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 the Grantee dated May 28, 2008 (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 the reverse side hereof 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:

	 	June 30, 2008
	 
	 	 
	Type of Option:

	 	Nonqualified Stock Option
	 
	 	 
	Shares Subject to Option:

	 	375,000
	 
	 	 
	Exercise Price Per Share:

	 	$1.275
	 
	 	 
	Term of Option:

	 	8 years

The Option represented hereby shall vest as to the underlying shares as follows: 25% on the first
anniversary date of the grant date and the remaining 75% in 36 equal monthly installments on the
same date of each month thereafter; provided, however, if, prior to the date this Option would
otherwise become fully vested, Grantee’s employment by the Company or Grantee’s other
agreed-to-in-writing service to the Company terminates as a result of (i) death, (ii) disability,
or (iii) retirement on or after the Grantee’s 65th birthday, this Option will be deemed
fully vested as of the date of such termination. Accelerated vesting also may occur in accordance
with the terms of the Employment Agreement.

For purposes of this Option, the terms “Cause,” “Good Reason,” “Change of Control,” “Severance
Termination” and “Change of Control Termination” shall have the meaning given to them in the
Employment Agreement.

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 subject to all
the terms and conditions of the Plan and this Stock Option Grant Certificate. 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 any 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”).

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.

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/ Peter J. Boni
	 	 
	 

Peter J. Boni

	 	 
	President & Chief Executive Officer
	 	 
	 
	 	 
	/s/ Stephen T. Zarrilli
	 	 
	 

	 	 
	Stephen T. Zarrilli
	 	 

 

 

1. Option Expiration. The Option shall automatically terminate on the earliest of the
following dates:

     (a) 5 p.m. prevailing eastern time on the 90th day after the later of the date
Grantee (i) ceases to be employed by, or (ii) otherwise ceases providing agreed-to-in-writing
service to, the Company if the termination is for any reason other than disability, death, Cause,
retirement on or after the Grantee’s 65th birthday, a Severance Termination or a Change
of Control Termination;

     (b) 5 p.m. prevailing eastern time on the one-year anniversary date of the later of the date
Grantee (i) ceases to be employed by, or (ii) otherwise ceases providing agreed-to-in-writing
service to, the Company on account of the Grantee’s disability;

     (c) 5 p.m. prevailing eastern time on the one-year anniversary date of the later of the date
Grantee (i) ceases to be employed by, or (ii) otherwise ceases providing agreed-to-in-writing
service to, the Company if the Grantee dies while employed by or otherwise providing
agreed-to-in-writing service to the Company or within three months after the Grantee’s employment
or other agreed-to-in-writing service ceases on account of a termination described in subparagraph
(a) above;

     (d) the date on which the Grantee (i) ceases to be employed by, or (ii) otherwise ceases
providing agreed-to-in-writing service to, the Company for Cause;

     (e) 5 p.m. prevailing eastern time on the one-year anniversary date of the date Grantee (i)
ceases to be employed by, or (ii) otherwise ceases providing agreed-to-in-writing service to, the
Company as a result of retirement on or after the Grantee’s 65th 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

     (f) 5 p.m. prevailing eastern time on the three-year anniversary date of the date Grantee (i)
ceases to be employed by, or (ii) otherwise ceases providing agreed-to-in-writing service to, the
Company on account of the Grantee’s Severance Termination or 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 the reverse side. Other than as specifically set forth herein, any
portion of the Option that is not vested at the later of the date Grantee (i) ceases to be employed
by, or (ii) otherwise ceases providing agreed-to-in-writing service to, the Company shall
immediately terminate.

     In the event Grantee’s employment or other agreed-to-in-writing service to the Company is
terminated 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, (iii) by payment through a broker in accordance with procedures permitted by Regulation T
of the Federal Reserve Board, or (iv) by such other method as the Committee may approve. 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 a 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
are 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 Grant Letter 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.

 

 

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 May 28, 2008 (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:

	 	June 30, 2008
	 
	 	 
	Type of Option:

	 	Nonqualified Option
	 
	 	 
	Shares Subject to Option:

	 	1,125,000
	 
	 	 
	Exercise Price Per Share:

	 	$1.275
	 
	 	 
	Term of Option:

	 	8 years

Shares subject to issuance under this Option shall vest solely as provided in Section 3 of this
Stock Option Grant Certificate.

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 to 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/ Peter J. Boni
	 	 
	 

Peter J. Boni

	 	 
	President & Chief Executive Officer
	 	 
	 
	 	 
	/s/ Stephen T. Zarrilli
	 	 
	 

	 	 
	Stephen T. Zarrilli
	 	 

 

 

1. Option Expiration. The Option shall automatically terminate on the earliest of the
following dates:

     (a) 5 p.m. prevailing Eastern time on the 90th day after the later of the date Grantee (i)
ceases to be employed by, or (iii) otherwise ceases providing agreed-to-in-writing services to, the
Company, if the termination is for any reason other than disability, death, Cause, retirement on or
after the Grantee’s 65th birthday, a Severance Termination or a Change of Control Termination;

     (b) 5 p.m. prevailing Eastern time on the one-year anniversary date of the later of the date
Grantee (i) ceases to be employed by, or (ii) otherwise ceases providing agreed-to-in-writing
services to, the Company, on account of the Grantee’s disability;

     (c) 5 p.m. prevailing Eastern time on the one-year anniversary date of the later of the date
Grantee (i) ceases to be employed by, or (ii) otherwise ceases providing services to, the Company
if the Grantee dies while employed by or while otherwise providing agreed-to-in-writing services to
the Company or within three months after the Grantee’s employment or agreed-to-in-writing service
ceases on account of a termination described in subparagraph (a) above;

     (d) the date on which the Grantee ceases to be employed by, or otherwise ceases providing
agreed-to-in-writing services to, the Company for Cause;

     (e) 5 p.m. prevailing Eastern time on the one-year anniversary date of the date Grantee’s
employment or agreed-to-in-writing service to the Company terminates as a result of retirement on
or after the Grantee’s 65th 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

     (f) 5 p.m. prevailing Eastern time on the one-year anniversary date of the later of the date
Grantee (i) ceases to be employed by, or (ii) otherwise ceases providing agreed-to-in-writing
services to, the Company on account of the Grantee experiencing a Severance Termination; or

     (g) 5 p.m. prevailing Eastern time on the two-year anniversary date of the later of the date
Grantee (i) ceases to be employed by, or (ii) otherwise ceases providing agreed-to-in-writing
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,” “Change of Control,” “Severance Termination” and “Change of Control Termination” shall
have the meaning given to them in the Employment Agreement. Other than as specifically set forth
herein, any portion of the Option that is not vested at the later of the date (i) Grantee ceases to
be employed by, or (ii) otherwise ceases providing agreed-to-in-writing service to, the Company
shall immediately terminate.

     In the event Grantee’s employment or other agreed-to-in-writing service to the Company is
terminated 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 12 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 (iii) by payment through a broker in accordance with procedures permitted by Regulation T
of the Federal Reserve Board; or (iv) by such other method as the Committee may approve. 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. Vesting and Forfeiture of Unvested Options.

     (a) In the event Grantee’s employment or other agreed-to-in-writing service to the Company is
terminated for any reason, Grantee shall forfeit all Options in which Grantee is not vested at the
time Grantee’s employment or other agreed-to-in-writing service to the Company ceases in accordance
with the Vesting Schedule set forth in Section 3(b) (hereinafter referred to as the “Unvested
Options”).

 

 

     (b) (1) Basic Vesting.

     If the Grantee remains employed by or otherwise continues providing agreed-to-in-writing
service to the Company through the applicable vesting events, Grantee shall acquire a vested
interest in, and the forfeiture provisions of this Section 3 shall lapse, in accordance with the
following vesting schedule, on the first date after the Grant Date that the average closing price
of a share of the Company’s common stock, as reported on the New York Stock Exchange consolidated
tape, for the 20 consecutive trading days ending immediately prior to such date, equals or exceeds
the prices set forth in the table below

	 	 	 	 	 
	Percentage Vesting	 	Per Share Stock Price
	First 20%

	 	$	3.1548	 
	Next 30%

	 	$	4.6466	 
	Next 40%

	 	$	6.5114	 
	Final 10%

	 	$	7.2246	 

          (2) Additional Vesting for Partial Achievement of Performance Goals.

          The purpose of this Section 3(b)(2) is to provide a mechanism for vesting on a semi-annual
basis under circumstances where the highest average closing stock price of a share of the Company’s
common stock, as reported on the New York Stock Exchange consolidated tape, for any 20 consecutive
trading days exceeds either the exercise price of the Option or one of the designated per share
stock price vesting thresholds specified in Section 3(b)(1) above but is less than the next higher
per share stock price vesting threshold specified in Section 3(b)(1) above. The number of shares
as to which the Option shall vest at the end of each semi-annual period ending on June 30 and
December 31 of each calendar year shall be determined based on the pro rata difference between (i)
any incremental improvement in the stock price in excess of any earlier stock price improvement
that may have been achieved and for which partial or full vesting of each such vesting tranche may
have occurred and (ii) the next higher per share stock price vesting threshold specified in Section
3(b)(1) above.

          For purposes of this Section 3(b), if the Company’s common stock is not principally traded on
the New York Stock Exchange, achievement shall be measured based on (i) the per share closing price
of the common stock as reported in the Wall Street Journal for the exchange on which the Company’s
common stock is principally traded on such date; or (ii) if the Company’s common stock is not
principally traded on an exchange, the mean between the last reported “bid” and “asked” prices of
common stock on the relevant date, as reported by such quotation system on which the Company’s
common stock is quoted, as applicable, and as the Board determines; or (iii) if the Company’s
common stock is not publicly traded or, if publicly traded, is not subject to reported transactions
or “bid” or “asked” quotations as set forth above, the price per share determined by the Board in
its sole and absolute discretion.

          In the event of any changes in the number or kind of shares of common stock outstanding by
reason of a stock dividend, spinoff, recapitalization, stock split or combination or exchange of
shares, the number of shares underlying this stock option grant and the per share stock price
vesting thresholds set forth in Section 3(b)(1) above shall be adjusted appropriately to reflect
such changes.

          Notwithstanding the foregoing, in the event of a “Change of Control Termination,” as such term
is defined in the Employment Agreement, the Grantee shall be deemed to be fully vested in any
Unvested Options.

4. 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.

5. 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.

6. 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.
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. Notwithstanding the preceding sentences, 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.

7. 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.

8. 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.

9. 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.

10. 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.

11. 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.

12. Notice. Any notice to the Company provided for in this instrument shall be addressed
to the Company 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.exv10w4

Exhibit 10.4

September 15, 2006

Mr. Kevin Kemmerer

40 Meadow Creek Lane

Malvern, PA 19355

Dear Kevin:

     Safeguard Scientifics, Inc. is pleased to formalize your promotion to Senior Vice-President,
Information Technology Group at Safeguard.  As per previous communications, this promotion was
effective earlier this year. This letter sets forth your compensation and benefits in your new
role.

     Salary and Bonus. The annual salary associated with this position is $250,000. As a
matter of maintaining competitive employment terms, salaries are reviewed annually against internal
and external peer groups, and individual performance, and, if appropriate, adjusted upwards. Your
salary was adjusted as of February 1, 2006.

     You will also be eligible to participate in the Safeguard annual bonus program, at a target
bonus of $250,000. The overall bonus program goals are determined at the beginning of each year,
and approved for payment annually, after the year-end audited results, by the Compensation
Committee of the Board. Your individual actual bonus amount will be determined by performance to
individual objectives, and by the overall performance of Safeguard. Your target bonus was adjusted
as of January 1, 2006.

     Option Grant. On February 21, 2006 (the “Grant Date”), the Compensation Committee
approved the grant to you of options to acquire 300,000 shares of Safeguard common stock under
Safeguard’s equity plans. These options will vest based on achievement by Safeguard of sustained
improvement in its market capitalization (as will be more fully described in the option agreement).
The options have an exercise price equal to the average of the high and low sales prices of
Safeguard common stock on the Grant Date and will expire on the eighth anniversary of the Grant
Date (subject to earlier termination in accordance with the plan). You will be eligible for
additional grants from time to time as the Compensation Committee approves additional grants.

     Fringe Benefits. You will continue to be eligible to participate in Safeguard’s
health, dental, vision, disability, 401(k), and other benefit plans generally available to
Safeguard executive employees from time to time. In addition, so long as you are an employee and
Safeguard offers these benefits generally to other senior executives (they are scheduled for a
Compensation Committee review this Fall), you will be paid a car allowance at the rate of $10,000
per annum (pro rated from February 1, 2006); will receive a non-accountable annual expense
allowance of $8,000 per annum (commencing in 2007); and, subject to evidence of insurability, will
be entitled to a Company paid universal life insurance providing coverage of $750,000 (commencing
as soon as practicable following your execution of this letter) in addition to the Company’s normal
group life plans offered to employees generally. You will also be

 

 

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entitled to vacation at the annual rate of four weeks of vacation per year (pro rated from
February 1, 2006).

     Severance Benefits. Subject to the terms and conditions of this letter, in the event
Safeguard terminates your employment without cause or you terminate your employment with Safeguard
for “good reason” (as defined below), Safeguard will provide you the following benefits which shall
be the only severance benefits or other payments in respect of your employment with Safeguard to
which you shall be entitled. Without limiting the generality of the foregoing, these benefits are
in respect of all salary, bonus, accrued vacation and other rights which you may have against
Safeguard or its affiliates.

	 	•	 	You will be paid an amount equivalent to one (1) year of your final Base Salary and the
greater of (a) your target annual bonus for the year of such termination, or (b) the
average of your last three year’s actual bonus payments, less applicable tax deductions and
withholdings. The severance amount will be paid in semi-monthly installments over one year
in accordance with Safeguard’s normal payroll practices. The first semi-monthly
installment of the severance payment will be made on the normal semi-monthly payroll date
first occurring after the eighth day following your execution and return of the release
described below.
	 
	 	•	 	Your medical and dental insurance and other health and welfare plan benefits will
terminate on the date of termination of your employment. Your COBRA notice will be given
and benefit conversion privileges will begin the first day after termination of your
employment.

     All compensation and benefits described above will be contingent on your execution of a
release, which is not subsequently rescinded, of all claims against Safeguard pursuant to
Safeguard’s standard employee form. You will have 21 days following your termination of employment
in which to consider the release although you may execute it sooner. Please note that the release
has a rescission period of seven days.

     In this letter, the term “cause” means (a) your failure to adhere to any written Safeguard
policy in effect from time to time if you have been given a reasonable opportunity to comply with
such policy or cure your failure to comply (which reasonable opportunity must be granted during the
ten-day period preceding termination of this Agreement); (b) your appropriation (or attempted
appropriation) of a material business opportunity of Safeguard, including attempting to secure or
securing any personal profit in connection with any transaction entered into on behalf of
Safeguard; (c) your misappropriation (or attempted misappropriation) of any of Safeguard’s funds or
property; or (d) your conviction of, indictment for (or its procedural equivalent), or your
entering of a guilty plea or plea of no contest with respect to, a felony, the equivalent thereof,
or any other crime with respect to which imprisonment is a possible punishment.

     In this letter, the term “good reason” means (i) your assignment (without your consent) to a
position, title, responsibilities, or duties of a materially lesser status or degree of
responsibility than your current position, responsibilities, or duties; provided, however, that a
mere change in your area of responsibilities shall not constitute a material change if you are
reasonably suited by your education and training for such responsibilities and you remain a Senior
Vice President, Information Technology of Safeguard; (ii) a reduction of your base salary or target
bonus

 

 

September 15, 2006

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opportunity (acknowledging that the payment of any bonus is subject to the discretion of the
Compensation Committee of the Board); (iii) the relocation of Safeguard’s principal executive
offices to a location which is more than 30 miles away from the location of Safeguard’s principal
executive offices on the date of this Agreement; or (iv) your assignment (without your consent) to
be based anywhere other than Safeguard’s principal executive offices. Notwithstanding the
foregoing, good reason shall not exist if Safeguard cures such action or failure to act that
constitutes good reason within a reasonable period of time (which reasonable period of time shall
not be longer than 10 days) following the date you provide Safeguard with notice of your intended
resignation for good reason.

     In addition, your agreement to comply with various covenants designed to protect Safeguard’s
confidential information and employee and customer relationships remains in effect. These
provisions are contained in an Employee Agreement that was included with your offer letter and was
signed by you on May 7, 2004.

     If the terms herein are agreeable, please signify your acceptance below and return one copy to
me and keep the other copy for your records.

Sincerely,

/s/ Steven J. Feder

Steven J. Feder

Senior Vice President and General Counsel

cc: Peter J. Boni

	 	 	 	 	 	 	 
	Agreed and accepted:

	 	/s/ Kevin L. Kemmerer
	 	 	 	9/25/06
	 

	 	       Kevin L. Kemmerer
	 	 
	 	Date

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