EXHIBIT 10.4
SAFEGUARD SCIENTIFICS, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
Amended and Restated Effective January 1, 2009

 

 

--------------------------------------------------------------------------------

 

SAFEGUARD SCIENTIFICS, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
TABLE OF CONTENTS

         
ARTICLE I ESTABLISHMENT OF THE PLAN
    1  
ARTICLE II DEFINITIONS
    1  
ARTICLE III ADMINISTRATION OF THE PLAN
    3  
ARTICLE IV PARTICIPATION
    4  
ARTICLE V PARTICIPANT ACCOUNTS
    5  
ARTICLE VI BENEFITS TO PARTICIPANTS
    5  
ARTICLE VII CLAIMS PROCEDURES
    7  
ARTICLE VIII MISCELLANEOUS
    9  

 

 

--------------------------------------------------------------------------------

 

SAFEGUARD SCIENTIFICS, INC.
EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE I
Establishment of the Plan
Safeguard Scientifics, Inc. (the “Company”) established the Safeguard
Scientifics, Inc. Executive Deferred Compensation Plan (the “Plan”) to provide
key management or other highly compensated employees of the Company with
supplemental retirement benefits. The Company amended and restated the Plan,
effective October 25, 2005 (“2005 Plan”), to incorporate the requirements of
Section 409A of the Internal Revenue Code of 1986, as amended and the
regulations promulgated thereunder (“Code”). The Company now desires to amend
and restate the 2005 Plan, effective January 1, 2009, to comply with the
applicable requirements of Section 409A of the Code and the final regulations
thereunder issued on April 17, 2007 and to make other appropriate changes.
The Company intends that the Plan shall at all times be maintained on an
unfunded basis for federal income tax purposes under the Code, and administered
as a non-qualified, “top hat” plan exempt from the substantive requirements of
the Employee Retirement Income Security of 1974, as amended (“ERISA”).
Amounts that were, pursuant to the terms of the Plan, earned and vested as of
December 31, 2004 are intended to be “grandfathered” for purposes of
Section 409A of the Code (“Grandfathered Amounts”). Distribution of the
Grandfathered Amounts shall be governed by the Plan as in effect on October 3,
2004, consistent with the “grandfather” provisions of Section 409A of the Code,
as set forth in Exhibit A hereto.
ARTICLE II
Definitions
For ease of reference, the following definitions will be used in the Plan:
2.1. Account. “Account” means the account maintained on the books of the Company
used solely to calculate the amounts payable to each Participant under this Plan
and shall not constitute a separate fund of assets.
2.2. Base Salary. “Base Salary” means the annual rate of base salary paid to
each Participant as of any date of reference before any reduction for amounts
deferred by the Participant pursuant to a Code Section 401(k) plan or Code
Section 125 plan, or pursuant to this Plan or any other non-qualified plan that
permits voluntary deferrals of compensation.

 

1

--------------------------------------------------------------------------------

 

2.3. Beneficiary(ies). “Beneficiary” or “Beneficiaries” means the person or
persons designated by the Participant to receive distributions under this Plan
in the event of the Participant’s death, as provided in Section 8.3.
2.4. Board or Board of Directors. “Board” or “Board of Directors” means the
Board of Directors of Safeguard Scientifics, Inc. (or any successor entity).
2.5. [intentionally omitted]
2.6. Committee. “Committee” means at least three individuals appointed by the
Board to administer the Plan pursuant to Article III and which also may act for
the Company or the Board in making decisions and performing specified duties
under the Plan.
2.7. Company. “Company” means Safeguard Scientifics, Inc. or any successor
entity.
2.8. Compensation. “Compensation” means an Eligible Employee’s earned income,
wages, salaries and fees for professional services and other amounts received,
without regard to whether or not an amount is paid in cash, for personal
services actually rendered in the course of employment with the Company as
defined in Section 415 of the Code.
2.9. Effective Date. “Effective Date” means the effective date of the Plan. The
original Effective Date was January 1, 2003. The Effective Date of the plan as
amended and restated herein is January 1, 2009.
2.10. Eligible Employee. “Eligible Employee” means, as designated by the
Company, in its sole discretion, (i) a managing director, a vice president,
director or higher level employee of the Company, or (ii) any employee who is a
member of a group of key management or other highly compensated employees of the
Company within the meaning of Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA.
The Company may determine the eligibility of similarly situated employees.
2.11. Employment Commencement Date. “Employment Commencement Date” means the
first day on which an individual became an employee of the Company.
2.12. Key Employee. “Key Employee” means a “key employee” as determined by the
Committee or its delegate as of the specified identification date for purposes
of Section 409A of the Code. The determination of Key Employees, including the
number and identity of persons considered Key Employees and the identification
date, shall be made by the Committee or its delegate each year in accordance
with Section 416(i) of the Code, the “specified employee” requirements
Section 409A of the Code, and applicable regulations.
2.13. Participant. “Participant” means any Eligible Employee. An individual
shall remain a Participant until that individual has received full distribution
of any amounts credited to the Participant’s Account.
2.14. Plan. “Plan” means this Safeguard Scientifics, Inc. Executive Deferred
Compensation Plan as described herein and as it may be amended from time to
time.

 

2

--------------------------------------------------------------------------------

 

2.15. Plan Year. “Plan Year” means the 12-month period beginning on each January
1 and ending on the following December 31.
2.16. Separation Date. “Separation Date” means the date on which a Participant
incurs a Separation from Service.
2.17. Separation from Service. “Separation from Service” means a Participant’s
“separation from service” with the Company within the meaning of such term under
Section 409A of the Code and the regulations issued thereunder.
2.18. Year of Service. A “Year of Service” means a Plan Year in which a
Participant has attained 1,000 hours of service; provided, however, that (a) the
Committee shall determine in its sole discretion whether a Year of Service has
been attained; and (b) no more than oneYear of Service shall be credited for any
Plan Year; and (c) each Year of Service shall be credited as of the last day of
the calendar quarter during the relevant Plan Year in which the Participant
first attains 1,000 hours of service for that Plan Year.
2.19. Valuation Funds. “Valuation Funds” means one or more of the independently
established funds or indices that are identified by the Committee. These
Valuation Funds are used solely to calculate the earnings (losses) that are
credited to each Participant’s Account in accordance with Article V below and do
not represent any beneficial interest on the part of the Participant in any
asset or other property of the Company. The determination of the increase or
decrease in the performance of each Valuation Fund shall be made by the
Committee in its reasonable discretion. Valuation Funds may be replaced, new
funds may be added, or both, from time to time at the discretion of the
Committee.
ARTICLE III
Administration of the Plan
3.1. Committee. The Plan shall be administered by the Committee appointed by the
Board of Directors. The Board shall designate one of the members of the
Committee to serve as Chairperson thereof. The Board shall also designate a
person to serve as Secretary of the Committee, which person may be, but need not
be, a member of the Committee. A member of the Committee may resign by
delivering a written notice of resignation to the Board. The Board, in its sole
discretion, may remove any member of the Committee. Vacancies in the membership
of the Committee shall be filled promptly by the Board. In the absence of any
appointment to the contrary, the Compensation Committee of the Company’s Board
of Directors shall be deemed to be the Committee for purposes hereof.
3.2. Action by the Committee. A majority of the members of the Committee shall
constitute a quorum for the transaction of business at a meeting of the
Committee and the Committee may delegate any of its functions hereunder. Any
action of the Committee may be taken upon the affirmative vote of a majority of
the members of the Committee at a meeting, or at the direction of the
Chairperson, without a meeting by unanimous consent of the Committee or by mail,
telegraph, telephone or electronic communication device; provided that all of
the members of the Committee are informed of their right to vote on the matter
before the Committee and of the outcome of the vote thereon.

 

3

--------------------------------------------------------------------------------

 

3.3. Committee Authority and Duties. The Committee shall have the full power,
authority and discretion to construe, interpret and administer the Plan, to
correct deficiencies therein, to supply omissions, and to make factual
determinations. All decisions, actions and interpretations of the Committee
shall be final, binding and conclusive upon all persons having any interest in
the Plan.
ARTICLE IV
Participation
4.1. Eligible Employees. Subject to Section 4.3, each Eligible Employee who was
a Participant in the Plan as of the last day of the immediately preceding Plan
Year shall continue as a Participant in the next Plan Year. Subject to the
requirements of Section 409A of the Code, the Committee may, in its discretion,
permit an employee who first becomes an Eligible Employee after the beginning of
a Plan Year, to participate in the Plan for that Plan Year. Participation under
the Plan shall be conditioned upon the Participant’s acknowledgement in writing
or by receipt of benefits under the Plan that all decisions and determinations
of the Committee shall be final and binding on the Participant and his or her
Beneficiaries.
4.2 Company Contribution. The Company, in its sole discretion, may determine to
credit a Participant’s Account with positive amounts for any Plan Year on such
terms as the Company shall determine. Absent action by the Company to the
contrary, the Account shall consist of:
(a) a fully vested amount equal to a stated percentage (which may vary from year
to year) of the Participant’s annual Compensation for the Plan Year not in
excess of the limit imposed by Section 401(a)(17) of the Code; and
(b) an amount equal to a stated percentage (which may vary from year to year) of
the Participant’s Base Salary for the Plan Year not in excess of the limit
imposed by Section 401(a)(17) of the Code, subject to a vesting schedule
pursuant to which such amount shall vest 20% in each Plan Year in which the
Participant attains a Year of Service.
4.3 Change of Status. The Committee, in its sole discretion, may determine that
a Participant no longer qualifies as a member of the group of key management or
other highly compensated employees under ERISA, and to take such further action
in light of such determination as the Committee determines appropriate in its
sole discretion.

 

4

--------------------------------------------------------------------------------

 

ARTICLE V
Participant Accounts
5.1. Establishment of Account. The Company shall establish and maintain a
separate Account with respect to each Participant. The Participant’s Account
shall be reduced by the amount of payments made by the Company to the
Participant or the Participant’s Beneficiary pursuant to this Plan.
5.2. Earnings (or Losses) on Accounts. At such time as the Committee designates
Valuation Funds for the deemed investment of each Participant’s Account balance,
each Participant’s Account shall be credited semi-annually with all deemed
earnings (or losses) generated by the Valuation Funds, as if the designated
balance of the Account had been invested in the applicable Valuation Fund.
5.3. Valuation of Accounts. The value of a Participant’s Account as of any date
shall equal the amounts theretofore credited to such Account, including any
earnings or losses deemed to be earned on such Account in accordance with
Section 5.2, less the amounts theretofore deducted from such Account.
5.4. Statement of Accounts. The Committee shall provide to each Participant, not
less frequently than semi-annually, a statement in such form as the Committee
deems desirable setting forth the balance standing to the credit of each
Participant’s Account.
5.5. Distributions from Accounts. Any distribution made to or on behalf of a
Participant from his or her Account in an amount which is less than the entire
balance of any such Account shall be made pro rata from each of the Valuation
Funds to which such Account is then allocated on the day before distribution
under the Plan.
5.6. Vesting. A Participant’s Account balances shall be vested in accordance
with Section 4.2.
ARTICLE VI
Benefits to Participants
6.1. Benefits from an Account. Benefits from a Participant’s Account shall be
paid to the Participant as follows:
(a) Subject to Section 6.7, upon a Participant’s Separation from Service, the
Participant’s vested Account shall be distributed in a lump sum within 30
business days following the Participant’s Separation Date. Any lump-sum benefit
payable in accordance with this Section shall be in an amount equal to the value
of such vested Account as of the business day the Valuation Funds are deemed to
be liquidated to make the payment. Any unvested portion of the Participant’s
Account shall be forfeited.

 

5

--------------------------------------------------------------------------------

 

(b) Upon the death of a Participant prior to the commencement of benefits under
this Plan from any particular Account, the Participant’s designated Beneficiary
shall be treated as a Participant under Section 6.1(a) with the distribution to
be made to such Beneficiary.
6.2. [intentionally omitted]
6.3. Unforeseeable Financial Emergency. In the event that the Committee, upon
written request of a Participant, determines that the Participant has suffered
an unforeseeable emergency, the Company shall pay to the Participant from the
Participant’s vested Account, as soon as practicable following such
determination, an amount necessary to meet the emergency (the “Emergency
Benefit”), after deduction of any and all taxes as may be required pursuant to
Section 6.5. For purposes of this Plan, an unforeseeable emergency is an
unexpected need for cash arising from a severe financial hardship which has
resulted from an illness or accident of the Participant, the Participant’s
spouse, the Participant’s Beneficiary, or a dependent (as defined in Section
152(a) of the Code without regard to Section 152(b)(1), (b)(2), or (d)(1)(B)) of
the Participant, loss of the Participant’s property due to casualty (including
the need to rebuild a home following damage to the home not otherwise covered by
insurance), or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the Participant’s control. Cash needs
arising from foreseeable events such as the purchase of a house or education
expenses for children shall not be considered to be the result of an
unforeseeable financial emergency. For purposes of an Emergency Benefit, only
that portion of any vested Account that is necessary to eliminate the financial
hardship plus amounts necessary to pay taxes reasonably anticipated as a result
of the distribution, after taking into account the extent to which such
financial hardship is or may be relieved through reimbursement or compensation
by insurance or by liquidation of the Participant’s assets (to the extent the
liquidation of such assets would not itself cause severe financial hardship) may
be distributed to the Participant. With respect to that portion of any vested
Account which is distributed to a Participant as an Emergency Benefit, in
accordance with this Article VI, no further benefit shall be payable to the
Participant under this Plan. It is intended that the Committee’s determination
as to whether a Participant has suffered an “unforeseeable emergency” shall be
made consistent with the requirements under Section 409A of the Code.
6.4. Withholding Taxes. The Company may make such provisions and take such
action as it may deem necessary or appropriate for the withholding of any taxes
which the Company is required by any law or regulation of any governmental
authority, whether federal, state or local, to withhold in connection with any
benefits under the Plan, including, but not limited to, the withholding of
appropriate sums from any amount otherwise payable to the Participant (or his or
her Beneficiary). Each Participant, however, shall be responsible for the
payment of all individual tax liabilities relating to any such benefits.
6.5. Effect of Payment. The full payment of the applicable benefit under this
Article VI shall completely discharge all obligations on the part of the Company
to the Participant (and the Participant’s Beneficiary) with respect to the
operation of this Plan, and the Participant’s (and Participant’s Beneficiary’s)
rights under this Plan shall terminate.

 

6

--------------------------------------------------------------------------------

 

6.6. Key Employees. Notwithstanding any provision of the Plan to the contrary,
any amount payable under the Plan with respect to the portion of the
Participant’s Account attributable to non-Grandfathered Amounts, to a
Participant who is determined to be a Key Employee shall be postponed to a date
that is not less than six months following the Participant’s Separation from
Service with the Company. If distributions are delayed pursuant to this
Section 6.6, the accumulated amounts withheld on account of Section 409A of the
Code shall be paid within 30 days after the end of the six-month period. If the
Participant dies during such six-month period, the amounts withheld on account
of Section 409A of the Code shall be paid to the Participant’s Beneficiary
within 90 days of the Participant’s death.
6.7. Permissible Distribution Event. Notwithstanding any provision of the Plan
to the contrary, distributions from the Plan shall only be made upon an event
and in a manner permitted by Section 409A of the Code and the regulations
thereunder.
6.8. Grandfathered Amounts. Notwithstanding anything in the Plan to the
contrary, the payment of benefits with respect to all Grandfathered Amounts
shall be determined pursuant to Exhibit A.
ARTICLE VII
Claims Procedures
7.1. Claim. A Participant who believes that he or she is being denied a benefit
to which he or she is entitled under the Plan may file a written request for
such benefit with the Committee, setting forth the claim.
7.2. Claim Decision. Upon receipt of a claim, the Committee shall advise the
Participant that a reply will be forthcoming within 90 days and shall, in fact,
deliver such reply within such period. The Committee may, however, extend the
reply period for an additional 90 days for reasonable cause. If the claim is
denied in whole or in part, the Participant shall be provided a written summary
of the Committee’s decision, using language calculated to be understood by the
Participant, setting forth:
(a) the specific reason or reasons for such denial;
(b) the specific reference to relevant provisions of this Plan on which such
denial is based;
(c) a description of any additional material or information necessary for the
Participant to perfect his or her claim and an explanation why such material or
such information is necessary;
(d) appropriate information as to the steps to be taken if the Participant
wishes to submit the claim for review;

 

7

--------------------------------------------------------------------------------

 

(e) the time limits for requesting a review under Section 7.3 and for review
under Section 7.4 hereof; and
(f) the Participant’s right to bring an action for benefits under Section 502 of
ERISA upon an adverse determination on review.
7.3. Request for Review. Within 60 days after the receipt by the Participant of
the written summary described above, the Participant may request in writing that
the Committee re-review the determination of the Committee. The Participant or
his or her duly authorized representative may, but need not, review the relevant
documents and submit issues and comment in writing for consideration by the
Committee. If the Participant does not request a review of the initial
determination within such 60-day period, the Participant shall be barred and
stopped from challenging the determination.
7.4. Review of Decision. Within 30 days of the Committee’s receipt of the
Participant’s request for re-review, the Committee shall schedule a meeting to
review the Participant’s request. Within 60 days of the Committee’s receipt of
such request, the Committee shall, after considering all materials presented by
the Participant, render a decision in writing. The Committee may, however,
extend the reply period for an additional 60 days for reasonable cause. If the
claim is again denied in whole or in part, the Participant shall be provided a
written summary of the Committee’s decisino, using language calculated to be
understood by the Participant, setting forth:
(a) the specific reason or reasons for such denial;
(b) the specific reference to relevant provisions of this Plan on which such
denial is based;
(c) that the claimant is entitled to receive, upon request and free of charge,
and have reasonable access to and copies of, all documents, records and other
information relevant to the claim for benefits; and
(d) the Participant’s right to bring an action for benefits under Section 502 of
ERISA upon an adverse determination or review.

 

8

--------------------------------------------------------------------------------

 

ARTICLE VIII
Miscellaneous
8.1. Protective Provisions. Each Participant and Beneficiary shall cooperate
with the Committee by furnishing any and all information requested by the
Committee in order to facilitate the payment of benefits hereunder. If a
Participant or Beneficiary refuses to cooperate with the Committee, the Company
shall have no further obligation to the Participant or Beneficiary under the
Plan, other than payment of the then-current balance of the Participant’s
Account in accordance with prior elections.
8.2. Inability to Locate Participant or Beneficiary. In the event that the
Committee is unable to locate a Participant or Beneficiary within two years
following the date the Participant was to commence receiving payment, the entire
amounts allocated to the Participant’s Account shall be forfeited. If, after
such forfeiture, the Participant or Beneficiary later claims such benefit, such
benefit shall be reinstated without interest or earnings from the date payment
was to commence pursuant to Article VI.
8.3. Designation of Beneficiary. Each Participant may designate in writing a
Beneficiary or Beneficiaries (which Beneficiary may be an entity other than a
natural person) to receive any payments which may be made following the
Participant’s death. No Beneficiary designation shall become effective until it
is in writing and it is filed with the Committee. Such designation may be
changed or canceled by the Participant at any time without the consent of any
such Beneficiary. Any such designation, change or cancellation must be made in a
form approved by the Committee and shall not be effective until received by the
Committee, or its designee. A Beneficiary designation under the Plan may be
separate from all other retirement-type plans sponsored by the Company. If a
Participant designates more than one Beneficiary, the interests of such
Beneficiaries shall be paid in equal shares, unless the Participant has
specifically designated otherwise. If there is no Beneficiary designation in
effect, or if there is no surviving designated Beneficiary, then the
Participant’s surviving spouse shall be the Beneficiary. If there is no
surviving spouse to receive any benefits payable in accordance with the
preceding sentence, the duly appointed and currently acting personal
representative of the participant’s estate (which shall include either the
Participant’s probate estate or living trust) shall be the Beneficiary. In any
case where there is no such personal representative of the Participant’s estate
duly appointed and acting in that capacity within 90 days after the
Participant’s death (or such extended period as the Committee determines is
reasonably necessary to allow such personal representative to be appointed, but
not to exceed 180 days after the Participant’s death), then Beneficiary shall
mean the person or persons who can verify by affidavit or court order to the
satisfaction of the Committee that they are legally entitled to receive the
benefits specified hereunder. In the event any amount is payable under the Plan
to a minor, payment shall not be made to the minor, but instead be paid (i) to
that person’s living parent(s) to act as custodian, (ii) if that person’s
parents are then divorced, and one parent is the sole custodial parent, to such
custodial parent, or (iii) if no parent of that person is then living, to a
custodian selected by the Committee to hold the funds for the minor under the
Uniform Transfers or Gifts to Minors Act in effect in the jurisdiction in which
the minor resides. If no parent is living and the Committee decides not to
select another custodian to hold the funds for the minor, then payment shall be
made to the duly appointed and currently acting guardian of the estate for the
minor or, if no guardian of the estate for the minor is duly appointed and
currently acting within 60 days after the date the amount becomes payable,
payment shall be deposited with the court having jurisdiction over the estate of
the minor.

 

9

--------------------------------------------------------------------------------

 

8.4. No Contract of Employment. Neither the establishment of the Plan, nor any
modification thereof, nor the creation of any fund, trust or account, nor the
payment of any benefits shall be construed as giving any Participant or any
person whosoever, the right to be retained in the service of the Company, and
all Participants and other employees shall remain subject to discharge to the
same extent as if the Plan had never been adopted.
8.5. No Limitation on Company Actions. Nothing contained in the Plan shall be
construed to prevent the Company from taking any action which is deemed by it to
be appropriate or in its best interest. No Participant, Beneficiary, or other
person shall have any claim against the Company as a result of such action.
8.6. Obligations to Company. If a Participant becomes entitled to a distribution
of benefits under the Plan, and if at such time the Participant has outstanding
any debt, obligation, or other liability representing an amount owing to the
Company, then the Company may offset such amount owed to it against the amount
of benefits otherwise distributable. Such determination shall be made by the
Committee.
8.7. Nonalienation of Benefits. The Company shall pay all amounts payable
hereunder only to the person or persons designated by the Plan and not to any
other person or corporation. No part of a Participant’s Account shall be liable
for the debts, contracts, or engagements of any Participant, his or her
Beneficiary, or successors in interest, nor shall a Participant’s Account be
subject to execution by levy, attachment, or garnishment or by any other legal
or equitable proceeding, nor shall any such person have any right to alienate,
anticipate, commute, pledge, encumber, or assign any benefits or payments
hereunder in any manner whatsoever. If any Participant, Beneficiary or successor
in interest is adjudicated bankrupt or purports to anticipate, alienate, sell,
transfer, assign, pledge, encumber or charge any distribution or payment from
the Plan, voluntarily or involuntarily, the Committee, in its discretion, may
cancel such distribution or payment (or any part thereof) to or for the benefit
of such Participant, Beneficiary or successor in interest in such mariner as the
Committee shall direct. The Company’s obligations under this Plan are not
assignable or transferable except to (a) any corporation or partnership which
acquires all or substantially all of the Company’s assets or (b) any corporation
or partnership into which the Company may be merged or consolidated. The
provisions of the Plan shall inure to the benefit of each Participant and the
Participant’s Beneficiaries, heirs, executors, administrators or successors in
interest.
8.8. Unfunded Status of Plan. The Plan is intended to constitute an “unfunded”
deferred compensation plan for Participants. Nothing contained in the Plan, and
no action taken pursuant to the Plan, shall create or be construed to create a
trust of any kind. The Company shall reflect in Accounts on its books the
Participants’ interests hereunder, but no Participant or any other person shall
under any circumstances acquire any property interest in any specific assets of
the Company. Nothing contained in this Plan and no action taken pursuant hereto
shall create or be construed to create a fiduciary relationship between the
Company and any Participant or other person. A Participant’s right to receive
payments under the Plan shall be no greater than the right of an unsecured
general creditor of the Company. Except to the extent that the Board determines
that a “rabbi” trust may be established in connection with the Plan, all
payments shall be made from the general funds of the Company, and no special or
separate fund shall be established and no segregation of assets shall be made to
assure payment.
8.9. Severability of Provisions. If any provision of this Plan shall be held
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provisions hereof, and this Plan shall be construed and enforced as if
such provisions had not been included.

 

10

--------------------------------------------------------------------------------

 

8.10. Governing Law. This Plan shall be construed in accordance with and
governed by the laws of the Commonwealth of Pennsylvania to the extent not
superseded by federal law, without reference to the principles of conflict of
laws.
8.11. Headings and Captions. The headings and captions herein are provided for
reference and convenience only, shall not be considered part of the Plan, and
shall not be employed in the construction of the Plan.
8.12. Gender, Singular and Plural. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, or neuter, as the identity of the
person or persons may require. As the context may require, the singular may read
as the plural and the plural as the singular.
8.13. Notice. Any notice or filing required or permitted to be given to the
Committee under the Plan shall be sufficient if in writing and hand delivered,
or sent by registered or certified mail, to the Company’s Chief Financial
Officer, or to such other person or entity as the Committee may designate from
time to time. Such notice shall be deemed given as to the date of delivery, or,
if delivery is made by mail, as of the date shown on the postmark on the receipt
for registration or certification.
8.14. Amendment and Termination. The Plan may be amended, suspended, or
terminated at any time by the Board as may be necessary to avoid current
taxation of amounts deferred under the Plan or to comply with applicable law;
provided, however, that no such amendment, suspension or termination shall
reduce or in any manner adversely effect the rights of any Participant with
respect to benefits that are payable or may become payable under the Plan. In
addition, the Board may, in its sole discretion, amend the Plan to comply with
applicable law without the consent of any Participant and without regard to any
effect such amendments may have on any participant.
8.15. Section 409A. The Plan is intended to comply with the requirements of
Section 409A of the Code, and shall in all respects be administered in
accordance with Section 409A. Notwithstanding anything in the Plan to the
contrary, distributions may only be made under the Plan upon an event and in a
manner permitted by Section 409A of the Code, and all payments to be made upon a
termination of employment under this Plan may only be made upon a “separation
from service” as defined under Section 409A of the Code. In accordance with
Section 1.409A-3(d) of the Treasury Regulations, a distribution under this Plan
will be treated as made on the designated payment date if the payment is made
(i) at such date or a later date within the same calendar year, or if later, by
the 15th day of the third month following the date designated in the Plan, or
(ii) at a date no earlier than 30 days before the designated payment date.
Except as permitted by Section 409A of the Code, in no event shall a
Participant, directly or indirectly, designate the calendar year of payment.

 

11

--------------------------------------------------------------------------------

 

Exhibit A
Grandfathered Provisions
The terms of the Plan applicable to re-deferrals and distributions of
Grandfathered Amounts are set forth on this Exhibit A. With respect to the
Grandfathered Amounts, the Plan shall be operated in accordance with the terms
of the Plan in existence on October 3, 2004, as set forth in this Exhibit A, in
accordance with the “grandfather” provisions of Section 409A of the Code.
ARTICLE I
Definitions
1.1. Termination Date. “Termination Date” means the date of termination of a
Participant’s active employment with the Company without regard to any
compensation continuation arrangement.
1.2. Change of Control. “Change of Control” means (a) the stockholders of the
Company approve (or, if stockholder approval is not required, the Board
approves) an agreement providing for (i) the merger or consolidation of the
Company with another corporation where the stockholders of the Company,
immediately prior to the merger or consolidation, will not beneficially own,
immediately after the merger or consolidation, shares of the Company entitling
such stockholders to more than 50% of all votes to which all stockholders of the
surviving corporation would be entitled in the election of directors (without
consideration of the rights of any class of stock to elect directors by a
separate class vote), (b) the sale or other disposition of all or substantially
all of the assets of the Company, (c) a liquidation or dissolution of the
Company, (d) the acquisition by any “person” (as such term is used in Sections
13(d) and 14(d) of the Securities and Exchange Act of 1934) other than Safeguard
Scientifics, Inc. or any of its subsidiaries or affiliates, of the “beneficial
ownership” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing a majority of the voting
power of the then outstanding securities of the Company except where the
acquisition is approved by the Board, or (e) any person has commenced a tender
offer or exchange offer for a majority of the voting power of the then
outstanding shares of the Company.
ARTICLE II

Benefits to Participants
2.1. Benefits from an Account. For Grandfathered Amounts, benefits from a
Participant’s Account shall be paid to the Participant as follows:
(a) The Participant’s Account shall be distributed in a lump sum within 30
business days following the Participant’s Termination Date. Any lump-sum benefit
payable in accordance with this Section shall be in an amount equal to the value
of such Account as of the business day the Valuation Funds are deemed to be
liquidated to make the payment.

 

1

--------------------------------------------------------------------------------

 

(b) Upon the death of a Participant prior to the commencement of benefits under
this Plan from his or her Account, the Participant’s designated Beneficiary
shall be treated as a Participant under Section 6.1(a), with the distribution to
be made to such Beneficiary.
2.2. Change of Control. For Grandfathered Amounts, in the event of a Change of
Control, within 60 days thereafter, a Participant may elect to receive the full
value then credited to the Participant’s Account. If a Participant elects to be
paid a benefit under this Section 2.2, the lump sum payment due to the
Participant (or Beneficiary, in the event of the Participant’s death) under this
Section shall be made no later than the end of the calendar year in which the
Change of Control occurred.
2.3. Withdrawal of Participation. The Participant may elect to cause all or a
portion of the Participant’s Account balances attributable to Grandfathered
Amounts to be distributed in accordance with Article II of Exhibit A as if the
Participant had terminated service with the Company as of the time of such
election, except that the amount distributed to the Participant shall be reduced
by a penalty of 10%, but not in excess of $50,000.
2.4. Unforeseeable Financial Emergency. In the event that the Committee, upon
written request of a Participant, determines that the Participant has suffered
an unforeseeable financial emergency, the Company shall pay to the Participant
from the Participant’s Account, as soon as practicable following such
determination, an amount necessary to meet the emergency (the “Emergency
Benefit”), after deduction of any and all taxes as may be required pursuant to
Section 6.4 of the Plan. For purposes of this Plan, an unforeseeable financial
emergency is an unexpected need for cash arising from an illness, casualty loss,
sudden financial reversal, or other such unforeseeable occurrence. Cash needs
arising from foreseeable events such as the purchase of a house or education
expenses for children shall not be considered to be the result of an
unforeseeable financial emergency. With respect to that portion of any Account
which is distributed to a Participant as an Emergency Benefit, in accordance
with this Article, no further benefit shall be payable to the Participant under
this Plan. It is intended that the Committee’s determination as to whether a
Participant has suffered an “unforeseeable financial emergency” shall be made
consistent with the requirements under Section 457(d) of the Code.

 

2