SAFEGUARD SCIENTIFICS, INC.
1990 STOCK OPTION PLAN
As adopted by the Board of Directors on August 8, 1990, as amended by the
Board of Directors on February 25, 1991, and as approved by the shareholders
on May 1, 1991; as amended by the Board of Directors on December 16, 1992,
and as approved by the shareholders on May 11, 1993; as amended by the Board
of Directors on October 25, 1996 and as approved by the shareholders on May
8, 1997. (Adjusted for 9/7/94 [2-for-1], 8/31/95 [3-for-2]and 7/17/96
[2-for-1] stock splits)
1. Purpose. The purpose of this Stock Option Plan (the
"Plan") is to provide additional incentive, in the form of stock options
which may be either incentive stock options or non-qualified stock options,
to employees (including employees who are also officers or directors),
non-employee directors and Eligible Independent Contractors (as hereinafter
defined) of Safeguard Scientifics, Inc., a Pennsylvania corporation (the
"Corporation"), and its subsidiaries whose judgment, initiative and efforts
contribute significantly to the successful operation of the Corporation's
business, and to increase their proprietary interest in the success of the
enterprise to the benefit of the Corporation and its shareholders.
2. Definitions. When used in this Plan, unless the
context otherwise requires:
(a) "Board" shall mean the Board of Directors of the
Corporation.
(b) "Cause" shall mean, except to the extent otherwise
specified by the Committee, a finding by the Committee that the
Optionee has breached his or her employment or service contract,
non-competition agreement, or other obligation with the
Corporation, or has been engaged in disloyalty to the
Corporation, including without limitation, fraud, embezzlement,
theft, commission of a felony or proven dishonesty in the course
of his or her employment or service, or has disclosed trade
secrets or confidential information of the Corporation to persons
not entitled to receive such information.
(c) "Code" shall mean the Internal Revenue Code of
1986, as amended from time to time, and any successor thereto.
(d) "Committee" shall mean the Committee designated by
the Board to administer the Plan.
(e) "Eligible Independent Contractor" shall mean an
independent consultant or advisor hired by the Corporation to
provide bona fide services for the Corporation that are not in
connection with the offer or sale of securities in a
capital-raising transaction.
(f) "Employed by the Corporation" shall mean
employment as an employee or Eligible Independent Contractor or
member of the Board so that for
1
purposes of exercising Stock Options, an Optionee shall not be
considered to have terminated employment until the Optionee
ceases to be an employee, Eligible Independent Contractor or
member of the Board, unless the Committee determines otherwise.
(g) "ISO" shall mean a stock option which, at the time
such option is granted, qualifies as an incentive stock option,
as defined in Section 422 of the Code.
(h) "NQSO" shall mean a stock option which, at the
time such option is granted, does not qualify as an ISO as
defined in the Code.
(i) "Optionee" shall mean an employee, non-employee
director or Eligible Independent Contractor to whom an award is
granted pursuant to the Plan.
(j) "Options" shall mean all ISOs and NQSOs which from
time to time may be granted under this Plan.
(k) "Share" shall mean a share of the common stock,
$.10 par value, of the Corporation.
(l) "Parent" shall mean any corporate parent of the
Corporation, as defined in Section 424(e) of the Code.
(m) "Plan" shall mean the Safeguard Scientifics, Inc.
1990 Stock Option Plan, as amended from time to time.
(n) "Subsidiary" shall mean any corporate subsidiary
of the Corporation, as defined in Section 424(f) of the Code.
3. Administration. The Plan shall be administered by
a Committee of the Board of Directors, which shall consist of not less than
two members of the Board of the Corporation, who shall be appointed by, and
shall serve at the pleasure of, the Board. Each member of such Committee,
while serving as such, shall be deemed to be acting in his capacity as a
director of the Corporation.
The Committee shall have full authority, subject to the
terms of the Plan, to select the persons to whom ISOs or NQSOs
may be granted under the Plan, to grant Options on behalf of the
Corporation, and to set the number of Shares to be covered by
such Options, the times and dates at which such Options shall be
granted and exercisable and the other terms of such Options. The
Committee also shall have the authority to establish such rules
and regulations, not inconsistent with the provisions of the
Plan, for the proper administration of the Plan, and to amend,
modify or rescind any such rules and regulations, and to make
such determinations and interpretations under, or in connection
with, the Plan, as it deems necessary or advisable. All such
rules, regulations, determinations and interpretations shall be
binding and conclusive upon the Corporation, its shareholders and
all employees, and
2
upon their respective legal representatives, beneficiaries,
successors and assigns and upon all other persons claiming under
or through any of them.
No member of the Board or the Committee shall be liable
for any action or determination made in good faith with respect
to the Plan or any Option granted under it. Nothing herein shall
be deemed to expand the personal liability of a member of the
Board or Committee beyond that which may arise under any
applicable standards set forth in the Corporation's by-laws and
Pennsylvania law, nor shall anything herein limit any rights to
indemnification or advancement of expenses to which any member of
the Board or the Committee may be entitled under any by-law,
agreement, vote of the shareholders or directors, or otherwise.
4. Eligibility. The class of persons who shall be
eligible to receive Options under the Plan shall be the employees
(including any employees who are also officers or directors ),
non-employee directors and Eligible Independent Contractors of
the Corporation or of any Subsidiary. More than one Option may
be granted to an Optionee under the Plan.
The Committee may require that the exercise of the
Option shall be subject to the satisfaction of conditions
relating to the Optionee's position and duties with the
Corporation and the performance thereof.
5. Amount of Stock. The stock to be offered for
purchase pursuant to Options granted under this Plan shall be treasury or
authorized but unissued Shares, and the total number of such Shares which may
be issued pursuant to Options under this Plan shall not exceed 4,750,000
Shares, subject to adjustment as provided in Section 16 hereof. The maximum
aggregate number of shares of Stock that shall be subject to Options granted
under the Plan to any Optionee shall not exceed 1,000,000. If any
unexercised Options lapse or terminate for any reason, the Shares covered
thereby may again be optioned.
6. Stock Option Agreement. Each Option
granted under this Plan shall be evidenced by an appropriate stock option
agreement ("Agreement"), which Agreement shall expressly specify whether such
Option is an ISO or NQSO and shall be executed by the Corporation and by the
Optionee. The Agreement shall contain such terms and provisions, not
inconsistent with the Plan, as shall be determined by the Committee. Such
terms and provisions may vary between Optionees or as to the same Optionee to
whom more than one Option may be granted.
7. Option Price. The exercise price under each Option
granted hereunder shall be determined by the Committee in its discretion,
provided, however, that the exercise price of an ISO shall in no event be
less than an amount equal to the fair market value of the Shares subject to
the ISO on the date of grant.
8. Ten Percent Shareholders. If an
Optionee owns more than ten percent of the total combined voting power of all
shares of stock of the Corporation or of a Parent or Subsidiary at the time
an ISO is granted to him, the Option price for the ISO shall
3
be not less than 110% of the fair market value of the Shares
subject to the ISO on the date the ISO is granted, and such ISO,
by its terms, shall not be exercisable after the expiration of
five years from the date the ISO is granted. The conditions set
forth in this Section 8 shall not apply to NQSOs.
9. Term and Exercise of Option.
(a) Term. Each Option shall expire on such date as
may be determined by the Committee with respect to such Option,
but in no event shall any Option expire more than ten years from
the date it is granted. The date on which an Option shall be
granted shall be the date of the Committee's authorization of the
Option or such later date as may be determined by the Committee
at the time the Option is authorized.
(b) Exercise. Options shall be exercisable in such
installments and on such dates, and/or upon the occurrence of
such events, as the Committee may specify. The Committee may
accelerate the exercise date of any outstanding Options, in its
discretion, if it deems such acceleration to be desirable.
Except as provided in Section 11, no Option shall be exercised
unless at the time of such exercise the Optionee is then employed
by the Corporation or any Subsidiary. Exercisable Options may be
exercised, in whole or in part, from time to time, by giving
written notice of exercise to the Corporation at its principal
office, specifying the number of Shares to be purchased and
accompanied by payment in full of the aggregate Option price for
such Shares. Only full Shares shall be issued under the Plan,
and any fractional Share which might otherwise be issuable upon
exercise of an Option granted hereunder shall be forfeited.
(c) Payment of Option Price. The Option price shall
be payable (i) in cash or its equivalent; (ii) in the discretion
of the Committee, in Shares previously acquired by the Optionee
(including Shares acquired in connection with the exercise of an
Option, subject to such restrictions as the Committee deems
appropriate), provided that, if such Shares were acquired through
exercise of an ISO, such Shares have been held by the Optionee
for a period of not less than the holding period described in
section 422(a)(1) of the Code on the date of exercise, and that,
in any case, such Shares have been held by the Optionee for the
requisite period of time necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and
adverse accounting consequences to the Corporation with respect
to the Option; (iii) in the discretion of the Committee, in any
combination of (i) and (ii) above; or (iv) in the discretion of
the Committee, by delivering a properly executed notice of
exercise of the Option to the Corporation and a broker, with
irrevocable instructions to the broker to deliver to the
Corporation on the settlement date the amount of sale proceeds
necessary to pay the exercise price of the Option.
(d) Replacement Options. The Committee may, in its
sole discretion and at the time of the original option grant,
authorize the Optionee to receive automatically replacement
Options pursuant to this part of the Plan. Any such replacement
Option shall be granted upon such terms and subject to such
conditions
4
and limitations as the Committee may deem appropriate. Any
replacement Option shall cover a number of shares determined by
the Committee, but in no event more than the number of shares of
the original Option exercised. The per share exercise price of
any replacement Option shall equal the then current Fair Market
Value of a Share, and shall have a term as determined by the
Committee at the time of grant of the original Option.
The Committee shall have the right, and may reserve the
right in any Option grant, in its sole discretion and at any
time, to discontinue the automatic grant of replacement Options
if it determines the continuance of such grants to no longer be
in the best interest of the Corporation.
10. Maximum Value of ISOs. The aggregate fair
market value of the Shares, determined as of the date of grant, with respect
to which ISOs first become exercisable during any calendar year by an
Optionee (under this Plan and any other plan of the Corporation or any parent
or Subsidiary) shall not exceed $100,000.
11. Termination of Employment.
(a) Except as set forth below, and unless otherwise
determined by the Committee at or after grant, in the event of
termination (voluntary or involuntary) for any reason of an
Optionee's employment by the Corporation or any subsidiary, all
Options granted hereunder to such Optionee, to the extent
exercisable on the date of termination, or to any greater extent
permitted by the Committee, may be exercised by the Optionee at
any time within ninety days after the date of such termination,
provided, however, that in no event shall any Option be
exercisable after the expiration of its term.
(b) Unless otherwise determined by the Committee at or
after grant, if the termination of employment is due to
disability (as defined in Section 22(e)(3) of the Code), the
Optionee shall have the privilege of exercising the unexercised
Option to the extent such Option was exercisable on the date of
such termination due to disability, or to any greater extent
permitted by the Committee, within one year of such date,
provided, however, that in no event shall any Option be
exercisable after the expiration of its term.
(c) Unless otherwise determined by the Committee at or
after grant, if the Optionee dies within three months of
termination of employment or the termination of employment is due
to the death of the Optionee while in the employ of the
Corporation or a subsidiary, the estate of the holder or the
person or persons who acquired the right to exercise such Option
by bequest or inheritance, shall have the privilege of exercising
the unexercised Option to the extent such Option was exercisable
on the date of such termination, or to any greater extent
permitted by the Committee, within one year of the earlier of the
date of termination or the date of death, but in no event shall
any Option be exercisable after the expiration of its term.
5
(d) Unless otherwise determined by the Committee at or
after grant, if the Corporation terminates the employment of the
Optionee for Cause, any Option held by such Optionee shall
terminate as of the date the Optionee ceases to be employed by
the Corporation, and the Optionee shall automatically forfeit all
Shares underlying any exercised portion of an Option for which
the Corporation has not yet delivered the share certificates upon
refund by the Corporation of the exercise price paid by the
Optionee for such Shares.
(e) Notwithstanding the provisions of subparagraphs
11(a), 11(b), 11(c) and 11(d) above, the Committee may determine
with respect to any NQSO that such NQSO shall terminate at a time
later than the expiration of such three-month or one-year
periods, as set forth in the Agreement.
12. Withholding and Use of Shares to Satisfy Tax Obligations.
(a) Required Withholding. The obligation of the
Corporation to deliver Shares upon the exercise of any Option
shall be subject to applicable federal (including FICA), state
and local tax withholding requirements. The Corporation may
require the Optionee or other person receiving such Shares to pay
to the Corporation the amount of any such taxes that the
Corporation is required to withhold with respect to such Options,
or the Corporation may deduct from other wages paid by the
Corporation the amount of any withholding taxes due with respect
to such Options.
(b) Election to Withhold Shares. If the Committee so
permits, an Optionee may elect to satisfy the Corporation's
income tax withholding obligation with respect to an Option by
having shares withheld up to an amount that does not exceed the
Grantee's maximum marginal tax rate for federal (including FICA),
state and local tax liabilities. The election must be in a form
and manner prescribed by the Committee and shall be subject to
the prior approval of the Committee.
13. Non-Assignability. Each Option granted under
the Plan shall be non-transferable by the Optionee except by will or the laws
of descent and distribution, and each Option shall be exercisable during the
Optionee's lifetime only by him. Notwithstanding the foregoing, the Committee
may provide, at or after grant, that an Optionee may transfer NQSOs pursuant
to a domestic relations order or to family members or other persons or
entities on such terms as the Committee may determine.
14. Issuance of Shares and Compliance with Securities Acts. Within a
reasonable time after exercise of an Option, the Corporation shall cause to
be delivered to the Optionee a certificate for the Shares purchased pursuant
to the exercise of the Option. At the time of any exercise of any Option,
the Corporation may, if it shall deem it necessary and desirable for any
reason connected with any law or regulation of any governmental authority
relative to the regulation of securities, require the Optionee to represent
in writing to the Corporation that it is his then intention to acquire the
Common Stock for investment and not with a view to distribution thereof and
that such Optionee will not dispose of such shares in any
6
manner that would involve a violation of applicable securities
laws. In such event, no shares shall be issued to such holder
unless and until the Corporation is satisfied with such
representation. Certificates for Shares issued pursuant to the
exercise of Options may bear an appropriate securities law
legend.
15. Rights as a Shareholder. An Optionee
shall have no rights as a shareholder with respect to Shares covered by his
Option until the date of the issuance or transfer of the Shares to him and
only after such Shares are fully paid. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date of
such issuance or transfer.
16. Stock Adjustments. In the event of a
reorganization, recapitalization, change of shares, stock split, or spinoff,
stock dividend, reclassification, subdivision or combination of shares,
merger, consolidation, rights offering, or any other change in the corporate
structure or shares of the Corporation, the Committee shall make such
adjustment as it, in its sole discretion, deems appropriate in the number and
kind of shares authorized by the Plan, in the number and kind of shares
covered by grants made under the Plan or in the purchase prices of
outstanding Options, and such adjustments shall be effective and binding on
the Optionee and the Corporation for all purposes of the Plan, provided,
however, that no such adjustments shall be made to any ISO without the
Optionee's consent if such adjustment would cause such ISO to fail to qualify
as such under Section 422 of the Code.
In the event of a corporate transaction (as that term
is described in Section 424(a) of the Code and the Treasury
Regulations issued thereunder as, for example, a merger,
consolidation, acquisition of property or stock, separation,
reorganization, or liquidation), each outstanding Option shall be
assumed by the surviving or successor corporation, provided,
however, that in the event of a proposed corporate transaction,
the Committee may terminate all or a portion of the outstanding
Options if it determines that such termination is in the best
interests of the Corporation. If the Committee decides to
terminate outstanding Options, the Committee shall give each
Optionee holding an Option to be terminated not less than seven
days' notice prior to any such termination by reason of such a
corporate transaction, and any such outstanding Option which is
to be so terminated may be exercised (if and only to the extent
that it is then exercisable) up to and including the date
immediately preceding such termination. Notwithstanding the
preceding sentence, as provided in Section 9 hereof, the
Committee, in its discretion, may accelerate, in whole or in
part, the date on which any or all Options become exercisable.
17. Adoption by Board and Approval by Shareholders. This Plan becomes
effective on August 8, 1990 (the date the Plan was adopted by the Board),
provided, however, that if the Plan is not approved by a majority of the
votes cast at a duly held meeting at which a quorum representing a majority
of all outstanding voting stock of the Corporation is, either in person or by
proxy, present and voting on the Plan, within 12 months after said date, the
Plan and all Options granted hereunder shall be null and void and no
additional Options shall be granted hereunder.
7
18. Termination and Amendment of the Plan. Subject to the right of the
Board to terminate the Plan prior thereto, the Plan shall terminate on, and
no Options shall be granted hereunder after, August 8, 2000. The Board shall
have power at any time, in its discretion, to amend, abandon or terminate the
Plan, in whole or in part, provided that no such action shall affect any
Options theretofore granted and then outstanding under the Plan. Nothing
contained in this Section 18, however, shall terminate or affect the
continued existence of rights created under Options issued hereunder and
outstanding on August 8, 2000, which by their terms extend beyond such date.
The Board may amend or terminate the Plan at any time
or from time to time, but no amendment or termination shall be
made which would impair the rights of an Optionee under an Option
theretofore granted without the Optionee's consent; and provided,
further that the Board shall not amend the Plan without
shareholder approval if such approval is required pursuant to the
Code or the rules of any national securities exchange or
over-the-counter market on which the Corporation's Shares are
then listed or included.
19. Interpretation. A determination of the Committee
as to any question which may arise with respect to the interpretation of the
provisions of this Plan or any Options shall be final and conclusive, and
nothing in this Plan, or in any regulation hereunder, shall be deemed to give
any Optionee, his legal representatives, assigns or any other person any
right to participate herein except to such extent, if any, as the Committee
may have determined or approved pursuant to this Plan. The Committee may
consult with legal counsel who may be counsel to the Corporation and shall
not incur any liability for any action taken in good faith in reliance upon
the advice of such counsel.
20. Governing Law. With respect to any ISOs granted
pursuant to the Plan and the Agreements thereunder, the Plan,
such Agreements and any ISOs granted pursuant thereto shall be
governed by the applicable Code provisions to the maximum extent
possible. Otherwise, the laws of the Commonwealth of
Pennsylvania shall govern the operation of, and the rights of
Optionees under, the Plan, the Agreements and any Options granted
thereunder.
21. Rule 16b-3 Compliance. Unless an Optionee could
otherwise transfer Shares issued hereunder without incurring
liability under Section 16(b) of the Exchange Act, at least six
months must elapse from the date of grant of an Option to the
date of disposition of the Shares issued upon exercise of the
Option.
8