with their respective counsel with respect to the negotiation, preparation, execution, performance, amendment or enforcement of this Agreement, whether or not the Closing shall have occurred. 6.6 Maintenance of Existence; Insurance. The Company will keep its corporate existence, rights and franchises in full force and effect; will keep its properties in good repair, working order and condition, normal wear and tear excepted; and will maintain public liability, property damage 10 and workmen's compensation insurance and insurance on all its insurable property against fire and other hazards with responsible insurance carriers to substantially the same extent presently maintained. 6.7 Participation in Private Equity Offerings. (a) The Purchasers shall have the right and option to participate in the initial private offering of equity (e.g. common stock, preferred stock, subordinated debt and other similar types of financing commonly utilized in venture financing) securities made by any future Conversion Affiliate from time to time in an aggregate amount not to exceed 500,000 common-equivalent shares per such Conversion Affiliate (the "PARTICIPATION RIGHTS"). The Company covenants and agrees to provide for such rights in connection with its creation and organization of all future Conversion Affiliates. The Participation Rights of each Purchaser shall remain in full force and effect for a period of five (5) years from the date of this Agreement and shall survive any prepayment or conversion of the Notes hereunder. (b) The Participation Rights shall (i) be issued by the Conversion Affiliate in a written offering document delivered to each Purchaser, (ii) remain exercisable for a period of no greater than twenty-one (21) days after the commencement of the offering, and (iii) shall be transferable by the holder thereof during such period to affiliates only. The Company shall bear all costs and expenses of any Participation Rights offering other than the fees and expenses of counsel for the Purchasers. The Participation Rights granted hereunder shall be on the same terms and conditions as those issued with respect to all other participants in such offerings. (c) The Participation Rights afforded each respective Purchaser hereunder shall bear the same ratio to the aggregate Participation Rights offered to all Purchasers as the principal amount of Notes purchased by such Purchaser pursuant to this Agreement (as set forth on Schedule 1 hereto) bears to the aggregate principal amount of all Notes issued hereunder; provided, however, that in the event either Purchaser elects not to exercise its respective share of the Participation Rights granted hereunder in the entirety, the other shall have the right to exercise all or any portion of such unexercised Participation Rights. Each Purchaser agrees to promptly notify the others in writing of its election not to exercise any or all of its Participation Rights hereunder. 6.8 Registration Rights. Within thirty (30) days from the date of this Agreement, the Company shall cause each Purchaser to be granted certain demand and piggyback registration rights with respect to shares of Common Stock of the Company, which rights may be exercised upon any conversion of the Notes into Common Stock of the Company, on substantially the same, and not less favorable in any material respect, terms and conditions as those granted pursuant to that certain Registration Rights Agreement dated as of November 20, 1998, by and between Integrated Visions, Inc. and certain stockholders named therein, a copy of which is attached hereto as Exhibit E (the "REGISTRATION RIGHTS AGREEMENT"). The Company covenants and agrees that it currently has, or will obtain prior to any conversion of the Notes into any Affiliate Stock and prior to the exercise of any Participation Rights, demand and piggyback registration rights with respect to such Affiliate Stock and the equity securities issuable upon exercise of any Participation Rights, on substantially the same, and not less favorable in any material respect, terms and conditions as those granted to the Purchasers by the Company pursuant to the Registration Rights Agreement. Such demand and piggyback registration rights shall be freely transferable by the Company to the holders of the Notes. The Company covenants agrees to utilize its best efforts to obtain such demand and piggyback rights from each Conversion Affiliate as soon as practicable, with time being of the essence. 6.9 Securities Law Compliance. The Company shall take such action as the Company shall reasonably determine is necessary to qualify the Notes and the Conversion Shares for, or 11 obtain exemption for the Notes and the Conversion Shares for, sale to the Purchasers pursuant to this Agreement under applicable securities and "Blue Sky" laws of states of the Unites States. 6.10 Board Observation Rights. For a period of one (1) year from the date of this Agreement, or until such time as the Wheatley Group no longer holds at least ten percent (10%) in aggregate principal amount of the Notes, whichever is greater, the Wheatley Group shall be entitled to receive reasonable prior notice of meetings of the Board of Directors of the Company and shall have the right to select one (1) individual to observe such meetings on behalf of the Wheatley Group, and to receive a copy of any materials distributed to Company directors in connection therewith. Such individual shall enter into a confidentiality agreement with the Company, on terms and conditions reasonably satisfactory to the Company, as a condition precedent to his or her observation rights hereunder. SECTION 7. THE NOTES. 7.1 Registration, Transfer and Exchange of the Notes. (a) The Company shall keep at its principal offices a register in which it shall provide for the registration of ownership of the Notes and for the transfer of the Notes. The ownership of the Notes shall be proved by reference to the register and, prior to due presentment for registration of transfer, the Company may treat the person in whose name any of the Notes shall be registered as the absolute owner thereof for the purpose of receiving payment of amounts of principal of and interest on such Note and for all other purposes. All payments made to any registered holder or upon its order shall be valid and, to the extent of the amount or amounts so paid, effectual to satisfy and discharge the liability for monies payable upon any such Note. Any demand, request, waiver, consent or vote of the registered holder of any of the Notes shall be conclusive and binding upon such holder and upon all future holders and owners of such Note or any Note issued in exchange therefor or in place thereof. (b) Upon surrender for registration of transfer of any of the Notes at the principal offices of the Company and compliance with Sections 7 and 10 hereof, the Company shall execute and register in the name of the designated transferee or transferees, one or more new Notes in such denomination or denominations (in minimum amounts of $100,000), as may be requested, in aggregate principal amount equal to the unpaid principal amount of the Note so surrendered and substantially in the form thereof, with appropriate insertions and variations, and dated and bearing interest from, the date to which interest has been paid on the Note so surrendered unless no interest has been paid on the Note so surrendered, in which case the new Note shall be dated the date of the Note surrendered and the Company shall, in the same manner aforesaid, issue a new Note to the transferor in an amount equal to the untransferred unpaid principal amount of the Note surrendered for transfer. (c) At any time upon the request of the holder of any of the Notes and upon surrender of such Note for such purpose at the principal offices of the Company, the Company will execute and register in the holder's name in exchange therefor new Notes, in such denomination or denominations (in minimum amounts of $100,000), as may be requested, in aggregate principal amount equal to the unpaid principal amount of the Note so surrendered and substantially in the form thereof, with appropriate insertions and variations, and dated, and bearing interest from, the date to which interest has been paid on the Note so surrendered unless no interest has been paid on the Note so surrendered, in which case the new Notes shall be dated the date of the Note so surrendered. (d) Upon receipt by the Company of evidence reasonably satisfactory to it that any of the Notes has been mutilated, destroyed, lost or stolen, and, in the case of any destroyed, lost 12 or stolen Note, a bond of indemnity reasonably satisfactory to the Company, or in the case of a mutilated Note, upon surrender and cancellation thereof, the Company shall execute and register in the holder's name a new Note in exchange and substitution for the Note so mutilated, destroyed, lost or stolen in an aggregate principal amount equal to the unpaid principal amount of the Note so mutilated, destroyed, lost or stolen and substantially in the form thereof, with appropriate insertions and variations, and dated and bearing interest from the date to which interest has been paid on the Note so mutilated, destroyed, lost or stolen unless no interest has been paid on the Note so mutilated, destroyed, lost or stolen, in which case the new Note shall be dated the date of the Note so mutilated, destroyed, lost or stolen. (e) All Notes presented or surrendered for exchange or transfer as provided in this Section 7.1 shall, if required by the Company, be accompanied by a written instrument or instruments of transfer, duly executed by the registered holder thereof or its attorney duly authorized in writing. No charge shall be made by the Company in respect of any transfer or exchange of Notes, but the holder shall bear any applicable transfer tax. (f) All Notes issued pursuant to this Section 7.1 shall contain the restrictive legends on the Note surrendered for transfer or exchange or which has been mutilated, lost, destroyed or stolen, unless such legends may be removed under Section 10.4 hereof. 7.2 Transfer Taxes. The Company will pay, and hold the Purchasers harmless against, liability for the payment of any transfer or similar taxes payable in connection with the issuance and sale of the Notes and Conversion Shares pursuant hereto. 7.3 Payment of Principal and Interest. The Company will make all payments of principal and interest on the Notes at the time the same shall become due thereunder or hereunder. 7.4 Notice of Default. The Company shall promptly notify each Purchaser of the occurrence of any default under any instrument evidencing or pursuant to which there shall be issued any Senior Indebtedness of the Company (as defined in Section 11.1) that has resulted in the holder of such Senior Indebtedness declaring a default thereunder or exercising any remedy with respect thereto. 7.5 Method of Payment. The Company will promptly and punctually pay the principal of and interest on the Notes to the holders thereof without any presentment thereof and without any notation of such payment being made thereon (except that presentment shall be required for payment of the Notes at maturity). The Company will pay all amounts payable to such holder in respect of principal of (other than the final payment of principal at maturity) and interest on the Notes by check mailed to such holder, if a Purchaser, at the address specified on Schedule 1 and, if a holder other than a Purchaser, at an address designated by such holder to the Company in writing, or at such other place as a holder may from time to time designate to the Company in writing. In the case of any sale or transfer of the Note by a Purchaser (which sale or transfer is subject to the restrictions set forth in Sections 3, 7 and 10 hereof ), such Purchaser shall notify the Company of the name and address of the transferee of such Note and prior to the delivery of any Note sold or transferred by such Purchaser, such Purchaser shall make a notation thereon of the date to which interest has been paid on the Note, and, if not theretofore made, a notation of the extent to which any payment has been made on account of the principal thereof. Payment of interest or principal pursuant to this Section 7.5 shall constitute satisfaction in full of the obligation of the Company in respect thereof notwithstanding any prior transfer by a Purchaser of the Note on which interest or principal shall have been so paid unless and until notice of such transfer shall have been given to the Company as herein provided. 13 SECTION 8. CONVERSION. 8.1 Optional Conversion. (a) At any time and from time to time after the date hereof, and subject to the provisions of this Section 8, at the election of either the holders of a majority in aggregate principal amount of the Notes then outstanding, or the holders of a majority in aggregate principal amount of the Notes then outstanding held by the Wheatley Group (the "WHEATLEY NOTES"), by written notice to the Company and to all other Purchasers, the Purchasers or the Wheatley Group, following the expiration of a fifteen (15) day waiting period following delivery of such written notice, may convert all or any portion of the then outstanding principal balance and interest under the Notes, or the Wheatley Notes, as the case may be, into fully paid and non-assessable shares of (i) common stock of any of the Conversion Affiliates (as defined below) owned by the Company as of the conversion date (the "AFFILIATE STOCK"), and/or (ii) Common Stock of the Company; provided, however, that in no event may any portion of the Notes be converted: (A) into greater than one-third (1/3) of the total number of shares, up to a maximum of 500,000 shares, of Affiliate Stock of any one (1) Conversion Affiliate issued or sold by the Conversion Affiliate to the Company from time to time (excluding any such shares granted by the Company or specifically reserved by the Company's Board of Directors for grant to Company employees or management under the benefit or incentive plans of the Company from time to time (the "RESERVED AFFILIATE STOCK"), which Reserved Affiliate Stock shall not, at any time exceed, in the aggregate, greater than sixty percent (60%) of the total number of shares of Affiliate Stock of such Conversion Affiliate issued or sold by the Conversion Affiliate to the Company); (B) during any underwriter lockup period affecting the Common Stock or the Affiliate Stock, as applicable, relating to a registration of the Common Stock or Affiliate Stock under the 1933 Act; or (C) into shares of the Common Stock of the Company prior to the Company's IPO (as defined below). Upon request, the Company's Chief Financial Officer shall provide each Purchaser with a schedule identifying the maximum number of shares of each Conversion Affiliate reserved for conversion and shall regularly update such schedule upon any changes to the information set forth thereon. The initial conversion price shall be equal to seventy-five percent (75%) of the initial gross selling price to the public per share of common stock of the applicable Conversion Affiliate pursuant to its IPO with respect to each share of Affiliate Stock other than (I) shares of ChromaVision Medical Systems, Inc. ("ChromaVision"), for which the initial conversion price shall be $9.07 per share, and (II) shares of any Conversion Affiliate for which an IPO is consummated pursuant to the Safeguard rights offering program, for which the initial conversion price shall equal the rights offering price relating thereto (each of the foregoing being referred to herein as the "AFFILIATE CONVERSION PRICE"), and the initial conversion price with respect to shares of Common Stock shall be $7.27 per share ("COMPANY CONVERSION PRICE," and collectively with the Affiliate Conversion Price, the "CONVERSION PRICE"), each subject to adjustment as described below. The number of shares issuable upon conversion of the Note shall be determined by dividing the principal amount to be converted by the Conversion Price in effect on the conversion date. Upon conversion, no payment or adjustment for accrued interest on the Notes (other than the payment of interest to the Purchasers upon conversion if the Notes have been called for full prepayment pursuant to Section 9 hereof) or for cash dividends or distributions on the Common Stock or Affiliate Stock will be made. The Company will deliver a check in lieu of any fractional share issuable upon conversion. 14 (b) The principal amount of the Notes to be converted hereunder shall be allocated as nearly as may be possible among the respective Notes and holders thereof so that the principal amount converted by each holder shall bear the same ratio to the aggregate principal amount then to be converted as the unpaid principal amount of Notes then held by such holder bears to the aggregate unpaid principal amount of all Notes then outstanding held by the converting holders. (c) EACH NOTE HOLDER, OTHER THAN THE WHEATLEY NOTE HOLDERS, HEREBY AGREES TO BE BOUND BY EACH CONVERSION ELECTION MADE BY HOLDERS OF A MAJORITY IN AGGREGATE PRINCIPAL AMOUNT OF THE NOTES THEN OUTSTANDING. SIMILARLY, EACH WHEATLEY NOTE HOLDER HEREBY AGREES TO BE BOUND BY EACH CONVERSION ELECTION MADE BY HOLDERS OF A MAJORITY IN AGGREGATE PRINCIPAL AMOUNT OF THE WHEATLEY NOTES THEN OUTSTANDING. EACH NOTE HOLDER, OR WHEATLEY NOTE HOLDER, AS THE CASE MAY BE, HEREBY SPECIFICALLY CONSENTS TO ALL SUCH ELECTIONS AND AGREES NOT TO TAKE ANY ACTION INCONSISTENT THEREWITH, EXCEPT AS OTHERWISE AUTHORIZED UNDER THIS AGREEMENT. (d) The terms listed below shall have the following meanings for purposes of this Agreement: (i) "CONVERSION AFFILIATES" shall mean Integrated Vision, Inc., Who?Vision Systems, Inc., eMerge Vision Systems, Inc. and ChromaVision, and each future corporation created by the Company, collectively, and each such entity individually is sometimes referred to herein as a "CONVERSION AFFILIATE." (ii) "CONVERSION SHARES" shall mean Common Stock, Affiliate Stock or any other securities issued or issuable upon the conversion or prepayment of the Notes. (iii) "IPO" means a company's initial public offering of its common stock pursuant to an effective registration statement filed pursuant to the 1933 Act (other than on Form S-4 or S-8 or any successor forms thereto) in an underwritten public offering on a firm commitment basis in which the gross proceeds of the offering will equal or exceed $15,000,000 (calculated before deducting underwriters' discounts and commissions and other offering expenses), and in which the public offering price per share of common stock (calculated before deducting underwriters' discounts and commissions) results in a valuation of the total number of outstanding shares of capital stock immediately prior to the closing of the public offering of at least $75,000,000. (iv) "TRADING DAY" means any day on which the stock market listing such security is open for business and a trade was made in the applicable security. 8.2 Mandatory Conversion. At any time and from time to time beginning eighteen (18) months after the completion date of the IPO of any Conversion Affiliate, and subject at all times to the provisions of this Section 8, the Company may, pursuant to written notice delivered to each Purchaser in the manner described herein, require the Purchasers to convert all or any portion of the then outstanding principal balance and interest under the Notes into fully paid and non-assessable shares of the Affiliate Stock of such Conversion Affiliate in accordance with and in the maximum amount permitted by Section 8.1 above; provided, however, that the Purchasers shall have no obligation to convert hereunder in the event that either (i) the closing price of the Affiliate Stock to be received in connection with such conversion failed to exceed a price equal to two (2) times the applicable Conversion Price per share in any of the immediately preceding sixty-five (65) Trading Days, or (ii) the Company fails or is otherwise 15 unable to deliver to the Purchasers, as of the date of conversion, the registration rights described in Section 6.8 hereof with respect to the shares of Affiliate Stock into which the Notes are to be converted. 8.3 Conversion. To convert Note principal hereunder, each Purchaser must (a) complete and sign the conversion notice included with each Note, (b) surrender their respective Notes to the Company, (c) furnish appropriate endorsements and transfer documents, if required by the Company, and (d) pay any transfer or similar tax, if required. 8.4 Reserve for Conversion; Delivery of Stock Certificates. The Company shall reserve at all times and keep available free from preemptive rights, out of its authorized but unissued Common Stock, enough shares of Common Stock to permit the maximum conversion of principal amount of the Notes permissible under this Agreement. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the maximum conversion of the Notes or otherwise to comply with the terms of this Agreement, the Company shall promptly take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes. The Company shall reserve at all times the Affiliate Stock and shall not sell, transfer, pledge or otherwise encumber the Affiliate Stock currently held by it (except in connection with a transfer of Reserved Affiliate Stock in accordance with the terms of this Agreement or with respect to that number of shares of Affiliate Stock in excess of the number required to permit the maximum conversion of the Notes permissible under this Agreement), and shall retain enough shares of Affiliate Stock to permit the maximum conversion of the Notes permissible under this Agreement. The Company will obtain any authorization, consent, approval or other action by, or make any filing with, any court or administrative body that may be required under applicable federal and state securities laws in connection with the issuance of shares of Common Stock and Affiliate Stock upon conversion of the Notes. The Company shall take any and all action necessary or appropriate in order to effectuate any authorized conversion of any Note hereunder in accordance with the terms and conditions of this Agreement. As soon as practicable on or after the conversion date, and not less than ten (10) business days thereafter, the Company shall deliver to Purchasers a certificate for the number of full shares of Company Stock or Affiliate Stock issuable upon the conversion of the Notes. 8.5 PURCHASERS ACKNOWLEDGE THAT THE COMMON STOCK AND AFFILIATE STOCK ISSUED UPON CONVERSION OF THE NOTE MAY BE RESOLD, ASSIGNED, PLEDGED OR OTHERWISE TRANSFERRED ONLY PURSUANT TO AN EXEMPTION FROM REGISTRATION IN ACCORDANCE WITH RULE 144 (IF AVAILABLE) UNDER THE SECURITIES ACT OR AS OTHERWISE MAY BE AVAILABLE UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS IN THE OPINION OF COUNSEL FOR THE COMPANY OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT WITH RESPECT TO SUCH SHARES AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. 8.6 Dilution. The Conversion Price with respect to shares of Common Stock and Affiliate Stock issuable upon conversion of the Note shall be subject to adjustment from time to time as follows: (a) On any recapitalization through the subdivision or combination of the outstanding Common Stock or Affiliate Stock into a greater or smaller number of shares for no consideration, the Conversion Price shall be appropriately decreased or increased to reflect such recapitalization; provided, however, that, with respect to shares of any Conversion Affiliate, such decrease or increase shall only apply in the event that such recapitalization occurs subsequent to the IPO with respect to such shares. 16 (b) If the Company or a Conversion Affiliate takes a record of the holders of its common stock for the purpose of entitling them to receive a stock dividend or other distribution payable in Common Stock or Affiliate Stock, or in securities convertible into or exchangeable for Common Stock or Affiliate Stock, the maximum number of shares of Common Stock or Affiliate Stock, as applicable, issuable in payment of such dividend or distribution, or on conversion of or in exchange for the securities convertible into or exchangeable for Common Stock or Affiliate Stock, shall be deemed to have been issued and to be outstanding as of such record date, and the Conversion Price shall be appropriately decreased, provided that if the dividend or distribution is subsequently canceled such that the Company or the Conversion Affiliate shall have no liability therefor then the Conversion Price shall be appropriately increased to reflect such cancellation. (c) The adjustments described in the preceding paragraphs shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date in the case of a subdivision, combination or other recapitalization. Appropriate adjustments shall be made in the application of the foregoing provisions so that such provisions shall be applicable, as nearly as reasonably may be, in relation to any securities or other assets thereafter deliverable on conversion of the Notes. (d) No adjustment in the Conversion Price shall be required in the case of the issuance or granting by the Company or any Conversion Affiliate of Common Stock, Affiliate Stock or other equity securities of Company for fair value for any valid corporate purpose including, but not limited to, financing, capital, employee or officer incentive programs, or conversion of warrants or other equity securities of the Company or any Affiliate outstanding as of the date hereof or as may be hereafter issued. (e) In case of any reclassification of the Common Stock or Affiliate Stock (other than a subdivision or combination referred to in Subsection (a) above), or in case of any consolidation of the Company or a Conversion Affiliate with, or merger of the Company or a Conversion Affiliate into, another corporation (other than a consolidation or merger in which the Company or a Conversion Affiliate, as applicable, is the continuing corporation and which does not result in a reclassification or exchange of the Common Stock or Affiliate Stock, as applicable), or in case of any sale or conveyance to another corporation of the property of the Company or a Conversion Affiliate as an entirety or substantially as an entirety, Company, or such successor or purchasing corporation or person, as the case may be, shall execute (or, in the case of a Conversion Affiliate, the Company shall use its best efforts to obtain) and deliver to Purchasers a legally enforceable supplemental agreement providing that the Purchasers shall thereafter have the right to convert the Note into the kind and amount of shares of stock and other securities and property receivable upon such consolidation, merger, sale or conveyance by Purchasers of the number of shares of Common Stock or Affiliate Stock into which the Note might have been converted immediately prior to such consolidation, merger, sale or conveyance. Such agreement shall provide for adjustments in the Conversion Price which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Section 8; provided, however, that, with respect to the shares of any Conversion Affiliate, in the event that such consolidation, merger, sale or conveyance occurs prior to the IPO with respect to such shares, then the applicable Affiliate Conversion Price shall be $5.00 per share. The provisions of this Subsection (e) shall similarly apply to succeeding reclassifications, consolidations, mergers, sales or conveyances. (f) The Company shall promptly notify each Purchaser in writing upon the occurrence of any event requiring an adjustment to the Conversion Price under this Agreement. Whenever the Conversion Price is adjusted as herein provided, the Company shall promptly provide each Purchaser with written notice of such change, indicating its nature and stating the new Conversion Price. 17 SECTION 9. PREPAYMENT OF NOTES. 9.1 Prepayment in Cash. Subject to the terms set forth in this Section 9, the Company may prepay all or any portion of the principal and interest due under the Notes in cash at any time on or after May 1, 2001, at the prepayment prices (expressed in percentages of principal amount) set forth in the following table, plus accrued interest to, but not including, the prepayment date set forth in Section 9.3, if prepaid during the twelve (12) month period beginning May 1 of the years set forth in the following table:
YEAR PERCENTAGE ---- ---------- 2001 104% 2002 102% 2003 and thereafter 100%
Any such payments shall only be made in integral multiples of $100 by check payable in a manner consistent with payments of principal and interest under this Agreement. Any such payment shall be applied first against any accrued and unpaid interest and then against outstanding principal amounts. 9.2 Prepayment in Stock. The Company may prepay a portion of the principal and interest due under the Notes at any time with shares of Affiliate Stock of any of the Conversion Affiliates at a price equal to the lesser of (i) seventy-five percent (75%) of the average closing price per share of the applicable Affiliate Stock for the twenty (20) Trading Days immediately preceding the date of prepayment, or (ii) eighty percent (80%) of the closing price per share of the applicable Affiliate Stock on the Trading Day immediately preceding the date of prepayment; provided, however, the Company shall have no right to prepay any principal or interest on the Notes with Affiliate Stock unless (x) the average closing price of such Affiliate Stock for the twenty (20) Trading Days immediately preceding the date of repayment, and the closing price per share of such applicable Affiliate Stock on the Trading Day immediately preceding the date of prepayment, is at least equal to two (2) times the applicable Conversion Price per share, (y) either eighteen (18) months have elapsed since the IPO completion date for such Conversion Affiliate or ninety (90) days have elapsed since the completion date of a second public offering of the common stock of such Conversion Affiliate pursuant to a Form S-1, S-2 or S-3 registration statement under the 1933 Act, and (z) the registration rights described in Section 6.8 shall be in effect with respect to the holders of the Notes. In addition, in no event may the Company prepay more than $5,000,000 in the aggregate of principal under the Notes through the conversion into Affiliate Stock of any one (1) Conversion Affiliate, or prepay principal under the Notes through the issuance of greater than 500,000 shares in the aggregate of Affiliate Stock in any one (1) Conversion Affiliate. Any prepayments hereunder shall be made in accordance with the procedures set forth in Section 8.3 above. Any such payment shall be applied first against any accrued and unpaid interest and then against outstanding principal amounts. 9.3 Prepayment Procedures. Any prepayment of Notes under this Section 9 shall be made by giving the holders of the Notes not less than thirty (30) days prior written notice thereof at its registered address. If there is more than one holder of the Notes, the principal amount of the Notes so to be prepaid shall be allocated as nearly as may be possible among the respective Notes and holders thereof so that the principal amount prepaid to each holder shall bear the same ratio to the aggregate principal amount then to be prepaid as the unpaid principal amount of Notes then held by such holder bears to the aggregate unpaid principal amount of all Notes then outstanding. If any Note is to be prepaid only in part, upon the surrender of the Note to the Company for prepayment, the Company shall execute and deliver to the holder of the Note so surrendered a new Note equal in principal amount to the unpaid portion of the 18 surrendered Note, dated the most recent date to which interest shall have been paid on the surrendered Note and bearing the restrictive legends, if any, on the surrendered Note. Upon the fixing of a date for prepayment pursuant to this Section 9.3, the Notes or portions to be prepaid shall cease to bear interest and cease to be convertible on the date fixed for prepayment unless the Company shall default in making such prepayment. SECTION 10. COMPLIANCE WITH 1933 ACT; RESTRICTIONS ON TRANSFERABILITY OF NOTES AND CONVERSION SHARES. 10.1 Compliance with 1933 Act. The Notes and Conversion Shares shall not be transferable, except upon the conditions specified in this Section 10, which conditions are intended to insure compliance with the provisions of the 1933 Act and applicable state securities laws in respect of any such transfer. 10.2 Restrictive Legend. The Notes and each certificate representing the Conversion Shares and any shares of common stock or other securities issued in respect of such Conversion Shares upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of Section 10.4 below) be stamped or otherwise imprinted with the following legend: "[THIS NOTE HAS] OR [THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE] NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND THE TRANSFERABILITY [T]HEREOF IS SUBJECT TO THE PROVISIONS OF A CERTAIN NOTE PURCHASE AGREEMENT DATED AS OF MAY 14, 1999, BY AND AMONG XL VISION, INC. AND THE PURCHASERS NAMED THEREIN" 10.3 Restrictions on Transferability. The Company shall not be required to register the transfer of the Notes or any Conversion Shares of Common Stock on the books of the Company unless registration under the 1933 Act or any applicable state securities law is not required in connection with the transaction resulting in such transfer. Each Note or certificate for Conversion Shares of Common Stock issued upon any transfer as above provided shall bear the restrictive legend set forth in Section 10.2 above, except that such restrictive legend shall not be required if such legend is not required in order to establish compliance with the provisions of the 1933 Act and any applicable state securities law, or if the transfer is made in accordance with the provisions of Rule 144(k) under the 1933 Act. The Company agrees to provide each Note holder with any and all information reasonably requested in connection with its efforts to remove such legend from any Affiliate Stock certificate. 10.4 Termination of Restrictions on Transferability. The conditions precedent imposed by this Section 10 upon the transferability of the Notes and Conversion Shares shall cease and terminate as to any of the Notes or Conversion Shares when (i) such securities shall have been registered under the 1933 Act and sold or otherwise disposed of in accordance with the intended method of disposition by the seller or sellers thereof set forth in the registration statement covering such securities, (ii) at such time as an opinion of counsel satisfactory to the Company shall have been rendered to the effect that the restrictive legend on such securities is no longer required, or (iii) when such securities are transferred in accordance with the provisions of Rule 144(k) promulgated under the 1933 Act. Whenever the conditions imposed by this Section 10 shall terminate as provided herein with respect to any of the Notes or Conversion Shares, the holder of any such securities bearing the legend set forth in this Section 10 as to which such conditions shall have terminated shall be entitled to receive from the Company, without expense (except for the payment of any applicable transfer tax) and as expeditiously as possible, 19 new Notes in accordance with Section 7.1(b) or (c) hereof or new stock certificates not bearing such legend. SECTION 11. SUBORDINATION OF NOTES. 11.1 Subordination. The indebtedness evidenced by, and the payment of the principal of and interest on, the Notes is hereby expressly subordinated and made junior, to the extent and in the manner set forth in this Agreement, to the prior payment in full of all Senior Indebtedness of the Company and will rank pari passu in all respects with other subordinated indebtedness of the Company. The Company hereby covenants and agrees that it will not, without the prior consent of the holders of a majority in aggregate principal amount of the Notes then outstanding, incur in excess of Five Million Dollars ($5,000,000) of parri passu indebtedness at any time for so long as any principal of or interest on the Notes remains outstanding hereunder. As used herein, "Senior Indebtedness" means any indebtedness, including interest and collection charges, of the Company, whether now existing or hereafter created, and all refinancings thereof, to any bank, trust company, pension or profit-sharing trust (other than such a trust for the benefit of employees of the Company), insurance company or other financial institution, except any such indebtedness which by its express terms is not senior in right of payment to the Notes. As used in the foregoing definition, "indebtedness" means (i) all obligations for borrowed money or for the deferred portion of the purchase price of any asset, (ii) all rental obligations under leases which, in accordance with generally accepted accounting principles, are shown as capitalized obligations on the Company's balance sheet as of the date as of which indebtedness is to be determined, and (iii) indebtedness secured by any mortgage, pledge, lien or security interest existing on property owned by the Company whether or not the indebtedness secured thereby shall have been assumed. 11.2 Insolvency. In the event of any insolvency or bankruptcy proceedings, or any receivership, liquidation, reorganization or other similar proceedings in connection therewith, relative to the Company or to its creditors as such, or to its property, or in the event of any proceedings for voluntary liquidation, dissolution or other winding-up of the Company, whether or not involving insolvency or bankruptcy, then the holders of Senior Indebtedness shall be entitled to receive payment in full of all principal, premium, if any, and interest on all Senior Indebtedness before the holder or holders of the Notes are entitled to receive any payment on account of principal of or interest on the Notes and the holders of Senior Indebtedness shall be entitled to receive, ratably according to the aggregate amounts remaining unpaid on account of the Senior Indebtedness held by each such holder, to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid after giving effect to any concurrent payment or distribution (or provision therefor) to the holders of Senior Indebtedness, for application in payment thereof, any payment or distribution of any kind or character, whether in cash or property or securities, which may be payable or deliverable in any such proceedings in respect of the Notes, except securities which are subordinate and junior in right of payment to the payment of all Senior Indebtedness then outstanding. 11.3 Maturity of or Default on Senior Indebtedness. (a) Upon the maturity of any Senior Indebtedness by lapse of time, acceleration or otherwise, and the giving of written notice thereof to the holders of the outstanding Notes by the holder or holders of such Senior Indebtedness, all principal thereof (and premium, if any) and interest due thereon shall first be paid in full, or such payment duly provided for in cash or in a manner satisfactory to the holder or holders of such Senior Indebtedness, before any payment is made on account of the principal of or interest on the Notes or to purchase any of the Notes. (b) Upon the happening of an event of default with respect to any Senior Indebtedness, as such event of default is defined therein or in the instrument under which it is 20 outstanding, permitting the holders to accelerate the maturity thereof, and upon written notice thereof given to the Company and the holders of any outstanding Notes by the holder or holders of such Senior Indebtedness or their representative or representatives, then, unless and until such event of default shall have been cured or waived or shall have ceased to exist, no payment thereafter shall be made by the Company with respect to the principal of or interest on the Notes or to purchase any of the Notes. In the event that, notwithstanding the foregoing, following any such event of default in respect of Senior Indebtedness and the giving of written notice thereof to the Company and the holders of any outstanding Notes, any such payment or distribution shall be received by any holder of the Notes before all Senior Indebtedness is paid in full, such payment or distribution shall be held in trust for the benefit of and shall be paid over to the holders of the Senior Indebtedness or their representative or representatives, ratably according to the aggregate amounts remaining unpaid on account of the Senior Indebtedness held by each such holder, to the extent necessary to make payment in full of the principal of (and premium, if any) and interest on, all Senior Indebtedness. (c) Any payment or distribution received by any holder of Notes prior to (i) written notice of maturity of Senior Indebtedness given to such holder under paragraph (a) above or (ii) an event of default with respect to the Senior Indebtedness and written notice given to such holder under paragraph (b) above, may be retained by such holder. 11.4 Rights. No right of any present or future holder of any Senior Indebtedness of the Company to enforce the subordination of the Notes as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act by any such holder, by the Company, or by any holder of any Note, or by any noncompliance by the Company with the terms, provisions and covenants of this Agreement or of any Note. The provisions of this Section 11 with respect to subordination shall not affect the obligations of the Company to make, or prevent the Company from making, at any time, except as provided in Sections 11.2 and 11.3, payments of principal of or interest on the Notes when the same shall be due and payable. The provisions of this Section 11 in regard to subordination are solely for the purpose of defining the relative rights of the holders of Senior Indebtedness on the one hand, and the holders of the Notes on the other hand, and nothing herein shall impair, as between the Company, its creditors other than the holders of Senior Indebtedness, and the holders of the Notes, the obligation of the Company, which is unconditional and absolute, to pay to the holder of any Note the principal thereof and interest thereon in accordance with its terms, or affect the relative rights of the holders of the Notes and creditors of the Company other than holders of the Senior Indebtedness, nor shall anything in this Agreement or the Notes prevent the holders of the Notes from exercising all remedies otherwise permitted by applicable law or under this Agreement or the Notes upon default thereunder, subject to the rights, if any, under this Section 11 of holders of Senior Indebtedness to receive cash, property or securities otherwise payable or deliverable to the holders of the Notes. Upon any payment or distribution of assets of the Company referred to in this Section 11, the holders of the Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which dissolution, winding-up, liquidation, reorganization or other similar proceedings are pending or upon a certificate of the liquidating trustee or agent or other person making any distribution to the holders of the Notes for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Section 11. The holders of the Senior Indebtedness may extend, renew, modify or amend the terms of the Senior Indebtedness or any security therefor and may release, sell or exchange such security and otherwise deal freely with the Company, all without notice to or consent of the holders of the Notes and without affecting the liabilities and obligations of the holders of the Notes. 11.5 Subrogation. In the event that cash, securities or other property otherwise payable or deliverable to the holders of the Notes shall have been applied pursuant to this Section 11 to 21 the payment of Senior Indebtedness, then, subject to the payment in full of all principal of (and premium, if any) and interest on Senior Indebtedness and to any applicable preference period relating thereto, the holders of the Notes (a) shall be entitled to receive from the holders of Senior Indebtedness at the time outstanding any payments or distributions received by such holders of Senior Indebtedness in excess of the amount sufficient to pay all principal of (and premium, if any) and interest on Senior Indebtedness in full and (b) shall be subrogated to all rights of any holders of Senior Indebtedness to receive payments or distributions of cash, property or assets of the Company applicable to the Senior Indebtedness, until all principal of and interest on the Notes shall be paid in full. No such payments or distributions received by the holders of the Notes shall, as between the Company and its creditors, if any, other than the holders of Senior Indebtedness, on the one hand, and the holders of the Notes, on the other hand, be deemed to have been made as a payment by the Company to or on account of the Notes, it being understood that the provisions of this Section are and are intended solely for the purpose of defining the relative rights of the holders of the Notes, on the one hand, and the holders of the Senior Indebtedness, on the other hand. 11.6 Binding Effect. The Company covenants and agrees, and each holder of any Note, by acceptance thereof, likewise covenants and agrees that the Notes shall be issued subject to the provisions of this Section 11, and each holder of any Note, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound thereby. 11.7 Pledge Agreement and Conversion Rights. Notwithstanding the provisions of this Section 11, the Purchasers shall be entitled to (i) the benefit of any and all available remedies arising under the Pledge Agreement, and (ii) exercise any and all conversion rights arising under Section 8 hereof, at any time in accordance with the terms and conditions thereof. SECTION 12. EVENTS OF DEFAULT. 12.1 Events of Default. (a) If any one or more of the following events (herein called "EVENTS OF DEFAULT") shall occur and be continuing: (i) default shall be made in the payment of any installment of interest on any of the Notes when and as the same shall become due and payable, and such default shall have continued for a period of ten (10) days after notice from the holder thereof; (ii) default shall be made in the payment of the principal of any of the Notes or any part thereof when and as the same shall become due and payable, either at maturity or at a date fixed for prepayment or by acceleration or otherwise and such default shall have continued for a period of three (3) days after notice from the holder thereof; (iii) default in any material respect shall be made in the due performance or observance of any other covenant, agreement or provision herein or in the Notes to be performed or observed by the Company or a material breach shall exist in any representation or warranty herein contained and such default or breach shall have continued for a period of thirty (30) days after written notice thereof to the Company from the holder of any Note; (iv) the Company shall (A) apply for or consent to the appointment of a receiver, trustee or liquidator of the Company or any of its property, (B) admit in writing its inability to pay its debts as they mature, (C) make a general assignment for the benefit of creditors, (D) be adjudicated a bankrupt or insolvent or (E) file a voluntary petition in bankruptcy, a petition or answer seeking reorganization or an arrangement with creditors to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filed against it in any proceeding under any such law or (F) corporate 22 action shall be taken by the Company for the purpose of effecting any of the foregoing; or (G) an order, judgment or decree shall be entered, without the application, approval or consent of the Company, by any court of competent jurisdiction, approving a petition seeking reorganization of the Company or of all or a substantial part of the assets of the Company and such order, judgment or decree shall continue unstayed and in effect for a period of sixty (60) days; or (v) a default shall occur under or with respect to any Senior Indebtedness of the Company having an outstanding aggregate principal balance of more than $50,000, which default has resulted in the holder of such Senior Indebtedness declaring a default thereunder and exercising any remedy with respect thereto; then and in each and every such case of (x) an Event of Default under Sections 12.1(a)(i) or 12.1(a)(2) any holder of a Note then outstanding may by notice in writing to the Company declare the unpaid principal of its Note, with accrued interest, to be forthwith due and payable whereupon such principal and interest shall be due and payable without presentation, protest or further demand or notice of any kind, all of which are hereby expressly waived, and (y) any other Event of Default (other than pursuant to Sections 12.1(a)(i) and 12.1(a)(2)), the holders of a majority in aggregate principal amount of the Notes then outstanding, may by notice in writing to the Company declare the unpaid principal of its Note(s), with accrued interest, to be forthwith due and payable whereupon such principal and interest shall be due and payable without presentation, protest or further demand or notice of any kind, all of which are hereby expressly waived. EACH NOTE HOLDER HEREBY AGREES TO BE BOUND BY EACH EVENT OF DEFAULT ELECTION MADE BY HOLDERS OF A MAJORITY IN AGGREGATE PRINCIPAL AMOUNT OF THE NOTES THEN OUTSTANDING. EACH NOTE HOLDER HEREBY SPECIFICALLY CONSENTS TO ALL SUCH ELECTIONS AND AGREES NOT TO TAKE ANY ACTION INCONSISTENT THEREWITH, EXCEPT AS OTHERWISE AUTHORIZED UNDER THIS AGREEMENT. (b) If a holder of a Note shall demand payment thereof or take any other action provided for hereunder (of which the Company has actual knowledge) in respect of an Event of Default, the Company will forthwith give written notice thereof, specifying such action and the nature of such event, to each holder of record of the Notes then outstanding. The Company will also give prompt written notice to each holder of record of the Notes at the time outstanding of any written instrument of rescission or annulment filed with it as aforesaid. (c) The Company covenants that, if default be made in any payment of principal of or interest on any Note, it will pay to the holder thereof such further amount as shall be sufficient to cover the reasonable costs and expenses of collection, including reasonable counsel fees. (d) No course of dealing between the Company and any holder of a Note or any delay on the part of the holder of a Note in exercising any rights thereunder or hereunder shall operate as a waiver of any rights of any such holder. (e) Prior to the declaration of acceleration of the maturity of the Notes, the holders of a majority in aggregate principal amount of the Notes at the time outstanding may waive on behalf of all the Note holders any default, except a default pursuant to Sections 12.1(a)(i) and 12.1(a)(2)). SECTION 13. INDEMNIFICATION; SURVIVAL. 13.1 Indemnification. In consideration of each Purchaser's execution and delivery of this Agreement and acquiring the Notes hereunder and in addition to all of the Company's other obligations under this Agreement, the Company shall defend, protect, indemnify and hold harmless each 23 Purchaser and each other holder of Securities and all of their officers, directors, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the "PURCHASER INDEMNITIES") from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Purchaser Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys' fees and disbursements (the "PURCHASER INDEMNIFIED LIABILITIES"), incurred by any Purchaser Indemnitee (and shall advance the same) as a result of, or arising out of, or relating to (a) any material misrepresentation or breach of any representation or warranty made by the Company in this Agreement, the Pledge Agreement, the Notes or any other certificate, instrument or document contemplated hereby or thereby, (b) any material breach of any covenant, agreement or obligation of the Company contained in this Agreement, the Pledge Agreement, the Notes, or any other certificate, instrument or document contemplated hereby or thereby, or (c) any cause of action, suit or claim brought or made against such Purchaser Indemnitee and arising out of or resulting from the execution, delivery, performance or enforcement by the Company of this Agreement or any other instrument, document or agreement executed pursuant hereto by any of the Purchaser Indemnitees, or any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Notes. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Purchaser Indemnified Liabilities which is permissible under applicable law. 13.2 Survival. All covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the execution and delivery of this Agreement and the issuance and sale of the Notes hereunder. SECTION 14. MISCELLANEOUS. 14.1 Owner of Conversion Shares. The Company may deem and treat the person in whose name the Conversion Shares, as the case may be, are registered as the absolute owner thereof for all purposes whatsoever, and the Company shall not be affected by any notice to the contrary. 14.2 Successors. This Agreement shall be binding upon and except as provided herein, shall inure to the benefit of the respective successors, executors, personal representatives, heirs and assigns of each of the parties hereto. 14.3 Broker or Finder. Each party to this Agreement represents and warrants that, to the best of its knowledge, no broker or finder has acted for such party in connection with this Agreement or the transactions contemplated by this Agreement and that no broker or finder is entitled to any broker's or finder's fee or other commission in respect thereof based in any way on agreements, arrangements or understandings made by such party. The Company shall indemnify each Purchaser against, and hold it harmless from, any liability, cost, or expense (including reasonable attorneys' fees and expenses) resulting from any agreement, arrangement, or understanding made by the Company, and each Purchaser shall indemnify the Company against, and hold the Company harmless from, any liability, cost, or expense (including reasonable attorneys fees and expenses) resulting from any agreement, arrangement, or understanding made by such Purchaser with any third party, for brokerage or finders fees or other commissions in connection with this Agreement or any of the transactions contemplated hereby. 14.4 Governing Law; Arbitration. (a) This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Florida. 24 (b) None of the parties to this Agreement shall institute an arbitration proceeding pursuant to this Section to resolve a dispute between the parties hereunder before the parties have sought to resolve the dispute through direct negotiation with the other parties. If the dispute is not resolved within three (3) weeks after a demand for direct negotiation, the parties shall attempt to resolve the dispute through mediation. If the parties do not promptly agree on a mediator, then either party may notify the J.A.M.S/Endispute, 345 Park Avenue, 8th floor, New York, New York, to initiate selection of a mediator from J.A.M.S/Endispute's panel of neutrals. The fees and expenses of the mediator shall be shared equally by each party to the dispute. If the mediator is unable to facilitate a settlement of the dispute within a reasonable period of time, as determined by the mediator, the mediator shall issue a written statement to the parties to that effect and the aggrieved party may then seek relief through arbitration, which shall be binding pursuant to the Commercial Arbitration Rules of the American Arbitration Association (the "ASSOCIATION"). The place of arbitration shall be Philadelphia, Pennsylvania. Arbitration may be commenced at any time by any party thereto after giving written notice in the manner described in this Agreement. A single arbitrator or arbitrators shall be selected by the joint agreement of the parties, but if they do not so agree within twenty (20) days after the date of the notice referred to above, the selection of the arbitrator(s) shall be made pursuant to the rules from the panels of the arbitrators maintained by such Association. The arbitrator(s) shall render his decision within one hundred eighty (180) days of appointment. Any award rendered by the arbitrator(s) shall be conclusive and binding upon the parties hereto; provided, however, that any such award shall be accompanied by a written opinion of the arbitrator(s) giving the reasons for the award. This provision for arbitration shall be specifically enforceable by the parties and the decision of the arbitrator(s) in accordance herewith shall be final and binding and there shall be no right of appeal therefrom. Judgment upon the award rendered by the arbitrator(s) may be entered by any court having jurisdiction thereof. The costs and expenses of arbitration, including attorneys' fees and expenses of the arbitrator(s) shall be apportioned between the parties as the arbitrator(s) may assess. The arbitrator(s) shall not be permitted to award punitive or similar type damages under any circumstances. This arbitration provision shall constitute the sole and exclusive remedy for any dispute under this Agreement. 14.5 Notice. Any notice or other communications required or permitted hereunder shall be deemed given when delivered personally, or upon receipt by the party entitled to receive the notice when sent by registered or certified mail, postage prepaid, addressed as follows or to such other address or addresses as may hereafter be furnished in writing by notice similarly given by one party to the other: To the Company: XL Vision, Inc. 10300 102 Terrace Sebastian, FL 32958 Attention: Chief Financial Officer To Safeguard: Safeguard 98 Capital, L.P. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 Attention: Steven J. Rosard, Esquire To Wheatley or the Wheatley Group: 25 Wheatley Partners, L.P. 80 Cuttermill Road, Suite 311 Greatneck, NY 11021 Attention: Barry Rubenstein With a copy to: GEO Capital Corp. 767 Fifth Avenue, 45th Floor New York, NY 10153 Attention: Jonathan Lieber 14.6 Full Agreement. This Agreement together with the Notes and Exhibits and Schedules attached hereto or delivered herewith sets forth the entire understanding of the parties with respect to the transactions contemplated hereby. 14.7 Headings. The headings of the sections of this Agreement are inserted for convenience of reference only and shall not be considered a part hereof. 14.8 Business Days. Should any installment of interest on or principal of any of the Notes become due and payable upon other than a business day, the maturity thereof shall be extended to the succeeding business day and, in the case of an installment of principal, interest shall be payable thereon at the rate per annum specified in such Note during such extension. 14.9 Amendment. This Agreement may not be modified, amended or changed without the written consent of the Company and the Purchasers. 14.10 Counterparts. This Agreement may be executed in one or more counterparts which, taken together, shall constitute one and the same original document. 26 IN WITNESS WHEREOF, each of the parties hereto has fully executed this Agreement as of the date first set forth above. XL VISION, INC. By:____________________________ Name: David Szostak Title: Chief Financial Officer SAFEGUARD 98 CAPITAL, L.P. By: SAFEGUARD DELAWARE, INC. Title: General Partner By:_____________________________ Name: Title: WHEATLEY GROUP: WHEATLEY PARTNERS, L.P. By: Wheatley Partners, LLC Title: General Partner By:_____________________________ Name: Barry Rubenstein Title: CEO WHEATLEY FOREIGN PARTNERS, L.P. By: Wheatley Partners, LLC Title: General Partner By:_____________________________ Name: Barry Rubenstein Title: CEO WOODLAND PARTNERS By:____________________________ Name: Barry Rubenstein Its: General Partner WOODLAND VENTURE FUND By:____________________________ Name: Barry Rubenstein Its: General Partner SENECA VENTURES By:____________________________ Name: Barry Rubenstein Its: General Partner 27 SCHEDULE 1 PRINCIPAL AMOUNT OF NOTES
- ------------------------------------------------------------------------------ NOTE PURCHASER AND ADDRESS PRINCIPAL AMOUNT OF NOTE - ------------------------------------------------------------------------------ Safeguard 98 Capital, L.P. 800 The Safeguard Building 435 Devon Park Drive Wayne, PA 19087 $13,600,000 - ------------------------------------------------------------------------------ Wheatley Partners, L.P. 80 Cuttermill Road, Suite 311 Greatneck, NY 11021 $ 3,128,000 - ------------------------------------------------------------------------------ Wheatley Foreign Partners, L.P. 80 Cuttermill Road, Suite 311 Greatneck, NY 11021 $ 272,000 - ------------------------------------------------------------------------------ Woodland Partners 68 Wheatley Road Brookville, NY 11545 $ 500,000 - ------------------------------------------------------------------------------ Woodland Venture Fund 68 Wheatley Road Brookville, NY 11545 $ 1,500,000 - ------------------------------------------------------------------------------ Seneca Ventures 68 Wheatley Road Brookville, NY 11545 $ 1,000,000 - ------------------------------------------------------------------------------ Total: $20,000,000 - ------------------------------------------------------------------------------
28 SCHEDULE 2.4(b) COMMON STOCK AGREEMENTS 1. The Company agreed, by action of its Board of Directors, to repurchase certain shares of Company common stock currently held by Company management upon the completion of the IPO with respect to either eMerge Vision Systems, Inc. or Who?Vision Systems, Inc. 2. Stock Restriction Agreement by and between the Company and certain Company common stockholders. SCHEDULE 2.4(c) AFFILIATE STOCK
Affiliate Affiliate Stock - --------- --------------- Integrated Vision, Inc. 1,348,750 shares, Common Stock, representing approximately 13.1% of the issued and outstanding shares Who?Vision Systems, Inc. 1,869,031 shares, Common Stock, representing approximately 10.0% of the issued and outstanding shares eMerge Vision Systems, Inc. 2,293,458 shares, Common Stock, representing approximately 16.0% of the issued and outstanding shares ChromaVision Medical Systems, Inc. 1,432,114 shares, Common Stock, representing approximately 4.0% of the issued and outstanding shares
29 EXHIBIT A WHEATLEY GROUP Name and Address: Wheatley Partners, L.P. (a Delaware limited partnership) The Wheatley Group 80 Cuttermill Road, Suite 311 Greatneck, NY 11021 Wheatley Foreign Partners, L.P. (a Delaware limited partnership) 80 Cuttermill Road, Suite 311 Greatneck, NY 11021 Woodland Partners (a New York general partnership) 68 Wheatley Road Brookville, NY 11545 Woodland Venture Fund (a New York general partnership) 68 Wheatley Road Brookville, NY 11545 Seneca Ventures (a New York general partnership) 68 Wheatley Road Brookville, NY 11545 30 EXHIBIT B FORM OF NOTE THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW AND THE TRANSFERABILITY THEREOF IS SUBJECT TO THE PROVISIONS OF A CERTAIN NOTE PURCHASE AGREEMENT DATED AS OF MAY ___, 1999, BY AND AMONG XL VISION, INC. AND THE PURCHASERS NAMED THEREIN. 6% CONVERTIBLE SUBORDINATED NOTE DUE MAY 14, 2004 $_________________ May 14, 1999 FOR VALUE RECEIVED, XL VISION, INC., a Delaware corporation (the "COMPANY"), promises to pay to ____________________________________, or registered assigns ("PAYEE"), on May 14, 2004, at the principal office of the Company, 10300 102nd Terrace, Sebastian, Florida, the principal sum of __________________________________ and 00/100 Dollars ($__________), as noted on the Payee's books and records, which books and records shall be conclusive absent manifest error, in lawful money of the United States of America, together with interest (calculated on the basis of the actual number of days elapsed in a year consisting of 365 days) from the date hereof on the unpaid balance of said principal sum, at the rate of six percent (6%) per annum payable at maturity and interest on any overdue principal or interest (to the extent lawful), at the rate of nine percent (9%) per annum until paid. Presentation, demand, protest and notice of dishonor are hereby waived by the Company. This Note is one of a duly authorized issue of Notes of the Company, limited in aggregate principal amount to $20,000,000 and known as its Convertible Subordinated Notes due May 14, 2004 (the "NOTES"). The Notes are issued pursuant to a certain Note Purchase Agreement dated as of May 14, 1999, by and among the Company, Safeguard 98 Capital, L.P., and the Wheatley Group, as defined therein (the "NOTE PURCHASE AGREEMENT"). The Notes are subject to the provisions and entitled to the benefits of the Note Purchase Agreement, including without limitation, provisions subordinating the Notes to the prior payment in full of principal of, premium, if any, and interest on, all Senior Indebtedness of the Company, and Payee assents to and expressly agrees to be bound by such subordination. In case an Event of Default, as defined in the Note Purchase Agreement, shall occur, the maturity of this Note may be accelerated in the manner and with the effect provided in the Note Purchase Agreement. The Company may prepay this Note in whole or in part in certain circumstances in the manner and as and to the extent permitted under the Note Purchase Agreement. The holder of this Note may, at its option, as and to the extent provided in the Note Purchase Agreement, apply all or any portion of the outstanding principal amount of this Note to the payment of an equal dollar amount of the purchase price of the common stock of the Company or a Conversion Affiliate (as defined in the Note Purchase Agreement) issuable to the holder upon the conversion of this Note in accordance with the terms and conditions of the Note Purchase Agreement. The Company may, at its option, as and to the extent provided in the Note Purchase Agreement, apply all or any portion of the outstanding principal amount of this Note to the payment of an 31 equal dollar amount of the purchase price of the common stock of the Company or a Conversion Affiliate (as defined in the Note Purchase Agreement) issuable to the holder upon the prepayment of this Note in accordance with the terms and conditions of the Note Purchase Agreement. This Note shall be binding upon and inure to the benefit of the Company and its successors and assigns, and the registered holder of this Note and its successors and registered assigns. This Note is made and delivered in the Commonwealth of Pennsylvania, and shall be construed and enforced in accordance with, and shall be governed by, the laws of the Commonwealth of Pennsylvania. This Note is further subject to the dispute resolution and arbitration provisions set forth in the Note Purchase Agreement. INTENDING TO BE LEGALLY BOUND, XL Vision, Inc. has caused this Note to be executed in its corporate name by its duly authorized officers under its corporate seal, and to be dated as of the day and year first above written. XL VISION, INC. By:__________________________________ Name: David Szostak Its: Chief Financial Officer EX-99.3 4 w46636ex99-3.txt MASTER NOTE MODIFICATION AGREEMENT 1 EXHIBIT 99.3 MASTER NOTE MODIFICATION AGREEMENT THIS MASTER NOTE MODIFICATION AGREEMENT ("Agreement"), is dated as of the 19th day of May, 2000, by and between XL Vision, Inc. ("Borrower"), and Safeguard Delaware, Inc. ("Safeguard"), Technology Leaders L.P. and Technology Leaders MI Corp. (collectively, "Technology Leaders"). Safeguard and Technology Leaders are each sometimes referred to herein individually as a "Lender" and, collectively, as the "Lenders." WITNESSETH: WHEREAS, the Borrower executed and delivered to Safeguard the following (collectively, the "Safeguard Notes"): (a) that certain Demand Note dated October 27, 1999, in the principal amount of Three Hundred Thousand and No/100 Dollars ($300,000); (b) two certain Demand Notes, each dated November 2, 1999, and each in the principal amount of One Million and No/100 Dollars ($1,000,000); and (c) that certain Amended and Restated Note dated November 3, 1999, in the principal amount of Five Million and No/ 100 Dollars ($5,000,000); each Safeguard Note bearing interest and default interest and being payable on the terms and conditions specified therein; WHEREAS, the Borrower executed and delivered to Technology Leaders the following, each dated February 2, 1994 (collectively, the "TL Notes"): (a) that certain 9% Subordinated Note Due December 31, 1999, payable to Technology Leaders MI Corp. in the principal amount of One Million Three Hundred Thirty Thousand Eight Hundred Forty-Seven and No/100 Dollars ($1,330,847); (b) that certain 9% Subordinated Note Due December 31, 1999, payable to Technology Leaders L.P. in the principal amount of One Million One Hundred Sixty-Five Thousand Five Hundred Eighty-Two and No/100 Dollars ($1,165,582); each bearing interest and default interest and being payable on the terms and conditions specified therein; and (c) that certain Note and Warrant Purchase Agreement by and among the Borrower, the Technology Leaders and Applewood Associates; WHEREAS, in connection with that certain Stock Purchase Agreement dated as of May 19, 2000 by and between the Borrower and incuVest LLC (the "Stock Purchase Agreement") and as a condition to the closing of the transactions contemplated thereby (the "Closing"), the Borrower and the Lenders have agreed to amend the Safeguard Notes and the TL Notes and set forth herein and effectuate hereby their agreement in this regard. NOW, THEREFORE, for and in consideration of the foregoing premises and the sum of Ten and No/ 100 Dollars ($10.00) cash in hand paid by each party hereto to the other, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower and each Lender hereby agree as follows: 1. The total amount outstanding under the Safeguard Notes, including all principal, interest, charges and fees calculated as of May 31, 2000, is Seven Million Two Hundred 2 Forty-Three Thousand Two Hundred Thirty-Nine and No/100 Dollars ($7,243,239) and the total amount outstanding under the TL Notes, including all principal, interest, charges and fees calculated as of May 31, 2000, is Four Million Four Hundred Sixty-Six Thousand Five Hundred Fourteen and No/100 Dollars ($4,466,514). No Lender has sold, assigned, participated or otherwise transferred any interest or rights in any Safeguard Notes or TL Notes to any person or entity prior to the date hereof The parties hereby waive any and all defaults or breaches which may have occurred prior to the date hereof under the Safeguard Notes or the TL Notes. 2. The Safeguard Notes and the TL Notes are hereby modified and amended, notwithstanding any terms or provision thereof to the contrary, to provide for the following repayment terms: (a) One-third of all amounts outstanding under the Safeguard Notes and the TL Notes, including principal, interest, charges and fees, shall be paid by the Borrower by transfer to Safeguard of 120,721 shares of common stock of eMerge Interactive, Inc. owned by the Borrower, and by transfer to the TL Lenders of 74,442 shares of such emerge Interactive common stock owned by the Borrower, divided 34,757 shares to Technology Leaders L.P. and 39,685 shares to Technology Leaders MI Corp. The shares of common stock of eMerge Interactive shall be valued at Twenty Dollars ($20.00) per share for purposes of such transfer. Such transfer shall occur within a reasonable period of time following the Closing, the parties being aware that the shares of eMerge Interactive may be subject to restrictions on transfer under lock-up agreements and pledge agreements. (b) The Borrower shall pay the second one-third of all amounts outstanding under the Safeguard Notes and the TL Notes, including principal, interest, charges and fees, by paying Safeguard the lump sum of Two Million Four Hundred Fourteen Thousand Four Hundred Thirteen and No/ 100 Dollars ($2,414,413) and by paying the TL Lenders One Million Four Hundred Eighty-Eight Thousand Eight Hundred Thirty-Eight and No/100 Dollars ($1,488,838), divided $695,138 to Technology Leaders L.P. and $793,700 to Technology Leaders MI Corp. Each such payment shall be made on or before August 15, 2001. (c) The amounts outstanding under the Safeguard Notes and the TL Notes after giving effect to the payments described in paragraphs (a) and (b) above, including principal, interest, charges and fees, shall be paid by the Borrower by transfer to Safeguard and Technology Leaders of shares of common stock of the next company in which the Borrower owns shares of common stock to register shares of such company's common stock for sale to the public in an underwritten initial public offering ("IPO") of such stock conducted pursuant to a registration statement filed under the Securities Act of 1933, as amended. Such transferred shares (the "IPO Shares") shall be valued at the IPO price per share offered to the public, and, in the aggregate, shall have a value, calculated using the IPO price per share, of Three Million Nine Hundred Three Thousand Two Hundred 3 Fifty-One and No/100 Dollars ($3,903,251). The transferred shares shall not be registered. The Borrower shall transfer to Safeguard IPO Shares with a value of Two Million Four Hundred Fourteen Thousand Four Hundred Thirteen and No/ 100 Dollars ($2,414,413) and shall transfer to the TL Lenders IPO Shares with a value of One Million Four Hundred Eighty-Eight Thousand Eight Hundred Thirty-Eight and No/100 Dollars ($1,488,838), divided $695,138 to Technology Leaders L.P. and $793,700 to Technology Leaders MI Corp. Such transfer shall occur within a reasonable period of time following closing of such IPO (provided the transferee agrees in writing to be bound by any lock-up agreement executed by the Borrower in connection with such IPO). (d) The payments described in paragraphs (a) through (c) above, if tendered when and as provided above, shall constitute full and complete payment of all obligations owed by the Borrower to the Lenders under and pursuant to the Safeguard Notes and the TL Notes, including principal, interest, fees and charges. As long as the Borrower is not in default of the above repayment provisions, interest shall not continue to accrue on any unpaid amounts outstanding under the Safeguard Notes or the TL Notes. If Borrower defaults on the above repayment provisions, then from the date of such default and continuing until such default is cured or the Safeguard Notes and the TL Notes are paid in full, interest shall accrue on the principal amounts outstanding under the Safeguard Notes and the TL Notes at the default rate of interest specified therein. 3. The parties hereto agree that, as of Closing, the Stock Purchase Agreement, the Related Agreements (as defined therein) and this Agreement and the agreements and documents executed or to be executed in connection herewith supercede and replace the terms and provisions of the Note and Warrant Purchase Agreement dated February 2, 1994 in their entirety. The parties hereto agree to execute and deliver promptly (and to cause their affiliates to execute and deliver promptly) such further agreements, amended and restated promissory notes, amendments, terminations, transfer documents, instruments and certificates as may be reasonably required to carry out the intent and purpose of this Agreement, and to give effect to the transactions contemplated hereby, including but not limited to such consents, releases of collateral and waivers as may be required under and pursuant to that certain Note Purchase Agreement dated as of May 14, 1999 by and among the Borrower, Safeguard 98 Capital, L.P. and the "Wheatly Group" as defined therein, and the Stock Pledge Agreement executed and delivered by the Borrower in connection therewith. 4. The terms and conditions of the Safeguard Notes and the TL Notes shall be amended and restated to give effect to the provisions of this Agreement and the parties' intentions with respect hereto within a reasonable period of time after the date of this Agreement. This Agreement is not intended to be nor shall it constitute a novation of the Safeguard Notes or the TL Notes or the indebtedness evidenced thereby, but rather a restatement of the terms thereof Borrower hereby ratifies, confirms and approves the Safeguard Notes and the TL Notes as modified herein and pursuant hereto, and agrees that the same constitutes the valid and binding obligation of Borrower, enforceable by the respective Lenders in 4 accordance with their terms, except as enforcement may be limited by applicable bankruptcy, fraudulent conveyance or similar laws affecting the rights of creditors, and for general principles of equity, and except as may otherwise be provided therein. From and after the Closing, any references to the Safeguard Notes or the TL Notes in any other document evidencing, securing or otherwise relating to the indebtedness evidenced thereby shall mean and refer to the Safeguard Notes and the TL Notes, as modified, amended and restated hereby and pursuant hereto. 5. This Agreement, the Safeguard Notes and the TL Notes, as amended and restated hereby and pursuant hereto, shall be governed by, and construed, interpreted and enforced in accordance with the laws of the State of Delaware. This Agreement shall bind and inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns. This Agreement may be executed in counterparts and may be delivered via facsimile, each of which shall constitute one and the same agreement. IN WITNESS WHEREOF, the Borrower and the Lenders have executed this Master Note Modification Agreement, all effective as of the day, month and year first above written. BORROWER: XL VISION, INC. By: ___________________________________ Name:_______________________________ Title:______________________________ (CORPORATE SEAL) LENDERS: SAFEGUARD DELAWARE, INC. By: ___________________________________ Name:_______________________________ Title:______________________________ TECHNOLOGY LEADERS L.P. By: ___________________________________ Name:_______________________________ Title:______________________________ TECHNOLOGY LEADERS MI CORP. By: ___________________________________ Name:_______________________________ Title:______________________________ EX-99.4 5 w46636ex99-4.txt PURCHASE AND SALE AGREEMENT 1 EXHIBIT 99.4 PURCHASE AND SALE AGREEMENT INTRODUCTION This Purchase and Sale Agreement (the "Agreement") is made and entered into on this 21st day of December, 2000 by and among XL Vision, Inc., a Delaware corporation (the "Company"), Safeguard Scientifics, Inc., a Pennsylvania corporation ("SSI"), Safeguard Delaware, Inc. a Delaware corporation ("SDI", and together with SSI, "Safeguard"), incuVest LLC, a Delaware limited liability company ("incuVest", and together with Safeguard, the "Purchasers"). BACKGROUND The Company owns shares of capital stock of eMerge Interactive, Inc. ("eMerge") and Chromavision Medical Systems, Inc. ("Chromavision") in the amounts set forth in Item B on EXHIBIT A hereto. As of the date hereof, the Company owes PNC Bank, National Association ("PNC Bank") an aggregate amount of $6,034,125 (the "PNC Debt") in respect of principal, interest and fees for indebtedness incurred under that certain Amended and Restated Loan and Security Agreement, dated November 21, 1997, as amended, between the Company and PNC Bank and as evidenced by that certain Amended and Restated Revolving Note dated April 29, 1999 in the original principal amount of $6,000,000 (the "PNC Note"). As a consequence of that certain Amended and Restated Limited Guaranty and Suretyship Agreement entered into by SSI, Safeguard Scientifics (Delaware), Inc. and SDI on December 30, 1998 (the "Guaranty") and that certain Amended and Restated Contribution and Sharing Agreement dated October 31, 2000 between SSI and incuVest (the "Contribution Agreement"), Safeguard and incuVest have agreed to guarantee the PNC Debt. Safeguard desires to purchase from the Company, and the Company desires to sell to Safeguard the numbers of shares of eMerge Class A common stock and Chromavision common stock as are identified in Item G on EXHIBIT A hereto (collectively, the "Safeguard Acquired Shares") for a total purchase price as identified in Item F on such EXHIBIT A (the "Safeguard Purchase Price"). incuVest desires to purchase from the Company, and the Company desires to sell to incuVest the numbers of shares of eMerge Class A common stock and Chromavision common stock as are identified in Item G on EXHIBIT A hereto (collectively, the "incuVest Acquired Shares", and together with the Safeguard Acquired Shares, the "Acquired Shares") for a total purchase price as identified in Item F on such EXHIBIT A (the "incuVest Purchase Price", and together with the Safeguard Purchase Price, the "Aggregate Purchase Price"). The Company desires, and each Purchaser desires for the Company, immediately to remit the Aggregate Purchase Price to PNC Bank in full satisfaction of the PNC Debt. NOW, THEREFORE, in consideration of and on the basis of and in reliance upon the accuracy of the representations and warranties and the performance of the covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows: Sale of Acquired Shares. Subject to the terms and conditions hereinafter set forth, including the payment of the Safeguard Purchase Price by Safeguard and of the incuVest Purchase Price by incuVest in accordance with Section 2.1 below, the Company hereby sells, assigns, conveys, transfers, and delivers to SDI the Safeguard Acquired Shares and to incuVest the incuVest Acquired Shares. Deliveries. On the date hereof the parties shall make the following deliveries and take the following actions: Payment of Purchase Price. On the date hereof on behalf of the Company, (i) Safeguard shall pay in immediately available funds the Safeguard Purchase Price, and (ii) incuVest shall pay in immediately available funds the incuVest Purchase Price as provided for in this Section 2.1. As an accommodation to the Company and in order to expeditiously effect the satisfaction of the PNC Debt, each Purchaser covenants to direct payment on behalf 2 of the Company of the Aggregate Purchase Price (i.e., Safeguard, in respect of the Safeguard Purchase Price, and incuVest, in respect of the incuVest Purchase Price) by wire transfer of immediately available funds to PNC Bank, it being the legal intent of the parties hereto that such payment of the Aggregate Purchase Price shall be remitted to PNC Bank in full satisfaction of the PNC Debt. Payment of the Aggregate Purchase Price shall be made in accordance with the payment instructions set forth in the instrument attached hereto as EXHIBIT B. Delivery of Acquired Shares. The Company shall deliver free and clear of all pledges, liens, transfer and stamp tax obligations, encumbrances, claims and other charges thereon of every kind, the certificates for the Safeguard Acquired Shares and the incuVest Acquired Shares to SDI and incuVest, respectively, in negotiable form, duly endorsed in blank, or with separate stock transfer powers attached thereto and signed in blank. The Company's execution and delivery of this Agreement constitutes its instruction to Morgan, Lewis & Bockius LLP, 1701 Market Street, Philadelphia, PA, which firm currently holds for the benefit of the Company certificates evidencing the Acquired Shares, to release such certificates to Purchasers in accordance with the Instruction Letter attached hereto as EXHIBIT C. The parties hereto agree to cause the transfer agents for the securities transferred hereunder to re-certificate, if necessary, the residual shares not transferred to Purchasers hereunder. Contribution Agreement. Safeguard and incuVest will execute and deliver to each other the Acknowledgement in the form of EXHIBIT D attached hereto which will terminate the effect of the Contribution Agreement with respect to the PNC Bank of the Loan and Security Agreement. Representations and Warranties of the Company. To induce the Purchasers to enter into this Agreement and to consummate the transactions contemplated hereby, the Company hereby represents and warrants to the Purchasers as follows: Organization and Standing. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has all requisite power and authority to carry on its business as it has been and is now being conducted and to own, lease and operate its properties. Authority and Binding Effect. The Company has the full power and authority to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement (i) have been duly and validly authorized by all necessary corporate action required on the part of the Company, and (ii) do not contravene or violate the Certificate of Incorporation or bylaws of the Company. This Agreement has been duly and validly executed and delivered by the Company and assuming due execution and delivery by each of the Purchasers, constitutes the legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, except as enforcement may be limited by general principles of equity whether applied in a court of law or a court of equity and by bankruptcy, insolvency, and similar laws affecting creditors' right and remedies generally. Ownership of Acquired Shares. The Company is the lawful record and beneficial owner of the Acquired Shares, free and clear of all pledges, liens, encumbrances, claims and other charges thereon of every kind, including, without limitation any agreements, subscriptions, options, warrants, calls, commitments or rights (contingent or otherwise) of any character granting to any person any interest in or right to acquire any of the Acquired Shares from the Company at any time, or upon the happening of any stated event. Representations and Warranties of Purchasers. To induce the Company to enter into this Agreement and to consummate the transactions contemplated hereby, each Purchaser hereby severally represents and warrants to the Company with respect to itself as follows: Organization and Standing. Such Purchaser is an entity duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its respective organization, and such Purchaser has all requisite power and authority to carry on its business as it has been and is now being conducted and to own, lease and operate its properties. Authority and Binding Effect. Such Purchaser has the full power and authority to execute, deliver and perform this Agreement. The execution, delivery and performance of this Agreement by such Purchaser (i) has been duly and validly authorized by all necessary corporate or member action, as the case may be, required on the 3 part of such Purchaser, and (ii) does not contravene or violate either SSI's or SDI's charter (in the case of Safeguard) or incuVest's Certificate of Formation or operating agreement (in the case of incuVest). This Agreement has been duly and validly executed and delivered by such Purchaser and assuming due execution and delivery by the Company, constitutes the legal, valid and binding obligation of such Purchaser, enforceable against it in accordance with its terms, except as enforcement may be limited by general principles of equity whether applied in a court of law or a court of equity and by bankruptcy, insolvency, and similar laws affecting creditors' right and remedies generally. Investment Intent. Such Purchaser acknowledges and understands that none of the Acquired Shares have been registered under the Securities Act of 1933 (the "Act") nor any other securities or blue sky laws based upon the representations set forth in this Section 4.3. Such Purchaser, to the extent acquiring any Acquired Shares hereunder, is doing so solely for its own account and not with a view to, or for resale in connection with, any distribution thereof, except pursuant to an effective registration statement under the Act or pursuant to and in compliance with an exemption from such registration afforded by the Act or the rules and regulations promulgated thereunder. Each such Purchaser is an "accredited investor" as that term is defined in Regulation D promulgated under the Act and (i) has such knowledge, sophistication and experience in financial and business matters so as to be capable of evaluating the merits and risks of its acquisition of the Acquired Shares and (ii) is able to bear the economic risks and lack of liquidity in holding the Safeguard Acquired Shares and the incuVest Acquired Shares, as applicable. Further Assurances. At the request of either Purchaser, the Company from time to time shall execute, acknowledge and deliver to such Purchaser such other instruments of conveyance and transfer and will take such other actions and execute and deliver such other documents, certifications and further assurances as may be necessary in order to vest more effectively in such Purchaser, or to put such Purchaser more fully in possession of, any of the Acquired Shares or as may otherwise be reasonably required to carry out the intent of the parties hereunder. Expenses; Sales and Transfer Taxes. The parties hereto shall pay their own expenses incidental to the preparation of this Agreement, the carrying out of the provisions of this Agreement and the consummation of the transactions contemplated hereby. The Company shall pay all documentary, stamp, sales, transfer, excise and other taxes incurred in connection with this Agreement and the transactions contemplated hereby. Headings; Gender; "Person". All section headings contained in this Agreement are for convenience of reference only, do not form a part of this Agreement and shall not affect in any way the meaning or interpretation hereof. Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context requires. Any reference to a "person" herein shall include an individual, firm, corporation, partnership, trust, governmental authority or body, association, unincorporated organization or any other entity. Contents of Agreement; Parties in Interest; Etc. This Agreement sets forth the entire understanding of the parties hereto with respect to the transactions contemplated hereby. It shall not be amended or modified except by a written instrument duly executed by each of the parties hereto. Any and all previous agreements and understandings between or among the parties regarding the subject matter hereof, whether written or oral are superseded by this Agreement. Exhibits. The Exhibits hereto are intended to be and hereby are specifically made a part of this Agreement. Notices. All notices that are required or permitted hereunder shall be in writing and shall be sufficient if personally delivered or sent by mail, facsimile message or Federal Express or other comparable delivery service. Any notices shall be deemed given upon the earlier of the date when received at, or the third day after the date when sent by registered or certified mail or the day after the date when sent by Federal Express to, the address or fax number set forth below, unless such address or fax number is changed by notice to the other party hereto: If to the Company, at 10315 102nd Terrace, Sebastian, Florida 32958, facsimile number (561) 589-2049 or at such other address designated by the Company to the other parties hereto in writing; 4 If to Safeguard, at 800 The Safeguard Building, 435 Devon Park Drive, Wayne, PA 19087, facsimile number (610) 293-0601 or at such other address designated by Safeguard to the other parties hereto in writing; If to incuVest, at 590 Madison Avenue, 32nd Floor, New York, NY 10022, facsimile number (212) 849-8170 or at such other address designated by Safeguard to the other parties hereto in writing. Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the State of Delaware without regard to its provisions concerning conflict of laws. Successors. This Agreement shall be binding upon and shall inure to the benefit of the respective successors, executors, personal representatives, heirs and assigns of each of the parties hereto. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be binding as of the date first written above, and all of which 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. 5 IN WITNESS WHEREOF, the parties hereto have duly executed this Purchase and Sale Agreement on the date first written above. XL VISION, INC. By:______________________________ Title: SAFEGUARD SCIENTIFICS, INC. By:______________________________ Title: SAFEGUARD DELAWARE, INC. By:______________________________ Title: INCUVEST LLC By:______________________________ Title: 6 EXHIBIT A EXHIBIT A to PURCHASE AND SALE AGREEMENT CLOSING DATE - DECEMBER 21, 2000
A. PURCHASE PRICE CALCULATION: CLOSING PRICE CVSN EMRG ---- ---- December 14,2000 $ 2.3750 $ 4.2500 December 15,2000 $ 2.6875 $ 4.0625 December 18,2000 $ 2.7500 $ 3.8750 December 19,2000 $ 2.4688 $ 3.7188 December 20,2000 $ 2.2500 $ 3.1875 5 DAY AVERAGE CLOSING PRICE $ 2.5063 $ 3.8188 ========== ========== PURCHASE PRICE @ 85% $2.1303 $ 3.2459 ========== ========== B. TOTAL SHARES OWNED BY XL VISION 1,432,114 2,567,403 C. AVAILABLE SHARES 954,743 1,797,240 D. AGGREGATE VALUE of AVAILABLE SHARES $2,033,909 $5,833,744 E. RATIO of AGGREGATE VALUE of AVAILABLE SHARES 25.85% 74.15% F. AGGREGATE PURCHASE PRICE $6,034,125 SAFEGUARD PURCHASE PRICE $3,017,063 INCUVEST PURCHASE PRICE $3,017,062 G. SHARES PURCHASED - TOTAL 732,244 1,378,400 SAFEGUARD ACQUIRED SHARES 366,122 689,200 INCUVEST ACQUIRED SHARES 366,122 689,200
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