[SAFEGUARD LOGO]
EXHIBIT 10.21
January 2, 2002
Xxxxxxx X. Xxxxxxxx
Safeguard Scientifics, Inc.
000 Xxxxx Xxxx Xxxxx
Xxxxx, XX 00000
Dear Xx. Xxxxxxxx:
Safeguard Scientifics, Inc. ("Safeguard") is pleased to enter into this
letter agreement with you (the "Executive"), which will address the terms of
Executive's employment with Safeguard. Safeguard considers it essential to the
best interests of its stockholders to attract and xxxxxx the continuous
employment of key management personnel of Safeguard and the arrangements
described in this letter are intended to address that goal.
1. Duties. Commencing on the date hereof (the "Commencement
Date") Executive will serve as Managing Director, Business and IT Services, will
report directly to the Chief Executive Officer and will be a member of the
Management Committee of Safeguard.
2. Term. Executive's employment relationship with Safeguard is
employment "at will". As a result, Executive's employment may be terminated by
the Chief Executive Officer, the Board of Directors or by Executive at any time
without any liability or obligation, except as set forth in this letter.
3. Compensation.
(a) Base Salary. During the term of Executive's employment,
Executive will receive a base salary of $300,000 per annum, subject to review
and potential increase in the sole discretion of the Compensation Committee.
(b) Bonus. Commencing with the 2002 calendar year, Executive
will participate in the 2002 Management Incentive Plan currently being developed
by
Safeguard (the "MIP") at a target bonus percentage equal to 100% of Executive's
base salary conditioned upon meeting the performance targets to be set forth in
the MIP.
(c) Guaranteed Bonus. Of Executive's 2002 bonus, $150,000 will
be guaranteed and shall be paid to Executive as follows: $75,000 on the date
hereof, $25,000 on March 31, 2002, $25,000 on June 30, 2002 and $25,000 on
September 30, 2002. Executive will repay to Safeguard in full this guaranteed
bonus if Executive terminates his employment with Safeguard prior to the first
anniversary of the Commencement Date.
4. Initial Equity Compensation Grants.
(a) Option Grant. On the Commencement Date, Executive will be
granted options to purchase 300,000 shares of Common Stock of Safeguard, which
options shares will vest 25% on the first anniversary hereof and the remaining
75% of which will vest in equal monthly installments during the three year
period commencing on the first anniversary of the date hereof. The options will
be granted under the 2001 Associates Equity Compensation Plan (the "Option
Plan") on the date hereof, will have an exercise price equal to the mean of the
high and low sales prices of Safeguard common stock on the date hereof, and will
expire on the eighth anniversary of the date hereof (subject to earlier
termination in accordance with the Option Plan). Additional equity grants may be
awarded commencing in 2002 by action of the Compensation Committee.
(b) One Year Restricted Stock Grant. On the Commencement Date,
Executive will be granted 50,000 shares of restricted stock, which restricted
shares will vest in full on the first anniversary of the date hereof. These
restricted shares will be granted under the Option Plan.
(c) Two Year Restricted Stock Grant. On the Commencement Date,
Executive will be granted 50,000 shares of restricted stock, which restricted
shares will vest in equal monthly installments during the year commencing on the
first anniversary of the date hereof. These restricted shares will be granted
under the Option Plan.
(d) Three Year Restricted Stock Grant. On the Commencement
Date, Executive will be granted 50,000 shares of restricted stock, which
restricted shares will vest in equal monthly installments during the year
commencing on the second anniversary of the date hereof. These restricted shares
will be granted under the Option Plan.
(e) Four Year Restricted Stock Grant. On the Commencement
Date, Executive will be granted 50,000 shares of restricted stock, which
restricted shares will vest in equal monthly installments during the year
commencing on the third anniversary of the date hereof. These restricted shares
will be granted under the Option Plan.
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5. Fringe Benefits. Executive will be paid a car allowance at the
rate of $10,000 per annum; will be reimbursed for country club dues at the rate
of $8,000 per annum; will participate in Safeguard's executive medical plan
(pursuant to which up to $5,000 of reasonable and necessary medical, healthcare,
vision or dental expenses not allowed under normal health plans are reimbursed);
will receive at Safeguard's cost up to $750,000 of life insurance (assuming that
Executive meets normal insurability requirements); and will participate in all
other benefit programs offered generally by the Company to its other executives.
6. Severance Payments. Subject to the terms and conditions of
this letter, in the event Safeguard involuntarily terminates Executive's
employment without cause, or Executive terminates his employment with good
reason (a "Severance Termination"), Safeguard will provide Executive the
following benefits which shall be the only severance benefits or other payments
in respect of Executive's employment with Safeguard to which Executive shall be
entitled. Without limiting the generality of the foregoing, these benefits are
in respect of all salary (except for salary for periods ending on the date of
termination), accrued vacation and other rights which Executive may have against
Safeguard or its affiliates.
(a) Upon a Severance Termination, Executive will receive
a lump sum payment equal to the product of (i) 1.5 (the "Multipler") multiplied
by (ii) the sum of Executive's annual base salary plus Executive's annual target
bonus (calculated at 100 percent of annual base salary).
(b) Upon a Severance Termination, Executive will become
fully vested in 50% of all unvested restricted stock grants held by Executive at
the time of termination (the "Vesting Number"). The restricted shares which will
vest pursuant to the immediately preceding sentence will be first, any
restricted share grants with respect to which an election under Section 83(b) of
the Internal Revenue Code of 1986, as amended, was made by the Executive in the
order of vesting dates which chronologically would have immediately followed the
Severance Termination until the Vesting Number is equaled; and thereafter any
restricted share grants with respect to which no Section 83 (b) election was
made by the Executive in the order of vesting dates which chronologically would
have immediately followed the Severance Termination until the Vesting Number is
equaled. In addition, if a Severance Termination occurs prior to the first
anniversary of the date hereof, Executive will become fully vested in the number
of options which is equal to 300,000 multiplied by a fraction, the numerator of
which is the number of 30 day periods which have elapsed from the date hereof
until the date of termination and the denominator of which is 48. Upon a
Severance Termination, Executive will be able to exercise any options which have
vested on the termination date until the earlier of (a) the first anniversary of
the date of termination, or (b) the expiration date of the option.
(c) Upon a Severance Termination, Executive will receive
continued coverage under Safeguard's medical and health plans and life insurance
plans for 18 months following the termination date, provided that coverage will
end if Executive
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obtains comparable coverage from a subsequent employer. Executive 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 the end
of such 18 month period. Upon a Severance Termination, Executive will receive up
to $20,000 for outplacement services or office space which Executive secures.
Executive will be reimbursed promptly for all Executive's reasonable and
necessary business expenses incurred on behalf of Safeguard prior to Executive's
termination date.
(d) All compensation and benefits described above will be
contingent on Executive's execution of a release of all claims against Safeguard
substantially in the form of Exhibit A.
(e) Safeguard will pay Executive the lump sum payments
described above within five business days of the date on which the release
Executive executes becomes effective. Safeguard will prepare the final release
(which will be substantially in the form attached as Exhibit A to this letter)
within five business days of Executive's termination of employment. Executive
will have 21 days in which to consider the release although Executive may
execute it sooner. Please note that the release has a rescission period of seven
days. All other payments will be made to Executive within five business days of
the date on which they become due or, in the case of payments payable on notice
from Executive, within five business days of such notice.
(f) 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 Executive
to enforce this agreement or any obligation hereunder.
(g) In this letter, the term "cause" means (a)
Executive's failure to adhere to any written Safeguard policy if Executive have
been given a reasonable opportunity to comply with such policy or cure
Executive's failure to comply (which reasonable opportunity must be granted
during the ten-day period preceding termination of this Agreement); (b)
Executive's 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) Executive's misappropriation (or attempted misappropriation) of
any of Safeguard's funds or property; or (d) Executive's conviction of,
indictment for (or its procedural equivalent), or Executive's 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 (a) (i) prior to the
second anniversary of the date hereof, Executive's assignment (without
Executive's consent) to a position, title, responsibilities, or duties of a
materially lesser status or degree of responsibility than the position,
responsibilities, or duties of Managing Director, Business and IT Services,
Executive ceases to be a member of the management committee or a successor
committee of comparable responsibilities, or Executive is
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required to report to any person other than the Chief Executive Officer; or (ii)
a reduction of Executive's base salary; (b) the relocation of Safeguard's
principal executive offices to a location which is more 30 miles outside of
center city Philadelphia; or (c) Executive's assignment (without Executive's
consent) to be based anywhere other than Safeguard's principal executive
offices.
(h) Executive will not be required to mitigate the amount
of any payment provided for in this letter by seeking other employment or
otherwise.
(i) Executive acknowledges that the arrangements
described in this letter will be the only obligations of Safeguard or its
affiliates in connection with any determination by Safeguard to terminate
Executive's employment with Safeguard. This letter does not terminate, alter, or
affect Executive's rights under any plan or program of Safeguard in which
Executive may participate, except as explicitly set forth herein. Executive's
participation in such plans or programs will be governed by the terms of such
plans and programs.
7. Withholding; Nature of Obligations. Safeguard will 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.
8. Miscellaneous. The agreement will inure to the benefit of
Executive's personal representatives, executors, and heirs. In the event
Executive dies while any amount payable under this agreement remains unpaid, all
such amounts will be paid in accordance with the terms and conditions of this
letter. No term or condition set forth in this letter may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing
and signed by Executive and the an officer of Safeguard authorized to sign such
writing by the Board of Directors (or an authorized committee thereof) of
Safeguard. This 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
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.
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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.
/s/ X. Xxxxxxx Xxxxxxx
----------------------
By: X. Xxxxxxx Xxxxxxx
Title: Managing Director
and General Counsel
I agree to the terms and conditions of this letter
/s/ Xxxxxxx X. Xxxxxxxx
------------------------
Xxxxxxx X. Xxxxxxxx
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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 he Equal
Employment Opportunity Commission (EEOC), the Department of Labor and state
civil rights agencies.
If Executive sign this General Release and Agreement and accept the
agreed-upon special severance allowance and other termination benefits described
in the letter addressed to Executive which accompanies this release, Executive
are giving up Executive's 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 Executive's employment or termination therefrom which
arise up to the date this Agreement is executed.
By signing this General Release and Agreement Executive waive
Executive's 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 Executive's behalf under and federal or state
discrimination law, except where prohibited by law. Executive agree to release
and discharge each Releasee not only from any and all claims which Executive
could make on Executive's 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. Executive
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
Executive, by no action of Executive's own, become a mandatory member of any
class from which Executive cannot, by operation of law or order of court, opt
out, Executive shall not be required to pay for any legal fees or costs incurred
by a Releasee as a result.
We encourage Executive to discuss the following release language with
an attorney prior to executing this Agreement. In any event, Executive should
thoroughly review and understand the effect of the release before acting on it.
Therefore, please take this release home and consider it for up to twenty-one
(21) days before Executive decide to sign it.
GENERAL RELEASE AND AGREEMENT
This GENERAL RELEASE AND AGREEMENT (hereinafter the "Release") is made
and entered into as of this ___ day of ________________, 200_, by and between
SAFEGUARD SCIENTIFICS, INC. ("Safeguard") and _________________ ("Employee").
1. Background. The parties hereto acknowledge that this Release is
being entered into pursuant to the terms of the Letter Agreement, dated January
2, 2002 (the "Letter Agreement"), between Safeguard and Employee. As used in
this Release, 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, Xxxxxxxx agrees to pre-sign and deliver to the Company resignation
letters acceptable to Safeguard in order to effect Employee's resignation from
certain companies and entities, and we 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 that accompanies this Release, 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 he ever had, now has, or hereafter may
have or which his or her heirs, executors or administrators may have, by reason
of any matter, cause or thing whatsoever, from the beginning of his or her
employment with Safeguard to the date of this Release, and particularly, but
without limitation, any claims arising from or relating in any way to his or her
employment or the termination of his or her 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. Section 2000e et seq., ("Title VII"), the Age Discrimination
in Employment Act, 29 U.S.C. Section 621 et seq. ("the ADEA"), the Americans
with Disabilities Act, 42 U.S.C. Section 12101 et seq. ("ADA"), the Employee
Retirement Income Security Act of 1974, 29 U.S.C. Section 301, et seq., as
amended ("ERISA"), the Pennsylvania Wage Payment and Collection Law, Pa. Stat.
Xxx. tit. 43 Sections 260.1-260.11a ("WPCL"), the Pennsylvania Human Relations
Act, 43 P.S. Section 951 et seq. (the "PHRA"), and any and all other federal,
state or local laws, 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 Release, Employee represents that Employee
has not commenced any proceeding against Safeguard in any forum (administrative
or judicial) 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 Release shall be
applied to any pay 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 Release or the Letter Agreement.
(c) Each party to this General Release and Agreement agrees
and covenants not to sue or to bring, or assign to any third person, any claims
or charges against one another with respect to any known matter arising before
the date of this Release or covered by the release and not to assert against one
another in any action, grievance, suit, litigation or proceeding any known
matter before the date of this Release or covered by the release. The parties
agree that in the event of a breach of any covenant of this Release by any
party, the party breached shall be entitled to recover attorneys' fees and costs
in an action to prosecute such breach, in addition to compensatory damages.
(d) Anything herein to the contrary notwithstanding, neither
party is released from any of his, her or its obligations under the Letter
Agreement and Employee acknowledges that Safeguard's obligations under the
Letter Agreement and this Release are the only obligations of Safeguard or its
affiliates in connection with the severance of Employee's service with
Safeguard. This Release does not terminate, alter, or affect Employee's rights
under any plan or program of Safeguard in which Employee may participate
(including the Safeguard LTIP), except as explicitly set forth in the Letter
Agreement. Employee's participation in such plans or programs will be governed
by the terms of such plans and programs.
4. Confidentiality; Non-Disparagement.
(a) Except to the extent required by law, including SEC and
New York Stock Exchange disclosure requirements, Safeguard and Employee agree
that the terms of this Release 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. Safeguard
shall use its best efforts to obtain Employee's prior written approval prior to
making any required disclosure.
(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
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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;
(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 Safeguard; or (iv) information
that may be required by law or an order of the court, agency or proceeding to be
disclosed; provided, 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, 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 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 my 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 Release shall not release Safeguard or any of its
insurance carriers from any obligation it or they might otherwise have to defend
and/or indemnify
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Employee and hold him harmless from any claims made against him arising out of
his activities as director or officer of Safeguard, to the same extent as
Safeguard or its insurance carriers are or may be obligated to defend and/or
indemnify 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, officer of Safeguard, as set forth in Safeguard's bylaws and
charter documents in effect on October 12, 2001.
(b) Employee agrees that Employee will personally provide
reasonable assistance and cooperation to Safeguard, at Safeguard's expense, in
activities related to the prosecution or defense of any pending or future
lawsuits or claims involving Safeguard.
6. General.
(a) Employee understands that this Release is revocable by him
for a period of seven days following execution of the Release. This Release
shall not become effective or enforceable until this seven day revocation period
has ended.
(b) Employee has carefully read and fully understands all the
provisions of the Notice and the Release 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) 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.
(d) 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 an officer of Safeguard duly
authorized by the Board of Directors of Safeguard.
(e) 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.
IN WITNESS WHEREOF, the parties have executed this Release as of the
date written above.
Dated: January 2, 2002 /S/ XXXXXXX XXXXXXXX
--------------------
Name of Employee:
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SAFEGUARD SCIENTIFICS, INC.
Dated: January 2, 2002
By: /S/ X. XXXXXXX XXXXXXX
Title: Managing Director and
General Counsel
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