Exhibit 10.10
July 10, 2001
Mr. N. Jeffrey Klauder
900 Gladestry Lane
Lower Gwynedd, Pennsylvania 19002
Dear Mr. Klauder:
Safeguard Scientifics, Inc. ("Safeguard") considers it essential to the
best interests of its stockholders to attract and foster the continuous
employment of key management personnel of Safeguard.
To further such interests, Safeguard will provide you the benefits set
forth in this letter in the event your employment with Safeguard is
involuntarily terminated without cause or you terminate your employment with
Safeguard for good reason within 12 months from the hire date of a new Chief
Executive Officer. Such benefits will be provided in accordance with the terms
and conditions of this letter.
Subject to the terms and conditions of this letter, in the event
Safeguard involuntarily terminates your employment without cause, or you
terminate your employment with good reason, prior to the first anniversary
hereof or, if later, the first anniversary of the hire date of a new Chief
Executive Officer, 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, accrued vacation
and other rights which you may have against Safeguard or its affiliates.
- You will receive a lump sum payment equal to the product of (i) 1.5
multiplied by (ii) the sum of your annual base salary (of at least
$310,000) plus your annual base bonus (calculated at 70 percent of
annual base salary).
- You will become vested in all stock options granted to you and 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).
- Vesting of your interest in the various LTIPs in which you participate
will cease on the date of termination of your employment and you will
receive
benefits under the various LTIP's in accordance with the terms and
conditions of such plans.
- In the event Safeguard involuntarily terminates your employment
without cause, or you terminate your employment with good reason,
before January 15, 2002, you will receive a lump sum payment of
$375,000 in lieu of the retention bonus of such amount to which you
would be entitled if your employment continued through such date.
- You will receive up to 18-month's continued coverage under Safeguard's
medical and health plans and life insurance plans; coverage will end
if you obtain coverage from a subsequent employer. 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 the end of such 18 month period.
- You will receive up to $1,500 a month for up to 12 months for
outplacement services or office space which you secure.
- You will be reimbursed promptly for all your reasonable and necessary
business expenses incurred on behalf of Safeguard prior to your
termination date.
All compensation and benefits described above will be contingent on
your execution of a release of all claims against Safeguard substantially in the
form attached to this letter.
Safeguard will pay you the lump sum payments described above within
five business days of the date on which the release you execute 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 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 recission period of seven days.) 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.
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 this 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 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 (a) (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; or (ii) a reduction of your 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) your assignment
(without your consent) to be based anywhere other than Safeguard's principal
executive offices.
The agreement will inure to the benefit of your personal
representatives, executors, and heirs. In the event you die 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 you and the Chief Executive Officer of Safeguard or
another 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 letter will be
the only obligations of Safeguard or its affiliates in connection with any
determination by Safeguard to terminate your employment with Safeguard. This
letter does not terminate, alter, or affect your rights under any plan or
program of Safeguard in which you may participate, except as explicitly set
forth herein. Your participation in such plans or programs will be governed by
the terms of such plans and programs.
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.
The obligations of Safeguard set forth in this letter 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 of claims against Safeguard in the form attached to this
letter.
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.
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,
/s/ Vincent Bell
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Safeguard Scientifics, Inc.
By: Vincent Bell
Title:
I agree to the terms and conditions of this letter
/s/ N. Jeffrey Klauder
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N. Jeffrey Klauder