Document:

exv10w2

 

EXHIBIT 10.2

Safeguard Scientifics, Inc.

800 The Safeguard Building

435 Devon Park Drive

Wayne, PA 19087

(610) 293-0060

(610) 293-0601 (General Fax)

August 17, 2004

Christopher J. Davis

7 Melissa Way

Plymouth Meeting, PA 19462

Dear Mr. Davis:

     You previously entered into a severance agreement with Safeguard
Scientifics, Inc. (“Safeguard”) on January 1, 2003 (the “Prior Agreement”).
Safeguard considers it essential to the best interests of its stockholders to
foster your continued employment with Safeguard and to offer you protection in
the event of your severance, including following a change of control.
Accordingly, the Board of Directors of Safeguard (the “Board”) believes it is
now appropriate to modify your Prior Agreement in certain respects and to
reaffirm its obligation to you in this letter (the “New Agreement”).
Accordingly, this New Agreement serves to amend and restate the Prior Agreement
in its entirety.

     Subject to the terms and conditions set forth below, in the event that (A)
your employment with Safeguard is terminated by Safeguard without cause or by
you for good reason within eighteen (18) months following a change of control
of Safeguard (“Change of Control Termination”) or (B) you are terminated for
any reason other than for cause or resignation without good reason (such a
termination, a “Severance Termination”), Safeguard shall provide you with the
following benefits, which together with any benefits provided under the
applicable terms of any other plan or program sponsored by the Safeguard, and
applicable to you, shall be the only severance benefits or other payments in
respect of your employment with Safeguard to which you shall be entitled. The
benefits you receive under this New Agreement will be in respect of all salary,
accrued vacation and other rights that you may have against Safeguard or its
affiliates.

1. You will receive a payment in respect of your current year’s bonus
equal to the product of (i) your annual bonus (of at least $325,000),
multiplied by (ii) Safeguard’s percentage achievement of its annual
Management Incentive Plan objectives as determined by the Compensation
Committee as of the end of the calendar quarter closest to your date of
termination, multiplied by (iii) a fraction, the numerator of which is
the number of days in Safeguard’s fiscal year elapsed at the time of the
termination and the denominator of which is 365. Payment under this
provision will be made within a

 

 

Christopher J. Davis

August 17, 2004

Page 2

reasonable period of time after the end of the quarter for which the
determination in (ii) is being made.

2. If (A) there is a Change of Control Termination or (B) a Severance
Termination, you will receive a lump sum payment equal to the product of
(i) 2 multiplied by (ii) the sum of your annual base salary (of at least
$375,000) plus your annual bonus (of at least $325,000).

3. Except as provided below, you will only vest in your interests under
and you will receive benefits in accordance with the terms and conditions
set forth in Safeguard’s various long term incentive plans.

4. You will receive up to twenty four (24) months continued coverage
under Safeguard’s medical and health plans and life insurance plans,
which coverage shall run concurrent with the coverage provided under
section 4980B of the Code; or as an alternative, at the discretion of the
Board, the Board may elect to pay you in lieu of such coverage an amount
equal to your cost of continuing such coverage. You should consult with
Safeguard’s Manager of Human Resources concerning the process for
assuming ownership of and continued premium payments for any whole life
policy at end of such twenty four (24) month period.

5. You will receive up to $20,000 as a reimbursement for documented
outplacement services or office space which you secure.

6. You will be reimbursed promptly for all your reasonable and necessary
business expenses incurred on behalf of Safeguard prior to your
termination date in accordance with Safeguard’s customary policies.

7. If you experience a Change of Control Termination as described above,
you will become fully vested in all of your outstanding stock options and
you may exercise those stock options during the thirty six (36) month
period following your termination of employment (unless any of the
options would by their terms expire sooner, in which case you may
exercise such options at any time before their expiration) and you will
become fully vested in all of your outstanding restricted stock awards
and deferred stock units, if any.

8. If you experience a Severance Termination as described above, you will
become fully vested in your outstanding stock options and you may
exercise those stock options during the 36 month period following your
termination of employment (unless any of the options would by their terms
expire sooner, in which case you may exercise such options at any time
before their expiration). In addition, upon such a termination, your
restricted stock grants made before October, 2002 will become fully
vested and the Board, in its discretion may accelerate the vesting of any
restricted stock grants and deferred stock units, if any, made or
credited after October, 2002.

 

 

Christopher J. Davis

August 17, 2004

Page 3

     All compensation and benefits described in this New Agreement will be
offered in return for and contingent on your execution and non-revocation of a
release and non-competition agreement substantially in the forms attached to
this letter.

     Upon your termination of employment with Safeguard in connection with a
change of control, as discussed above, if it is determined that any payment or
distribution by Safeguard of benefits provided under this New Agreement or any
other benefits due upon a change of control (the “Change of Control Benefits”)
would constitute an “excess parachute payment” within the meaning of section
280G of the Code that would be subject to an excise tax under section 4999 of
the Code (the “Excise Tax”) the following provisions shall apply, unless
provided otherwise in the applicable plan, program or agreement that provides
change of control payments that are not paid pursuant to this New Agreement.
If the aggregate present value to you of receiving the Change of Control
Benefits and paying the Excise Tax is not greater than the aggregate present
value to you of the Change of Control Benefits reduced to the safe harbor
amount (as defined below), then Safeguard shall reduce the Change of Control
Benefits such that the aggregate present value to you of receiving the Change
of Control Benefits is equal to the safe harbor amount. Otherwise you shall
receive the full amount of the Change of Control Benefits and you shall be
responsible for payment of the Excise Tax. For purposes of this paragraph
“present value” shall be determined in accordance with Section 280G(d)(4) of
the Code and the term “safe harbor amount” shall mean an amount expressed in
the present value that maximizes the aggregate present value of the Change of
Control Benefits without causing any of the Change of Control Benefits to be
subject to the deduction limitations set forth in Section 280G of the Code.

     All determinations made pursuant to the foregoing paragraph shall be made
by Safeguard’s independent public accountant immediately prior to the change of
control (the “Accounting Firm”), which firm shall provide its determinations
and any supporting calculations both to Safeguard and to you within ten days of
the termination date. Any such determination by the Accounting Firm shall be
binding upon you and Safeguard. You shall then, in your sole discretion,
determine which and how much of the Change of Control Benefits shall be
eliminated or reduced consistent with the requirements of the foregoing
paragraph. All of the fees and expenses of the Accounting Firm in performing
the determinations referred to above shall be borne solely by Safeguard.

     Safeguard will pay you the lump sum payments described above within five
business days of the date on which you have signed the release and
non-competition agreement and such agreements have become effective and
following any determination required by the preceding paragraph. Safeguard
will prepare the final release (which will be substantially in the form
attached as Exhibit A to this letter, but with such changes, if any, as
recommended by Safeguard’s counsel) and the final non-competition agreement
(which will be substantially in the form attached as Exhibit B to this letter,
but with such changes, if any, as recommended by Safeguard’s counsel) within
five business days of your termination of employment. You will have 21 days in
which to consider the release although you may execute it sooner. Please note
that the release has a rescission period of seven days after which it becomes
effective if not revoked. All other payments will be made to you within five
business days of the date on which they become due or, in the case of payments
payable on notice from you, within five business days of such notice.

 

 

Christopher J. Davis

August 17, 2004

Page 4

     Safeguard will pay interest on late payments at the prime rate at
Safeguard’s agent bank plus 2 percent compounded monthly. In addition,
Safeguard will pay all reasonable costs and expenses (including reasonable
attorney’s fees and all costs of arbitration) incurred by you to enforce the
agreement set forth in this New Agreement or any obligation hereunder.

     In this letter, the term “cause” means (a) your failure to adhere to any
written Safeguard policy 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 New 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 Safeguard fund or property; or (d) your conviction of, or your entering
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 member of the Safeguard Managing Directors Committee; (ii) a
reduction of your base salary or target bonus 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 New
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.

     A “change of control” shall be deemed to have occurred if (i) any “person”
or “group” (as such terms are used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), other than
any Safeguard employee stock ownership plan or an equivalent retirement plan,
becomes the beneficial owner (as such term is used in Section 13(d) of the
Exchange Act), directly or indirectly, of securities of Safeguard representing
50% or more of the combined voting power of Safeguard’s then outstanding voting
securities, (ii) the Board ceases to consist of a majority of Continuing
Directors (as defined below), (iii) the consummation of a sale of all or
substantially all of Safeguard’s assets or a liquidation (as measured by the
fair value of the assets being sold compared to the fair value of all of
Safeguard’s assets), or (iv) a merger or other combination occurs such that a
majority of the equity securities of the resultant entity after the transaction
are not owned by those who owned a majority of the equity securities of
Safeguard prior to the transaction. A “Continuing Director” shall mean a
member of the Board of Directors who either (i) is a member of the board of

 

 

Christopher J. Davis

August 17, 2004

Page 5

Directors at the date of this New Agreement or (ii) is nominated or
appointed to serve as a Director by a majority of the then Continuing
Directors.

     The provisions set forth in this New Agreement will inure to the benefit
of your personal representative, executors and heirs. In the event you die
while any amount payable under the New Agreement remains unpaid, all such
amounts will be paid in accordance with the terms and conditions of this
letter.

     No term or condition set forth in this letter may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and the Board of Safeguard or a duly authorized
officer of Safeguard.

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

     You acknowledge that the arrangements described in this New Agreement will
be the only obligations of Safeguard or its affiliates in connection with any
determination by Safeguard to terminate your employment with Safeguard. This
New Agreement does not terminate, alter or affect your rights under any plan or
program of Safeguard in which you may participate or under which you are due a
benefit, except as explicitly set forth herein. Your participation in such
plans or programs will be governed by the terms of such plans and programs.

     The provisions set forth in this New Agreement will be construed and
enforced in accordance with the law of the Commonwealth of Pennsylvania without
regard to the conflicts of laws rules of any state.

     Any controversy or claim arising out of or relating to this New Agreement,
or the breach thereof, will be settled by arbitration in Philadelphia,
Pennsylvania, in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association, using one
arbitrator, and judgment upon the award rendered by the arbitrator may be
entered in any court of competent jurisdiction.

     The obligations of Safeguard set forth herein are absolute and
unconditional and will not be subject to any right of set-off, counterclaim,
recoupment, defense or other right which Safeguard may have against you,
subject to, in the event of your termination of employment, your execution of
the relevant release and the non-competition agreement set forth in the forms
attached to this New Agreement.

     Safeguard may withhold applicable taxes and other legally required
deductions from all payments to be made hereunder.

     Safeguard’s obligations to make payments under this letter are unfunded
and unsecured and will be paid out of the general assets of Safeguard.

     The New Agreement, together with the Prior Agreement, where applicable, as
discussed in the first paragraph of this letter, constitute the entire
agreement and understanding with respect

 

 

Christopher J. Davis

August 17, 2004

Page 6

to your severance arrangements, and supersede any and all prior agreements
and understandings whether oral or written, relating thereto.

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

	 	 	 	 	 
	 	 	Sincerely,
	 
	 	 	 	 
	 	 	Safeguard Scientifics, Inc.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	 
	 	 	 	 
	

	 	Title	 	 

I agree to the terms and conditions of this letter.

	 
	

	Christopher J. Davis

 

 

EXHIBIT A

GENERAL RELEASE AND AGREEMENT

NOTICE:

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

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

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

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

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GENERAL RELEASE AND AGREEMENT

     This GENERAL RELEASE AND AGREEMENT (hereinafter the “Agreement”) is made
and entered into as of this    day of    , 200_, by and between
SAFEGUARD SCIENTIFICS, INC. (“Safeguard”) and [Name of Managing Director]
(“Employee”).

1. Background. The parties hereto acknowledge that this Agreement is being
entered into pursuant to the terms of the Letter Agreement, dated ___________
between Safeguard and Employee (the “Letter Agreement”). As used in this
Agreement, any reference to Safeguard shall include its predecessors and
successors and, in their capacities as such, all of its present, past, and
future directors, officers, employees, attorneys, insurers, agents and assigns,
as well as all Safeguard affiliates, subdivisions and subsidiaries; and any
reference to Employee shall include, in their capacities as such, his or her
attorneys, heirs, administrators, representatives, agents and assigns.

2. Resignation from Boards. Employee shall, and hereby does resign from such
Boards and officer positions with Safeguard and all affiliates and partner
companies of Safeguard as such employee holds on the date hereof. In this
regard, Employee agrees to pre-sign and deliver to Safeguard resignation
letters acceptable to Safeguard in order to affect Employee’s resignation from
certain companies and entities, and Safeguard may submit other such letters
from time to time, although nothing contained herein shall prohibit Employee
from resigning from such boards and officer positions at an earlier time.

3. General Release.

     (a) Employee, for and in consideration of the special severance allowance
and other termination benefits offered to him by Safeguard specified in the
Letter Agreement and intending to be legally bound, does hereby REMISE, RELEASE
AND FOREVER DISCHARGE Safeguard, of and from any and all causes of actions,
suits, debts, claims and demands whatsoever in law or in equity, which Employee
ever had, now has, or hereafter may have or which Employee’s heirs, executors
or administrators may have, by reason of any matter, cause or thing whatsoever,
from the beginning of Employee’s employment with Safeguard to the date of this
Agreement, and particularly, but without limitation, any claims arising from or
relating in any way to Employee’s employment or the termination of Employee’s
employment relationship with Safeguard, including, but not limited to, any
claims arising under any federal, state, or local laws, including Title VII of
the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq., (“Title
VII”), the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. (“the
ADEA”), the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq. (“ADA”),
Employee Retirement Income Security Act of 1974, as amended 29 U.S.C. § 301, et
seq., as amended (“ERISA”), the Pennsylvania Wage Payment and Collection Law,
Pa. Stat. Ann. tit. 43 §§ 260.1-260.11a (“WPCL”), the Pennsylvania Human
Relations Act, 43 P.S. § 951 et seq. (the “PHRA”), and any and all other
federal, state or local laws, regulations, ordinances or public policies and
any common law claims now or hereafter recognized, including claims for
wrongful discharge, slander and defamation, as well as all claims for counsel
fees and costs.

     (b) By signing this Agreement, Employee represents that Employee has not
commenced any proceeding against Safeguard in any forum (administrative or
judicial)

2

 

concerning Employee’s employment or the termination thereof. Employee
further acknowledges that Employee was given sufficient notice under the Worker
Adjustment and Retraining Notification Act (the “WARN Act”) and that the
termination of Employee’s employment does not give rise to any claim or right
to notice, or pay or benefits in lieu of notice under the WARN Act. In the
event any WARN Act issue does exist or arises in the future, Employee agrees
and acknowledges that the payments and benefits set forth in this Agreement
shall be applied to any compensation or benefits in lieu of notice required by
the WARN Act, provided that any such offset shall not impair or affect the
validity of any provision of this Agreement or the Letter Agreement.

     (c) Employee agrees that in the event of a breach of any of the terms of
this Agreement, Safeguard shall be entitled to recover attorneys’ fees and
costs in an action to prosecute such breach, in addition to compensatory
damages, and may cease to make any payments then due under the Letter
Agreement.

     (d) Anything herein to the contrary notwithstanding, neither party is
released from any obligations under the Letter Agreement and Employee
acknowledges that Safeguard’s obligations under the Letter Agreement and this
Agreement are the only obligations of Safeguard or its affiliates in connection
with the severance of Employee’s service with Safeguard. This Agreement does
not terminate, alter or affect Employee’s rights under any plan or program of
Safeguard in which Employee may participate and under which Employee is due a
benefit, except as explicitly set forth herein. Employee’s participation in
such plans or programs will be governed by the terms of such plans and
programs.

     (e) Employee agrees and acknowledges that this Agreement is not and shall
not be construed to be an admission by Safeguard of any violation of any
federal, state or local statue, ordinance, regulation or of any duty owed by
Safeguard to Employee.

4. Confidentiality; Non-Disparagement.

     (a) Except to the extent required by law, including SEC disclosure
requirements, Safeguard and Employee agree that the terms of this Agreement
will be kept confidential by both parties, except that Employee may advise his
family and confidential advisors, and Safeguard may advise those people needing
to know to implement the above terms.

     (b) Employee will not at any time knowingly reveal to any person or entity
any of the trade secrets or confidential information of Safeguard or of any
third party which Safeguard is under an obligation to keep confidential
(including but not limited to trade secrets or confidential information
respecting inventions, products, designs, methods, know-how, techniques,
systems, processes, software programs, works of authorship, customer lists,
projects, plans and proposals), and Employee shall keep secret all confidential
matters relating to Safeguard and shall not use or attempt to use any such
confidential information in any manner which injures or causes loss or may
reasonably be calculated to injure or cause loss whether directly or indirectly
to Safeguard. These restrictions contained in this sub-paragraph (b) shall not
apply to: (i) information that at the time of disclosure is in the public
domain through no fault of Employee’s; (ii) information received from a third
party outside of Safeguard that was disclosed without a breach of any
confidentiality obligation; (iii) information approved for release by written
authorization of

3

 

Safeguard; or (iv) information that may be required by law or an order of
the court, agency or proceeding to be disclosed; provided, that Employee shall
provide Safeguard notice of any such required disclosure once Employee has
knowledge of it and will help Safeguard at Safeguard’s expense to the extent
reasonable to obtain an appropriate protective order.

     (c) Employee represents that Employee has not taken, used or knowingly
permitted to be used any notes, memorandum, reports, list, records, drawings,
sketches, specifications, software programs, data, documentation or other
materials of any nature relating to any matter within the scope of the business
of Safeguard or its partner companies or concerning any of its dealings or
affairs otherwise than for the benefit of Safeguard. Employee shall not, after
the termination of Employee’s employment, use or knowingly permit to be used
any such notes, memoranda, reports, lists, records, drawings, sketches,
specifications, software programs, data, documentation or other materials, it
being agreed that all of the foregoing shall be and remain the sole and
exclusive property of Safeguard and that immediately upon the termination of
Employee’s employment, Employee shall deliver all of the foregoing, and all
copies thereof, to Safeguard, at its main office.

     (d) In accordance with normal ethical and professional standards,
Safeguard and Employee agree that they shall not in any way engage in any
conduct or make any statement that would defame or disparage the other, or make
to, or solicit for, the media or others, any comments, statements (whether
written or oral), and the like that may be considered to be derogatory or
detrimental to the good name or business reputation of either party. It is
understood and agreed that Safeguard’s obligation under this paragraph extends
only to the conduct of Safeguard’s senior officers. The only exception to the
foregoing shall be in those circumstances in which Employee or Safeguard is
obligated to provide information in response to an investigation by a duly
authorized governmental entity or in connection with legal proceedings.

5. Indemnity.

     (a) This Agreement shall not release Safeguard or any of its insurance
carriers from any obligation it or they might otherwise have to defend and/or
indemnify Employee and hold harmless any other director or officer and
Safeguard affirms its obligation to provide indemnification to Employee as a
director, officer or former director or officer of Safeguard, as set forth in
Safeguard’s bylaws and charter documents in effect on January 1, 2003.

     (b) Employee agrees that Employee will personally provide reasonable
assistance and cooperation to Safeguard in activities related to the
prosecution or defense of any pending or future lawsuits or claims involving
Safeguard.

6. General.

     (a) Employee acknowledges and agrees that he has twenty-one (21) days to
consider this Agreement, and that Employee has been advised by Safeguard, in
writing, to consult with his attorney before signing this Agreement, and that
Employee had discussed this matter with his attorney before signing it.
Employee further acknowledges that Safeguard has advised him that he may revoke
this Agreement for a period of seven (7) calendar days after it has been
executed,

4

 

with the understanding that Safeguard has no obligations under this
Agreement until the seven (7) day period has passed. If the seventh day is a
weekend or national holiday, Employee will have until the next business day to
revoke. Any revocation must be in writing and received by Safeguard at its
facility located at 800 The Safeguard Building, 435 Devon Park Drive, Wayne, PA
19087.

     (b) Employee has carefully read and fully understands all of the
provisions of the Notice and the Agreement which set forth the entire agreement
between him and Safeguard, and he acknowledges that he has not relied upon any
representation or statement, written or oral, not set forth in this document.

     (c) This Agreement is made in the Commonwealth of Pennsylvania and shall
be interpreted under the laws thereof. Its language shall be construed as a
whole, to give effect to its fair meaning and to preserve its enforceability.

     (d) Employee agrees that any breach of this Agreement by Employee will
cause irreparable damage to Safeguard and that in the event of such breach
Safeguard shall have, in addition to any and all remedies of law, the right to
an injunction, specific performance or other equitable relief to prevent the
violation of Employee’s obligations hereunder.

     (e) No term or condition set forth in this letter may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by Employee and the Chief Executive Officer of Safeguard or
another duly authorized officer of Safeguard.

     (f) Any waiver by Safeguard of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach of such
provision or any other provision hereof.

     (g) Each covenant, paragraph and division of this Agreement is intended to
be severable and distinct, and if any paragraph, subparagraph, provision or
term of this Agreement is deemed to be unlawful or unenforceable, such a
determination will not impair the legitimacy or enforceability of any other
aspect of the Agreement.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date written above.

	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 
	 	 	
	 	

	 	 	 	 	[Name of Employee]
	 
	 	 	 	 	 	 
	 	 	 	 	SAFEGUARD SCIENTIFICS, INC.
	 
	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 
	

	 	
	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	

	

	 	 	 	Title	 	 

5

 

EXHIBIT B

NON-COMPETITION AGREEMENT

     This NON-COMPETITION AGREEMENT (hereinafter the “Agreement”) is made and
entered into as of this    day of    , 200_, by and between SAFEGUARD
SCIENTIFICS, INC. (the “Company”) and [Name of Managing Director] (“Employee”).

     1. Background. The parties hereto acknowledge that this Agreement is
being entered into pursuant to the terms of the Letter Agreement, dated
   between the Company and Employee (the “Letter Agreement”). As used
in this Agreement, any reference to “Majority Subsidiary” shall mean any person
or entity that at the date of this Agreement has a majority of its outstanding
voting securities owned directly or indirectly by the Company; “Partner
Company” shall mean any person or entity in which, at the date hereof, the
Company has made, or is actively considering making, an equity or debt
investment or acquisition.

     2. Confidentiality and Non-Disclosure. (a) I will not reveal to any
person or entity any of the trade secrets or confidential information of the
Company or of any Partner Company (including but not limited to trade secrets
or confidential information respecting inventions, products, designs, methods,
know-how, techniques, systems, processes, software programs, works of
authorship, customer lists, employee lists, customer lists, projects, plans and
proposals) and I shall keep secret all matters entrusted to me and shall not
use or attempt to use any such information in any manner which may injure or
cause loss or may be calculated to injure or cause loss, whether directly or
indirectly, to the Company. The above restrictions shall not apply to: (i)
information that at the time of disclosure is in the public domain through no
fault of mine; (ii) information received from a third party outside of the
Company that was disclosed without a breach of any confidentiality obligation;
(iii) information approved for release by written authorization of the Company;
or (iv) information that may be required by law or an order of any court,
agency or proceeding to be disclosed; provided, I shall provide the Company
notice of any such required disclosure once I have knowledge of it and will
help the Company to the extent reasonable to obtain an appropriate protective
order.

          (b) Upon termination of my employment, I shall not take, use or permit to
be used any notes, memoranda, reports, lists, records, drawings, sketches,
specifications, software programs, data, documentation or other materials of
any nature relating to any matter within the scope of the business of the
Company or any Partner Company concerning any of its dealings or affairs, it
being agreed that all of the foregoing shall be and remain the sole and
exclusive property of the Company or the Partner Company, as appropriate, and
that immediately upon the termination of my employment I shall deliver all of
the foregoing, and all copies thereof, to the Company, at its main office.

     3. Ownership of Inventions and Ideas. I acknowledge that the Company
shall be the sole owner of all patents, patent applications, patent rights,
formulas, copyrights, inventions, developments, discoveries, other
improvements, data, documentation, drawings, charts, and other written, audio
and/or visual materials relating to equipment, methods, products, processes, or
programs in connection with or useful to the business of the Company or a
Partner Company (collectively, the “Developments”) which I, by myself or in
conjunction with any other person,

6

 

conceived, made, acquired, acquired knowledge of, developed or created during
the term of my employment with the Company, free and clear of any claims by me
(or any successor or assignee of mine) of any kind or character whatsoever
other than my rights under the Letter Agreement. I acknowledge that all
copyrightable Developments shall be considered works made for hire under the
Federal Copyright Act. I hereby assign and transfer my right, title and
interest in and to all such Developments, and agree that I shall, at the
request of the Company, execute or cooperate with the Company in any patent
applications, execute such assignments, certificates or other instruments, and
do any and all other acts, as the Company from time to time reasonably deems
necessary or desirable to evidence, establish, maintain, perfect, protect,
enforce or defend the Company’s right, title and interest in or to any such
Developments.

     4. Non-Compete. Until the first anniversary of the date hereof (the
“Restricted Period”), I agree that I will not:

               (i) directly or indirectly solicit, entice or induce any customer of the
Company or a Majority Subsidiary to become a customer of any other person, firm
or corporation with respect to products and/or services then sold by the
Company or to cease doing business with the Company, and I shall not approach
any such person, firm or corporation for such purpose or authorize or knowingly
approve the taking of such actions by any other person;

               (ii) directly or indirectly solicit, recruit or hire any person who was an
employee of the Company or a Majority Subsidiary on the date of my termination
of employment to work for a third party other than the Company or such Majority
Subsidiary or engage in any activity that would cause any employee to violate
any agreement with the Company or such Majority Subsidiary; provided that I
shall not be prohibited from soliciting any person who, at the time of
solicitation, is no longer employed by the Company or a Majority Subsidiary and
who was not induced to leave employment in violation of this sub-paragraph
(ii); or

               (iii) whether alone or as a partner, officer, director, consultant, agent,
employee or stockholder of any company or other commercial enterprise, directly
or indirectly engage in any business or other activity which is competitive in
the same service areas with the products or services being manufactured,
marketed, distributed, or provided by the Company or a Majority Subsidiary at
the time of termination of my employment (“Competitive Activities”). The
foregoing prohibition shall not prevent (i) my ownership of securities of a
public company not in excess of five percent (5%) of any class of such
securities, or (ii) my employment or engagement by a company or business
organization which during the previous 12 months did not generate, or during
the next 12 months does not seek to generate, more than 5% of its consolidated
revenues from Competitive Activities, provided that my responsibilities for
such company or business organization do not require me to engage in
Competitive Activities or to violate sub-paragraphs (i) or (ii) of this
Section.

     5. Reasonable Restrictions. I agree that any breach of this Agreement by
me will cause irreparable damage to the Company and that in the event of such
breach the Company shall have, in addition to any and all remedies of law, the
right to an injunction, specific performance or other equitable relief to
prevent the violation of my obligations hereunder. I hereby acknowledge that
the type and periods of restriction imposed in the provisions of this Agreement

7

 

are fair and reasonable and are reasonably required for the protection of the
Company and the goodwill associated with the business of the Company. I
represent that my experience and capabilities are such that the restrictions
contained herein will not prevent me from obtaining employment or otherwise
earning a living at the same general economic benefit as reasonably required by
me. I further agree that each provision herein shall be treated as a separate
and independent clause, and the unenforceability of any one clause shall in no
way impair the enforceability of any of the other clauses herein. Moreover, if
one or more of the provisions contained in this Agreement shall for any reason
be held to be excessively broad as to scope, activity or subject so as to be
unenforceable at law, such provision or provisions shall be construed by the
appropriate judicial body by limiting and reducing it or them, so as to be
enforceable to the maximum extent compatible with the applicable law as it
shall then appear.

     6. General. Any waiver by the Company of a breach of any provision of
this Agreement shall not operate or be construed as a waiver of any subsequent
breach of such provision or any other provision hereof. No term or condition
set forth in this letter may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing and signed by me and
an officer of the Company authorized to sign such writing by the Board of
Directors of Safeguard. My obligations under this Agreement shall survive the
termination of my employment regardless of the manner of such termination and
shall be binding upon my heirs, executors, administrators and legal
representatives. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania. Any controversy
or claim arising out of or relating to this agreement, or the breach thereof
(other than a request for equitable relief) will be settled by arbitration in
Philadelphia, Pennsylvania, in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association,
using one arbitrator, and judgment upon the award rendered by the arbitrator
may be entered in any court of competent jurisdiction.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date written above.

	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 
	 	 	
	 	

	 	 	 	 	[Name of Employee]
	 
	 	 	 	 	 	 
	 	 	 	 	SAFEGUARD SCIENTIFICS, INC.
	 
	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 
	

	 	
	 	 	 	 
	 
	 	 	 	 	 	 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	

	

	 	 	 	Title	 	 

8exv10w3

 

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, subject to all
of the terms and conditions on the reverse side of this Stock Option Grant
Certificate and the _____ Equity Compensation Plan (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:

	 	                   
	 
	 	 
	Type of Option:

	 	Nonqualified Stock Option
	 
	 	 
	Shares Subject to Option:

	 	                   
	 
	 	 
	Exercise Price Per Share:

	 	$                   
	 
	 	 
	Term of Option:

	 	                   years

Shares subject to issuance under this Option will vest as follows:
________________; provided, however, if Grantee’s service terminates prior to
the date this option would otherwise become fully vested as a result of (i)
death, (ii) permanent disability, (iii) retirement on or
after his or her 65th
birthday, (iv) upon the occurrence of a Reorganization or Change of Control (as
defined in the Plan) or (v) not being nominated by the Corporate Governance
Committee for re-election to the Company’s Board of Directors if the
Compensation Committee has determined that the Grantee is a Retiring Director,
this option will be deemed fully vested as of the date of such termination of
service.

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.

By:                                                          

                                                         

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 such
exercise or disposition.

 

 

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 disability (as defined in the Plan), death, cause (as
defined in the Plan), retirement as provided herein, or not being nominated for
re-election to the Company’s Board of Directors by the Corporate Governance
Committee if the Compensation Committee has determined that the Grantee is a
Retiring Director;

     (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
disability;

     (c) 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 within three months after the Grantee ceases to be
so employed or provide such services on account of a termination described in
subparagraph (a) above;

     (d) 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;

     (e) the expiration of the two-year period after the Grantee’s service on
the Company’s Board of Directors terminates as a result of not being nominated
by the Corporate Governance Committee for re-election to the Company’s Board of
Directors if the Compensation Committee has determined that the Grantee is a
Retiring Director;

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

     Notwithstanding the foregoing, in no event may the Option be exercised
after the expiration of the Term of Option specified on the reverse side. 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 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 maximum marginal tax
rate for federal (including FICA), state and local tax liabilities.

3. Change of Control. The provisions of the Plan applicable to a Change of
Control shall apply to the Option, and, in the event of a Change of Control,
the Board may take such actions as it deems appropriate pursuant to the Plan.

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 non-qualified 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. This grant is made pursuant to the Plan,
the terms of which are incorporated herein by reference, and in all respects
shall be interpreted in accordance with 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. The Committee shall have the authority to
interpret and construe the Option pursuant to the terms of the Plan, and its
decisions shall be conclusive as to any questions arising hereunder.

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. The right of the Company to
terminate at will the Grantee’s employment or service at any time for any
reason is specifically reserved. 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 Chief Financial Officer 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.

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