SAFEGUARD SCIENTIFICS INC ET AL
FORM OF LETTER AGREEMENT DATED JANUARY 1, 2003
<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>5
<FILENAME>w84521exv10w16.txt
<DESCRIPTION>FORM OF LETTER AGREEMENT DATED JANUARY 1, 2003
<TEXT>
<PAGE>

                                                                   EXHIBIT 10.16

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

                                                                 January 1, 2003

[Name of Managing Director]
[Address of Managing Director]

Dear ____________:

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

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

         -        You will receive a payment in respect of your current year's
         bonus equal to the average bonus percentage of annual base salary paid
         to other members of Safeguard's Managing Directors Committee as
         determined at the end of Safeguard's fiscal year multiplied by 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 Safeguard's fiscal year for
         which the payment is being made.

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[Name of Managing Director]
January 1, 2003
Page 2

         -        If (A) there is a Change of Control Termination or (B) a
         Severance Termination occurs after the later of (1) the third
         anniversary of your date of employment or (2) October 12, 2003
         (collectively the "Service Requirements"), you will receive a lump sum
         payment equal to the product of (i) 2 multiplied by (ii) the sum of
         your annual base salary (of at least $310,000) plus the average of your
         actual bonus as received for the last three completed fiscal years
         during which you were a Managing Director (taking into account the
         value of any equity grants received by you during such period in lieu
         of cash bonuses). If there has been no Change of Control termination
         but there has been a Severance Termination before the Service
         Requirements are met, 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 the average of your actual bonus as
         received for the last three completed fiscal years during which you
         held your current position on the date of this letter (taking into
         account the value of any equity grants received by you during such
         period in lieu of cash bonuses)

         -        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.

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

         -        You will receive up to $20,000 as a reimbursement for
         documented 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 in accordance with Safeguard's customary
         policies.

         -        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.

         -        If your employment with Safeguard is terminated, for any
         reason, other than cause or your resignation without good reason, 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

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[Name of Managing Director]
January 1, 2003
Page 3

         their terms expire sooner, in which case you may exercise such options
         at any time before their expiration). In addition, upon such a
         termination, your restricted stock grants made before October, 2002
         will become fully vested and the Board, in its discretion may
         accelerate the vesting of any restricted stock grants and deferred
         stock units, if any, made or credited after October, 2002.

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

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

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

         Safeguard will pay you the lump sum payments described above within
five business days of the date on which you have signed the release and
non-competition agreement and such agreements have become effective and
following any determination required by the preceding paragraph. Safeguard will
prepare the final release (which will be substantially in the form attached as
Exhibit A to this letter, but with such changes, if any, as recommended by
Safeguard's counsel) and the final non-competition agreement (which will be
substantially in the form attached as Exhibit B to this letter, but with such
changes, if any, as recommended by Safeguard's counsel) within five business
days of your termination of employment. You will

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[Name of Managing Director]
January 1, 2003
Page 4

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 the agreement set forth
in this New Agreement or any obligation hereunder.

         In this letter, the term "cause" means (a) your failure to adhere to
any written Safeguard policy if you have been given a reasonable opportunity to
comply with such policy or cure your failure to comply (which reasonable
opportunity must be granted during the ten-day period preceding termination of
this New Agreement); (b) your appropriation (or attempted appropriation) of a
material business opportunity of Safeguard, including attempting to secure or
securing any personal profit in connection with any transaction entered into on
behalf of Safeguard; (c) your misappropriation (or attempted misappropriation)
of any Safeguard fund or property; or (d) your conviction of, or your entering a
guilty plea or plea of no contest with respect to, a felony, the equivalent
thereof, or any other crime with respect to which imprisonment is a possible
punishment.

         In this letter, the term "good reason" means (i) your assignment
(without your consent) to a position, title, responsibilities, or duties of a
materially lesser status or degree of responsibility than your current position,
responsibilities, or duties; provided, however, that a mere change in your area
of responsibilities shall not constitute a material change if you are reasonably
suited by your education and training for such responsibilities and you remain a
member of the Safeguard Managing Directors Committee; (ii) a reduction of your
base salary or target bonus opportunity (acknowledging that the payment of any
bonus is subject to the discretion of the Compensation Committee of the Board);
(iii) the relocation of Safeguard's principal executive offices to a location
which is more than 30 miles away from the location of Safeguard's principal
executive offices on the date of this New Agreement; or (iv) your assignment
(without your consent) to be based anywhere other than Safeguard's principal
executive offices. Notwithstanding the foregoing, good reason shall not exist if
Safeguard cures such action or failure to act that constitutes good reason
within a reasonable period of time (which reasonable period of time shall not be
longer than 10 days) following the date you provide Safeguard with notice of
your intended resignation for good reason.

         A "change of control" shall be deemed to have occurred if (i) any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other
than any Safeguard employee stock ownership plan or an equivalent retirement
plan, becomes the beneficial owner (as such term is used in Section 13(d) of the
Exchange Act), directly or indirectly, of securities of Safeguard representing
50% or more of the combined voting power of Safeguard's then outstanding voting
securities, (ii) the Board ceases to consist of a majority of Continuing
Directors (as defined below), (iii) the consummation of a sale of all or
substantially all of Safeguard's assets or a liquidation (as measured by the
fair value of the assets being sold compared to the fair value of all of

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[Name of Managing Director]
January 1, 2003
Page 5

Safeguard's assets), or (iv) a merger or other combination occurs such that a
majority of the equity securities of the resultant entity after the transaction
are not owned by those who owned a majority of the equity securities of
Safeguard prior to the transaction. A "Continuing Director" shall mean a member
of the Board of Directors who either (i) is a member of the board of Directors
at the date of this New Agreement or (ii) is nominated or appointed to serve as
a Director by a majority of the then Continuing Directors.

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

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

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

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

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

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

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

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

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

<PAGE>

[Name of Managing Director]
January 1, 2003
Page 6

         The New Agreement, together with the Prior Agreement, where applicable,
as discussed in the first paragraph of this letter, constitute the entire
agreement and understanding with respect to your severance arrangements, and
supersede any and all prior agreements and understandings whether oral or
written, relating thereto.

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

                                          Sincerely,

                                          Safeguard Scientifics, Inc.

                                          By:__________________________________

                                          Title

I agree to the terms and conditions of this letter.

__________________________________
[Name of Managing Director]

<PAGE>

                                    EXHIBIT A

                          GENERAL RELEASE AND AGREEMENT

NOTICE:

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

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

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

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

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                          GENERAL RELEASE AND AGREEMENT

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

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

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

3.                General Release.

         (a)      Employee, for and in consideration of the special severance
allowance and other termination benefits offered to him by Safeguard specified
in the Letter Agreement and intending to be legally bound, does hereby REMISE,
RELEASE AND FOREVER DISCHARGE Safeguard, of and from any and all causes of
actions, suits, debts, claims and demands whatsoever in law or in equity, which
Employee ever had, now has, or hereafter may have or which Employee's heirs,
executors or administrators may have, by reason of any matter, cause or thing
whatsoever, from the beginning of Employee's employment with Safeguard to the
date of this Agreement, and particularly, but without limitation, any claims
arising from or relating in any way to Employee's employment or the termination
of Employee's employment relationship with Safeguard, including, but not limited
to, any claims arising under any federal, state, or local laws, including Title
VII of the Civil Rights Act of 1964, as amended, 42 U.S.C.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)

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<PAGE>

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

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

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

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

4.                Confidentiality; Non-Disparagement.

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

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

                                       3

<PAGE>

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

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

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

5.                Indemnity.

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

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

6.                General.

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

                                       4

<PAGE>

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

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

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

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

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

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

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

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

Date:_______________________________      ___________________________________
                                          [Name of Managing Director]

                                          SAFEGUARD SCIENTIFICS, INC.

Date:_______________________________
                                          By:________________________________
                                          Title

                                       5

<PAGE>

                                    EXHIBIT B

                            NON-COMPETITION AGREEMENT

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

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

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

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

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

                                       6

<PAGE>

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

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

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

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

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

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

                                       7

<PAGE>

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 Managing Director]

                                          SAFEGUARD SCIENTIFICS, INC.

Date:_______________________________

                                          By:________________________________
                                          Title

                                       8

</TEXT>
</DOCUMENT>
