Document:

exv10w3

 

EXHIBIT 10.3

Safeguard Scientifics, Inc., a Pennsylvania corporation (the “Company”), hereby grants to the
grantee named below (“Grantee”) an option (this “Option”) to purchase the total number of shares
shown below of Common Stock of the Company (the “Shares”) at the exercise price per share set forth
below, as an inducement to accept employment with the Company pursuant to that certain employment
agreement between the Company and Grantee dated September 7, 2005 (the “Employment Agreement”),
subject to all of the terms and conditions on the subsequent pages of this Stock Option Grant
Certificate. Although the grant is not made pursuant to the 2004 Equity Compensation Plan (the
“Plan”), except as otherwise provided herein, the grant shall be subject to the rules of the Plan
as if it were a grant made pursuant to the Plan. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings ascribed to them in the Plan. The terms and conditions
set forth on subsequent pages hereto and the terms and conditions of the Plan are incorporated
herein by reference. This Stock Option Grant Certificate shall constitute the “Agreement” for this
Option as such term is used in the Plan.

	 	 	 	 	 
	Grant Date:

	 	September 7, 2005

	 
	 	 	 	 
	Type of Option:

	 	Nonqualified Option

	 
	 	 	 	 
	Shares Subject to Option:

	 	500,000	 	 
	 
	 	 	 	 
	Exercise Price Per Share:

	 	$1.56	 	 
	 
	 	 	 	 
	Term of Option:

	 	8 years

Shares subject to issuance under this Option will vest 25% on the first anniversary of the Grant
Date and in 36 equal monthly installments thereafter; provided, however, if Grantee’s employment
terminates prior to the date this option would otherwise become fully vested as a result of (i)
death, (ii) “Disability” (as defined in the Employment Agreement) or (iii) retirement on or after
his or her 65th birthday, this option will be deemed fully vested as of the date of such
termination. In addition, this option will be deemed fully vested upon the occurrence of a “Change
of Control Termination” (as such term is defined in the Employment Agreement).

The Company shall have the right, without the consent of Grantee, to amend the terms of this Stock
Option Grant Certificate to the extent necessary or appropriate, as determined by the Company in
its sole discretion, to conform with Section 409A of the Internal Revenue Code of 1986, as amended.

Grantee hereby acknowledges receipt of a copy of the Plan, represents that Grantee has read the
Plan and understands the terms and provisions of the Plan, and accepts this Option as if it were
granted pursuant to the Plan and subject to all the terms and conditions of the Plan and this Stock
Option Grant Certificate, except as otherwise provided herein. Grantee acknowledges that the grant
and exercise of this Option, and the sale of Shares obtained through the exercise of this Option,
may have tax implications that could result in adverse tax consequences to the Grantee and that
Grantee is not relying on the Company for any tax, financial or legal advice and will consult a tax
adviser prior to such exercise or disposition.

This Option is designated a nonqualified stock option. It is not an incentive stock option within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

In witness whereof, this Stock Option Grant Certificate has been executed by the Company by a duly
authorized officer as of the date specified hereon.

Safeguard
Scientifics, Inc.

/s/ Christopher J. Davis

Christopher J. Davis, Executive Vice President and Chief Administrative & Financial Officer

	 	 	 	 	 
	 	 	 
	/s/ James A. Datin
 	 	 
	James A. Datin 	 	 
	 	 	 
	 

 

 

1.   Option Expiration. The Option shall automatically terminate upon the happening of the
first of the following events:

     (a) the expiration of the 90-day period after the Grantee ceases to be employed by, or
providing services to, the Company, if the termination is for any reason other than involuntary
termination without Cause or voluntary termination with Good Reason, Disability, death, Cause, a
Change of Control Termination or retirement as provided herein;

     (b) the expiration of the one-year period after the Grantee ceases to be employed by, or
providing services to, the Company, on account of the Grantee’s involuntary termination without
Cause or voluntary termination with Good Reason (not including a Change of Control Termination);

     (c) the expiration of the one-year period after the Grantee ceases to be employed by, or
providing services to, the Company on account of the Grantee’s Disability;

     (d) the expiration of the one-year period after the Grantee ceases to be employed by, or
providing services to, the Company if the Grantee dies while employed by the Company or if the
Grantee dies within three months after the Grantee ceases to be so employed on account of a
termination described in subparagraph (a) above;

     (e) the date on which the Grantee ceases to be employed by, or providing services to, the
Company for Cause;

     (f) the expiration of the one-year period after the Grantee’s employment or service terminates
as a result of retirement on or after the Grantee’s sixty-fifth birthday, or after such earlier
date as may be determined by the Committee, in its sole discretion, to be warranted given the
particular circumstances surrounding the earlier termination of the Grantee’s employment or
service; or

     (g) where there has been a Change of Control Termination, the two-year period after the
Grantee ceases to be employed by, or providing services to, the Company, on account of the Grantee
experiencing a Change of Control Termination.

     Notwithstanding the foregoing, in no event may the Option be exercised after the expiration of
the Term of Option specified on page 1. For purposes of this Option, the terms “Cause,” “Good
Reason,” “Disability” and “Change of Control Termination” shall have the meaning given to them in
the Employment Agreement. Other than as set forth in this Agreement, any portion of the Option that
is not vested at the time the Grantee ceases to be employed by, or providing service to, the
Company shall immediately terminate.

     In the event a Grantee ceases to be employed by, or providing service to, the Company for
Cause, the Grantee shall automatically forfeit all shares underlying any exercised portion of an
Option for which the Company has not yet delivered the share certificates upon refund by the
Company of the exercise price paid by the Grantee for such shares.

2.   Exercise Procedures.

     (a) Subject to the provisions of this Stock Option Grant Certificate and the Plan, the Grantee
may exercise part or all of the vested Option by giving the Company written notice of intent to
exercise in the manner provided in Paragraph 11 below, specifying the number of Shares as to which
the Option is to be exercised. On the delivery date, the Grantee shall pay the exercise price (i)
in cash, (ii) by delivering Shares of the Company (duly endorsed for transfer or accompanied by
stock powers signed in blank) which shall be valued at their fair market value on the date of
delivery, or (iii) by such other method as the Committee may approve, including payment through a
broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board. The
Committee may impose from time to time such limitations as it deems appropriate on the use of
Shares of the Company to exercise the Option.

     (b) The obligation of the Company to deliver Shares upon exercise of the Option shall be
subject to all applicable laws, rules, and regulations and such approvals by governmental agencies
as may be deemed appropriate by the Committee, including such actions as Company counsel shall deem
necessary or appropriate to comply with relevant securities laws and regulations. The Company may
require that the Grantee (or other person exercising the Option after the Grantee’s death)
represent that the Grantee is purchasing Shares for the Grantee’s own account and not with a view
to or for sale in connection with any distribution of the Shares, or such other representation as
the Board deems appropriate. All obligations of the Company under this Stock Option Grant
Certificate shall be subject to the rights of the Company as set forth in the Plan as if the grant
had been issued pursuant to the Plan, to withhold amounts required to be withheld for any taxes, if
applicable. Subject to Committee approval, the Grantee may elect to satisfy any income tax
withholding obligation of the Company with respect to the Option by having Shares withheld up to an
amount that does not exceed the minimum marginal tax rate for federal (including FICA), state and
local tax liabilities.

3.   Change of Control. The provisions of the Employment Agreement and this Stock Option
Grant Certificate relating to Change of Control and Change of Control Termination shall override
any provisions of the Plan relating to Change of Control.

4.   Restrictions on Exercise. Only the Grantee may exercise the Option during the Grantee’s
lifetime. After the Grantee’s death, the Option shall be exercisable (subject to the limitations
specified in the Plan) solely by the legal representatives of the Grantee, or by the person who
acquires the right to exercise the Option by will or by the laws of descent and distribution, to
the extent that the Option is exercisable pursuant to this Stock Option Grant Certificate.
Notwithstanding the foregoing, the Committee may provide, at or after grant, that a Grantee may
transfer nonqualified stock options pursuant to a domestic relations order or to family members or
other persons or entities on such terms as the Committee may determine.

5.   Grant Subject to Plan Provisions; Entire Agreement. This grant is made separate from
the Plan, as an inducement to Grantee to accept employment pursuant to the Employment Agreement.
Notwithstanding the preceding sentence, except to the
extent otherwise stated in this Stock Option Grant Certificate or to the extent the context
otherwise requires, this grant shall be interpreted

 

 

as if it had been granted pursuant to the Plan.
The grant and exercise of the Option shall be subject to the provisions of the Plan and to
interpretations, regulations and determinations concerning the Plan established from time to time
by the Committee in accordance with the provisions of the Plan, including, but not limited to,
provisions pertaining to (i) rights and obligations with respect to withholding taxes, (ii) the
registration, qualification or listing of the Shares, (iii) capital or other changes of the
Company, and (iv) other requirements of applicable law, all as if the grant had been made pursuant
to the Plan. The Committee shall have the authority to interpret and construe the Option as if it
had been granted pursuant to the terms of the Plan, and its decisions shall be conclusive as to any
questions arising hereunder. This Stock Option Grant Certificate represents the entire agreement
between the parties with respect to the grant of the Option and may only be modified or amended in
a writing signed by both parties.

6.   No Employment Rights. The grant of the Option shall not confer upon the Grantee any
right to be retained by or in the employ of the Company and shall not interfere in any way with the
right of the Company to terminate the Grantee’s employment or service at any time pursuant to the
Employment Agreement. No policies, procedures or statements of any nature by or on behalf of the
Company (whether written or oral, and whether or not contained in any formal employee manual or
handbook) shall be construed to modify this Stock Option Grant Certificate or to create express or
implied obligations to the Grantee of any nature.

7.   No Stockholder Rights. Neither the Grantee, nor any person entitled to exercise the
Grantee’s rights in the event of the Grantee’s death, shall have any of the rights and privileges
of a stockholder with respect to the Shares subject to the Option until certificates for Shares
have been issued upon the exercise of the Option.

8.   No Disclosure. The Grantee acknowledges that the Company has no duty to disclose to the
Grantee any material information regarding the business of the Company or affecting the value of
the Shares before or at the time of a termination of the Grantee’s employment, including without
limitation any plans regarding a public offering or merger involving the Company.

9.   Assignment and Transfers. The rights and interests of the Grantee under this Stock
Option Grant Certificate may not be sold, assigned, encumbered or otherwise transferred except, in
the event of the death of the Grantee, by will or by the laws of descent and distribution. In the
event of any attempt by the Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose
of the Option or any right hereunder, except as provided for in this Stock Option Grant
Certificate, or in the event of the levy or any attachment, execution or similar process upon the
rights or interests hereby conferred, the Company may terminate the Option by notice to the
Grantee, and the Option and all rights hereunder shall thereupon become null and void. The rights
and protections of the Company hereunder shall extend to any successors or assigns of the Company
and to the Company’s parents, subsidiaries, and affiliates. This Stock Option Grant Certificate
may be assigned by the Company without the Grantee’s consent.

10.   Applicable Law. The validity, construction, interpretation and effect of this
instrument shall be governed by and determined in accordance with the laws of the Commonwealth of
Pennsylvania.

11.   Notice. Any notice to the Company provided for in this instrument shall be addressed
to the Company in care of the General Counsel at the Company’s headquarters and any notice to the
Grantee shall be addressed to such Grantee at the current address shown on the payroll of the
Company, or to such other address as the Grantee may designate to the Company in writing. Any
notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope
addressed as stated above, registered and deposited, postage prepaid, in a post office regularly
maintained by the United States Postal Service.Department 56, Inc. Exhibit 4.1 to 10-Q Dated: October 1, 2005

Exhibit 4.1  

		

	

	 	INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE 	SEE REVERSE SIDE
FOR CERTAIN DEFINITIONS

	 	 	CUSIP 249509 10 0
		THIS CERTIFIES THAT  	
		[SPECIMEN]  	
	 
		is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF THE PAR VALUE OF $.01 EACH OF  	
	 
		
  Department 56, Inc.   	
	 
		        Transferable
on the share register of the Corporation by the holder hereof, in person, or by duly
authorized attorney, upon surrender of this Certificate properly endorsed.

        This Certificate is not valid unless countersigned and registered by the transfer agent and
registrar. Witness the facsimile seal of the Corporation and the facsimile signatures of
its duly authorized officers.

Dated: 

                		COUNTERSIGNED
AND REGISTERED:

                           WELLS FARGO BANK, N.A. 		
                
                        

        		
                
                        

        	
	
                
                        TRANSFER AGENT

                                AND REGISTRAR

        		
                
                        CHAIRPERSON AND CEO

        		
                
                        EXECUTIVE VICE PRESIDENT AND CFO

        	
						
	BY					
	
                
                        AUTHORIZED SIGNATURE

        					

	DEPARTMENT 56, INC. 
	        The
corporation will furnish without charge to each stockholder who so requests a statement of
the powers, designations, preferences and relative, participating, optional or other
special rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.

	
                                        

                                
	The following abbreviations, when
used in the inscription on the face of this certificate, shall be construed as though they
were written out in full according to applicable laws or regulations: 
	TEN COM	-	  as tenants in common	
                
                        
                         UNIF GIFT MIN ACT-   

        	_______________Custodian_______________
		        
            (Cust)            
                          
                  (Minor)
	TEN ENT	-	  as tenants by entireties	
                
                        under Uniform Transfer to Minors

        
				
	JT TEN	-	  as joint tenants with right of survivorship
  and not as tenants in common	Act ________________________________
			
                
                        (State)

        
	
                
                        Additional abbreviations may also be used though not in the above list. 

        
	
          

        

For value received __________
hereby sell, assign and transfer unto  

	PLEASE INSERT SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE 	
	 

	 

	

	
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE

	 
	Shares 

	

of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
______________________________________
Attorney to transfer the said stock on the books of the within-named
Corporation with full power of substitution in the premises.

	Dated 
	

			

		NOTICE:  	THE SIGNATURE TO THIS ASSIGNMENT MUST
 CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
 WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. 

	
This certificate also evidences and entitles the holder to certain rights
as set forth in a Rights Agreement between Department 56, Inc. and ChaseMellon Shareholder Services, L.L.C. dated as of April
23, 1997 (the “Rights Agreement”), the terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal executive offices of Department 56, Inc. Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. Department
56, Inc. will mail to the holder of this certificate a copy of the Rights Agreement without charge after receipt of a written
request therefor from such holder. Under certain circumstances set forth in the Rights Agreement, Rights issued to, or held by,
any Person who is, was or becomes an Acquiring Person or an Affiliate or Associate thereof (as defined in the Rights Agreement)
and certain related persons, whether currently held by or on behalf of such Person or by any subsequent holder, may become null
and void. Wells Fargo Bank, N.A. is successor to ChaseMellon Shareholder Services, L.L.C. as rights agent.

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