8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) February 23, 2005

Safeguard Scientifics, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Pennsylvania

(State or Other Jurisdiction of Incorporation)

1-5620	23-1609753
(Commission File Number)	(IRS Employer Identification No.)

800 The Safeguard Building 435 Devon Park Drive Wayne, PA	19087
(Address of Principal Executive Offices)	(Zip Code)

610-293-0600

(Registrant’s Telephone Number, Including Area Code)

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	ITEM 1.01. Entry into a Material Definitive Agreement.
	ITEM 9.01. Financial Statements and Exhibits
SIGNATURES
	Exhibit Index
Letter Agreement, dated February 25, 2005, by and between Safeguard Scientifics, Inc. and John A. Loftus.

ITEM 1.01. Entry into a Material Definitive Agreement.

Approval of Variable Portion of Total 2004 Compensation for Executive Officers

On February 23, 2005, the Compensation Committee of the Board of Directors approved payment of, and the Board ratified, the variable cash incentive for the Chief Executive Officer and each other eligible executive officer for the 2004 fiscal year under the Registrant’s management incentive plan. The awards were made pursuant to the plan adopted by the Compensation Committee in April 2004, which was not set forth in a written agreement and which established corporate and individual objectives for the payment of variable, at-risk cash incentives to eligible executive officers based on 2004 performance and operating results. The corporate objectives for 2004 included: (i) specified revenue and EBITDA objectives for the Registrant’s controlled companies; (ii) corporate expense plus interest expense objectives; (iii) capital generation objectives from the sale of non-strategic assets; (iv) completion of the sale of CompuCom Systems, Inc.; and (v) each participant’s individually established objectives.

In addition to its review of the quantitative achievement of the corporate objectives under the 2004 plan, the Compensation Committee considered the efforts of the executive officers and the significant milestones achieved during 2004 in completing the transformation of the Registrant’s business strategy, including completion of the $150 million convertible debt offering which extended the stated maturity of the Registrant’s long-term debt to 2024 and reduced interest expense by approximately $3.5 million per year; completion of the sale of CompuCom Systems, Inc., which provided approximately $128 million of gross proceeds; acquisition of Laureate Pharma; continued development of the Registrant’s companies; substantial reductions in corporate expenses; establishment of a growing pipeline for potential acquisitions; and expansion of the Registrant’s management team to supplement deal sourcing and execution, investor relations and legal support capabilities.

The Compensation Committee approved the payment of 2004 cash incentives for the Chief Executive Officer and each other eligible executive officer in the amounts stated below:

Name of Officer (1)	Position	2004 Variable Compensation
Anthony L. Craig	President and Chief Executive Officer	$622,800
Michael F. Cola	Group President, Life Sciences	$247,967
Christopher J. Davis	Executive Vice President and Chief Administrative & Financial Officer	$284,625
John A. Loftus	Senior Vice President and Chief Technology Officer	$116,775
Anthony A. Ibargüen (2)	President & Chief Executive Officer, Alliance Consulting Group Associates, Inc.	$100,000

(1)	Steven J. Feder, who joined the Registrant in November 2004 as Senior Vice President and General Counsel, was not eligible for a 2004 cash incentive.
(2)	Represents the portion of his 2004 cash incentive earned while Mr. Ibargüen served as an officer of the Registrant and was eligible for participation in the plan. In May 2004, Mr. Ibargüen left the Registrant to become President of a subsidiary of the Registrant. Mr. Ibarguen is no longer considered an executive officer of the Registrant.

Compensation of Non-Management Directors

The form and amount of compensation paid to the Registrant’s non-management directors is periodically reviewed by the Compensation and Corporate Governance Committees of the Registrant’s Board. On February 23, 2005, the Corporate Governance Committee recommended to the Board, and the Board approved, an annual retainer of $50,000, effective January 1, 2005, for Robert E. Keith for serving as Chairman of the Board. The annual retainer had been $85,000 for 2004.

Employment Agreement

On February 25, 2005, the Board authorized the Registrant to enter into a letter agreement with John A. Loftus. The letter agreement provides for a base salary for 2005 of $250,000 and a variable cash incentive target of $150,000 under the 2005 Plan. The letter agreement also provides that in the event the Registrant terminates Mr. Loftus’

employment without cause, Mr. Loftus terminates his employment for good reason (as those terms are defined in the letter agreement), or such events occur within 18 months following a change in control of the Registrant (as defined in the letter agreement), Mr. Loftus would receive a payment equal to a multiple of 1.5 of his annual base salary. In addition, under those circumstances, certain insurance coverages would continue for up to 12 months. All such payments are subject to execution of a customary release agreement as well as compliance with confidentiality and non-solicitation agreements with the Registrant.

The letter agreement is filed with this Current Report on Form 8-K as Exhibit 99.1. The foregoing description is subject to, and qualified in its entirety by, the letter agreement, which is incorporated by reference herein.

ITEM 9.01. Financial Statements and Exhibits

(a) Financial Statements of Businesses Acquired.

     Not applicable.

(b) Pro Forma Financial Information.

     Not applicable.

(c) Exhibits.

99.1   Letter Agreement, dated February 25, 2005, by and between Safeguard Scientifics, Inc. and John A. Loftus

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Safeguard Scientifics, Inc.
Dated: February 25, 2005	By:	STEVEN J. FEDER
		Steven J. Feder
		Senior Vice President and General Counsel

Exhibit Index

99.1   Letter Agreement, dated February 25, 2005, by and between Safeguard Scientifics, Inc. and John A. Loftus

EX-99.1

                                                                    Exhibit 99.1

                           Safeguard Scientifics, Inc.
                           800 The Safeguard Building
                              435 Devon Park Drive
                                 Wayne, PA 19087
                                 (610) 293-0060
                          (610) 293-0601 (General Fax)

                                                            February 25, 2005



John A. Loftus
4002 Browning Court
Lower Providence, PA 19403


Dear Mr. Loftus:


      You previously entered into an employment letter, dated April 25, 2002,
(the "Prior Agreement") with Safeguard Scientifics, Inc. ("Safeguard").
Safeguard considers it essential to the best interests of its stockholders to
foster your continued employment with Safeguard by offering 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
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 replaces the Prior Agreement, which is hereby terminated.

      Salary and Bonus. Your annual salary for 2005 will be $250,000, and shall
be effective as of January 1, 2005. As a matter of maintaining competitive
employment terms, salaries are reviewed annually against internal and external
peer groups, and individual performance, and, if appropriate, adjusted upwards.
You will also be eligible to participate in the Safeguard annual bonus program,
at a target bonus for 2005 of $150,000. The overall bonus program goals are
determined at the beginning of each year, and approved for payment annually,
after the year-end audited results, by the Compensation Committee of the Board.
Your individual actual bonus amount will be determined by performance to
individual objectives, and by the overall performance of Safeguard.

      Fringe Benefits. You will also be eligible to participate in Safeguard's
health, dental, vision, disability, 401(k), and other benefit plans generally
available to Safeguard executive employees from time to time. In addition, so
long as you are an employee and Safeguard offers these benefits generally to
other executives, you will be paid a car allowance at the rate of $10,000 per
annum; will receive a non-accountable annual expense allowance of $8,000 per
annum; and, subject to evidence of insurability, will be entitled to a Company
paid universal life insurance providing coverage of $750,000 in addition to the
Company's normal group life plans offered to employees generally. You will also
be entitled to vacation at the annual rate of four weeks of vacation per year,
and other benefits as described in materials provided to you from time to time.

John A. Loftus
February 25, 2005
Page 2

      Terms of Employment. You will be an employee-at-will and subject to the
arrangements described in Safeguard's employee handbook as modified from time to
time. In addition, your continued employment is subject to your compliance with
the Employee Agreement that you have previously signed and delivered to
Safeguard.

      Severance Termination and Change of Control. 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 $150,000),
      multiplied by (ii) Safeguard's percentage achievement of its annual
      Management Incentive Plan objectives as determined by the Compensation
      Committee as measured 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 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) 1.5 multiplied by (ii) your annual salary (of at least $250,000).

      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 twelve (12) 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 the end of
      such twelve (12) month period.

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

John A. Loftus
February 25, 2005
Page 3

      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) , and the Board, in its discretion, may accelerate the
      vesting of any restricted stock grants and deferred stock units, if any.

      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

John A. Loftus
February 25, 2005
Page 4

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) and the final non-competition agreement (which will be
substantially in the form attached as Exhibit B 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 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.

      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 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 thirty calendar days 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 experience, education and training for such responsibilities and
you remain Senior Vice President and Chief Technology Officer of Safeguard; (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

John A. Loftus
February 25, 2005
Page 5

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 who either (i) is a member of the Board 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.

      Miscellaneous. 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

John A. Loftus
February 25, 2005
Page 6

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.

      This New Agreement constitutes the entire agreement and understanding with
respect to your severance arrangements, and supersedes any and all prior
agreements (including, specifically, the Prior Agreement) 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:   /s/ Anthony L. Craig
                                       ---------------------------------------
                                          Anthony L. Craig
                                          President and Chief Executive Officer


I agree to the terms and conditions of this letter.

/s/ John A. Loftus
- ------------------------------------------------
John A. Loftus

                                    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.


                                       1

                          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 Executive Officer]
("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 waivable 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.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"), Employee Retirement Income
Security Act of 1974, as amended 29 U.S.C.Section 301, et seq., as amended
("ERISA"), the Pennsylvania Wage Payment and Collection Law, Pa. Stat. Ann.
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, 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, 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
Safeguard; or (iv) information that may be required by law or an order of the
court, agency or


                                       3

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 Employee in his capacity as an officer of
Safeguard 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 now in effect.

   (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,
with the understanding that Safeguard has no obligations under this Agreement
until the seven


                                       4

(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, Attention: Steven J.
Feder, Senior Vice President and General Counsel.

   (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 Executive Officer] ("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. Notwithstanding the
foregoing, Developments will not become owned by the Company if they were
conceived, made, developed or created in furtherance of my performance of my
duties as a member of the Board of Directors of Gestalt, Inc.

      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 (a) my ownership of
securities of a public company not in excess of five percent (5%) of any class
of such securities, or (b) 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. Further,
the foregoing prohibition shall not prevent me from continuing to own shares of
Gestalt Investments, LLC and continuing to serve as a member of the Board of
Directors of Gestalt Investments, LLC, provided that I shall not take part,
personally, in any activities on behalf of Gestalt Investments, LLC which, if
undertaken by me personally, would violate sub-paragraphs (i) or (ii) of this
Section.


                                       7

      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 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


                                       8