MRRS Application Pursuant to Subsection 74(1) - exemptions from sections 25 and 53of the Act for trades in connection with distribution of common shares by non-reportingissuer U.S. corporation -issuance of shares to Ontario shareholders exempt providedthat U.S. prospectus is provided to such shareholders - first trade in shares acquiredpursuant to the ruling exempt from section 53 of the Act provided such trades executedover Nasdaq National Market.
Applicable Ontario Statutory Provisions
Securities Act, R.S.O. 1990, c.S.5, as am., ss. 1(1), 25, 53, 74(1).
IN THE MATTER OF THE MUTUAL RELIANCE REVIEW SYSTEM FOR EXEMPTIVE RELIEF APPLICATIONS
IN THE MATTER OF
eMERGE INTERACTIVE, INC.
MRRS DECISION DOCUMENT
WHEREAS the local securities regulatory authority or regulator(the "DecisionMaker") in each of British Columbia, Manitoba, Ontario and Québec (the "Jurisdictions")has received an application from eMerge Interactive, Inc. (the "Filer") for a decision underthe securities legislation of the Jurisdictions (the "Legislation") that the registration andprospectus requirements contained in the Legislation shall not apply to the proposed issueto the holders of common shares of Safeguard Scientifics, Inc. ("Safeguard") of commonshares in the capital of the Filer;
AND WHEREAS under the Mutual Reliance Review System for Exemptive ReliefApplications (the "System"), the Ontario Securities Commission is the principal regulatorfor this application;
AND WHEREAS the Filer has represented to the Decision Makers that:
1. The Filer is a company incorporated under the laws of the State of Delaware. TheFiler is not a reporting issuer or equivalent in any jurisdiction in Canada. The Filer'sprincipal executive offices are located at 10315 102nd Terrace, Sebastian, Florida,U.S.A. 32958.
2. Safeguard is a company incorporated under the laws of the Commonwealth ofPennsylvania whose shares trade on the New York Stock Exchange. Safeguard isnot a reporting issuer or equivalent in any jurisdiction in Canada.
3. The Filer filed a Registration Statement on October 27, 1999 with the SEC, asamended on December 6, 1999, December 10, 1999, December 15, 1999 andJanuary 10, 2000 (which has not yet become effective) pursuant to which 8,000,000class A common shares of the Filer will be offered, of which 6,500,000 class Acommon shares of the Filer will be offered by the Filer and several stockholders,including limited partnerships affiliated with Safeguard, will be selling shareholderswith respect to 1,500,000 class A common shares of the Filer. Safeguard and itsrelated entities is one of the Filer's principal shareholders, beneficially holdingapproximately 27.2% of the issued and outstanding shares of the Filer prior to theoffering.
4. Of the 8,000,000 class A common shares covered by the Registration Statement,the Filer is offering 2,806,000 class A common shares to shareholders ofSafeguard, and Safeguard is offering 694,000 class A common shares of the Filerto the shareholders of Safeguard, pursuant to what is referred to as the SafeguardSubscription Program (the "Program"). The 3,500,000 class A common shares ofthe Filer offered under the Program are referred to in this Application as the "FilerShares". The balance of the 8,000,000 class A common shares covered by theRegistration Statement will be offered in the traditional underwritten fashion.
5. Pursuant to the Program, Safeguard shareholders will have the opportunity tosubscribe for one Filer Share for every ten Safeguard common shares that they ownof record as of October 20, 1999 (the "Record Date"). Shareholders of Safeguardwho owned less than 100 shares of Safeguard as of the Record Date will beineligible to participate in the Program.
6. If any of the Filer Shares offered by the Filer under the Program are not purchasedby the shareholders of Safeguard, Safeguard will purchase such shares from theFiler at the closing of the offering.
7. Sales under the Program will close on the day of the closing of the sale of the othershares offered to the public.
8. The Filer's authorized share capital consists of 125,000,000 shares of commonstock, $.008 par value per share, consisting of 115,888,887 class A common sharesand 9,111,113 class B common shares, and 15,000,000 preferred shares, $.01 parvalue per share, of which 6,957,694 class A common shares and 9,943,606preferred shares are issued and outstanding. The preferred shares will beautomatically converted immediately prior to closing into common shares on thebasis of 1.25 common shares for each preferred share. Safeguard's authorizedshare capital consists of 500,000,000 common shares and 1,000,000 preferredshares, of which 34,769,635 common shares were issued and outstanding as atOctober 31, 1999. After giving effect to the offering, the Filer will have 31,732,902common shares outstanding (assuming the automatic conversion of the outstandingpreferred shares into common shares).
9. The Filer has applied for quotation of the class A common shares on the NasdaqNational Market.
10. Based on the share register of Safeguard as at the Record Date, there are tworegistered shareholders with British Columbia addresses holding an aggregate of2,100 common shares of Safeguard, three registered shareholders with Manitobaaddresses holding an aggregate of 524 common shares of Safeguard, threeregistered shareholders with Ontario addresses holding an aggregate of 272common shares of Safeguard, and two registered shareholders with addresses inQuébec holding an aggregate of 12,006 common shares of Safeguard, being a deminimus percentage of the issued and outstanding common shares of Safeguard.
11. Based on the share register of the Filer as at January 5, 2000 there are fourregistered shareholders with Alberta addresses holding an aggregate of 78,752shares of the Filer and one registered shareholder with an Ontario address holding8,750 shares of the Filer, being a de minimis percentage of the issued andoutstanding shares of the Filer.
12. The Filer will provide to each shareholder of Safeguard wishing to purchase classA common shares of the Filer under the Program, a copy of the final prospectus asfiled with the SEC.
13. There is no present or anticipated future market in the Jurisdictions for the commonshares of the Filer, and, accordingly, any resale of these securities will occuroutside of the Jurisdictions, more specifically through the Nasdaq National Market.
14. All disclosure material relating to the Filer that is furnished to securityholdersresident in the United States will, at the relevant time, be furnished tosecurityholders resident in the Jurisdictions.
AND WHEREAS under the System, this MRRS Decision Document evidences thedecision of each Decision Maker (collectively, the "Decision");
AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe Legislation that provides the Decision Maker with the jurisdiction to make the Decisionhas been met;
The decision of the Decision Makers under the Legislation is that:
A. the registration and prospectus requirements contained in the Legislation shall notapply to the sale of class A common shares of the Filer to the holders of commonshares of Safeguard pursuant to the Program provided that a copy of the finalprospectus as filed with the SEC is provided to each registered shareholder ofSafeguard having an address in the Jurisdictions prior to the acceptance of anysubscription from any such shareholder; and
B. a first trade in common shares of the Filer acquired pursuant to this Decision shallbe subject to the registration and prospectus requirements contained in theLegislation unless such first trade is executed on the Nasdaq National Market inaccordance with all laws and rules applicable to such market.
January 28th, 2000.
"J. A. Geller" "R. Stephen Paddon"