<PAGE>   1
                                                                   Exhibit 10.42



               SAILS MANDATORILY EXCHANGEABLE SECURITIES CONTRACT



                                   dated as of



                                 August 25, 1999





                                      among





                          SAFEGUARD SCIENTIFICS, INC.,



                     SAFEGUARD SCIENTIFICS (DELAWARE), INC.,



                        CREDIT SUISSE FINANCIAL PRODUCTS



                                       and



                          CSFP CAPITAL, INC., as Agent
<PAGE>   2



                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                 PAGE

<S>                                                                             <C>
                                    ARTICLE 1
                                   DEFINITIONS

SECTION 1.01.  Definitions ....................................................    1

                                    ARTICLE 2
                                SALE AND PURCHASE

SECTION 2.01.  Sale and Purchase ..............................................    5
SECTION 2.02.  Purchase Price .................................................    6
SECTION 2.03.  Payment for and Delivery of Contract Shares ....................    6
SECTION 2.04.  Cash Settlement Option .........................................    7

                                    ARTICLE 3
                             TERMINATION BY SELLERS

SECTION 3.01.  Termination by Seller ..........................................    7

                                    ARTICLE 4
                    REPRESENTATIONS AND WARRANTIES OF SELLERS

SECTION 4.01.  Representations and Warranties of Seller .......................    8

                                    ARTICLE 5
                        CONDITIONS TO BUYER'S OBLIGATIONS

SECTION 5.01.  Conditions .....................................................    10

                                    ARTICLE 6
                                    COVENANTS

SECTION 6.01.  Taxes ..........................................................    11
SECTION 6.02.  Forward Contract ...............................................    11
SECTION 6.03.  Notices ........................................................    12
SECTION 6.04.  Further Assurances .............................................    12
SECTION 6.05.  Actions That Could Cause Either Seller to Become an Affiliate ..    12
SECTION 6.06.  Securities Contract ............................................    13
</TABLE>

                                       ii
<PAGE>   3

<TABLE>
<CAPTION>
                                    ARTICLE 7
                                   ADJUSTMENTS

<S>                                                                             <C>
SECTION 7.01.  Dilution Adjustments ...........................................    13
SECTION 7.02.  Reorganization Events ..........................................    15
SECTION 7.03.  Provisions Relating to Reorganization Events and Spin-Offs .....    15
SECTION 7.04.  Termination and Payment ........................................    15

                                    ARTICLE 8
                                  ACCELERATION

SECTION 8.01.  Acceleration ...................................................    16

                                    ARTICLE 9
                                  MISCELLANEOUS

SECTION 9.01.  Notices ........................................................    19
SECTION 9.02.  Governing Law; Submission to Jurisdiction; Severability;
               Waiver of Jury Trial ...........................................    19
SECTION 9.03.  Confidentiality ................................................    19
SECTION 9.04.  Entire Agreement ...............................................    20
SECTION 9.05.  Amendments, Waivers ............................................    20
SECTION 9.06.  No Third Party Rights, Successors and Assigns ..................    20
SECTION 9.07.  Calculation Agent ..............................................    20
SECTION 9.08.  Matters Related to CSFP Capital, Inc., as Agent ................    20
SECTION 9.09.  Joint and Several Liability ....................................    21
SECTION 9.10.  Counterparts ...................................................    21
</TABLE>


                                      iii
<PAGE>   4
               SAILS MANDATORILY EXCHANGEABLE SECURITIES CONTRACT

         THIS AGREEMENT is made as of this 25th day of August, 1999 among
SAFEGUARD SCIENTIFICS, INC., a Pennsylvania corporation ("PARENT"), SAFEGUARD
SCIENTIFICS (DELAWARE), INC., a Delaware corporation ("SUBSIDIARY", each of
Parent and Subsidiary, a "SELLER"), CSFP CAPITAL, INC., as agent (the "AGENT")
hereunder, and CREDIT SUISSE FINANCIAL PRODUCTS ("BUYER").

         WHEREAS, Sellers own shares of common stock (the "COMMON STOCK") of
Tellabs, Inc., a Delaware corporation (the "ISSUER"), or security entitlements
in respect thereof;

         WHEREAS, Subsidiary has agreed, pursuant to the Pledge Agreement (as
defined herein), to grant Buyer a security interest in certain shares of Common
Stock to secure the obligations of Sellers hereunder;

         WHEREAS, Sellers and Buyer are willing to sell and purchase such shares
of Common Stock, or security entitlements in respect thereof, at the time and on
the terms set forth herein;

         NOW, THEREFORE, in consideration of their mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby mutually
covenant and agree as follows:

                                   Article 1.

                                   DEFINITIONS

SECTION .1.01 Definitions. As used herein, the following words and phrases shall
have the following meanings:

         "ACCELERATION AMOUNT" has the meaning provided in Section 8.01.

         "ACCELERATION AMOUNT NOTICE" has the meaning provided in Section 8.01.

         "ACCELERATION DATE" has the meaning provided in Section 8.01.

         "ACCELERATION EVENT" has the meaning provided in Section 8.01.

         "BANKRUPTCY CODE" has the meaning provided in Section 6.06.

         "BASE AMOUNT" has the meaning provided in Section 2.01.

         "BUSINESS DAY" means any day on which commercial banks are open for
business in New York City.

         "CALCULATION AGENT" means Credit Suisse Financial Products.





                                       4
<PAGE>   5
         "CASH SETTLEMENT AMOUNT" means an amount of cash equal to the product
of the Maturity Price and the number of shares of Common Stock (or security
entitlements in respect thereof) required to be delivered (but for Section 2.04)
pursuant to Section 2.03(b) on the Maturity Date.

         "CLOSING PRICE" of any security on any date of determination means the
closing sale price (or, if no closing sale price is reported, the last reported
sale price) of such security on the Exchange on such date or, if such security
is not listed on a national securities exchange or quoted on a national
automated quotation system, the last quoted bid price for such security in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market value of such
security on such date as determined by the Calculation Agent in a commercially
reasonable manner.

         "COLLATERAL AGENT" has the meaning provided in the Pledge Agreement.

         "CONTRACT SHARES" has the meaning provided in Section 2.03(b).

         "EXCHANGE" means, at any time, the principal national securities
exchange or automated quotation system, if any, on which the Common Stock is
listed or quoted at such time.

         "EXCHANGE BUSINESS DAY" means any day that is (or, but for the
occurrence of a Market Disruption Event, would have been) a trading day on the
Exchange, other than a day on which trading on the Exchange is scheduled to
close prior to its regular weekday closing time.

         "EXCHANGE RATE" has the meaning provided in Section 2.03(c).

         "FREE STOCK" means Common Stock (or security entitlements in respect
thereof) that is not subject to any Transfer Restrictions in the hands of either
Seller immediately prior to delivery to Buyer hereunder and would not upon
delivery to Buyer be subject to any Transfer Restrictions in the hands of Buyer.

         "ISSUE PRICE" has the meaning provided in Section 2.03(c).

         "LIEN" means any lien, mortgage, security interest, pledge, charge or
encumbrance of any kind.

         "MARKET DISRUPTION EVENT" means the occurrence or the existence on any
Exchange Business Day during the one-half hour period ending at the close of
trading on the relevant exchange of any suspension of or limitation in trading
(by reason of movements in price exceeding limits permitted by the relevant
exchange or otherwise) in the Common Stock or in listed options on the Common
Stock, if any, if, in the determination of the Calculation Agent, such
suspension or limitation is material.





                                       5
<PAGE>   6
         "MARKET VALUE" means, as of any date with respect to any share of
Common Stock, the Closing Price per share of Common Stock for the Exchange
Business Day prior to such date.

         "MARKETABLE SECURITIES" means shares of common stock of a
Publicly-Traded Entity that are not subject to any Transfer Restrictions.

         "MATURITY DATE" means August 30, 2002.

         "MATURITY PRICE" means the average of the Closing Prices per share of
the Common Stock on the 20 Trading Days beginning 30 Exchange Business Days
immediately prior to the Maturity Date, provided that if there are not 20
Trading Days during the period beginning 30 Exchange Business Days immediately
prior to the Maturity Date and ending on the Exchange Business Day immediately
prior to the Maturity Date, the Maturity Price shall be the market value of the
Common Stock during such period as determined by the Calculation Agent in its
discretion in a commercially reasonable manner.

         "NEW COMMON STOCK" has the meaning provided in Section 7.01(c).

         "OPTIONAL TERMINATION DATE" has the meaning provided in Section 3.01.

         "ORIGINAL COMMON STOCK" has the meaning provided in Section 7.01(c).

         "PAYMENT DATE" has the meaning provided in Section 2.03(a).

         "PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.

         "PLEDGE AGREEMENT" means the SAILS Pledge Agreement dated as of the
date hereof among Subsidiary, Buyer and the Collateral Agent, as amended from
time to time.

         "PUBLICLY-TRADED ENTITY" means a surviving or continuing corporation of
the Issuer (or any successor) following a Reorganization Event, or a corporation
the capital stock of which is distributed in a Spin-Off, the common stock of
which is traded on any national securities exchange or automatic interdealer
quotation system in the United States; provided that, in the case of a
Reorganization Event, the product of (i) the Closing Price of such surviving or
continuing corporation's common stock on the Exchange Business Day immediately
succeeding such Reorganization Event multiplied by (ii) the number of shares of
such surviving or continuing corporations common stock held by non-affiliates of
such corporation shall not be less than the product of (A) the Closing Price of
the Common Stock on the Exchange Business Day immediately preceding such
Reorganization Event and (B) the number of shares of Common Stock held by
non-affiliates of the Issuer.

         "POTENTIAL ADJUSTMENT EVENT" has the meaning provided in Section 7.01.



                                       6
<PAGE>   7
         "PURCHASE PRICE" has the meaning provided in Section 2.02.

         "REORGANIZATION EVENT" has the meaning provided in Section 7.02.

         "REPLACEMENT VALUE" has the meaning provided in Section 8.01.

         "SECURITIES ACT" means the Securities Act of 1933, as amended.

         "SPIN-OFF" has the meaning provided in Section 7.01.

         "TERMINATION AMOUNT NOTICE" has the meaning provided in Section 7.04.

         "TERMINATION DATE" means, with respect to any Reorganization Event, the
closing date of such Reorganization Event.

         "THRESHOLD PRICE" has the meaning provided in Section 2.03(c).

         "TRADING DAY" is defined as any Exchange Business Day on which there is
not a Market Disruption Event.

         "TRANSFER RESTRICTION" means, with respect to any share of Common Stock
(or security entitlements in respect thereof) or other item of collateral
pledged under the Pledge Agreement, any condition to or restriction on the
ability of the holder thereof to sell, assign or otherwise transfer such share
of Common Stock (or security entitlements in respect thereof) or other item of
collateral or to enforce the provisions thereof or of any document related
thereto whether set forth in such item of Collateral itself or in any document
related thereto, including, without limitation, (i) any requirement that any
sale, assignment or other transfer or enforcement of such share of Common Stock
(or security entitlements in respect thereof) or other item of collateral be
consented to or approved by any Person, including, without limitation, the
issuer thereof or any other obligor thereon, (ii) any limitations on the type or
status, financial or otherwise, of any purchaser, pledgee, assignee or
transferee of such share of Common Stock (or security entitlements in respect
thereof) or other item of collateral, (iii) any requirement of the delivery of
any certificate, consent, agreement, opinion of counsel, notice or any other
document of any Person to the issuer of, any other obligor on or any registrar
or transfer agent for, such share of Common Stock (or security entitlements in
respect thereof) or other item of collateral, prior to the sale, pledge,
assignment or other transfer or enforcement of such share of Common Stock (or
security entitlements in respect thereof) or other item of collateral and (iv)
any registration or qualification requirement or prospectus delivery requirement
for such share of Common Stock (or security entitlements in respect thereof) or
other item of collateral pursuant to any federal, state or foreign securities
law (including, without limitation, any such requirement arising as a result of
Rule 144 or Rule 145 under the Securities Act); provided that the required
delivery of any assignment, instruction or entitlement order from the seller,
pledgor, assignor or transferor of such share of Common Stock (or security
entitlements in respect thereof) or other item of collateral, together with any






                                       7
<PAGE>   8
evidence of the corporate or other authority of such Person, shall not
constitute a "TRANSFER RESTRICTION".



                                   ARTICLE 2.

                                SALE AND PURCHASE

         SECTION .2.01 Sale and Purchase. Upon the terms and subject to the
conditions of this Agreement, Sellers jointly and severally agree to sell to
Buyer, and Buyer agrees to purchase and acquire from Sellers, the number of
shares of Common Stock (or security entitlements in respect thereof) equal to
the product of 1,374,408 (subject to reduction as provided in Section 3.01, the
"BASE AMOUNT") and the Exchange Rate.

         SECTION .2.02 Purchase Price. The purchase price (the "PURCHASE PRICE")
shall be $68,103,732.80 in cash.

         SECTION .2.03 Payment for and Delivery of Contract Shares.

         (a) Upon the terms and subject to the conditions of this Agreement,
Buyer shall deliver to Subsidiary the Purchase Price on August 30, 1999 (the
"PAYMENT DATE") at the offices of Davis Polk & Wardwell, 450 Lexington Avenue,
New York, New York 10017, or at such other place as shall be agreed upon by
Buyer and Sellers, paid by certified or official bank check or checks duly
endorsed to, or payable to the order of, Subsidiary, or in immediately available
funds by wire transfer to an account designated by Subsidiary.

         (b) On the Maturity Date, Sellers agree, subject to Section 2.04, to
deliver to Buyer a number of shares of Free Stock (the "CONTRACT SHARES") equal
to the product of (A) the Base Amount and (B) the Exchange Rate, rounded down to
the nearest whole number, and cash in an amount equal to the value (based on the
Maturity Price) of any fractional share not delivered as a result of such
rounding. If (x) by 10:00 A.M., New York City time on the Maturity Date, Sellers
have not otherwise effected such delivery of Common Stock (or security
entitlements in respect thereof) or delivered cash in lieu thereof pursuant to
Section 2.04 and (y) the Common Stock and security entitlements in respect
thereof then held by the Collateral Agent as collateral under the Pledge
Agreement is Free Stock, then (i) Sellers shall be deemed not to have elected to
deliver cash in lieu of shares of Free Stock pursuant to Section 2.04
(notwithstanding any notice by either Seller to the contrary) and (ii) the
delivery provided by this Section 2.03(b) shall be effected by delivery by the
Collateral Agent to Buyer of a number of shares of Free Stock then held by the
Collateral Agent as collateral under the Pledge Agreement equal to the number
thereof required to be delivered by Sellers to Buyer pursuant to this Section
2.03(b); provided that, notwithstanding the foregoing and without limiting the
generality of Section 8.01, if Sellers give notice of their election to deliver
cash in lieu of shares of Free Stock on the Maturity Date pursuant to Section
2.04 and fails to deliver the Cash Settlement Amount on the Maturity Date as
provided





                                       8
<PAGE>   9
in Section 2.04, Sellers shall be in breach of this Agreement and shall be
liable to Buyer for any losses incurred by Buyer or its affiliates as a result
of such breach, including without limitation losses incurred in connection with
any decrease in the Closing Price of the Common Stock subsequent to the fifth
Exchange Business Day immediately preceding the Maturity Date.

         (c) The "EXCHANGE RATE" shall be determined by the Calculation Agent in
accordance with the following formula, and is subject to adjustment as a result
of certain events as provided in Article 7 and as provided in Section 6(i) of
the Pledge Agreement: (i) if the Maturity Price is less than the Threshold Price
but greater than $63.0424 (the "ISSUE PRICE"), the Exchange Rate shall be a
ratio (rounded upward or downward to the nearest 1/10,000th or, if there is not
a nearest 1/10,000th, to the next lower 1/10,000th) equal to the Issue Price
divided by the Maturity Price, (ii) if the Maturity Price is equal to or greater
than the Threshold Price, the Exchange Rate shall be a ratio (rounded upward or
downward to the nearest 1/10,000th or, if there is not a nearest 1/10,000th, to
the next lower 1/10,000th) equal to the Issue Price divided by the Threshold
Price and (iii) if the Maturity Price is equal to or less than the Issue Price,
the Exchange Rate shall be one (1). "THRESHOLD PRICE" means $77.5421, provided
that if for any period during the term of this Agreement a Rehypothecation
Unavailability (as defined in the Pledge Agreement) shall not have occurred or
shall not be continuing, then the Threshold Price shall be increased by an
amount equal to the product of $1.2609 and a fraction, the numerator of which
shall equal the number of days during the term of this Agreement on which a
Rehypothecation Unavailability shall not have occurred or shall not be
continuing and the denominator of which shall equal 1,096.

         SECTION .2.04 Cash Settlement Option. Sellers may, upon written notice
delivered to Buyer at least 35 Exchange Business Days prior to the Maturity
Date, elect to deliver the Cash Settlement Amount to Buyer on the Maturity Date
by wire transfer of immediately available funds to an account designated by
Buyer, in lieu of the shares of Common Stock (or security entitlements in
respect thereof) to be delivered on the Maturity Date pursuant to Section
2.03(b).

                                   ARTICLE 3.

                             TERMINATION BY SELLERS

         SECTION .3.01 Termination by Seller. Sellers may terminate this
Agreement in whole or in part upon 35 Exchange Business Days' prior written
notice to Buyer (the termination date specified in such notice, the "OPTIONAL
TERMINATION DATE"). If Sellers terminate this Agreement in whole, Sellers shall
make a cash payment, by wire transfer of immediately available funds to an
account designated by Buyer, to Buyer on the Optional Termination Date in an
amount equal to the Replacement Value (calculated in the manner set forth in
Section 8.01 as if the Optional Termination Date were the Acceleration Date). If
Sellers terminate this Agreement in part, Sellers shall specify the number of





                                       9
<PAGE>   10
shares of Common Stock with respect to which this Agreement is to be terminated
and (i) Sellers shall make a cash payment, by wire transfer of immediately
available funds to an account designated by Buyer, to Buyer on the Optional
Termination Date in an amount equal to the Replacement Value (calculated in the
manner set forth in Section 8.01 as if the Optional Termination Date were the
Acceleration Date, provided that for purposes of such calculation, the Base
Amount shall be deemed to be such number of shares of Common Stock with respect
to which this Agreement is to be terminated) and (ii) the Base Amount shall be
reduced by such number of shares of Common Stock with respect to which this
Agreement is to be terminated.

                                   ARTICLE 4.

                   REPRESENTATIONS AND WARRANTIES OF SELLERS

         SECTION .4.01 Representations and Warranties of Seller. Each Seller
represents and warrants to Buyer that:

         (a) Such Seller is a corporation duly organized and existing in good
standing under the laws of its jurisdiction of incorporation and has the
requisite corporate power to own its properties and to carry on its business as
now being conducted.

         (b) The execution and delivery of this Agreement and (in the case of
Subsidiary) the Pledge Agreement and the performance by such Seller of its
obligations hereunder and thereunder do not violate or conflict with any law
applicable to it, any order or judgment of any court or other agency of
government applicable to it or any of its assets or any contractual restriction
binding on or affecting it or any of its assets.

         (c) All government and other consents that are required to have been
obtained by it with respect to this Agreement or (in the case of Subsidiary) the
Pledge Agreement have been obtained and are in full force and effect and all
conditions of any such consents have been complied with.

         (d) It has the requisite corporate power and authority to enter into
and perform this Agreement and (in the case of Subsidiary) the Pledge Agreement
and to deliver the Contract Shares in accordance with the terms hereof. The
execution and delivery of this Agreement and (in the case of Subsidiary) the
Pledge Agreement by Seller and the consummation by such Seller of the
transactions contemplated hereby and thereby (including the delivery by Sellers
of the Contract Shares) have been duly authorized by all necessary corporate
action. This Agreement and (in the case of Subsidiary) the Pledge Agreement have
been duly executed and delivered by such Seller. Its obligations under this
Agreement and (in the case of Subsidiary) the Pledge Agreement constitute its
legal, valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganization, insolvency,
moratorium or similar laws affecting creditors' rights generally and subject, as
to enforceability,






                                       10
<PAGE>   11
to equitable principles of general application (regardless of whether
enforcement is sought in a proceeding in equity or at law)).

         (e) No Acceleration Event or event that, with the giving of notice or
the lapse of time or both, would constitute an Acceleration Event has occurred
and is continuing and no such event would occur as a result of its entering into
or performing its obligations under this Agreement or (in the case of
Subsidiary) the Pledge Agreement.

         (f) There is not pending or, to its knowledge, threatened against it or
any of its affiliates any action, suit or proceeding at law or in equity or
before any court, tribunal, governmental body, agency or official or any
arbitrator that is likely to affect the legality, validity or enforceability
against it of this Agreement or (in the case of Subsidiary) the Pledge Agreement
or its ability to perform its obligations under this Agreement or (in the case
of Subsidiary) the Pledge Agreement.

         (g) It is acting for its own account, and has made its own independent
decision to enter into this Agreement and (in the case of Subsidiary) the Pledge
Agreement and as to whether this Agreement and the Pledge Agreement are
appropriate or proper for it based upon its own judgment and upon advice of such
advisors as it deems necessary. It acknowledges and agrees that it is not
relying, and has not relied, upon any communication (written or oral) of Buyer
or any affiliate, employee or agent of Buyer with respect to the legal,
accounting, tax or other implications of this Agreement and (in the case of
Subsidiary) the Pledge Agreement and that it has conducted its own analyses of
the legal, accounting, tax and other implications hereof and thereof; it being
understood that information and explanations related to the terms and conditions
of this Agreement or (in the case of Subsidiary) the Pledge Agreement shall not
be considered investment advice or a recommendation to enter into this Agreement
or (in the case of Subsidiary) the Pledge Agreement. It is entering into this
Agreement and (in the case of Subsidiary) the Pledge Agreement with a full
understanding of all of the terms and risks hereof and thereof (economic and
otherwise) and is capable of evaluating and understanding (on its own behalf or
through independent professional advice), and understands and accepts, the
terms, conditions and risks. It is also capable of assuming (financially and
otherwise), and assumes, those risks. It acknowledges that neither Buyer nor any
affiliate, employee or agent of Buyer is acting as a fiduciary for or an advisor
to it in respect of this Agreement or (in the case of Subsidiary) the Pledge
Agreement.

         (h) It is not an "affiliate", within the meaning of Rule 144 under the
Securities Act, of the Issuer. Seller does not know or have any reason to
believe that the Company has not complied with the reporting requirements
contained in Rule 144(c)(1) under the Securities Act.

         (i) Delivery of shares of Common Stock (or security entitlements in
respect thereof) by it pursuant to Section 2.03(b) or Section 8.01 will pass to







                                       11
<PAGE>   12
Buyer title to such shares (or security entitlements) free and clear of any
Liens or Transfer Restrictions, except for those created pursuant to the Pledge
Agreement.

         (j) It has a valid business purpose for entering into this Agreement,
and the transaction contemplated hereby is consistent with its overall
investment strategy.

                                   ARTICLE 5.

                       CONDITIONS TO BUYER'S OBLIGATIONS

         SECTION .5.01 Conditions. The obligation of Buyer to deliver the
Purchase Price on the Payment Date is subject to the satisfaction of the
following conditions:

         (a) The representations and warranties of each Seller contained in
Article 4 and in the Pledge Agreement shall be true and correct as of the
Payment Date.

         (b) The Pledge Agreement shall have been executed by the parties
thereto, and Subsidiary shall have delivered to the Collateral Agent in
accordance therewith the collateral required to be delivered pursuant to Section
1(b) thereof.

         (c) Sellers shall have performed all of the covenants and obligations
to be performed by them hereunder and (in the case of Subsidiary) under the
Pledge Agreement on or prior to the Payment Date.

         (d) There shall not have occurred, in the reasonable determination of
Buyer, any material decrease in the public float or daily trading volume of the
Common Stock.

         (e) Sellers shall have delivered to Buyer on or prior to the Payment
Date an opinion of counsel acceptable to Buyer to the effect set forth in Annex
A.




                                   ARTICLE 6.

                                   COVENANTS

         SECTION .6.01 Taxes. Sellers shall pay any and all documentary, stamp,
transfer or similar taxes and charges that may be payable in respect of the
entry into this Agreement and the transfer and delivery of any Common Stock (or
security entitlements in respect thereof) pursuant hereto. Sellers further agree
to make all payments in respect of this Agreement free and clear of, and without
withholding or deduction for or on account of, any present or future taxes,
duties, fines, penalties, assessments or other governmental charges of
whatsoever nature (or interest on any taxes, duties, fines, penalties,
assessments or other governmental charges of whatsoever nature) imposed, levied,
collected, withheld






                                       12
<PAGE>   13
or assessed by, within or on behalf of () the United States or any political
subdivision or governmental authority thereof or therein having power to tax or
() any jurisdiction from or through which payment on the Agreement is made by
the either Seller, or any political subdivision or governmental authority
thereof or therein having power to tax. In the event such withholding or
deduction is imposed, Sellers jointly and severally agree to indemnify the Buyer
for the full amount of such withholding or deduction, as well as any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto.

         SECTION .6.02 Forward Contract. Each Seller hereby agrees that: (i) it
will not treat this Agreement, any portion of this Agreement, or any obligation
hereunder as giving rise to any interest income or other inclusions of ordinary
income; (ii) it will not treat the delivery of any portion of the shares of
Common Stock (or security entitlements in respect thereof) or cash to be
delivered pursuant to this Agreement as the payment of interest or ordinary
income; (iii) it will treat this Agreement in its entirety as a forward contract
for the delivery of such shares of Common Stock (or security entitlements in
respect thereof) or cash; and (iv) it will not take any action (including filing
any tax return or form or taking any position in any tax proceeding) that is
inconsistent with the obligations contained in (i) through (iii).
Notwithstanding the preceding sentence, either Seller may take any action or
position required by law, provided that such Seller deliver to Buyer an
unqualified opinion of counsel, nationally recognized as expert in Federal tax
matters and acceptable to Buyer, to the effect that such action or position is
required by a statutory change or a Treasury regulation or applicable court
decision published after the date of this Agreement.

         SECTION .6.03 Notices. Each Seller will cause to be delivered to Buyer:

         (a) Immediately upon the occurrence of any Acceleration Event
hereunder, notice of such occurrence; and

         (b) In case at any time prior to the Maturity Date such Seller or any
officer of such Seller receives notice that any event requiring that an
adjustment be calculated pursuant to Article 7 hereof shall have occurred or be
pending, then such Seller shall promptly cause to be delivered to Buyer a notice
identifying such event and stating, if known to such Seller, the date on which
such event occurred or is to occur and, if applicable, the record date relating
to such event. Such Seller shall cause further notices to be delivered to Buyer
if such Seller or any officer of such Seller shall subsequently receive notice
of any further or revised information regarding the terms or timing of such
event or any record date relating thereto.

         SECTION .6.04 Further Assurances. From time to time from and after the
date hereof through the Maturity Date, each of the parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper and advisable to consummate and
make effective as promptly as practicable the transactions contemplated by this






                                       13
<PAGE>   14
Agreement in accordance with the terms and conditions hereof, including (i)
using reasonable best efforts to remove any legal impediment to the consummation
of such transactions and (ii) the execution and delivery of all such deeds,
agreements, assignments and further instruments of transfer and conveyance
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement in accordance with the terms and conditions
hereof.

         SECTION .6.05 Actions That Could Cause Either Seller to Become an
Affiliate. Each Seller shall notify Buyer immediately of its intention to (i)
purchase Common Stock (or security entitlements in respect thereof) or any other
equity security of the Issuer in an amount that would cause such Seller to
become the beneficial owner, directly or indirectly, of more than three percent
of the outstanding shares of any equity security of the Issuer, (ii) accept a
position as an officer or director of the Company, (iii) take any action that
would cause such Seller to possess, directly or indirectly, the power to direct
or cause the direction of the management and policies of the Issuer, whether by
ownership of voting securities, by contract or otherwise, or (iv) take any other
action that could reasonably be expected to result in such Seller becoming an
"affiliate," within the meaning of Rule 144 under the Securities Act, of the
Issuer. Each Seller shall not take any such action unless a period of fifteen
Business Days shall have elapsed after receipt of such notice by Buyer and Buyer
shall not have objected in writing to such action during such period.

         SECTION .6.06 Securities Contract. The parties hereto recognize that
the Collateral Agent is a "financial institution" within the meaning of Section
101(22) of Title 11 of the United States Code (the "BANKRUPTCY CODE") and is
acting as agent and custodian for Buyer in connection with this Agreement and
that Buyer is a "customer" of the Collateral Agent within the meaning of said
Section 101(22). The parties hereto further recognize that this Agreement is a
"securities contract," as such term is defined in Section 741(7) of the
Bankruptcy Code, entitled to the protection of Section 555 of the Bankruptcy
Code.

                                   ARTICLE 7.

                                  ADJUSTMENTS

         SECTION .7.01 Dilution Adjustments.

         (a) Following the declaration by the Issuer of the terms of any
Potential Adjustment Event occurring prior to the Maturity Date, the Calculation
Agent will determine whether such Potential Adjustment Event has a diluting or
concentrative effect on the theoretical value of the Common Stock and, if so,
will (i) make the corresponding adjustment, if any, to any one or more of the
Base Amount, the Exchange Rate, the Threshold Price, the Issue Price, the
Maturity Price, the Cash Settlement Amount, any Closing Price and any other
variable relevant to the exercise, settlement or payment terms hereof or of the
Pledge Agreement as the Calculation Agent determines appropriate to account for
that



                                       14
<PAGE>   15
diluting or concentrative effect and (ii) determine the effective date of the
adjustment. The Calculation Agent may (but need not) determine the appropriate
adjustment by reference to the adjustment in respect of such Potential
Adjustment Event made by an options exchange to options on the Common Stock
traded on that options exchange.

         (b) For these purposes, "POTENTIAL ADJUSTMENT EVENT" means any of the
following:


                  (i) a subdivision, consolidation or reclassification of shares
         of Common Stock (which does not constitute a Reorganization Event), or
         a free distribution or dividend of any shares of Common Stock to
         existing holders of Common Stock by way of bonus, capitalization or
         similar issue;

                  (ii) a distribution or dividend to existing holders of Common
         Stock of (A) shares of Common Stock, or (B) other share capital or
         securities granting the right to payment of dividends and/or the
         proceeds of liquidation of the Issuer equally or proportionately with
         such payments to holders of Common Stock, or (C) other types of
         securities, rights or warrants or other assets, in any case for payment
         (cash or other) at less than the prevailing market price as determined
         by the Calculation Agent;

                  (iii) a cash dividend;

                  (iv) a call by the Issuer in respect of shares of Common Stock
         that are not fully paid;

                  (v) a repurchase by the Issuer of shares of Common Stock,
         whether out of profits or capital and whether the consideration for
         such repurchase is cash, securities or otherwise; or

                  (vi) any other similar event that may have a diluting or
         concentrative effect on the theoretical value of the Common Stock.

         Without limiting the foregoing, the parties acknowledge that the
Calculation Agent will make adjustments to the Base Amount, the Threshold Price,
the Issue Price and any other variable relevant to the exercise, settlement or
payment terms hereof or of the Pledge Agreement as the Calculation Agent
determines appropriate to account for the value of all cash dividends (ordinary
or extraordinary) with respect to the Common Stock.

         (c) Notwithstanding the foregoing, in the event of a distribution of
shares of capital stock of a subsidiary of the Issuer that is a Publicly-Traded
Entity (a "SPIN-OFF") made to holders of shares of Common Stock, the Exchange
Rate in effect immediately prior to such Spin-Off shall be adjusted so that
Buyer shall thereafter be entitled to receive, on the Maturity Date, in addition
to the number of shares of Common Stock required to be delivered on the Maturity
Date, the number of shares of common stock of such Publicly-Traded Entity that
Buyer





                                       15
<PAGE>   16
would have owned or been entitled to receive immediately following such Spin-Off
had the shares of Common Stock required to be delivered to Buyer hereunder on
the Maturity Date been delivered immediately prior to such Spin-Off. Following a
Spin-Off, "Original Common Stock" shall mean the common stock of the Issuer and
"New Common Stock" shall mean the common equity securities of the
Publicly-Traded Entity resulting from such Spin-Off.

         SECTION .7.02 Reorganization Events. In the event of (i) any
consolidation or merger of the Issuer with or into another entity (other than a
merger or consolidation in which the Issuer is the continuing corporation and in
which the Common Stock outstanding immediately prior to the merger or
consolidation is not exchanged for cash, securities or other property of the
Issuer or another corporation), (ii) any sale, transfer, lease or conveyance of
the property of the Issuer as an entirety or substantially as an entirety, (iii)
any statutory exchange of securities of the Issuer with another corporation
(other than in connection with a merger or acquisition) or (iv) any liquidation,
dissolution or winding up of the Issuer (any such event, a "REORGANIZATION
EVENT"), then (A) if the surviving or continuing corporation is a
Publicly-Traded Entity, the Exchange Rate in effect immediately prior to such
Reorganization Event shall be adjusted so that Buyer shall thereafter be
entitled to receive, on the Maturity Date, the number of shares of common stock
of the Publicly-Traded Entity that Buyer would have owned or been entitled to
receive immediately following such Reorganization Event had the shares of Common
Stock required to be delivered to Buyer hereunder on the Maturity Date been
delivered immediately prior to such Reorganization Event or (B) if the surviving
or continuing corporation is not a Publicly-Traded Entity, this Agreement shall
terminate and Sellers shall make a payment or delivery to Buyer as provided in
Section 7.04.

         SECTION .7.03 Provisions Relating to Reorganization Events and
Spin-Offs. If a Reorganization Event occurs and clause (B) of Section 7.02 does
not apply, the surviving or continuing corporation shall be deemed to be the
"Issuer" and the common equity securities of such corporation shall be deemed to
be the "Common Stock". If a Spin-Off occurs, the Issuer and the Publicly-Traded
Entity resulting from the Spin-Off shall each be deemed to be the "Issuer" and
the Original Common Stock and the New Common Stock shall each be deemed to be
the "Common Stock". Following any Spin-Off, the Calculation Agent shall
calculate further adjustments pursuant to this Article 7 by applying the
methodology set forth in this Article 7 to both the Original Common Stock and
the New Common Stock.

         SECTION .7.04 Termination and Payment. Following termination of this
Agreement as a result of any Reorganization Event, the Calculation Agent shall
determine the Replacement Value in the manner provided in Section 8.01
(calculated, for purposes of this Section 7.04, as if the Termination Date were
the Acceleration Date, and representing the fair replacement value (including
both intrinsic and time value) to Buyer of an agreement with terms that would
preserve for Buyer the economic equivalent of the payments and deliveries that
Buyer and its affiliates would, but for the occurrence of the Reorganization
Event, have been






                                       16
<PAGE>   17
entitled to receive after the Termination Date hereunder). As promptly as
reasonably practicable after calculation of the Replacement Value, the
Calculation Agent shall deliver to Buyer and Sellers a notice (the "TERMINATION
AMOUNT NOTICE") specifying the Replacement Value. Not later than three Business
Days following delivery of a Termination Amount Notice, Sellers shall make a
cash payment, by wire transfer of immediately available funds to an account
designated by Buyer, to Buyer in an amount equal to the Replacement Value.
Notwithstanding the foregoing, to the extent that any Marketable Securities are
received by holders of Common Stock in such Reorganization Event, then in lieu
of delivering cash as provided in the immediately preceding sentence, Sellers
may deliver Marketable Securities with an equal value (as determined by the
Calculation Agent in its discretion in a commercially reasonable manner).

                                   Article 8.

                                  ACCELERATION

         SECTION .8.01 Acceleration. If one or more of the following events
(each an "ACCELERATION EVENT") shall occur:

         (a) any legal proceeding shall have been instituted or any other event
shall have occurred or condition shall exist that in Buyer's reasonable judgment
could have a material adverse effect on the financial condition of either Seller
or on either Seller's ability to perform such Seller's obligations hereunder, or
that provides a reasonable basis to call into question the validity or binding
effect of any agreement of such Seller hereunder or under the Pledge Agreement;

         (b) such Seller makes an assignment for the benefit of creditors, files
a petition in bankruptcy, is adjudicated insolvent or bankrupt, petitions or
applies to any tribunal for any receiver of or any trustee for such Seller or
any substantial part of such Seller's property, commences any proceeding
relating to such Seller under any reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction, whether now
or hereafter in effect, or there is commenced against or with respect to such
Seller or any substantial portion of Seller's property any such proceeding and
an order for relief is issued or such proceeding remains undismissed for a
period of 30 days;

         (c) at any time, any representation made or repeated or deemed to have
been made or repeated by either Seller under this Agreement or the Pledge
Agreement or any certificate delivered pursuant hereto or thereto would be
incorrect or misleading if made or repeated as of such time in any respect that,
in the reasonable judgment of Buyer, would have a material adverse effect on
Buyer in respect of the transactions contemplated hereby;

         (d) Sellers fail to deliver shares of Common Stock (or security
entitlements in respect thereof) or cash on the Maturity Date as required by
this Agreement;




                                       17
<PAGE>   18
         (e) such Seller fails to fulfill or discharge when due any of its other
obligations, covenants or agreements under or relating to this Agreement or the
Pledge Agreement (other than the obligation referred to in Section 8.01(d)), and
such failure remains unremedied for 30 days following notice from Buyer;

         (f) due to the adoption of, or any change in, any applicable law after
the date hereof, or due to the promulgation of, or any change in, the
interpretation by any court, tribunal or regulatory authority with competent
jurisdiction of any applicable law after the date hereof, it becomes unlawful
for either Seller to perform any absolute or contingent obligation to make
payment or delivery hereunder or to comply with any other material provision of
this Agreement or the Pledge Agreement;

         (g) in the reasonable judgement of the Calculation Agent, Buyer is
unable to hedge Buyer's exposure to this Agreement in the ordinary course of
Buyer's business through share borrowing arrangements because of the lack of
sufficient shares of Common Stock being made available by lenders (it being
understood that, at any time at which a Rehypothecation Unavailability (as
defined in the Pledge Agreement) shall not have occurred and be continuing,
there shall be deemed to be sufficient shares of Common Stock being made
available by lenders);

         (h) there occurs a default under any indebtedness for money borrowed by
either Seller or its subsidiaries (except CompuCom Systems, Inc. and Tangram
Enterprise Solutions, Inc.), whether such indebtedness now exists or shall
hereafter be created, which indebtedness, individually or in the aggregate, is
in excess of $10,000,000 principal amount, which default shall constitute a
failure to pay any portion of the principal of such indebtedness when due and
payable after the expiration of any applicable grace or cure period with respect
thereto or shall have resulted in such indebtedness becoming or being declared
due and payable prior to the date on which it would otherwise have become due
and payable;

         (i) a Collateral Event of Default within the meaning of the Pledge
Agreement shall occur;

then, upon notice to Sellers from Buyer at any time following an Acceleration
Event, an "ACCELERATION DATE" shall occur, and Sellers shall become obligated to
deliver to Buyer immediately upon receipt of the Acceleration Amount Notice a
number of shares of Free Stock equal to the Acceleration Amount; provided that
if the Collateral Agent proceeds to realize upon any collateral pledged under
the Pledge Agreement and to apply the proceeds of such realization as provided
in paragraph second of Section 8(d) thereof, then, to the extent of such
application of proceeds, Sellers" obligation to deliver Free Stock pursuant to
this paragraph shall be deemed to be an obligation to deliver an amount of cash
equal to the aggregate Market Value of such Free Stock on the Acceleration Date.
The "ACCELERATION AMOUNT" means the quotient obtained by dividing: (i) the
Replacement Value by (ii) the Market Value per share of the Common Stock on the
Acceleration Date, provided that the Acceleration Amount shall not be greater
than the Base Amount.




                                       18
<PAGE>   19
         The "REPLACEMENT VALUE" means an amount determined by the Calculation
Agent representing the fair replacement value (including both intrinsic and time
value) to Buyer of an agreement with terms that would preserve for Buyer the
economic equivalent of the payments and deliveries that Buyer and its affiliates
would, but for the occurrence of the Acceleration Date, have been entitled to
receive after the Acceleration Date hereunder (taking into account any
adjustments pursuant to Section 7.01 or pursuant to Section 6(i) of the Pledge
Agreement that may have been calculated on or prior to the Acceleration Date),
including any loss of bargain, cost of funding or, without duplication, loss or
cost incurred as a result of Buyer terminating, liquidating, obtaining or
reestablishing any hedge or related trading position.

         As promptly as reasonably practicable after calculation of the
Replacement Value, the Calculation Agent shall deliver to either Seller and
Buyer a notice (the "ACCELERATION AMOUNT NOTICE") specifying the Acceleration
Amount of shares of Common Stock (or security entitlements in respect thereof)
required to be delivered by Sellers.

                                   Article 9.

                                  MISCELLANEOUS

         SECTION .9.01 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard forms of telecommunication. Notices to Buyer shall
be directed to it care of CSFP Capital, Inc., Eleven Madison Avenue, New York,
New York 10010, Telecopy No. (212) 325-8175, Attention: Ricardo Harewood;
notices to Sellers shall be directed to Parent at 800 the Safeguard Building,
435 Devon Park Drive, Wayne, Pennsylvania 19087 , Telecopy No. (610) 293-0601,
Attention: Chief Financial Officer.

         SECTION .9.02 Governing Law; Submission to Jurisdiction; Severability;
Waiver of Jury Trial. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without reference to choice of
law doctrine and each party hereto submits to the jurisdiction of the Courts of
the State of New York and the United States District Court located in the
Borough of Manhattan in New York City.

         (b) To the extent permitted by law, the unenforceability or invalidity
of any provision or provisions of this Agreement shall not render any other
provision or provisions herein contained unenforceable or invalid.

         (c) EACH SELLER AND BUYER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

         SECTION .9.03 Confidentiality. Except as required by law or judicial or
administrative process, or as requested by a regulatory authority or
self-regulatory organization, each party hereto agrees to keep this Agreement
and



                                       19
<PAGE>   20
the Pledge Agreement and the transactions contemplated hereby and thereby
confidential. In the event disclosure is permitted pursuant to the preceding
sentence, the disclosing party shall (i) provide prior notice of such disclosure
to the other party, (ii) use its best efforts to minimize the extent of such
disclosure and (iii) comply with all reasonable requests of the other party to
minimize the extent of such disclosure. This Section 9.03 shall not prevent
either Seller or Buyer from disclosing information as necessary to third-party
advisors in connection with the transactions contemplated hereby or in the
Pledge Agreement; provided that such Seller or Buyer, as the case may be, shall
cause such advisors comply with the provisions of this Section 9.03 as if a
party hereto.

         SECTION .9.04 Entire Agreement. Except as expressly set forth herein,
this Agreement constitutes the entire agreement and understanding among the
parties with respect to its subject matter hereof and supersedes all oral
communications and prior writings with respect thereto.

         SECTION .9.05 Amendments, Waivers. Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Buyer and Sellers or, in the case of a
waiver, by the party against whom the waiver is to be effective. No failure or
delay by either party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.

         SECTION .9.06 No Third Party Rights, Successors and Assigns. This
Agreement is not intended and shall not be construed to create any rights in any
person other than Sellers, Buyer and their respective successors and assigns and
no other person shall assert any rights as third party beneficiary hereunder.
Whenever any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All the covenants
and agreements herein contained by or on behalf of each Seller and Buyer shall
bind, and inure to the benefit of, their respective successors and assigns
whether so expressed or not, and shall be enforceable by and inure to the
benefit of Buyer and its successors and assigns. The rights and duties under
this Agreement may not be assigned or transferred by any party hereto without
the prior written consent of the other parties hereto; provided that (i) Buyer
may assign or transfer any of its rights or duties hereunder to any of its
affiliates or any special purpose company sponsored or managed by Buyer or any
of its affiliates without the prior written consent of Seller and (ii) the Agent
may assign or transfer any of its rights or duties hereunder without the prior
written consent of the other parties hereto.

         SECTION .9.07 Calculation Agent. The determinations and calculations of
the Calculation Agent shall be binding in the absence of manifest error. The
Calculation Agent will have no responsibility for good faith errors or omissions
in the determination of any Closing Price, the Maturity Price, the






                                       20
<PAGE>   21
Exchange Rate, the Cash Settlement Amount or any other amount as provided
herein.

         SECTION .9.08 Matters Related to CSFP Capital, Inc., as Agent. (CSFP
Capital, Inc. shall act as "agent" for Buyer and Sellers within the meaning of
Rule 15a-6 under the Securities Exchange Act of 1934.

         (b) The Agent is not a principal to this Agreement and shall have no
responsibility or liability (including, without limitation, by way of guarantee,
endorsement or otherwise) to Buyer or either Seller in respect of this
Agreement, including, without limitation, in respect of the failure of Buyer or
either Seller to pay or perform under this Agreement.

         (c) Each of Buyer and each Seller agrees to proceed solely against the
other to collect or recover any securities or money owing to it in connection
with or as a result of this Agreement. The Agent shall otherwise have no
liability in respect of this Agreement, except for its gross negligence or
willful misconduct in performing its duties as Agent hereunder.

         (d) As a broker-dealer registered with the Securities and Exchange
Commission, CSFP Capital, Inc., in its capacity as Agent, will be responsible
for (i) effecting the transaction contemplated in this Agreement, (ii) issuing
all required notices, confirmations and statements to Buyer and Sellers and
(iii) maintaining books and records relating to this Agreement.

         SECTION .9.09 Joint and Several Liability. Sellers' obligations
hereunder shall be joint and several.

         SECTION .9.10 Counterparts. This Agreement may be executed in any
number of counterparts, and all such counterparts taken together shall be deemed
to constitute one and the same agreement.

         IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date and year first above written.





                                         SELLER:
                                         SAFEGUARD SCIENTIFICS, INC.
                                         By:      /s/ Michael W. Miles
                                                  ------------------------------
                                                  Name: Michael W. Miles
                                                  Title: Senior Vice President
                                                         and CFO



                                       21
<PAGE>   22
                                         SELLER:
                                         SAFEGUARD SCIENTIFICS
                                         (DELAWARE), INC.
                                         By:      /s/ Michael W. Miles
                                                  ------------------------------
                                                  Name: Michael W. Miles
                                                  Title: Senior Vice President
                                                         and CFO

                                         BUYER:
                                         CREDIT SUISSE FINANCIAL PRODUCTS
                                         By:      /s/ Edmond Curtin
                                                  -----------------------------
                                                  Name: Edmond Curtin
                                                  Title: Director - Legal and
                                                         Compliance Department


                                         By:      /s/ David Bonham
                                                  -----------------------------
                                                  Name: David Bonham
                                                  Title: Director-Legal and
                                                         Compliance Department


                                         AGENT:
                                         CSFP CAPITAL, INC.
                                         By:      /s/ Darren Malcolm
                                                  ----------------------------
                                                  Name: Darren Malcolm
                                                  Title: Vice President





                                       22