SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
SCHEDULE 13D
Under
The Securities Exchange Act of 1934
(Amendment No. ______)*
---------------
Verticalnet, Inc.
(Name of Issuer)
Common Stock, par value $.01 per share
(Title of Class of Securities)
92532L 10 7
(CUSIP Number)
Henry N. Nassau, Esq.
Managing Director and General Counsel
Internet Capital Group, Inc.
600 Building
435 Devon Park Drive
Wayne, Pennsylvania 19087
(610) 989-0111
(Name, Address and Telephone Number of
Person Authorized to Receive Notices
and Communications)
COPY TO:
Christopher G. Karras, Esq.
Dechert
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, Pennsylvania 19103-2793
March 6, 2002
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g),
check the following box [ ]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the act but shall be subject to all other provisions of the Act (however, see
the Notes).
CUSIP NO. 92532L 10 7 Page 2 of 16 Pages
1) NAME OF REPORTING PERSONS Internet Capital Group, Inc.
I.R.S. IDENTIFICATION
NOS. OF ABOVE PERSON 23-2996071
2) CHECK THE APPROPRIATE BOX (A) [ ]
IF A MEMBER OF A GROUP (B) [X]
3) SEC USE ONLY
4) SOURCE OF FUNDS (SEE INSTRUCTIONS) WC/OO
5) CHECK IF DISCLOSURE OF
LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E)
6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES 7) SOLE VOTING
BENEFICIALLY OWNED BY EACH POWER 0
REPORTING PERSON WITH 8) SHARED VOTING
POWER 35,841,747*
9) SOLE DISPOSITIVE
POWER 0
10) SHARED DISPOSITIVE
POWER 35,841,747*
11) AGGREGATE AMOUNT BENEFICIALLY
OWNED BY EACH REPORTING PERSON 35,841,747*
12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES [X]
(SEE INSTRUCTIONS)
13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11) 31.6%
14) TYPE OF REPORTING PERSON (SEE CO
INSTRUCTIONS)
* Excludes 28,376 shares of Common Stock held by Mr. Douglas A. Alexander, a
Managing Director of Internet Capital Group, Inc. Also excludes 51,592 shares of
Common Stock held by Mr. Walter W. Buckley, III, the Chief Executive Officer and
Chairman of the Board of Directors of Internet Capital Group, Inc. and the
President and a Director of ICG Holdings, Inc., a wholly-owned subsidiary of
Internet Capital Group, Inc. Internet Capital Group, Inc. disclaims beneficial
ownership of such securities held by Messrs. Alexander and Buckley. Messrs.
Alexander and Buckley have disclaimed beneficial ownership of such securities
held by Internet Capital Group, Inc. Excludes an aggregate of 136,228 shares of
Common Stock held by certain executive officers and directors of Safeguard
Scientifics, Inc. and 501(c)(3) foundations, trusts and limited
CUSIP NO. 92532L 10 7 Page 3 of 16 Pages
partnerships that are either controlled by them or over which they exercise
shared voting or dispositive power. Internet Capital Group, Inc. disclaims
beneficial ownership of such shares.
CUSIP NO. 92532L 10 7 Page 4 of 16 Pages
1) NAME OF REPORTING PERSONS ICG Holdings, Inc.
I.R.S. IDENTIFICATION
NOS. OF ABOVE PERSON 51-0396570
2) CHECK THE APPROPRIATE BOX (A) [ ]
IF A MEMBER OF A GROUP (B) [ ]
3) SEC USE ONLY
4) SOURCE OF FUNDS (SEE INSTRUCTIONS) OO
5) CHECK IF DISCLOSURE OF
LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E)
6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES 7) SOLE VOTING
BENEFICIALLY OWNED BY EACH POWER 0
REPORTING PERSON WITH 8) SHARED VOTING
POWER 25,318,644*
9) SOLE DISPOSITIVE
POWER 0
10) SHARED DISPOSITIVE
POWER 25,318,644*
11) AGGREGATE AMOUNT BENEFICIALLY
OWNED BY EACH REPORTING PERSON 25,318,644*
12) CHECK BOX IF THE AGGREGATE AMOUNT
IN ROW (11) EXCLUDES CERTAIN SHARES [X]
(SEE INSTRUCTIONS)
13) PERCENT OF CLASS REPRESENTED
BY AMOUNT IN ROW (11) 22.3%
14) TYPE OF REPORTING PERSON (SEE CO
INSTRUCTIONS)
* Excludes 28,376 shares of Common Stock held by Mr. Douglas A. Alexander, a
Managing Director of Internet Capital Group, Inc., the parent company and sole
stockholder of ICG Holdings, Inc. Also excludes 51,592 shares of Common Stock
held by Mr. Walter W. Buckley, III, the President and a Director of ICG Holdings
and the Chief Executive Officer and Chairman of the Board of Directors of
Internet Capital Group, Inc. ICG Holdings disclaims beneficial ownership of such
securities held by Messrs. Alexander and Buckley. Messrs. Alexander and Buckley
have disclaimed beneficial ownership of such securities held by ICG Holdings.
CUSIP NO. 92532L 10 7 Page 5 of 16 Pages
ITEM 1. SECURITY AND ISSUER
This statement on Schedule 13D (the "Statement") relates to
the Common Stock, par value $0.01 per share (the "Common Stock"), of
Verticalnet, Inc., a Pennsylvania corporation (the "Company"). The principal
executive offices of the Company are located at 700 Dresher Road, Horsham,
Pennsylvania 19044. According to the Company's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2001, the number of shares of the Company's
Common Stock outstanding as of October 31, 2001 was 98,561,793. According to the
Company's Current Report on Form 8-K filed with the Securities and Exchange
Commission as of January 4, 2002, the Company issued approximately 14,300,000
shares of its Common Stock in connection with the merger on December 28, 2001 of
Atlas Commerce, Inc. ("Atlas") into Everest Acquisition Co., a wholly-owned
subsidiary of the Company. Based on the foregoing disclosures by the Company,
approximately 112,861,793 shares of the Company's Common Stock are outstanding
as of the date hereof.
ITEM 2. IDENTITY AND BACKGROUND
(a) - (c) This Schedule 13D is being filed by: (i) Internet
Capital Group, Inc., a Delaware corporation ("ICG"), with its principal place of
business and principal office at 435 Devon Park Drive, Building 600, Wayne,
Pennsylvania 19087; and (ii) ICG Holdings, Inc., a Delaware corporation
("Holdings" and together with ICG, the "Reporting Persons"), with its principal
place of business and principal office at 100 Lake Drive, Suite 4, Pencader
Corporate Center, Newark, Delaware 19702. ICG is an Internet company actively
engaged in business-to-business e-commerce through a network of partner
companies. ICG provides operational assistance, capital support, industry
expertise and a strategic network of business relationships intended to maximize
the long-term market potential of its business-to-business e-commerce partner
companies. Holdings is a wholly-owned direct subsidiary of ICG and is a holding
company. The information required by Item 2 of Schedule 13D about the identity
and background of the executive officers and directors of: (i) ICG is set forth
on Schedule I hereto; and (ii) Holdings is set forth on Schedule II hereto.
(d) During the last five years, neither of the Reporting
Persons nor any of their respective executive officers or directors has been
convicted in a criminal proceeding.
(e) During the last five years, neither of the Reporting
Persons nor any of their respective executive officers or directors has been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) All the executive officers and directors of the Reporting
Persons are citizens of the United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On July 22, 1996, the Company issued a demand note to ICG in
exchange for a $60,000 loan from ICG funded from working capital. On September
12, 1996, ICG purchased 512,821 shares of the Company's Series A Convertible
Preferred Stock for an aggregate cash purchase price of $940,000 funded by
working capital and conversion of the $60,000 demand note. ICG's Series A
shareholdings automatically converted into 2,442,000 shares of the Company's
Common Stock upon the Company's initial public offering ("IPO") on February 11,
1999. Adjusted for the Company's subsequent forward 2:1 stock splits effective
on August 23, 1999 and April 3, 2000, these holdings presently constitute
9,768,000 shares of Common Stock of the Company.
CUSIP NO. 92532L 10 7 Page 6 of 16 Pages
On December 31, 1996, ICG purchased 7,891 shares of the
Company's Common Stock for a purchase price of $25,000 funded from working
capital. Adjusted for the Company's subsequent forward 2:1 stock splits, these
holdings presently constitute 31,564 shares of Common Stock of the Company.
On May 31, 1997, June 6, 1997, June 30, 1997 and July 10,
1997, the Company issued demand notes in exchange for loans from ICG totaling
$650,000 in the aggregate funded from working capital. On July 18, 1997, ICG
purchased 4,734,232 shares of the Company's Series A Convertible Preferred Stock
for an aggregate cash purchase price of $1,350,000 funded by working capital and
conversion of the $650,000 in demand notes. ICG's Series B shareholdings
automatically converted into 2,427,811 shares of the Company's Common Stock upon
the Company's IPO on February 11, 1999. Adjusted for the Company's subsequent
forward 2:1 stock splits, these holdings presently constitute 9,711,244 shares
of Common Stock of the Company.
On February 26, 1998, March 20, 1998, March 31, 1998, April 8,
1998, April 14, 1998, April 21, 1998 and April 28, 1998, the Company issued
demand notes in exchange for loans from ICG totaling $1,520,000 in the aggregate
funded from working capital. On May 11, 1998, ICG purchased 2,222,223 shares of
the Company's Series D Convertible Preferred Stock for an aggregate cash
purchase price of $2,480,000 funded by working capital and conversion of the
$1,520,000 in demand notes. ICG's Series D shareholdings automatically converted
into 1,139,602 shares of the Company's Common Stock upon the Company's IPO on
February 11, 1999. Adjusted for the Company's subsequent forward 2:1 stock
splits, these holdings presently constitute 4,558,408 shares of Common Stock of
the Company.
On May 12, 1998, the Company granted ICG warrants to purchase
85,470 shares of Common Stock at an exercise price of $3.51 per share in
consideration for certain guarantees of the Company's bank debt by ICG. The
warrants have not been exercised and, split-adjusted, are presently exercisable
within sixty days for 341,880 shares of the Company's Common Stock.
On November 25, 1998, ICG purchased with funds provided by
working capital Convertible Notes of the Company in the principal amount of
$5,000,000. On January 19, 1999, the Company repaid $833,563 principal amount of
these Convertible Notes and on February 24, 1999, ICG sold $2,083,221 in
principal amount of the notes to another party. The residual $2,083,216
principal amount of the note was converted into 130,201 shares of the Company's
Common Stock upon the Company's IPO. Adjusted for the Company's subsequent
forward 2:1 stock splits, these holdings presently constitute 520,804 shares of
Common Stock of the Company.
In connection with issuance of its Convertible Notes, on
November 25, 1998, the Company granted holders of its Series D Preferred Stock
warrants to purchase Common Stock exercisable at the Company's IPO price.
Pursuant to these grants, ICG received warrants to purchase 34,186 shares of
Common Stock, after giving effect to the transfer of certain warrants in
conjunction with the sale by ICG of $2,083,216 principal amount of the notes in
February 1999. The warrants have not been exercised and, split-adjusted, are
presently exercisable within sixty days into 136,744 shares of the Company's
Common Stock.
On October 7, 1999, ICG purchased with funds provided by
working capital $5,000,000 in principal amount of the Company's Convertible
Notes which are presently convertible into 250,000 shares of the Company's
Common Stock.
In the aggregate, ICG purchased 24,590,020 split-adjusted
shares of the Company's Common Stock, Convertible Notes presently convertible
into 250,000 shares of the Company's Common Stock and warrants presently
exercisable into 478,624 shares of the
CUSIP NO. 92532L 10 7 Page 7 of 16 Pages
Company's Common Stock.
ICG has transferred all securities of the Company held by it
to Holdings in an inter-company transfer without consideration.
ITEM 4. PURPOSE OF TRANSACTION
ICG has acquired the shares of Common Stock of the Company as
part of its operating strategy to integrate ICG's partner companies into a
collaborative network that leverages its collective knowledge and resources.
With the goal of holding its partner company interests for the long-term, ICG
uses these collective resources to actively develop the business strategies,
operations and management teams of the Company and its other partner companies.
ICG intends to review, from time to time, its interest in the Company on the
basis of various factors, including but not limited to, the Company's business,
financial condition, results of operations and prospects, synergies with other
partner companies and integration in the network, general economic and industry
conditions, as well as other developments and other acquisition opportunities.
Based upon those considerations, ICG may seek to acquire additional shares of
Common Stock of the Company on the open market or in privately negotiated
transactions, or to dispose of all or a portion of its shares of Common Stock of
the Company.
One representative of ICG, Walter W. Buckley, III, the Chief
Executive Officer and Chairman of the Board of Directors of ICG, is currently a
member of the Board of Directors of the Company. ICG anticipates that a second
representative of ICG will be elected to the Company's Board of Directors and
that ICG's strategic relationship with the Company will continue.
ICG has entered into a Joint Venture Agreement dated March 6,
2002 (the "JV Agreement") with Safeguard Scientifics, Inc. ("Safeguard") with
respect to the shares of Common Stock of the Company controlled by each of ICG
or Safeguard from time to time. Pursuant to the terms of the JV Agreement, ICG
and Safeguard have agreed to vote all shares controlled by either of them for
the election to the Board of Directors of the Company of two designees of ICG.
The JV Agreement also provides, among other things, that ICG and Safeguard shall
have certain rights of first refusal with respect to future sales by ICG or
Safeguard of capital stock of the Company. Safeguard has reported on a Schedule
13G filed February 15, 2002 that it is the beneficial owner of 10,523,103 shares
of the Company's Common Stock.
Except as set forth above, neither of the Reporting Persons
has formulated any plans or proposals of the types referred to in clauses (a)
through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a-b) The table below sets forth the aggregate number of
shares of Common Stock and percentage of the Company's outstanding Common Stock
beneficially owned by each Reporting Person.
Beneficial Ownership
--------------------------------------------
Number of Shares Percentage of Total
---------------- -------------------
Internet Capital Group, Inc. 35,841,747 (2) 31.6% (1)
ICG Holdings, Inc. 25,318,644 (3) 22.3% (1)
CUSIP NO. 92532L 10 7 Page 8 of 16 Pages
(1) Calculations based upon 112,861,793 shares outstanding
(98,561,793 shares outstanding on October 31, 2001, plus approximately
14,300,000 shares issued by the Company pursuant to its merger with Atlas
Commerce Inc. ("Atlas") as of December 28, 2001), warrants to purchase 478,624
shares exercisable within 60 days of the date hereof, and securities convertible
into 250,000 shares within 60 days of the date hereof.
(2) Includes 25,318,644 shares beneficially owned by Holdings
and 10,523,103 shares beneficially owned by Safeguard. ICG is the sole
stockholder of Holdings, and each of ICG and Holdings have shared voting and
dispositive power with respect to the shares beneficially held by Holdings.
Safeguard and ICG have entered into the JV Agreement that, among other things,
governs the voting and disposition of the Company's Common Stock beneficially
owned by each of them. See Item 4 and Exhibit 2 hereof for more information.
Safeguard disclaims beneficial ownership of all shares held by ICG. Safeguard
Scientifics, Inc. is a Delaware corporation with its principal place of business
and principal offices at 800 The Safeguard Building, 435 Devon Park Drive,
Wayne, PA 19087-1945. Safeguard identifies, develops and operates emerging
technology companies, with a current focus primarily on the infrastructure
technology industry, including communications, software and e-Services. To the
best knowledge of the Reporting Persons, (i) Safeguard has not been convicted in
a criminal proceeding during the last five years, and (ii) during the last five
years Safeguard has not been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
(3) Includes 24,590,020 shares owned directly, 478,624 shares
from warrants exercisable within 60 days of the date hereof, and 250,000 shares
related to Convertible Notes of the Company which may be converted within 60
days of the date hereof. Holdings is a wholly-owned subsidiary of ICG, with
which it shares voting and dispositive power with respect to these securities.
(c) On March 6, 2002, ICG transferred 24,590,020 shares of
Common Stock held by it to Holdings in an inter-company transfer without
consideration, as disclosed in Item 3 hereto. ICG concurrently transferred to
Holdings, in inter-company transfers without consideration, $5,000,000 in
principal amount of Convertible Notes of the Company presently convertible into
250,000 shares of the Company's Common Stock and warrants presently exercisable
into 478,624 shares of the Company's Common Stock.
(d) Safeguard is the beneficial owner of 10,523,103 shares of
Common Stock of the Company which it holds subject to provisions of the JV
Agreement between ICG and Safeguard, as described in Item 4 hereof. Safeguard
has the right to receive and the power to direct the receipt of dividends from,
and the proceeds from the sale of, its holdings of the Company's securities.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
ICG and Safeguard are parties to the JV Agreement with respect
to the shares of Common Stock of the Company controlled from time to time by
either ICG or Safeguard, as described in Items 4 and 5 hereof. Other than the JV
Agreement between ICG and Safeguard, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among the Reporting Persons
and any person with respect to any securities of the Company, including but not
limited to transfer or voting of
CUSIP NO. 92532L 10 7 Page 9 of 16 Pages
any securities of the Company, finder's fees, joint ventures, loan or option
arrangements, put or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1 Joint Filing Agreement dated March 15, 2002.
Exhibit 2 Joint Venture Agreement dated March 6, 2002
between ICG and Safeguard.
CUSIP NO. 92532L 10 7 Page 10 of 16 Pages
Signature
After reasonable inquiry and to the best knowledge and belief
of the undersigned, the undersigned certifies that the information set forth in
this statement is true, complete and correct.
Dated March 15, 2002 INTERNET CAPITAL GROUP, INC.
By: HENRY N. NASSAU
------------------------------------
Henry N. Nassau
Managing Director, General Counsel &
Secretary
Dated March 15, 2002 ICG HOLDINGS, INC.
By: HENRY N. NASSAU
------------------------------------
Henry N. Nassau
Vice President & Secretary
CUSIP NO. 92532L 10 7 Page 11 of 16 Pages
SCHEDULE I
Name Present Principal Employment Business Address
---- ---------------------------- ----------------
EXECUTIVE OFFICERS
Walter W. Buckley, III Chairman & Chief Executive Officer Internet Capital Group, Inc.
435 Devon Park Drive
Building 600
Wayne, PA 19087
Edward H. West President, Chief Operating Officer, Internet Capital Group, Inc.
Chief Financial Officer & Managing 435 Devon Park Drive
Director Building 600
Wayne, PA 19087
Henry N. Nassau Managing Director, General Counsel & Internet Capital Group, Inc.
Secretary 435 Devon Park Drive
Building 600
Wayne, PA 19087
DIRECTORS
Walter W. Buckley, III (same as above) (same as above)
Robert E. Keith, Jr. President & Chief Executive Officer TL Ventures
700 Building
435 Devon Park Drive
Wayne, PA 19087
David Berkman Managing Partner Liberty Associated Partners, L.P.
3 Bala Plaza
Suite 502
Bala Cynwyd, PA 19004
Kenneth A. Fox Managing Director, M&A Internet Capital Group, Inc.
435 Devon Park Drive
Building 600
Wayne, PA 19087
Warren V. Musser Chairman Emeritus Safeguard Scientifics, Inc.
435 Devon Park Drive
700 Building
Wayne, PA 19087
CUSIP NO. 92532L 10 7 Page 12 of 16 Pages
Thomas P. Gerrity Professor and Director of the The Wharton School
e-Business Initiative University of Pennsylvania
1000 Steinberg Hall
Philadelphia, PA 19104
Michael D. Zisman Executive Vice President-Strategy Lotus Development Corporation
55 Cambridge Parkway
Cambridge, MA 02142
CUSIP NO. 92532L 10 7 Page 13 of 16 Pages
SCHEDULE II
Name Present Principal Employment Business Address
---- ---------------------------- ----------------
EXECUTIVE OFFICERS
Walter W. Buckley, III President Internet Capital Group, Inc.
435 Devon Park Drive
Building 600
Wayne, PA 19087
Kenneth A. Fox Vice President Internet Capital Group, Inc.
435 Devon Park Drive
Building 600
Wayne, PA 19087
Henry N. Nassau Vice President & Secretary Internet Capital Group, Inc.
435 Devon Park Drive
Building 600
Wayne, PA 19087
Edward H. West Chief Financial Officer & Assistant Internet Capital Group, Inc.
Secretary 435 Devon Park Drive
Building 600
Wayne, PA 19087
Philip A. Rooney Vice President Internet Capital Group, Inc.
435 Devon Park Drive
Building 600
Wayne, PA 19087
DIRECTORS
Walter W. Buckley, III (same as above) (same as above)
Henry N. Nassau (same as above) (same as above)
Edward H. West (same as above) (same as above)
Philip A. Rooney (same as above) (same as above)
CUSIP NO. 92532L 10 7 Page 14 of 16 Pages
Exhibit 1
JOINT FILING AGREEMENT
The undersigned parties hereby agree that the Schedule 13D
filed herewith (and any amendments thereto) relating to the Common Stock of
Verticalnet, Inc. is being filed jointly on behalf of each of them with the
Securities and Exchange Commission pursuant to Section 13(d) of the Securities
Act of 1934, as amended.
Dated March 15, 2002 INTERNET CAPITAL GROUP, INC.
By: HENRY N. NASSAU
------------------------------------
Henry N. Nassau
Managing Director, General Counsel &
Secretary
Dated March 15, 2002 ICG HOLDINGS, INC.
By: HENRY N. NASSAU
------------------------------------
Henry N. Nassau
Vice President & Secretary
CUSIP NO. 92532L 10 7 Page 15 of 16 Pages
Exhibit 2
JOINT VENTURE AGREEMENT
This Agreement is made as of March 6, 2002 by and between Internet Capital
Group, Inc. ("ICG") and Safeguard Scientifics, Inc. ("SSI").
WHEREAS, SSI and ICG and certain entities controlled by them own and/or have the
right to acquire substantial numbers of shares of voting capital stock of
Verticalnet, Inc. (the "Company"); and
WHEREAS, SSI and ICG desire to act jointly with respect to their interest in the
Company.
NOW, THEREFORE, intending to be legally bound, the parties agree as follows:
1. Election of Directors. Each of SSI and ICG will vote all shares of the
Company that it currently owns or hereafter acquires, and will use
reasonable efforts in good faith to cause all other Company
shareholders controlled by it to vote all of their shares of the
Company currently owned or hereafter acquired, to elect to and maintain
on the Company's Board of Directors, two designees of ICG reasonably
acceptable to SSI.
2. Other Votes. The parties will consult with each other with regard to
all matters submitted to a vote of the shareholders of the Company, and
will attempt in good faith to agree on a course of action which is in
the best interests of both SSI and ICG.
3. Right of First Refusal. If either of SSI or ICG or any of their
majority owned subsidiaries intends to sell to an unaffiliated buyer
less than all of its shares of capital stock of the Company, it will
first offer to sell such shares to the other party at the fair market
price of the shares, based on the average closing price of the common
stock of the Company as reported on the principal market or exchange on
which such shares trade for the five trading days immediately preceding
the date on which the offer expires. Such offer will expire at 4:00
eastern time on the first trading day after the date the offer was
made. If the offer is accepted for any or all of the shares, the
parties will each be obligated to complete the transaction at the
offered price within five business days after acceptance. If the offer
is not accepted in whole, then the selling party may sell the remaining
offered shares at any time within fifty days after the offer was made
at a price of at least 80% of the market price at the time of the sale.
4. Sale of Entire Interest. If either of SSI or ICG desires to sell to an
unaffiliated buyer in one or a series of related transactions all of
the shares of capital stock of the Company owned by such party and its
majority owned subsidiaries, such party will first discuss such
intention with the other party and will attempt in good faith to
provide the other party to have the opportunity either to purchase all
of the shares owned by the selling party and its subsidiaries or to
participate in the sale of shares to the unaffiliated buyer.
CUSIP NO. 92532L 10 7 Page 16 of 16 Pages
5. Notification Regarding Sale of Securities. ICG will provide SSI 50 days
prior written notice of any sale by ICG of shares of Company common
stock unless the Company shall not at the time of sale be deemed to be
"controlled" by ICG within the meaning of the Investment Company Act of
1940, as amended, and the regulations promulgated thereunder; provided,
however, that this notice requirement shall terminate at such time
after the date hereof as SSI has sold, whether in one transaction or a
series of transactions, an aggregate of 2,500,000 shares of Company
common stock at a price per share in excess of $1.00.
6. Management of the Company. Each of SSI and ICG acknowledges that (i) it
is concerned with the management of the Company and intends to actively
participate in discussions with the other party regarding the business
of the Company and (ii) it has substantial expertise in the e-commerce
industry. The parties will coordinate their public statements regarding
this Agreement and the Company, including appropriate filings under
Section 13 of the Securities Exchange Act of 1934, as amended.
7. Term and Termination. This Agreement shall continue in effect until the
earliest of (a) the date the parties mutually agree in writing to
terminate or amend this Agreement, (b) the date that is 180 days after
either party notifies the other in writing of its intent to terminate
this agreement and (c) the date that the aggregate number of shares of
the Company owned by either ICG or SSI is less than 3% of all of the
outstanding shares of all classes of Common Stock of the Company on a
combined basis. This Agreement shall terminate automatically if it is
determined by relevant authority not to create a valid joint venture;
provided that the parties will prior to such termination meet to
discuss in good faith and to determine whether this Agreement could be
modified to constitute a valid joint venture so long as such
modifications do not materially alter the respective rights and
obligations of the parties.
8. Non-assignable Agreement. This Agreement, and the rights and
obligations of the parties hereunder, shall be binding on the parties
and their successors, but may not be otherwise assigned by either
party.
9. Governing Law. This Agreement shall be governed in all respects by the
laws of the State of Delaware as applied to contracts made and to be
performed entirely within that state between residents of that state.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
INTERNET CAPITAL GROUP, INC. Safeguard Scientifics, inc.
By: HENRY N. NASSAU By: N. J. KLAUDER
---------------------------------- -----------------------
Name: Henry N. Nassau Name: N. J. Klauder
Title: Managing Director, General Counsel Title: Managing Director &
& Secretary General Counsel