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EXHIBIT 10.6




SAFEGUARD SCIENTIFICS, INC.

GROUP DEFERRED STOCK UNIT PROGRAM

FOR DIRECTORS




Under the Safeguard Scientifics, Inc. ______ Equity Compensation Plan




     Safeguard Scientifics, Inc. (the “Company”) generally pays retainer fees,
Board meeting fees, Committee chair retainer fees, and Committee meeting fees
to its directors (“Directors Fees”). By filing the attached form (the
“Election Form”) with the Company you will commence participation in the
Safeguard Scientifics, Inc. Group Deferred Stock Unit Program for Directors
under the Safeguard Scientifics, Inc.    Equity Compensation Plan (the
“Program”). For 2004, you may elect to defer Directors Fees to be earned after
June 30, 2004. Your participation in the Program will automatically terminate
on the date you cease to be a director and are no longer entitled to receive
Directors Fees from the Company.



     The following sets forth a brief description of the tax treatment
associated with your election to participate in the Program as well as some of
the more significant features and requirements of the Program. However, we
encourage you to consult with your tax advisor before making an election to
receive deferred shares in lieu of your Directors Fees.



     In general, if you elect to participate in the Program, you may elect to
defer all or part of the Directors Fees to be earned after the date of your
election. Upon filing your election, you (a) receive in exchange for your
Directors Fees a stock award under the Safeguard Scientifics, Inc.    
Equity Compensation Plan (the “Plan”) and (b) defer the receipt of the shares
under that stock award until the date you terminate service. The stock award
will provide you with the right to receive a number of shares of common stock
of the Company that is equal to the sum of (1) your Directors Fees divided by
the Fair Market Value (as defined in Section 5(b)(ii) of the Plan) of a share
of the Company’s common stock (the “Stock”), as of the date on which your
Directors Fees otherwise would have been paid (the “Deferral Shares”), plus (2)
25% of your Directors Fees divided by the Fair Market Value of a share of Stock
as of the date on which your Directors Fees otherwise would have been paid
(“Matching Shares”). If, at the time you make your deferral election, there is
a trading blackout period, or if otherwise deemed necessary by the Company, the
Directors Fees you elect to defer will be held and invested in a money market
account until the close of the blackout period, at which time the deferred
Directors Fees will be converted into Deferral Shares and Matching Shares based
on the Fair Market Value of a share of Stock on the date the blackout period
closed, or, on the date determined by the Company, as applicable.



     You will always be fully vested in your Deferral Shares but, upon the date
you cease to provide services to the Company, you shall not be entitled to
receive your Matching Shares unless such shares have become vested as described
below. Your execution of an Election Form shall constitute acknowledgement
that all decisions and determinations by the Company shall be final and binding
on the Company, you and any other persons having or claiming an interest under
the Program.



     If you make an election in 2004, your deferral election will apply to
Directors Fees to be earned after June 30, 2004 for the 2004 calendar year and
for Directors Fees to be earned during



 









 





each calendar year thereafter that you remain a director and are entitled
to receive Directors Fees from the Company, unless you elect to cease making
deferrals on or before November 30 of the calendar year immediately preceding
the calendar year for which you wish your deferral election to cease to apply.
Your election with respect to 2004 Directors Fees will be irrevocable once
made.




     To elect to defer all or part of the Director Fees to be earned after June
30, 2004 for the 2004 calendar year (and subsequent calendar years), you must
complete and file an Election Form with the Company on or before June 11, 2004.
If you choose not to defer Directors Fees for 2004 but would like to defer
Directors Fees for a subsequent calendar year, you must complete and file an
Election Form on or before November 30 of the calendar year immediately
preceding the calendar year for which you wish your deferral election to become
effective. Once made, your election will be irrevocable with respect to the
initial calendar year for which the election is made, and will remain in effect
for all subsequent calendar years, unless you revoke your election as described
above. Notwithstanding any provision of the Program to the contrary, an
election that is made to defer Directors Fees that is made after you first
become eligible to participate in this Program must be made within 30 days
after you become eligible.



     Upon your filing of the Election Form with the Company, the Company will
establish a bookkeeping account in your name (the “Account”). The Account will
be credited with the number of Deferral Shares and Matching Shares you will be
entitled to receive on a deferred basis. The Deferral Shares and Matching
Shares will be subject to the terms of the Plan regarding stock awards,
including the terms regarding the treatment of stock awards granted under the
Plan upon a Change of Control of the Company (as defined in the Plan).



     If the Company distributes a dividend to its shareholders, the Company
will pay you an amount equal to the amount that would have been paid to you if
you actually owned the Stock represented by the Deferral Shares and Matching
Shares. Any amounts that you receive as a result of the distribution of a
dividend will also be treated as ordinary income when you actually receive such
amounts.



     You will become vested in 100% of the Matching Shares upon the first
anniversary of the date on which your Directors Fees otherwise would have been
paid. If you cease to provide services to the Company for any reason other
than death, Disability (as defined in the Plan), upon the occurrence of a
Change of Control (as defined in the Plan), retirement on or after your 65th
birthday, or as a result of your not being nominated by the Corporate
Governance Committee for re-election to the Company’s Board of Directors before
the Matching Shares have become fully vested, Matching Shares that are not then
vested shall be forfeited and must be immediately returned to the Company. If
you terminate due to death, Disability, upon the occurrence of a Change of
Control, retirement on or after your 65th birthday, or as a result of your not
being nominated by the Corporate Governance Committee for re-election to the
Company’s Board of Directors, all of your Matching Shares shall automatically
become 100% fully vested.



     Ordinarily, upon payment of Directors Fees, you must recognize as ordinary
taxable income the amount of such Directors Fees. If you elect to be credited
with Deferral Shares and Matching Shares in lieu of cash Directors Fees, your
recognition of ordinary income will be postponed until you actually receive the
Deferral Shares and Matching Shares. The Fair Market Value of the Stock you
receive in respect of the Deferral Shares and the Matching Shares on the



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date on which you actually receive them following your termination of
service will then be treated as ordinary income. When you sell the Stock, you
will realize capital gain or loss (long-term or short-term, depending on the
length of time the Stock was held) in an amount equal to the difference between
your tax basis in the Stock and the selling price. For the Stock attributable
to the Deferral Shares and the Matching Shares, your tax basis will ordinarily
be the Fair Market Value of the Stock at the time you receive it.




     In order to benefit from this deferred tax treatment for Directors Fees to
be earned after June 30, 2004, you must complete and return an Election Form on
or before June 11, 2004. As indicated above, your election will relate to
Directors Fees earned after June 30, 2004 for the 2004 calendar year and
Directors Fees to be earned for each calendar year thereafter unless you revoke
your election on or before November 30 of the calendar year preceding the
calendar year for which you wish your deferral election to cease to apply. (An
Election Form to defer Directors Fees commencing in 2004 is enclosed). If you
do not wish to defer Directors Fees for 2004, but would like to defer Directors
Fees for a subsequent calendar year, you must return an Election Form on or
before November 30 of the calendar year preceding the calendar year for which
you wish your election to become effective.



     In general, the Stock credited to your Account will be distributed to you
as soon as possible after the one-year anniversary of the date you cease to
provide services to the Company, but in no event later than sixty (60) days
thereafter. However, you may elect to have all or a portion of the Stock in
your Account distributed to you on a date that is later than the one year
anniversary of the date you cease to provide services to the Company by
notifying the Company of the date on which you wish to receive a distribution.
Such notice must be in writing, set forth the number of shares of Stock that
you request to be distributed and be filed with the Company prior to the date
on which you cease to provide services to the Company and is irrevocable.
Distribution of all of the Deferral Shares and Matching Shares must be made by
the later of (i) the date on which you attain age 70 or (ii) the fifth
anniversary of your termination of service with the Company.



     You may elect to have the Company distribute Stock to you in a single
distribution, or over a period of time, not to exceed five annual installments.
You may change this election at any time prior to your termination of service.
If you do not make an election, your Account balance will be distributed in a
single lump sum as soon as practicable after the one year anniversary of the
date you cease to provide services to the Company. However, if your Account
balance is less than $50,000 (determined by multiplying the number of shares in
your Account by the Fair Market Value of the Shares on the date of your
termination) on the date you cease to provide services to the Company, your
Account balance will be distributed to you in a single lump sum as soon as
reasonably practicable after you cease to provide services to the Company. In
the event of a trading blackout period, or as otherwise deemed necessary by the
Company, distribution may be delayed until such blackout period closes, or as
determined by the Company, as applicable.



     In the event the Company determines that you have encountered an
unforeseeable hardship, upon receipt of your written request, you may redeem as
many Deferral Shares and vested Matching Shares as necessary to alleviate your
hardship up to the number of Deferral Shares and vested Matching Shares in your
Account. Stock redeemed as the result of a hardship will be distributed as
soon as possible after the Company determines you have encountered an



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unforeseeable hardship. For purposes of this Program, unforeseeable
hardship is an unexpected need for cash arising from an illness, casualty loss,
sudden financial reversal, or other such unforeseeable occurrence. Cash needs
arising from foreseeable events such as the purchase of a house or education
expenses for children are not considered to be the result of an unforeseeable
hardship. Notwithstanding anything in this Program to the contrary, if you
receive a distribution of Stock in a calendar year by reason of a hardship, any
election you have made under this Program for the remaining portion of the year
will be terminated and you will be prohibited from making an election under
this Program for the next calendar year.




     If you die before your Account has been fully paid out, the beneficiary
designated on your Election Form will receive a distribution of a number of
shares of Stock equal to the remaining Deferral Shares and Matching Shares
credited to your Account as soon as administratively practicable after your
death. If your beneficiary predeceases you or if, for some reason, you have
not designated a beneficiary, your Deferral Shares and Matching Shares will be
paid to your surviving spouse, or, if none, your estate.



     Upon request, the Company will provide to you a statement showing the
number of Deferral Shares and Matching Shares that have been credited to your
Account.



     You may make an election to receive Deferral Shares and Matching Shares in
lieu of all or part of your Directors Fees and to defer receipt of the Deferral
Shares and Matching Shares by completing the attached Election Form and
returning it to the Corporate Secretary. If you wish to defer Directors Fees
to be earned after June 30, 2004, you must return the completed Election Form
no later than June 11, 2004. If you do not wish to make a deferral election
for 2004, but wish to defer receipt of Directors Fees for a subsequent calendar
year, you must complete an Election Form and return it to the Corporate
Secretary no later than November 30 of the calendar year immediately preceding
the calendar year for which you wish your deferral election to become
effective.



     This Program may be amended, suspended or terminated at any time by the
Company; provided, however that no amendment, suspension or termination that
occurs after Deferral Shares and Matching Shares have been credited to your
Account will adversely effect your rights in such Deferral Shares or Matching
Shares without your consent. Notwithstanding the foregoing, the Company may
amend or terminate the Plan immediately at any time if the Company deems such
amendment or termination appropriate to avoid adverse accounting or tax
consequences in connection with the Plan or should the financial accounting
rules or tax laws applicable to the Plan be revised so as to subject the
Company to adverse accounting consequences or to subject the Company or Plan
participants to adverse tax consequences, in connection with the Plan, as
determined by the Company in its sole discretion. In addition, the Company
reserves the right to freeze the Program at any time and to cease all elections
then in place to defer additional Directors Fees. Upon such an election, the
Company will communicate to you that the Program has been frozen and that no
Directors Fees will be deferred under the Program, regardless of any then
current election to the contrary. Deferrals of Directors Fees will thereafter
not be permitted until such time, if any, as the Company elects to re-institute
the Program. Upon such an event, distributions of Deferral Shares and Matching
Shares will continue to be made in accordance with the terms of this Program.



     If you have any questions, please call the Corporate Secretary at
877-506-7371.



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SAFEGUARD SCIENTIFICS, INC. _____ EQUITY COMPENSATION PLAN

DEFERRED STOCK UNIT PROGRAM




DEFERRAL ELECTION FORM




Select and complete the following. Except as indicated below, capitalized
terms herein have the same meaning as ascribed to such terms under the
Safeguard Scientifics, Inc. Group Deferred Stock Unit Program for Directors
Under the Safeguard Scientifics, Inc. 1999 Equity Compensation Plan (the
“Program”) or under the Safeguard Scientifics, Inc. 1999 Equity Compensation
Plan (the “Plan”), as indicated.





		
	o 	Directors Fees. I hereby elect to receive a deferred stock award in
lieu of _________% or $_____________________ (select either a
percentage or indicate a flat dollar amount) of the Directors Fees (as
defined in the Program) I will earn as a result of my serving as a
member of the Board of Directors of Safeguard Scientifics, Inc. (the
“Company”). I understand that such stock award shall be for a number
of shares equal to (a) my Directors Fees divided by the Fair Market
Value (as defined in the Plan) of a share of Stock (as defined in the
Program) on the date on which I would have otherwise received the
Directors Fees (the “Deferral Shares”), plus (b) 25% of my Directors
Fees divided by the Fair Market Value of a share of Stock on the date
I would otherwise have received my Directors Fees (“Matching Shares”);
provided, however, that if at the time I make a deferral election
there is a trading blackout period in effect, I understand the
Directors Fees I elect to defer will be held and invested in a money
market account until the close of the blackout period, at which time
the deferred Directors Fees will be converted into Deferral Shares and
Matching Shares based on the Fair Market Value of a share of Stock on
the date the blackout period closes I understand that once filed,
this election will apply to the percentage or dollar amount of
Directors Fees indicated above to be earned after June 30, 2004 for
the 2004 calendar year and for each calendar year thereafter. I
understand that my election is irrevocable with respect to Directors
Fees to be earned on or after June 30, 2004 for the 2004 calendar year
but that I may revoke this election with respect to subsequent
calendar years by filing a notice with the Company no later than
November 30 of the calendar year immediately preceding the calendar
year for which I wish to revoke my deferral election.




Distributions. I understand that by completing this
election form my Deferral Shares and
Matching Shares will be distributed to me as
soon as is reasonably practicable after the
one-year anniversary of the date that I
cease to perform services for the Company.
I further understand that if I wish to defer
distribution of my Deferral Shares and
Matching Shares until a date that is after
the one-year anniversary of the date I cease
to perform services for the Company, I will
be required to provide the Company with
written notice of the date on which I would
like to receive a distribution of my
Deferral Shares and Matching Shares, and
that such written notice must be received by
the Company prior to the date that I cease
to provide services to the Company. I
further understand that I must receive a
distribution of my shares by the later of
(i) the date that I attain 70 or (ii) the
date that is five years after the date I
cease to provide services to the Company.





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FORM OF DISTRIBUTION




I hereby elect to have any Deferral Shares and Matching Shares paid to me in
the following form [select and complete one of the following]:





		
	o 	In a single distribution at the distribution time for the Account as discussed above.






		
	o 	In substantially equal annual installments over a period of _________ years (not more than 5) with the first installment
being made at the distribution time for the Account discussed above and the remaining installments being made each
anniversary thereof.





I understand that I may change this election at any time prior to the date I
cease to provide services to the Company.




BENEFICIARY DESIGNATION




Beneficiary to whom payment is to be made (as above specified) in the event of
my death before receiving payment of the entire balance in my Account:




	 	 	 
	
 
	 	
 
	Name
	 	Address







Contingent Beneficiary to whom payment is to be made (as above specified) in
the event of my death before receiving payment of the entire balance in my
Account if the Beneficiary listed above dies before the entire balance of my
Account has been distributed.




	 	 	 
	
 
	 	
 
	Name
	 	Address







     This election supersedes any prior election I have made under the Plan.



	 	 	 	 	 	 	 
	GRANTEE SIGNATURE	 	Receipt Acknowledged:
	 
	 	 	 	 	 	 
	 	 	 	 	Safeguard Scientifics, Inc.
	 
	 	 	 	 	 	 
	

	 	 	 	By:	 	 
	
	 	 	 	

	 
	 	 	 	 	 	 
	Date:

	 	 	 	Date:	 	 
	

	 	

	 	 	 	









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