Document:

Exhibit
10.10

 

REIMBURSEMENT
AND INDEMNITY AGREEMENT

 

This Reimbursement and
Indemnity Agreement (this “Agreement”) is
made as of the 11th day of March, 2005, by CHROMAVISION MEDICAL
SYSTEMS, INC. (“ChromaVision”), a Delaware
corporation, in favor of SAFEGUARD DELAWARE, INC., a Delaware corporation (“SDI”) and SAFEGUARD SCIENTIFICS
(DELAWARE), INC., a Delaware corporation (“SSI”)
and together with SDI (“Safeguard”).

 

BACKGROUND

 

A.                                   Pursuant
to a Loan Agreement dated as of February 13, 2003, by and between ChromaVision
and Comerica Bank, N.A. (the “Bank”) (as
amended from time to time, including by a Fourth Amendment thereto dated as of
even date herewith (“Amendment No. 4”), the
“Loan Agreement”) the Bank agreed
to provide to ChromaVision a revolving line of credit in the maximum aggregate principal
amount of $5,500,000 (the “Loan”).

 

B.                                     At
the request of ChromaVision, and as required by the Bank, Safeguard agreed to
guaranty all of the payment obligations of ChromaVision under the Loan
Agreement, pursuant to the terms of that certain Unconditional Guaranty
originally dated as of February 13, 2003 (as amended and affirmed from
time to time (the “Original Guaranty”)). In
connection with Amendment No. 4, Safeguard is contemporaneously herewith
entering into an Amended and Restated Guaranty (the “Guaranty”).

 

C.                                     In
consideration of Safeguard’s agreements as set forth above, ChromaVision has agreed
to pay certain fees to Safeguard, to reimburse Safeguard for any of the
obligations required to be paid or satisfied by Safeguard pursuant to the
Guaranty, and to hold Safeguard harmless from and against any claims made
against Safeguard on account of the Guaranty, on the terms and subject, to the
conditions set forth below.

 

D.                                   All
capitalized terms used and not otherwise defined herein shall have the respective
meanings ascribed thereto in the Guaranty.

 

AGREEMENT

 

NOW,
THEREFORE in consideration of the foregoing and of the covenants and mutual
agreements set forth below, and intending to be legally bound, the parties agree
as follows:

 

1.               Payments,
Performance, Covenants.

 

(a) In the event Comerica
makes any demand on ChromaVision, or ChromaVision is otherwise required to
perform any obligations under the Loan Agreement (including without limitation,
any payment obligation) or any other Loan Document, ChromaVision promptly shall
perform its obligations under the Loan Agreement or applicable Loan Document.

 

(b) In the event any such
amount is not timely paid or such obligation is not timely performed by
ChromaVision and Comerica seeks to enforce Safeguard’s Guaranty, ChromaVision
shall reimburse to Safeguard the aggregate amount of all funds advanced by
Safeguard on account of such obligation, together with interest on such amount
at an annual rate equal to the prime rate (as defined below) plus 4%, from the
date of payment by Safeguard until all such amounts have been repaid by
ChromaVision. For the purpose of this Agreement,
“prime rate” shall mean the variable rate of interest, per

 

 

annum, most recently
announced by Comerica Bank, as its “prime rate,” whether or not such announced
rate is the lowest rate available from such bank.

 

(c)
ChromaVision will not agree to any amendment, modification, waiver or
supplement to the Comerica Loan Agreement or any of the documents, instruments
or agreements executed in connection therewith (collectively, the “Loan Documents”) without the prior
written consent of each of SDI and SSI.

 

2.               Fees. As
consideration for the Guarantee, ChromaVision agrees to pay to Safeguard the
following amounts:

 

(a) $27,500 (.5% of the
committed amount of the Loan) payable concurrently with the execution of
Amendment No. 4; and

 

(b) An amount equal to
1.125% of the daily weighted average of the principal amounts outstanding under
the line of credit during each calendar quarter of the term of the line of
credit.

 

The amount referenced in
clause (b) above will be payable within 30 days after the end of each calendar
quarter with respect to amounts outstanding under the line of credit during the
quarter preceding the payment date. Payments for fractional calendar quarters
at the beginning and end of the term of the line of credit will be prorated
based on the number of days in the fractional quarter included in the term of
the line of credit divided by the total number of days in the calendar quarter.
All payments will be made by wire transfer in immediately available funds to
such account as Safeguard shall designate from time to time.

 

3.               Obligations of
ChromaVision. The obligations of ChromaVision under this Agreement shall be
absolute, unconditional and irrevocable, shall apply to the fullest extent
authorized or permitted by any applicable law, under and shall be paid and
performed strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including, without limitation, the following
circumstances:

 

(a)
Any lack of validity or
enforceability of this Agreement;

 

(b) The existence of any
claim, set-off, defense or other rights which ChromaVision may have at any time
against Safeguard or any other person or entity, whether or not in connection
with this Agreement; or

 

(c) Any other
circumstance or happening whatsoever, whether or not similar to any of the
foregoing.

 

4.               Representations
and Warranties of ChromaVision. ChromaVision hereby represents and warrants
to Safeguard as follows:

 

(a) Organization and
Standing. ChromaVision 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 carry on its business as now being conducted.

 

(b) Authority;
Enforceability. ChromaVision has all requisite power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby.

 

2

 

(c) Execution of
Agreement. This Agreement has been duly executed and delivered by
ChromaVision. The execution, delivery and performance of this Agreement will
not cause any default, breach or violation of any provision of any material
agreement to which ChromaVision is a party or by which any of ChromaVision’s
assets are bound.

 

(d) Validity of
Agreement. This Agreement constitutes the legal, valid and binding
obligation of ChromaVision, enforceable in accordance with its terms.

 

(e) Approvals. No
approval, authorization, consent or other order or action of or filing with any
governmental or administrative entity or any other person is required for the
execution and delivery by ChromaVision of this Agreement or such other
agreements and instruments required hereunder or for the consummation by
ChromaVision of the transactions contemplated hereby or thereby.

 

(f) Violation of Laws
or Agreements. The making and performance of this Agreement and the other
documents, agreements and actions required hereunder or thereunder will not
violate any provisions of any law, federal, state or local rule or regulation,
or any judgment, decree, award or order of any court or other governmental
entity, agency or arbitrator to which ChromaVision is subject.

 

5.               Events of
Default. The occurrence of one or more of the following events shall
constitute an event of default hereunder (each, an “Event of Default”):

 

(a) If ChromaVision fails
to make any payment due to Safeguard under this Agreement, in each case within
five (5) days after demand therefor from Safeguard that the same shall be due
and payable.

 

(b) ChromaVision fails to
observe or perform any material covenant or agreement required to be observed
or performed by it under this Agreement within five (5) days after ChromaVision’s
Chief Executive Officer, Chief Financial Officer and/or Controller knew or
should have known of its failure to so observe or perform.

 

(c) If any representation
or warranty of ChromaVision under this Agreement shall be false or misleading
in any material respect when made.

 

(d) If custody or control
of any substantial part of the property of ChromaVision shall be assumed by any
governmental agency or any court of competent jurisdiction at the instance of any
governmental agency; if any material license or franchise shall be suspended,
revoked or otherwise terminated the effect of which would be to affect
materially and adversely the operations of ChromaVision; or if any governmental
regulatory authority or judicial body shall make any other final non-appealable
determination the effect of which would be to affect materially and adversely
the operations of ChromaVision.

 

(e) If ChromaVision:
becomes insolvent, bankrupt or generally fails to pay its debts as such debts
become due; is adjudicated insolvent or bankrupt; admits in writing its
inability to pay its debts; or shall suffer a custodian, receiver or trustee
for it or substantially all of its property to be appointed and if appointed
without its consent, not be discharged within thirty (30) days; makes an
assignment for the benefit of creditors; or suffers proceedings under any law
related to bankruptcy, insolvency, liquidation or the reorganization,
readjustment or the release of debtors to be instituted against it and if
contested by it not dismissed or stayed within sixty (60) days; if proceedings
under any law related to bankruptcy, insolvency, liquidation, or the
reorganization, readjustment or the release of debtors is instituted or
commenced by ChromaVision; or if any order for relief is entered relating to
any of the foregoing proceedings; if ChromaVision shall call a meeting of its
creditors with a view to arranging a

 

3

 

composition or adjustment
of its debts; or if ChromaVision shall by any act or failure to act indicate
its consent to, approval of or acquiescence in any of the foregoing.

 

6.               Remedies Upon
Default. Upon the occurrence of any Event of Default, the entire amount of
reimbursement due hereunder, plus any and all interest accrued thereon at the
rate set forth in Section 1 hereof, plus all other sums due and payable to
Safeguard hereunder shall, at the option of Safeguard become due and payable
immediately without presentment, demand, notice of nonpayment, protest, notice
of protest, or other notice of dishonor, all of which are hereby expressly
waived by ChromaVision.

 

7.               Remedies
Cumulative, etc.

 

(a) No right or remedy
conferred upon or reserved to Safeguard hereunder or now or hereafter existing
at law or in equity is intended to be exclusive of any other right or remedy,
and each and every such right or remedy shall be cumulative and concurrent, and
in addition to every other such right or remedy, and may be pursued singly,
concurrently, successively or otherwise, at the sole discretion of Safeguard
and shall not be exhausted by any one exercise thereof but may be exercised as
often as occasion therefor shall occur.

 

(b) ChromaVision hereby
waives presentment, demand, notice of nonpayment, protest, notice of protest,
notice of dishonor and any and all other notices in connection with any default
in the payment of, or any enforcement of the payment of, all amounts due under
this Agreement. To the extent permitted by law, ChromaVision waives the right
to any stay of execution and the benefit of all exemption laws now or hereafter
in effect.

 

(c) ChromaVision agrees
that any action or proceeding against it to enforce the Agreement may be
commenced in state or federal court in any county in the Commonwealth of Pennsylvania
in which Safeguard and/or its successors or assigns has an office. ChromaVision
waives personal service of process and agrees that a summons and complaint
commencing an action or proceeding in any such court shall be properly served
and shall confer personal jurisdiction if served by registered or certified
mail in accordance with the notice provisions set forth herein.

 

(d) ChromaVision
acknowledges and agrees that Safeguard shall be subrogated to the rights of
Comerica, including, without limitation, with respect to the security interests
granted to Comerica in connection with the Loan Documents, in the event
Safeguard is required to make any payments on account of the Guaranty.

 

8.               Termination.
This Agreement shall remain in full force and effect and shall terminate on the
later to occur of (i) the date that the Guaranty is terminated or (ii) the date
that all obligations of ChromaVision to Safeguard, and all obligations of
ChromaVision hereunder have been paid in full and satisfied and; in each case,
after the expiration of the period during which any payment by ChromaVision is
or may be subject to rescission, avoidance or refund under the United States Bankruptcy
Code (or any similar state statute).

 

9.               Indemnification.

 

(a) ChromaVision hereby
agrees to indemnify, protect, defend and hold harmless Safeguard and its
officers, directors, employees, successors and assigns, (collectively, the “Indemnified Parties”), from and against
any and all claims, damages, losses, liabilities, costs or expenses of any kind
or nature and from any suits, claims or demands, including reasonable attorney’s
fees incurred in investigating or defending such claim, suffered by any of them
and caused by, relating to, arising out of,

 

4

 

resulting from, or in any
way connected with this Agreement or the transactions contemplated hereby
(unless determined by a final judgment of a court of competent jurisdiction to
have been caused solely by the gross negligence or willful misconduct of the
Indemnified Parties) including without limitation:

 

(i)                                     by
reason of any breach of any representation or warranty of ChromaVision in this
Agreement;

 

(ii)                                  by
reason of, in connection with, or as a consequence of any default by
ChromaVision, in the performance or observance of any term, condition,
covenant, or undertaking contained in this Agreement or any other document to
be observed or performed by ChromaVision;

 

(iii)                               by
reason of or in connection with any litigation or other proceeding in any way restraining,
enjoining, questioning or affecting performance or obligation hereunder; and

 

(iv)                              by
reason of or in connection with its obligations under the Loan Documents and
its payment and reimbursement obligations contemplated by Section 1
hereof.

 

(b) In case any action
shall be brought against Safeguard or any other Indemnified Party in respect to
which indemnity may be sought against ChromaVision, Safeguard or such other
Indemnified Party shall promptly notify ChromaVision and ChromaVision shall
assume the defense thereof, including the employment of counsel selected by
ChromaVision and satisfactory to Safeguard, the payment of all costs and
expenses and the right to negotiate and consent to settlement. The failure of
Safeguard to so notify ChromaVision shall not relieve ChromaVision of any
liability it may have under the foregoing indemnification provisions or from
any liability which it may otherwise have to Safeguard or any of the other
Indemnified Parties except to the extent ChromaVision is materially prejudiced
thereby. Safeguard shall have the right, at its sole option, to employ separate
counsel in any such action and to participate in the defense thereof and retain
its own counsel, but the fees and expenses of such counsel shall be at the expense
of Safeguard unless (i) ChromaVision and Safeguard have agreed in writing to
the retention of such counsel; or (ii) the named parties to any such litigation
or proceeding (including any impleaded parties) include ChromaVision and
Safeguard and representation of both parties by the same counsel would, in the
opinion of counsel to Safeguard, be inappropriate due to actual or potential
conflicts of interests between ChromaVision and Safeguard, ChromaVision shall
not be liable for any settlement of any such action effected without its
consent, which consent shall not be unreasonably withheld, delayed or
conditioned, but if settled with ChromaVision’s consent, or if there shall be a
final judgment for the claimant in any such action, ChromaVision agrees to indemnify
and hold harmless Safeguard from and against any loss or liability by reason of
such settlement or judgment.

 

(c) The provisions of
this Section 9 shall survive the repayment or other satisfaction of the
obligations of ChromaVision hereunder.

 

10.         Notices. All
notices, requests, demands and other communications that this Agreement
requires or permits shall be in writing and shall be sent by overnight courier
providing delivery receipt, or by certified mail, return receipt requested, or
by telecopy or hand delivery to the following addresses:

 

	
  If
  to ChromaVision:

  	
   

  	
  ChromaVision Medical
  Systems, Inc.

  
	
   

  	
   

  	
  33171 Paseo Corvezon

  
	
   

  	
   

  	
  San Juan Capistrano, CA
  92675

  
	
   

  	
   

  	
  Attention: Steve Dixon

  
	
   

  	
   

  	
  Telephone:949.276.0121

  
	
   

  	
   

  	
  Fax:

  	
  949.443.3355 ext 221

  

 

5

 

	
  If to Safeguard:

  	
   

  	
  c/o Safeguard
  Scientifics, Inc.

  
	
   

  	
   

  	
  435 Devon Park Drive

  
	
   

  	
   

  	
  800 The Safeguard
  Building

  
	
   

  	
   

  	
  Wayne, PA 19087

  
	
   

  	
   

  	
  Attention: Steven J. Feder, Senior Vice President and
  General Counsel

  
	
   

  	
   

  	
  Telephone: 610.975.4984

  
	
   

  	
   

  	
  Fax:

  	
  610.482.9105

  

 

All notices, requests,
demands and other communications provided in accordance with the provisions of
this Agreement shall be effective: (i) if sent by overnight courier or
telecopier, when received, (ii) if sent by certified mail, return receipt
requested, the third day after sending, and (iii) if given by hand delivery,
when delivered.

 

11.         Amendments. The
provisions of this Agreement may be amended only by a written agreement signed
by ChromaVision.

 

12.         Governing Law and
Jurisdiction. This Agreement shall be governed by, construed and enforced
in accordance with the laws of the Commonwealth of Pennsylvania, without regard
to the conflicts of laws provisions.

 

13.         Continuing Obligation.
This Agreement is a continuing obligation and shall (a) be binding upon
ChromaVision and its respective its successors and assigns, and (b) inure to
the benefit of and be enforceable by Safeguard against ChromaVision (and its
successors, transferees and assigns); provided, that ChromaVision may
not assign all or any part of their obligations hereunder without the prior
written consent of Safeguard, which consent shall not be unreasonably withheld.

 

14.         Savings Clause.
Whenever possible, each provision of this Agreement shall be interpreted in a
manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the remaining
provisions of this Agreement.

 

15.         Severability. In
case any one or more of the provisions contained in this Agreement shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect the validity
of any other provision of this Agreement, and such provision(s) shall be deemed
modified to the extent necessary to make it enforceable.

 

16.         Jury Trial Waiver.
EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON
OR ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF
ANY OTHER PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR SAFEGUARD’S
ENTERING INTO THIS AGREEMENT.

 

EACH
PARTY ACKNOWLEDGES THAT IT HAS HAD THE ASSISTANCE OF COUNSEL IN THE REVIEW AND
EXECUTION OF THIS AGREEMENT AND FURTHER

 

6

 

ACKNOWLEDGES THAT THE
MEANING AND EFFECT OF THE FOREGOING WAIVER OF JURY TRIAL HAS BEEN FULLY
EXPLAINED BY SUCH COUNSEL.

 

17.         Survival of
Representations and Warranties. All representations and warranties
contained or incorporated herein or made in writing in connection herewith
shall survive the execution and delivery of this Agreement.

 

18.         Counterparts. This
Agreement may be executed in more than one counterpart, including by facsimile signature,
all of which, together, constitute one and the same instrument.

 

19.         No Third-Party Beneficiaries.
This Agreement is intended for the benefit of the parties hereto; there are no
third-party beneficiaries of this Agreement.

 

20.         Entire Agreement.
This Agreement embodies and reflects the entire agreement between the parties
with respect to the matters set forth herein, and there are no other
agreements, understandings, representations
or warranties between the parties other than those set forth in this Agreement.

 

7

 

IN WITNESS WHEREOF, the
undersigned have executed this Agreement on the date first set forth above.

 

	
   

  	
  CHROMAVISION MEDICAL
  SYSTEMS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen T.D. Dixon

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title

  
	
   

  	
   

  
	
   

  	
  SAFEGUARD DELAWARE,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Steven J. Feder

  	
   

  
	
   

  	
   

  	
  Name: Steven J. Feder

  
	
   

  	
   

  	
  Title Vice President

  
	
   

  	
   

  
	
   

  	
  SAFEGUARD SCIENTIFICS
  (DELAWARE), INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Steven J. Feder

  	
   

  
	
   

  	
   

  	
  Name: Steven J. Feder

  
	
   

  	
   

  	
  Title Vice President

  

 

8Exhibit
10.29

 

	
  

  	
  June 13, 2003

  

 

Kenneth D. Bauer, Ph.D.

c/o ChromaVision Medical Systems, Inc.

33171 Paseo Cerveza

San Juan Capistrano, CA 92675-4824

 

Dear Dr. Bauer:

 

ChromaVision Medical Systems, Inc. (the “Company”)
is pleased to enter into this Letter Agreement with you (the “Executive”) which
will address the terms of Executive’s employment with the Company. The Company
considers it essential to the best interests of its stockholders to attract and
foster the continuous employment of key management personnel of the Company and
the arrangements described in this letter are intended to address that goal.

 

1.                                       Duties. Executive will
continue to serve as Vice President and Chief Science Officer and will report
directly to the President & Chief Executive Officer.

 

2.                                       Term. Executive’s
employment relationship with the Company is employment “at will”. As a result,
Executive’s employment may be terminated by the President, Chief Executive
Officer, the Board of Directors or by Executive at any time (subject to the
notice provision below), in each case without any liability or obligation,
except as set forth in this letter. If Executive terminates his employment, he
shall give the Company written notice of such termination not less than sixty
(60) days prior to the effective date of such termination. In light of the
severance benefits provided for in Section 6, the Company will have no
obligation to give Executive prior notice of any such termination by the
Company (whether or not such termination is without cause).

 

3.                                       Compensation.

 

(a)                                  Base Salary. During the term
of Executive’s employment, Executive will receive a base salary of $178,200 per
annum payable in bi-weekly increments, subject to annual salary and performance
review and potential salary increase at the sole discretion of the Company.

 

(b)                                 Bonus. Executive
will be eligible for a performance-based bonus as a participant in the Company’s
Management Incentive Plan (“MIP”) with an annual target payment of 40% of base
salary. Potential exists under the MIP to receive as much as twice this figure based
on achievement of Company and personal objectives. Establishment and revision
of the MIP performance requirements and determination of any bonuses payable
under the MIP will be made at the sole discretion of the Compensation
Committee. Any MIP payment determined by the Compensation Committee to be
payable for 2003 will be prorated based on the number of days of service in
2003.

 

	
  ChromaVision
  Medical Systems, Inc.

  	
  33171
  Paseo Cerveza

  	
  San
  Juan Capistrano, CA 92675-4824

  	
  Telephone
  949.443.3355

  	
  Fax  949.443.3366

  

 

 

4.                                       Option Grants. Executive will
be eligible for additional option grants as may be awarded commencing in 2003
by action of the Board of Directors or a duly authorized committee of the
Board.

 

5.                                       Fringe Benefits.

 

(a)                                  Executive is
eligible for group life and accidental death and dismemberment insurance in an
amount equal to twice the Executive’s annual base salary not to exceed $600,000
(assuming that Executive meets normal insurability requirements.) If insurability
requirements cannot be met, the maximum amount of group life insurance benefit
is $225,000. Executive will be offered the opportunity to purchase voluntary
life insurance for himself and his spouse and children, if applicable; and
otherwise be eligible to participate in all other benefits programs offered
generally by the Company to its other Executives, including medical, dental,
and vision insurance, short and long term disability insurance, 401k Plan,
flexible spending account (Section 125) plan, and employee assistance
program.

 

(b)                                 Executive will
also be entitled to twenty-two (22) days of vacation which will continue to
accrue at the rate of 6.77 hours for each biweekly pay period. Executive may
not accrue more than forty (40) hours above his eligible vacation allowance per
year. All vacation accrued will carry over year to year; however, the point at
which the total number of vacation hours accrued exceeds the maximum allowable,
no additional accruals will be earned until the amount is reduced below the
maximum.

 

6.                                       Severance Payments. Subject to the
provisions of (d) below and the other terms and conditions of this letter, in
the event (i) the Company terminates Executive’s employment without cause, or
(ii) within twelve months after a Change of Control Executive terminates his employment
with good reason (any of the foregoing being a “Severance Termination”), the Company
will provide Executive the following benefits, which shall be the only
severance benefits or other payments with respect to Executive’s employment
with the Company to which Executive shall be entitled. Without limiting the
generality of the foregoing, these benefits are in lieu of all salary (except
for salary for periods ending on the date of termination), accrued vacation and
other rights which Executive may have against the Company or its affiliates.

 

(a)                                  After a Severance
Termination, Executive will receive payment of an amount equal to his annual
base salary in effect at the time of the Severance Termination.

 

(b)                                 Upon a Severance
Termination, Executive will be able to exercise any options which have become
exercisable on or before the termination date until the earlier of (a) the
first anniversary of the date of termination or (b) the expiration date of the
option.

 

(c)                                  Upon a Severance
Termination, Executive will receive continued coverage under the Company’s
medical and health plans for 12 months following the termination date (including
any period as may be required by law), provided that coverage will end if
Executive obtains comparable coverage from a subsequent employer or otherwise
ceases to be eligible for COBRA benefits. In addition, the Company will
reimburse Executive for the premiums for a 12-month period after a Severance
Termination for continuation of any life insurance policy issued for Executive’s
benefit under the Company’s then existing life insurance plan if Executive
elects

 

2

 

to continue the policy, provided that such
reimbursement will end if Executive obtains comparable life insurance from a
subsequent employer. If Executive ceases to be eligible for COBRA because the
Company does not pay the premiums for its existing or group insurance policy or
the Company ceases to have a group healthcare plan, the Company will pay
Executive, for any portion of the 12 month period referred to above during
which Executive’s COBRA eligibility ceases for such reasons, the amount of the
premium it would have had to pay for Executive’s coverage under the then
existing, or if none, the most recently existing, health care insurance policy.
Executive should consult with the Company’s Manager of Human Resources
concerning the process for assuming ownership of and continued premium payments
for any life policy. Executive will be reimbursed in accordance with Company
policies promptly for all of Executive’s reasonable and necessary business
expenses incurred on behalf of the Company prior to Executive’s termination
date.

 

(d)                                 All compensation
and benefits described above in (a) through (c) of this Section 6 will be
contingent upon (i) Executive’s execution of a release of all claims against
the Company substantially in the form of Exhibit A and expiration of the
seven-day revocation period referred to in the release, (ii) Executive’s not
engaging in any Competition (as defined in Section 7 of this Agreement)
with the Company during the period of his employment by the Company or the 12
month period following termination and (iii) Executive’s not engaging in any Solicitation
(as defined in Section 7 of this Agreement) during the period of his
employment by the Company or the 12 month period following termination.

 

(e)                                  The Company will
pay Executive the amount described in (a) above in 12 equal monthly
installments with the first payment being payable on the date when the
seven-day revocation period referred to below with respect to the release
expires. The Company will prepare the final release (which will be
substantially in the form attached as Exhibit A to this letter) and deliver it
to Executive within five business days of Executive’s termination of employment.
Executive will have twenty-one (21) days in which to consider the release although
Executive may execute it sooner. Please note that the release has a revocation
period of seven days.

 

(f)                                    Subject to the
provisions of paragraph (d) above, the Company will pay interest on payments
that are more than ten days past due at the prime rate at the Company’s principal
bank (or, if none, Citibank N.A.) plus two percentage points compounded
monthly. In addition, the Company will pay all reasonable costs and expenses
(including reasonable attorney’s fees and all costs of arbitration or court
proceedings) incurred by Executive to enforce this agreement or any obligation
hereunder but only if Executive is the prevailing party in any such proceeding.
If the Company is the prevailing party, Executive will pay all of the Company’s
reasonable costs and expenses (including reasonable attorneys’ fees and all
costs of arbitration or court proceedings) incurred in connection with any such
proceeding.

 

(g)                                 In this letter,
the term “cause”
means
(a) Executive’s failure to adhere to any written policy of the Company if
Executive has been given a reasonable opportunity to comply with such policy
and cure Executive’s failure to comply (which reasonable opportunity to cure
must be granted for a period of ten days); (b) Executive’s appropriation (or
attempted appropriation) of a business opportunity of the Company, including
attempting to secure or securing any personal profit in connection with any
transaction entered into on behalf of the

 

3

 

Company; (c) Executive’s misappropriation (or
attempted misappropriation) of any of the Company’s funds or property (including
without limitation trade secrets and other intellectual property); or (d)
Executive’s conviction of, or Executive’s entering of a guilty plea or plea of
no contest with respect to, a felony or the equivalent thereof.

 

(h)                                 In this letter,
the term “Change of Control” means (a) the issuance, sale, transfer or
acquisition by the Company of shares of capital stock of the Company (including
a transfer as a result of death, disability, operation of law, or otherwise) in
a single transaction or a group of related transactions, as a result of which
any entity, person, or group (other than Safeguard Scientifics, Inc. and/or its
affiliates) acquires the beneficial ownership of newly issued, outstanding or
treasury shares of the capital stock of the Company having 50% or more of the
combined voting power of the Company’s then outstanding securities entitled to
vote for at least a majority of the authorized number of directors of the
Company or (b) any merger, consolidation, sale of all or substantially all the assets
or other comparable transaction as a result of which all or substantially all
of the assets and business of the Company are acquired directly or indirectly
by another entity (except Safeguard Scientifics, Inc. and/or any of its
affiliates). An “affiliate” of an entity is an entity controlling, controlled
by or under common control with the entity specified, directly or indirectly
through one or more intermediaries. “Group” shall have the same meaning as in section 13(d)
of the Securities Exchange Act of 1934, and “beneficial ownership” shall have
the meaning set forth in Rule 13d-3 of the Securities and Exchange Commission
adopted under the Securities Exchange Act of 1934.

 

(i)                                     Executive will not
be required to mitigate the amount of any payment provided for in this letter
by seeking other employment or otherwise.

 

(j)                                     Executive
acknowledges that the arrangements described in this letter will be the only
obligations of the Company or its affiliates in connection with any
determination by the Company to terminate Executive’s employment with the
Company. This letter does not terminate, alter, or affect Executive’s rights
under any plan or program of the Company in which Executive may participate,
except as explicitly set forth herein. Executive’s participation in such plans
or programs will be governed by the terms of such plans and programs.

 

7.                                       Definitions of
Competition and Solicitation. (a) For purposes of Section 6(d) of this
Agreement, Executive shall be deemed to have engaged in “Competition” with the
Company if, without prior written approval of the Board of Directors of the
Company, Executive directly or indirectly through any other person, firm or
corporation, whether individually or in conjunction with any other person, or
as an employee, agent, consultant, representative, partner or holder of any
interest in any other person, firm, corporation or other association during any
portion of the term of this Agreement or any renewals or extensions hereof or
the period of salary continuation referred to in Section 6(a), competes
with, or encourages or assists others to compete with, or solicit orders or
otherwise participate in business transactions or provide services in
competition with, the business engaged in by the Company at any time during the
term of Executive’s employment (unless such business shall have been abandoned
by the Company). Executive acknowledges that the Company’s products are
marketed throughout the United States, that therefore the Company is engaged in
business in every county and state of the United States and that the foregoing
definition of “competition” includes competition in every county and state of
the United States as well as in foreign countries.

 

4

 

(b)                                 For purposes of Section 6(d)
of this Agreement “Solicitation” shall mean (A) soliciting, enticing or
inducing any Customer (as defined below) to become a client, customer, OEM,
distributor or reseller of any other person, firm or corporation with respect
to, or provide, products or services which are competitive with products or
services then sold or under development by the Company or to cease doing
business with the Company or authorizing or knowingly approving the taking of
such actions by any other person or (B) soliciting, enticing or inducing
directly or indirectly, or hiring any person who presently is or at any time
during the term hereof shall be an employee of the Company to become employed
by any other person, firm or corporation or to leave his or her employment with
the Company or authorizing or approving any such action by any other person or
entity. Providing a reference for an employee of the Company will not, however,
constitute Solicitation if the employee has decided to leave the employ of the
Company, is seeking other employment and requests the reference.

 

(c)                                  For purposes of
this Section 7, “Customer” means any person or entity which at the time of
determination, if made prior to termination of employment, or, after termination
of employment, at the time of such termination, shall be, or shall have been
within two years prior to such time, a client, customer, OEM, distributor or
reseller of the Company or a bona fide prospect to become any of the foregoing.

 

(d)                                 Competition shall
not include investing in the securities of any corporation having securities
listed on a national securities exchange, the Nasdaq National Market or the Nasdaq
SmallCap Market, provided that such investment does not exceed 5% of any class
of securities of any corporation engaged in business in competition with the
Company, and provided that such ownership represents a passive investment and
that neither Executive nor any group of persons including him, in any way,
either directly or indirectly, manages or exercises control of any such corporation,
guarantees any of its financial obligations, otherwise takes any part in its
business, other than exercising his rights as a shareholder, or seeks to do any
of the foregoing.

 

(e)                                  Executive
acknowledges (i) that his experience and capabilities are such that the
conditions in Section 6(d) to his receiving the severance benefits
referred to in Section 6 will not prevent him from obtaining employment or
otherwise earning a living at the same general economic benefit as reasonably
required by him without losing the severance benefits and (ii) that he has,
prior to the execution of this Agreement, reviewed this Agreement with his legal
counsel. Executive acknowledges that the provisions contained in this Section 7
and in Section 6(d) are reasonable and necessary to protect the legitimate
business interests of the Company and that the Company would not have entered
into this Agreement in the absence of such provisions.

 

8.                                       Other Payments in
the Event of Termination of Employment. In the event of termination of Executive’s
employment for any reason, Executive will be entitled to receive upon such
termination payment of all accrued, unpaid salary to the date of termination
and, when bonuses for the year of termination are paid generally to other
employees of the Company, a “pro rata portion” of his bonus for the year of
termination” (as those terms are defined below). “Pro rata portion” means the
number of days in the calendar year of termination up to and including the date
of termination divided by the total number of days in that full calendar year.
The “bonus for the year of termination” means the amount the Executive would
have been likely to earn if

 

5

 

she had been employed for the full year, as determined
in good faith by the Board of Directors of the Company or a committee thereof
at the time that bonuses for the year of termination are paid generally to
other employees of the Company.

 

9.                                       Withholding;
Nature of Obligations. The Company will withhold applicable taxes and
other legally required deductions from all payments to be made hereunder. The Company’s
obligations to make payments under this letter are unfunded and unsecured and
will be paid out of the general assets of the Company.

 

10.                                 Miscellaneous. The agreement
will inure to the benefit of Executive’s personal representatives, executors,
and heirs. In the event Executive dies while any amount payable under this
agreement remains unpaid, all such amounts will be paid to the parties legally
entitled thereto in accordance with the terms and conditions of this letter. No
term or condition set forth in this letter may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Executive and an officer of the Company authorized to
sign such writing by the Board of Directors of the Company or an authorized committee
thereof. This agreement will be construed and enforced in accordance with the
laws of the State of California without regard to the conflicts of laws of any
state. Any controversy or claim arising out of or relating to this agreement,
or the breach thereof, will be settled by arbitration in Los Angeles or Orange
County, California in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association, using one arbitrator,
and judgment upon the award rendered by the arbitrator may be entered in any
court of competent jurisdiction.

 

This letter sets forth the entire agreement between
the Company and Executive relating to the terms of his employment and
supersedes all prior agreements, commitments and understandings with respect to
the terms of Executive’s employment and all such agreements, commitments and
understandings existing on the date hereof, except that this letter does not
supersede any agreement between the Company and Executive relating to
confidentiality or ownership or assignment of rights to intellectual property.

 

If this letter sets forth our agreement on the
subject matter hereof, kindly sign and return to us the enclosed copy of this
letter which will then constitute our legally binding agreement on this
subject.

 

	
   

  	
  Sincerely,

  
	
   

  	
  CHROMAVISION MEDICAL SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  /s/ Carl W. Apfelbach

  	
   

  
	
   

  	
  By: Carl W. Apfelbach

  
	
   

  	
  Title:  President,
  Chief Executive Officer

  

 

I agree to the terms and conditions of this letter

 

	
  /s/ Kenneth D. Bauer

  	
   

  
	
  KENNETH D. BAUER, PH.D.

  
	
   

  
	
  Dated: June 13, 2003

  

 

6

 

EXHIBIT A

 

GENERAL RELEASE AND
AGREEMENT

 

NOTICE:

 

Various state and federal laws, including the Civil Rights
Act of 1964 and 1991 and the Age Discrimination in Employment Act, prohibit
employment discrimination based on age, sex, race, color, national origin,
religion, disability and veteran status. These laws are enforced through the
Equal Employment Opportunity Commission (EEOC), the Department of Labor and
state civil rights agencies.

 

If you sign this General Release and Agreement and accept
the agreed-upon special severance allowance and other termination benefits
described in the letter addressed to you which accompanies this release, you
are giving up your right to file a lawsuit pursuant to the aforementioned
federal, state and local laws in local, state or federal courts against
ChromaVision Medical Systems, Inc. and its affiliates, as defined in the
General Release and Agreement (the “Releasees,”) with respect to any claims
relating to your employment or termination therefrom which arise up to the date
this Agreement is executed.

 

By signing this General Release and Agreement you waive your
right to recover any damages or other relief in any claim or suit brought by or
though the Equal Employment Opportunity Commission or any other state or local
agency on your behalf under and federal or state discrimination law, except
where prohibited by law. You agree to release and discharge each Releasee not
only from any and all claims which you could make on your own behalf but also
specifically waive any right to become, and promise not to become, a member of
any class in any proceeding or case in which a claim or claims against a
Releasee may arise, in whole or in part, from any event which occurred as of
the date of this Agreement.  You agree to
pay for any legal fees or cost incurred by any Releasee as a result of any
breach of the promises in this paragraph. The parties agree that if you, by no
action of your own, become a mandatory member of any class from which you
cannot, by operation of law or order of court, opt out, you shall not be
required to pay for any legal fees or costs incurred by a Releasee as a result.

 

We encourage you to discuss the following release language
with an attorney prior to executing this Agreement. In any event, you should
thoroughly review and understand the effect of the release before acting on
it.  Therefore, please take this release
home and consider it for up to twenty-one (21) days before you decide to sign
it.

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