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                                                                    EXHIBIT 4.12

                          REGISTRATION RIGHTS AGREEMENT

                                     between

                           SAFEGUARD SCIENTIFICS, INC.

                                   as Issuer,

                                       and

                          WACHOVIA CAPITAL MARKETS, LLC

                            as the Initial Purchaser

                          Dated as of February 18, 2004

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         REGISTRATION RIGHTS AGREEMENT dated as of February 18, 2004 between
Safeguard Scientifics, Inc., a Pennsylvania corporation (the "Company") and
Wachovia Capital Markets, LLC, as the initial purchaser (the "Initial
Purchaser") named in the Purchase Agreement dated February 11, 2004 (the
"Purchase Agreement") between the Company and the Initial Purchaser. In order to
induce the Initial Purchaser to enter into the Purchase Agreement, the Company
has agreed to provide the registration rights set forth in this Agreement.

         The Company agrees with the Initial Purchaser, (i) for its benefit as
Initial Purchaser and (ii) for the benefit of the beneficial owners (including
the Initial Purchaser) from time to time of the Debentures (as defined herein)
and the beneficial owners from time to time of the Underlying Common Stock (as
defined herein) issued upon conversion of the Debentures (each of the foregoing
a "Holder" and together the "Holders"), as follows:

         Section 1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:

         "Affiliate" means with respect to any specified person, an "affiliate,"
as defined in Rule 144, of such person.

         "Amendment Effectiveness Deadline Date" has the meaning set forth in
Section 2(d) hereof.

         "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to close.

         "Closing Date" means the date hereof.

         "Common Stock" means the shares of common stock, $0.10 par value per
share, of the Company and any other shares of common stock as may constitute
"Common Stock" for purposes of the Indenture, including the Underlying Common
Stock.

         "Conversion Price" has the meaning assigned such term in the Indenture.

         "Damages Accrual Period" has the meaning set forth in Section 2(e)
hereof.

         "Damages Payment Date" means each March 15 and September 15.

         "Debentures" means the 2.625% Convertible Senior Debentures Due 2024 of
the Company to be purchased pursuant to the Purchase Agreement.

         "Deferral Notice" has the meaning set forth in Section 3(h) hereof.

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         "Deferral Period" has the meaning set forth in Section 3(h) hereof.

         "Effectiveness Deadline Date" has the meaning set forth in Section 2(a)
hereof.

         "Effectiveness Period" means the period commencing on the date hereof
and ending on the date that all Registrable Securities have ceased to be
Registrable Securities.

         "Event" has the meaning set forth in Section 2(e) hereof.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.

         "Filing Deadline Date" has the meaning set forth in Section 2(a)
hereof.

         "Holder" has the meaning set forth in the second paragraph of this
Agreement.

         "Indenture" means the Indenture, dated as of the date hereof, between
the Company and Wachovia Bank, National Association, as trustee, pursuant to
which the Debentures are being issued.

         "Initial Purchaser" has the meaning set forth in the preamble hereof.

         "Initial Shelf Registration Statement" has the meaning set forth in
Section 2(a) hereof.

          "Liquidated Damages Amount" has the meaning set forth in Section 2(e)
hereof. Any Liquidated Damages Amount with respect to any Debenture shall be
treated as additional interest on the Debenture for purposes of the Indenture.

         "Material Event" has the meaning set forth in Section 3(h) hereof.

         "Notice and Questionnaire" means a written notice delivered to the
Company containing substantially the information called for by the Selling
Securityholder Notice and Questionnaire attached as Annex A to the Offering
Memorandum of the Company dated February 11, 2004 relating to the Debentures.

         "Notice Holder" means, on any date, any Holder that has delivered a
Notice and Questionnaire to the Company on or prior to such date.

         "Purchase Agreement" has the meaning set forth in the preamble hereof.

         "Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in

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reliance upon Rule 430A promulgated under the Securities Act), as amended or
supplemented by any amendment or prospectus supplement, including post-effective
amendments, and all materials incorporated by reference in such Prospectus.

         "Record Holder" means with respect to any Damages Payment Date relating
to any Debentures or Underlying Common Stock as to which any Liquidated Damages
Amount has accrued, the registered holder of such Debenture or Underlying Common
Stock on the March 1 immediately preceding a Damages Payment Date occurring on a
March 15, and on the September 1 immediately preceding a Damages Payment Date
occurring on a September 15.

         "Registrable Securities" means the Debentures until such Debentures
have been converted into or exchanged for the Underlying Common Stock and, at
all times subsequent to any such conversion, the Underlying Common Stock and any
securities into or for which such Underlying Common Stock has been converted or
exchanged, and any security issued with respect thereto upon any stock dividend,
split or similar event until, in the case of any such security, (A) the earliest
of (i) the sale pursuant to Rule 144 under the Securities Act or its effective
registration under the Securities Act and resale in accordance with the
Registration Statement covering it, (ii) expiration of the holding period that
would be applicable thereto under Rule 144(k) under the Securities Act or any
successor provision or (iii) the date on which all such registrable securities
cease to be outstanding.

         "Registration Statement" means any registration statement of the
Company that covers any of the Registrable Securities pursuant to the provisions
of this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all materials incorporated by reference in such registration statement.

         "Restricted Securities" means "Restricted Securities" as defined in
Rule 144.

         "Rule 144" means Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.

         "Rule 144A" means Rule 144A under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.

         "SEC" means the U.S. Securities and Exchange Commission.

         "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.

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         "Shelf Registration Statement" has the meaning set forth in Section
2(a) hereof.

         "Special Counsel" means Davis Polk & Wardwell or one such other
successor counsel as shall be specified by the Holders of a majority of the
Registrable Securities, but which may, with the written consent of the Initial
Purchaser (which shall not be unreasonably withheld), be another nationally
recognized law firm experienced in securities law matters designated by the
Company, the reasonable fees and expenses of which will be paid by the Company
pursuant to Section 5 hereof. For purposes of determining the holders of a
majority of the Registrable Securities in this definition, Holders of Debentures
shall be deemed to be the Holders of the number of shares of Underlying Common
Stock into which such Debentures are or would be convertible as of the date the
consent is requested.

         "Subsequent Shelf Registration Statement" has the meaning set forth in
Section 2(b) hereof.

          "Trustee" means Wachovia Bank, National Association, the Trustee under
the Indenture.

         "Underlying Common Stock" means the Common Stock into which the
Debentures are convertible or issued upon any such conversion.

         Section 2. Shelf Registration. (a) The Company shall prepare and file
or cause to be prepared and filed with the SEC within ninety (90) days of the
Closing Date (the "Filing Deadline Date"), a Registration Statement for an
offering to be made on a delayed or continuous basis pursuant to Rule 415 of the
Securities Act (a "Shelf Registration Statement") registering the resale from
time to time by Holders thereof of all of the Registrable Securities (the
"Initial Shelf Registration Statement"). The Initial Shelf Registration
Statement shall be on Form S-3 or another appropriate form permitting
registration of such Registrable Securities for resale by such Holders in
accordance with the methods of distribution elected by the Holders and set forth
in the Initial Shelf Registration Statement. The Company shall use its
reasonable best efforts to cause the Initial Shelf Registration Statement to be
declared effective under the Securities Act within one hundred eighty (180) days
of the Closing Date (the "Effectiveness Deadline Date"), and the Company shall
use its reasonable best efforts to keep the Initial Shelf Registration Statement
(or any Subsequent Shelf Registration Statement) continuously effective under
the Securities Act until the expiration of the Effectiveness Period. At the time
the Initial Shelf Registration Statement is declared effective, each Holder that
became a Notice Holder on or prior to the date ten (10) Business Days prior to
such time of effectiveness shall be named as a selling securityholder in the
Initial Shelf Registration Statement and the related Prospectus in such a manner
as to permit such Holder to deliver such Prospectus to purchasers of Registrable
Securities in accordance with applicable law. None of the Company's security
holders (other than the Holders of Registrable

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Securities) shall have the right to include any of the Company's securities in
the Shelf Registration Statement.

         (b)      If the Initial Shelf Registration Statement or any Subsequent
Shelf Registration Statement ceases to be effective for any reason at any time
during the Effectiveness Period (other than because all Registrable Securities
registered thereunder shall have been resold pursuant thereto or shall have
otherwise ceased to be Registrable Securities), the Company shall use its
reasonable best efforts to obtain the prompt withdrawal of any order suspending
the effectiveness thereof, or file an additional Shelf Registration Statement
covering all of the securities that as of the date of such filing are
Registrable Securities (a "Subsequent Shelf Registration Statement"). If a
Subsequent Shelf Registration Statement is filed, the Company shall use its
reasonable best efforts to cause the Subsequent Shelf Registration Statement to
become effective as promptly as is practicable after such filing and to keep
such Registration Statement (or subsequent Shelf Registration Statement)
continuously effective until the end of the Effectiveness Period.

         (c)      The Company shall supplement and amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement,
if required by the Securities Act or as necessary to name a Notice Holder as a
selling securityholder pursuant to Section (d) below.

         (d)      Each Holder agrees that if such Holder wishes to sell
Registrable Securities pursuant to a Shelf Registration Statement and related
Prospectus, it will do so only in accordance with this Section 2(d) and Section
3(h) of this Agreement. Following the date that the Initial Shelf Registration
Statement is declared effective, each Holder that is not a Notice Holder wishing
to sell Registrable Securities pursuant to a Shelf Registration Statement and
related Prospectus agrees to deliver a Notice and Questionnaire to the Company
on or prior to the tenth Business Day prior to any intended distribution of
Registrable Securities under the Shelf Registration Statement. From and after
the date the Initial Shelf Registration Statement is declared effective, the
Company shall use its reasonable best efforts to, within twenty (20) Business
Days after the date a Notice and Questionnaire is received by the Company, or
within twenty (20) Business Days after the expiration of any Deferral Period in
effect when the Notice and Questionnaire is received by the Company:

                           (i)      (A) if required by applicable law, file with
                  the SEC a post-effective amendment to the Shelf Registration
                  Statement or prepare and, if required by applicable law, file
                  a supplement to the related Prospectus or a supplement or
                  amendment to any document incorporated therein by reference or
                  file any other required document so that the Holder delivering
                  such Notice and Questionnaire is named as a selling
                  securityholder in the Shelf Registration Statement and the
                  related Prospectus in such a manner

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                  as to permit such Holder to deliver such Prospectus to
                  purchasers of the Registrable Securities in accordance with
                  applicable law and, (B) if the Company shall file a
                  post-effective amendment to the Shelf Registration Statement,
                  use its reasonable best efforts to cause such post-effective
                  amendment to be declared effective under the Securities Act no
                  later than the date (the "Amendment Effectiveness Deadline
                  Date") that is ninety (90) days after the date such
                  post-effective amendment is required by this clause to be
                  filed;

                           (ii)     provide such Holder copies of any documents
                  filed pursuant to Section 2(d)(i); and

                           (iii)    notify such Holder as promptly as
                  practicable after the effectiveness under the Securities Act
                  of any post-effective amendment filed pursuant to Section
                  2(d)(i);

provided, that (x) the Company shall not be obligated to add a holder to the
Shelf Registration Statement if the Company would have to make more than two
filings with the SEC in any three-month period, the first of such periods will
begin on the date the Registration Statement first becomes effective, and in no
case shall the Company be obligated to file more than a total of four
post-effective amendments to the Shelf Registration Statement, and (y) if such
Notice and Questionnaire is delivered during a Deferral Period, the Company
shall so inform the Holder delivering such Notice and Questionnaire and shall
take the actions set forth in clauses (i), (ii) and (iii) above within twenty
(20) Business Days of the expiration of the Deferral Period in accordance with
Section 3(h). Notwithstanding anything contained herein to the contrary, (i) the
Company shall be under no obligation to name any Holder that is not a Notice
Holder as a selling securityholder in any Registration Statement or related
Prospectus and (ii) the Amendment Effectiveness Deadline Date shall be extended
by up to ten (10) Business Days from the expiration of a Deferral Period (and
the Company shall incur no obligation to pay Liquidated Damages during such
extension) if such Deferral Period shall be in effect on the Amendment
Effectiveness Deadline Date.

         (e)      The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with precision, if, other than as permitted
hereunder,

                           (i)      the Initial Shelf Registration Statement has
                  not been filed on or prior to the Filing Deadline Date,

                           (ii)     the Initial Shelf Registration Statement has
                  not been declared effective under the Securities Act on or
                  prior to the Effectiveness Deadline Date,

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                           (iii)    the Company has failed to perform its
                  obligations set forth in Section 2(d)(i)(A) within the time
                  period required therein,

                           (iv)     any post-effective amendment to a Shelf
                  Registration Statement filed pursuant to Section 2(d)(i)(B)
                  has not become effective under the Securities Act on or prior
                  to the Amendment Effectiveness Deadline Date, or

                           (v)      the aggregate duration of Deferral Periods
                  in any period exceeds the number of days permitted in respect
                  of such period pursuant to Section 3(h) hereof.

Each event described in any of the foregoing clauses (i) through (v) is
individually referred to herein as an "Event." For purposes of this Agreement,
each Event set forth above shall begin and end on the dates set forth in the
table set forth below:

<TABLE>
<CAPTION>
 Type of
  Event                       Beginning                                   Ending
by Clause                       Date                                       Date
---------                       ----                                       ----
<S>                 <C>                                           <C>
   (i)              Filing Deadline Date                          the date the Initial Shelf
                                                                  Registration Statement is filed

  (ii)              Effectiveness Deadline Date                   the date the Initial Shelf
                                                                  Registration Statement becomes
                                                                  effective under the Securities Act

  (iii)             the date by which the Company                 the date the Company
                    is required to perform its obligations        performs its obligations
                    under Section 2(d)(i)                         set forth in Section 2(d)(i)

  (iv)              the Amendment Effectiveness                   the date the applicable
                    Deadline Date                                 post-effective amendment to a Shelf
                                                                  Registration Statement becomes effective
                                                                  under the Securities Act

   (v)              the date on which the                         termination of the Deferral Period
                    aggregate duration of                         that caused the limit on the aggregate
                    Deferral Periods in any                       duration of Deferral Periods to be
                    period exceeds the number of                  exceeded
                    days permitted by Section 3(h)
</TABLE>

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<PAGE>

         Commencing on (and including) any date that an Event has begun and
ending on (but excluding) the next date on which there are no Events that have
occurred and are continuing (a "Damages Accrual Period"), the Company shall pay,
as liquidated damages and not as a penalty, to Record Holders of Registrable
Securities an amount (the "Liquidated Damages Amount") accruing, for each day in
the Damages Accrual Period, (i) in respect of any Debenture, at a rate per annum
equal to 0.25% for the first 60 days from such Event and 0.5% thereafter of the
aggregate principal amount of such Debenture and (ii) in respect of each share
of Underlying Common Stock that has been issued upon conversion of a Debenture
and is then a Restricted Security at a rate per annum equal to 0.25% for the
first 60 days from such Event and 0.5% thereafter of the Conversion Price on
such date, as the case may be; provided that (x) if a Record Holder of
Registrable Securities converts Debentures into Common Stock on any date when
the Company is required to pay the Liquidated Damages Amount, such Record Holder
will receive additional shares of Common Stock, as described in the Indenture,
upon conversion unless the Company elects to pay cash and (y) in the case of a
Damages Accrual Period that is in effect solely as a result of an Event of the
type described in clause (iii) or (iv) of the preceding paragraph, such
Liquidated Damages Amount shall be paid only to the Holders (as set forth in the
succeeding paragraph) that have delivered Notices and Questionnaires that caused
the Company to incur the obligations set forth in Section 2(d) the
non-performance of which is the basis of such Event. In calculating the
Liquidated Damages Amount on any date on which no Debentures are outstanding,
the Conversion Price and the Liquidated Damages Amount payable with respect to
the shares of Common Stock that are Registrable Securities shall be calculated
as if the Debentures were still outstanding. Notwithstanding the foregoing, no
Liquidated Damages Amount shall accrue as to any Registrable Security from and
after the earlier of (x) the date such security is no longer a Registrable
Security and (y) expiration of the Effectiveness Period. The rate of accrual of
the Liquidated Damages Amount with respect to any period shall not exceed the
rate provided for in this paragraph notwithstanding the occurrence of multiple
concurrent Events.

         The Liquidated Damages Amount shall accrue from the first day of the
applicable Damages Accrual Period, and shall be payable on each Damages Payment
Date during the Damage Accrual Period (and on the Damages Payment Date next
succeeding the end of the Damages Accrual Period if the Damage Accrual Period
does not end on a Damages Payment Date) to the Record Holders of the Registrable
Securities entitled thereto; provided that any Liquidated Damages Amount accrued
with respect to any Debenture or portion thereof redeemed by the Company on a
redemption date or converted into Underlying Common Stock on a conversion date
prior to the Damages Payment Date, shall, in any such event, be paid instead to
the Holder who submitted such Debenture or

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<PAGE>

portion thereof for redemption or conversion on the applicable redemption date
or conversion date, as the case may be, on such date (or promptly following the
conversion date, in the case of conversion); provided further, that, in the case
of an Event of the type described in clause (iii) or (iv) of the first paragraph
of this Section 2(e), such Liquidated Damages Amount shall be paid only to the
Holders entitled thereto pursuant to such first paragraph by check mailed to the
address set forth in the Notice and Questionnaire delivered by such Holder;
provided further, that any payments of all or a portion of the Liquidated
Damages Amount that are not made when due will accrue interest from the required
payment date until the date of payment at a rate 1% per annum above the then
applicable interest rate for the Debentures. The Trustee shall be entitled, on
behalf of registered holders of Debentures or Underlying Common Stock, to seek
any available remedy for the enforcement of this Agreement, including for the
payment of such Liquidated Damages Amount. Notwithstanding the foregoing, the
parties agree that the sole damages payable for a violation of the terms of this
Agreement with respect to which liquidated damages are expressly provided shall
be such liquidated damages. Nothing shall preclude any Holder from pursuing or
obtaining specific performance or other equitable relief with respect to this
Agreement.

         All of the Company's obligations set forth in this Section 2(e) to pay
any Liquidated Damages Amount that is outstanding with respect to any
Registrable Security at the time such security ceases to be a Registrable
Security shall survive until such time as all such obligations with respect to
such security have been satisfied in full (notwithstanding termination of this
Agreement pursuant to Section 8(k)).

         The parties hereto agree that the liquidated damages provided for in
this Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Shelf Registration Statement to be filed or declared effective or available for
effecting resales of Registrable Securities in accordance with the provisions
hereof.

         Section 3. Registration Procedures. In connection with the
registration obligations of the Company under Section 2 hereof, during the
Effectiveness Period, the Company shall:

                  (a)      Prepare and file with the SEC a Registration
         Statement or Registration Statements on any appropriate form under the
         Securities Act available for the sale of the Registrable Securities by
         the Holders thereof in accordance with the intended method or methods
         of distribution thereof, and use its reasonable best efforts to cause
         each such Registration Statement to become effective and remain
         effective as provided herein; provided that before filing any
         Registration Statement or Prospectus or any amendments or supplements
         thereto with the SEC, furnish to the Initial Purchaser copies of all
         such documents proposed to be filed at least three (3) Business Days
         prior to the filing of such Registration Statement or amendment thereto
         or Prospectus or supplement thereto.

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<PAGE>

                  (b)      Subject to Section 3(h), use its reasonable best
         efforts to prepare and file with the SEC such amendments and
         post-effective amendments to each Registration Statement as may be
         necessary to keep such Registration Statement continuously effective
         for the applicable period specified in Section 2(a); cause the related
         Prospectus to be supplemented by any required prospectus supplement,
         and as so supplemented to be filed pursuant to Rule 424 (or any similar
         provisions then in force) under the Securities Act; and use its best
         efforts to comply with the provisions of the Securities Act applicable
         to it with respect to the disposition of all securities covered by such
         Registration Statement during the Effectiveness Period in accordance
         with the intended methods of disposition by the sellers thereof set
         forth in such Registration Statement as so amended or such Prospectus
         as so supplemented.

                  (c)      As promptly as practicable give notice to the Notice
         Holders and the Initial Purchaser, (i) when any Registration Statement
         or post-effective amendment to a Registration Statement or Prospectus
         or a prospectus supplement to a Prospectus has been filed with the SEC
         and, with respect to a Registration Statement or any post-effective
         amendment, when the same has been declared effective, (ii) of any
         request, following the effectiveness of the Initial Shelf Registration
         Statement under the Securities Act, by the SEC or any other federal or
         state governmental authority for amendments or supplements to any
         Registration Statement or related Prospectus or for additional
         information, (iii) of the issuance by the SEC or any other federal or
         state governmental authority of any stop order suspending the
         effectiveness of any Registration Statement or the initiation or
         threatening of any proceedings for that purpose, (iv) of the receipt by
         the Company of any notification with respect to the suspension of the
         qualification or exemption from qualification of any of the Registrable
         Securities for sale in any jurisdiction or the initiation or
         threatening of any proceeding for such purpose, (v) of the occurrence
         of, but not the nature of or details concerning, a Material Event and
         (vi) of the determination by the Company that a post-effective
         amendment to a Registration Statement will be filed with the SEC, which
         notice may, at the discretion of the Company (or as required pursuant
         to Section 3(h)), state that it constitutes a Deferral Notice, in which
         event the provisions of Section 3(h) shall apply.

                  (d)      Use its reasonable best efforts to obtain the
         withdrawal of any order suspending the effectiveness of a Registration
         Statement or the lifting of any suspension of the qualification (or
         exemption from qualification) of any of the Registrable Securities for
         sale in any jurisdiction in which they have been qualified for sale, in
         either case at the earliest possible time, and provide immediate notice
         to each Notice Holder and the Initial Purchaser of the withdrawal of
         any such order.

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<PAGE>

                  (e)      As promptly as practicable furnish to each Notice
         Holder and the Initial Purchaser, upon written request and without
         charge, at least one (1) conformed copy of the Registration Statement
         and any amendment thereto, including exhibits and all documents
         incorporated or deemed to be incorporated therein by reference.

                  (f)      During the Effectiveness Period, deliver to each
         Notice Holder, in connection with any sale of Registrable Securities
         pursuant to a Registration Statement, without charge, as many copies of
         the Prospectus or Prospectuses relating to such Registrable Securities
         (including each preliminary prospectus) and any amendment or supplement
         thereto as such Notice Holder may reasonably request; and the Company
         hereby consents (except during such periods that a Deferral Notice is
         outstanding and has not been revoked) to the use of such Prospectus or
         each amendment or supplement thereto by each Notice Holder in
         connection with any offering and sale of the Registrable Securities
         covered by such Prospectus or any amendment or supplement thereto in
         the manner set forth therein.

                  (g)      Prior to any public offering of the Registrable
         Securities pursuant to a Registration Statement, use its reasonable
         best efforts to register or qualify or cooperate with the Notice
         Holders in connection with the registration or qualification (or
         exemption from such registration or qualification) of such Registrable
         Securities for offer and sale under the securities or Blue Sky laws of
         such jurisdictions within the United States as any Notice Holder
         reasonably requests in writing (which request may be included in the
         Notice and Questionnaire); prior to any public offering of the
         Registrable Securities pursuant to the Shelf Registration Statement,
         use its reasonable best efforts to keep each such registration or
         qualification (or exemption therefrom) effective during the
         Effectiveness Period in connection with such Notice Holder's offer and
         sale of Registrable Securities pursuant to such registration or
         qualification (or exemption therefrom) and do any and all other acts or
         things reasonably necessary or advisable to enable the disposition in
         such jurisdictions of such Registrable Securities in the manner set
         forth in the relevant Registration Statement and the related
         Prospectus; provided that the Company will not be required to (i)
         qualify as a foreign corporation or as a dealer in securities in any
         jurisdiction where it would not otherwise be required to qualify but
         for this Agreement or (ii) take any action that would subject it to
         general service of process in suits or to taxation in any such
         jurisdiction where it is not then so subject.

                  (h)      Upon (A) the issuance by the SEC of a stop order
         suspending the effectiveness of the Shelf Registration Statement or the
         initiation of proceedings with respect to the Shelf Registration
         Statement under Section 8(d) or 8(e) of the Securities Act, (B) the
         occurrence of any event or the existence of any fact (a "Material
         Event") as a result of which any Registration Statement shall contain
         any untrue statement of a material

                                       11
<PAGE>

         fact or omit to state any material fact required to be stated therein
         or necessary to make the statements therein not misleading, or any
         Prospectus shall contain any untrue statement of a material fact or
         omit to state any material fact required to be stated therein or
         necessary to make the statements therein, in the light of the
         circumstances under which they were made, not misleading, or (C) the
         occurrence or existence of any pending corporate development that, in
         the reasonable discretion of the Company, makes it appropriate to
         suspend the availability of the Shelf Registration Statement and the
         related Prospectus:

                            (i) in the case of clause (B) above only, as
                  promptly as practicable prepare and file, if necessary
                  pursuant to applicable law, a post-effective amendment to such
                  Registration Statement or a supplement to the related
                  Prospectus or any document incorporated therein by reference
                  or file any other required document that would be incorporated
                  by reference into such Registration Statement and Prospectus
                  so that such Registration Statement does not contain any
                  untrue statement of a material fact or omit to state any
                  material fact required to be stated therein or necessary to
                  make the statements therein not misleading, and such
                  Prospectus does not contain any untrue statement of a material
                  fact or omit to state any material fact required to be stated
                  therein or necessary to make the statements therein, in the
                  light of the circumstances under which they were made, not
                  misleading, as thereafter delivered to the purchasers of the
                  Registrable Securities being sold thereunder, and, in the case
                  of a post-effective amendment to a Registration Statement, use
                  its reasonable best efforts to cause it to be declared
                  effective as promptly as is practicable, provided that the
                  Company shall not be required to file such amendment,
                  supplement or document if the Company has made a determination
                  pursuant to clause (C) above, so long as the suspension
                  pursuant to clause (C) above is continuing and permitted by
                  this Section 3(h); and

                            (ii) give notice to the Notice Holders, and the
                  Special Counsel, if any, that the availability of the Shelf
                  Registration Statement is suspended (a "Deferral Notice") and,
                  upon receipt of any Deferral Notice, each Notice Holder agrees
                  not to sell any Registrable Securities pursuant to the
                  Registration Statement until such Notice Holder's receipt of
                  copies of the supplemented or amended Prospectus provided for
                  in clause (i) above, or until it is advised in writing by the
                  Company that the Prospectus may be used, and has received
                  copies of any additional or supplemental filings that are
                  incorporated or deemed incorporated by reference in such
                  Prospectus.

                                       12
<PAGE>
                  The Company will use its reasonable best efforts to ensure
                  that the use of the Prospectus may be resumed (x) in the case
                  of clause (A) above, as promptly as is practicable, (y) in the
                  case of clause (B) above, as soon as, in the sole judgment of
                  the Company, public disclosure of such Material Event would
                  not be prejudicial to or contrary to the interests of the
                  Company or, if necessary to avoid unreasonable burden or
                  expense, as soon as practicable thereafter and (z) in the case
                  of clause (C) above, as soon as in the reasonable discretion
                  of the Company, such suspension is no longer appropriate. The
                  Company shall be entitled to exercise its right under this
                  Section 3(h) to suspend the availability of the Shelf
                  Registration Statement or any Prospectus from time to time as
                  appropriate, and any such period during which the availability
                  of the Registration Statement and any Prospectus is suspended
                  (the "Deferral Period") shall, without incurring any
                  obligation to pay liquidated damages pursuant to Section 2(e),
                  not exceed 45 days in any three month period or 90 days in any
                  twelve (12) month period, provided, that any days on which the
                  ability of Holders to make sales of Registrable Securities
                  under the Shelf Registration Statement are prevented or
                  restricted as a result of the filing of a post-effective
                  amendment to the Shelf Registration Statement shall not count
                  towards the calculation of the 45 and 90 day periods described
                  above if the post-effective amendment is made either for the
                  sole purpose of naming additional Holders as selling
                  securityholders or to include information reasonably requested
                  by a managing underwriter if an underwritten offering of
                  Registrable Securities is conducted under this Agreement.

                  (i)      If requested in writing in connection with a
         disposition of Registrable Securities pursuant to a Registration
         Statement, make reasonably available for inspection during normal
         business hours by a representative for the Notice Holders of such
         Registrable Securities, any broker-dealers, attorneys and accountants
         retained by such Notice Holders, and any attorneys or other agents
         retained by a broker-dealer engaged by such Notice Holders, all
         relevant financial and other records and pertinent corporate documents
         and properties of the Company and its subsidiaries, and cause the
         appropriate officers, directors and employees of the Company and its
         subsidiaries to make reasonably available for inspection during normal
         business hours on reasonable notice all relevant information reasonably
         requested by such representative for the Notice Holders, or any such
         broker-dealers, attorneys or accountants in connection with such
         disposition, in each case as is customary for similar "due diligence"
         examinations; provided that such persons shall first agree in writing
         with the Company that any non-public information shall be kept
         confidential by such persons and shall be used solely for the purposes
         of exercising rights under this Agreement, unless (i) disclosure of
         such information is required by court or administrative order or is
         necessary to respond to inquiries of regulatory authorities, (ii)
         disclosure of such information is required by law (including any
         disclosure requirements pursuant to federal securities laws in
         connection with the filing of any Registration Statement or the use of
         any prospectus referred to in this Agreement), (iii) such information

                                       13
<PAGE>

         becomes generally available to the public other than as a result of a
         disclosure or failure to safeguard by any such person or (iv) such
         information becomes available to any such person from a source other
         than the Company and such source is not bound by a confidentiality
         agreement, and provided further that the foregoing inspection and
         information gathering shall, to the greatest extent possible, be
         coordinated on behalf of all the Notice Holders and the other parties
         entitled thereto by Special Counsel. Any person legally compelled to
         disclose any such confidential information made available for
         inspection shall provide the Company with prompt prior written notice
         of such requirement so that the Company may seek a protective order or
         other appropriate remedy.

                  (j)      Use its reasonable best efforts to comply with all
         applicable rules and regulations of the SEC and make generally
         available to its securityholders earning statements (which need not be
         audited) satisfying the provisions of Section 11(a) of the Securities
         Act and Rule 158 thereunder (or any similar rule promulgated under the
         Securities Act) for a 12-month period commencing on the first day of
         the first fiscal quarter of the Company commencing after the effective
         date of a Registration Statement, which statements shall be made
         available no later than 45 days after the end of the 12-month period or
         90 days if the 12-month period coincides with the fiscal year of the
         Company.

                  (k)      Unless Registrable Securities shall be in book-entry
         form only, cooperate with each Notice Holder to facilitate the timely
         preparation and delivery of certificates representing Registrable
         Securities sold or to be sold pursuant to a Registration Statement,
         which certificates shall not bear any restrictive legends, and cause
         such Registrable Securities to be in such denominations as are
         permitted by the Indenture and registered in such names as such Notice
         Holder may reasonably request in writing in connection with any sale of
         Registrable Securities pursuant to a Registration Statement.

                  (l)      Provide a CUSIP number for all Registrable Securities
         that are debt securities not later than the effective date of such
         Registration Statement.

                  (m)      Cooperate and assist in any filings required to be
         made with the New York Stock Exchange.

                  (n)      Upon (i) the filing of the Initial Shelf Registration
         Statement and (ii) the effectiveness of the Initial Shelf Registration
         Statement, announce the same, in each case by release to Reuters
         Economic Services and Bloomberg Business News.

         Section 4. Holder's Obligations. Each Holder agrees, by acquisition of
the Registrable Securities, that no Holder shall be entitled to sell any of such

                                       14
<PAGE>

Registrable Securities pursuant to a Registration Statement or to receive a
Prospectus relating thereto, unless such Holder has furnished the Company with a
Notice and Questionnaire as required pursuant to Section 2(d) hereof (including
the information required to be included in such Notice and Questionnaire) and
the information set forth in the next sentence. Each Notice Holder agrees
promptly to furnish to the Company all information required to be disclosed in
order to make the information previously furnished to the Company by such Notice
Holder not misleading and any other information regarding such Notice Holder and
the distribution of such Registrable Securities as the Company may from time to
time reasonably request. Any sale of any Registrable Securities by any Holder
shall constitute a representation and warranty by such Holder that the
information relating to such Holder and its plan of distribution is as set forth
in the Prospectus delivered by such Holder in connection with such disposition,
that such Prospectus does not as of the time of such sale contain any untrue
statement of a material fact relating to or provided by such Holder or its plan
of distribution and that such Prospectus does not as of the time of such sale
omit to state any material fact relating to or provided by such Holder or its
plan of distribution necessary to make the statements in such Prospectus, in the
light of the circumstances under which they were made, not misleading.

         Section 5. Registration Expenses. The Company shall bear all fees and
expenses incurred in connection with the performance by the Company of its
obligations under Sections 2 and 3 of this Agreement whether or not any
Registration Statement is declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (x) with respect to filings required to be
made with the New York Stock Exchange and (y) of compliance with federal and
state securities or Blue Sky laws (including, without limitation, reasonable
fees and disbursements of the Special Counsel in connection with Blue Sky
qualifications of the Registrable Securities under the laws of such
jurisdictions as Notice Holders of a majority of the Registrable Securities
being sold pursuant to a Registration Statement may designate)), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities in a form eligible for deposit with The Depository Trust
Company), (iii) duplication expenses relating to copies of any Registration
Statement or Prospectus delivered to any Holders hereunder, (iv) fees and
disbursements of counsel for the Company in connection with the Shelf
Registration Statement, (v) reasonable fees and disbursements of the Trustee and
its counsel and of the registrar and transfer agent for the Common Stock and
(vi) any Securities Act liability insurance obtained by the Company in its sole
discretion. In addition, the Company shall pay the internal expenses of the
Company (including, without limitation, all salaries and expenses of officers
and employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing by the
Company of the Registrable Securities on any securities exchange on which
similar securities of the Company are then listed and the fees and expenses of
any person, including special experts, retained by the

                                       15
<PAGE>

Company. Notwithstanding the provisions of this Section 5, each seller of
Registrable Securities shall pay selling expenses, including any underwriting
discount and commissions, and all registration expenses to the extent required
by applicable law.

         Section 6. Indemnification and Contribution.

         (a)      Indemnification by the Company. Following the registration of
the Registration Securities pursuant to Section 2 hereof, the Company agrees to
indemnify and hold harmless each Notice Holder, each person, if any, who
controls any Notice Holder within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, and each affiliate of any
Notice Holder within the meaning of Rule 405 under the Securities Act from and
against any and all losses, claims, damages and liabilities (including, without
limitation, all reasonable legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement or any amendment thereof, any preliminary prospectus
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, provided, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damages or liability arises out of or is based upon an untrue statement
or alleged untrue statement or omission or alleged omission made in such
Registration Statement or Prospectus, or amendment or supplement, based upon the
written information furnished to the Company by or on behalf of such Holder
expressly for use therein; and provided, further, that the Company shall not be
liable for any losses, claims, damages or liabilities (i) arising from any offer
or sale of Registrable Securities during a period in which the Company has
suspended use of the Prospectus pursuant to Section 3(h) and of which suspension
the Notice Holder has been provided notice or (ii) if the Notice Holder fails to
deliver, within the time required by the Securities Act, a Prospectus that is
amended or supplemented, and such Prospectus, as amended or supplemented, would
have corrected the untrue statement or omission or alleged untrue statement or
omission of a material fact contained in the Prospectus delivered by the Notice
Holder, so long as the Prospectus, as amended or supplemented, has been
delivered to such Notice Holder prior to such time.

         (b)      Indemnification by Holders. Each Holder agrees severally and
not jointly to indemnify and hold harmless the Company and its directors,
officers and each person, if any, who controls the Company (within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act) or
any other Holder, to the same extent as the foregoing indemnity from the Company
to such Holder, but only with reference to information relating to such Holder
furnished to the Company in writing by such Holder expressly for use in such
Registration Statement or Prospectus or amendment or supplement thereto. In no
event shall

                                       16
<PAGE>

the liability of any Holder hereunder be greater in amount than the dollar
amount of the proceeds received by such Holder upon the sale of the Registrable
Securities pursuant to the Registration Statement giving rise to such
indemnification obligation.

         (c)      Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
person in respect of which indemnity may be sought pursuant to Section 6(a) or
6(b) hereof, such person (the "indemnified party") shall promptly notify the
person against whom such indemnity may be sought (the "indemnifying party") in
writing and the indemnifying party, upon request of the indemnified party, shall
retain counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the reasonable fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the reasonable fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm (in addition to any local counsel) for
all such indemnified parties and that all such fees and expenses shall be
reimbursed as they are incurred. Such firm shall be designated in writing by, in
the case of parties indemnified pursuant to Section 6(a), the Holders of a
majority (with Holders of Debentures deemed to be the Holders, for purposes of
determining such majority, of the number of shares of Underlying Common Stock
into which such Debentures are or would be convertible as of the date on which
such designation is made) of the Registrable Securities covered by the
Registration Statement held by Holders that are indemnified parties pursuant to
Section 6(a) and, in the case of parties indemnified pursuant to Section 6(b),
the Company. The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment that is indemnifiable
pursuant to Section 6(a) or 6(b), as the case may be. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the second and third sentences of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such

                                       17
<PAGE>

indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.

         (d)      Contribution. To the extent that the indemnification provided
for in Section 6(a) or 6(b) is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party or parties on the other hand or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and of the indemnified party or parties on the other
hand in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company shall be deemed to
be equal to the total net proceeds from the initial placement pursuant to the
Purchase Agreement (before deducting expenses) of the Registrable Securities to
which such losses, claims, damages or liabilities relate. The relative benefits
received by any Holder shall be deemed to be equal to the value of receiving
registration rights under this Agreement for the Registrable Securities. The
relative fault of the Holders on the one hand and the Company on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Holders or by
the Company, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Holders'
respective obligations to contribute pursuant to this Section 6 are several in
proportion to the respective number of Registrable Securities they have sold
pursuant to a Registration Statement, and not joint.

         The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed

                                       18
<PAGE>

to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding this
Section 6, no indemnifying party that is a selling Holder shall be required to
contribute any amount in excess of the amount by which the total price at which
the Registrable Securities sold by it and distributed to the public were offered
to the public exceeds the amount of any damages that such indemnifying party has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

         (e)      The remedies provided for in this Section 6 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
an indemnified party at law or in equity, hereunder, under the Purchase
Agreement or otherwise.

         (f)      The indemnity and contribution provisions contained in this
Section 6 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Holder, any person controlling any Holder or any affiliate of any Holder
or by or on behalf of the Company, its officers or directors or any person
controlling the Company and (iii) the sale of any Registrable Securities by any
Holder.

         Section 7. Information Requirements. The Company covenants that, if at
any time before the end of the Effectiveness Period the Company is not subject
to the reporting requirements of the Exchange Act, it will cooperate with any
Holder and take such further reasonable action as any Holder may reasonably
request in writing (including, without limitation, making such reasonable
representations as any such Holder may reasonably request), all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144 and Rule 144A under the Securities Act and
customarily taken in connection with sales pursuant to such exemptions. Upon the
written request of any Holder, the Company shall deliver to such Holder a
written statement as to whether it has complied with such filing requirements,
unless such a statement has been included in the Company's most recent report
filed pursuant to Section 13 or Section 15(d) of Exchange Act. Notwithstanding
the foregoing, nothing in this Section 7 shall be deemed to require the Company
to register any of its securities (other than the Common Stock) under any
section of the Exchange Act.

         Section 8. Miscellaneous.

         (a)      No Conflicting Agreements. The Company is not, as of the date
hereof, a party to, nor shall it, on or after the date of this Agreement, enter
into, any agreement with respect to its securities that conflicts with the
rights granted to

                                       19
<PAGE>

the Holders in this Agreement. The Company represents and warrants that the
rights granted to the Holders hereunder do not in any way conflict with the
rights granted to the holders of the Company's securities under any other
agreements. The Company shall not be restricted from granting registration
rights which are not conflicting with this provision.

         (b)      Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a majority of the then outstanding Underlying Common Stock constituting
Registrable Securities (with Holders of Debentures deemed to be the Holders, for
purposes of this Section, of the number of outstanding shares of Underlying
Common Stock into which such Debentures are or would be convertible as of the
date on which such consent is requested). Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders whose securities are being
sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders may be given by Holders of at
least a majority of the Registrable Securities being sold by such Holders
pursuant to such Registration Statement; provided that the provisions of this
sentence may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence. Notwithstanding the
foregoing two sentences, this Agreement may be amended by written agreement
signed by the Company and the Initial Purchaser, without the consent of the
Holders of Registrable Securities, to cure any ambiguity or to correct or
supplement any provision contained herein that may be defective or inconsistent
with any other provision contained herein, or to make such other provisions in
regard to matters or questions arising under this Agreement that shall not
adversely affect the interests of the Holders of Registrable Securities. Each
Holder of Registrable Securities outstanding at the time of any such amendment,
modification, supplement, waiver or consent or thereafter shall be bound by any
such amendment, modification, supplement, waiver or consent effected pursuant to
this Section 8(b), whether or not any notice, writing or marking indicating such
amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.

         (c)      Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, by telecopier, by
courier guaranteeing overnight delivery or by first-class mail, return receipt
requested, and shall be deemed given (i) when made, if made by hand delivery,
(ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after
being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the
parties as follows:

                                       20
<PAGE>

                           (i)      if to a Holder, at the most current address
                  given by such Holder to the Company in a Notice and
                  Questionnaire or any amendment thereto;

                           (ii)     if to the Company, to:

                                    Safeguard Scientifics, Inc.
                                    800 The Safeguard Scientifics, Inc.
                                    435 Devon Park Drive
                                    Wayne, PA 19087
                                    Attention:  Christopher J. Davis
                                    Telecopy No.: 610-909-6349

                                    and

                                    Morgan, Lewis & Bockius, LLP
                                    1701 Market Street
                                    Philadelphia, PA 19103
                                    Attention: N. Jeffrey Klauder
                                    Telecopy No.: (215) 963-4751

                           (iii)    if to the Initial Purchaser, to:

                                    Wachovia Capital Markets, LLC
                                    53 Forest Avenue
                                    Old Greenwich, CT 06870
                                    Attention: Convertible Syndication
                                    Telecopy No.: (203) 698-2368

or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.

         (d)      Approval of Holders. Whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or its affiliates (as such
term is defined in Rule 405 under the Securities Act) (other than the Initial
Purchaser or subsequent Holders if such subsequent Holders are deemed to be such
affiliates solely by reason of their holdings of such Registrable Securities)
shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.

         (e)      Successors and Assigns. Any person who purchases any
Registrable Securities from the Initial Purchaser shall be deemed, for purposes
of this Agreement, to be an assignee of the Initial Purchaser. This Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties and shall inure to the benefit of and be binding upon each
Holder of any Registrable Securities, provided that nothing herein shall be
deemed to permit any

                                       21
<PAGE>

assignment, transfer or other disposition of Registrable Securities in violation
of the terms of the Indenture. If any transferee of any Holder shall acquire
Registrable Securities, in any manner, whether by operation of law or otherwise,
such Registrable Securities shall be held subject to all of the terms of this
Agreement, and by taking and holding such Registrable Securities, such person
shall be conclusively deemed to have agreed to be bound by and to perform all of
the terms and provisions of this Agreement and such person shall be entitled to
receive the benefits hereof.

         (f)      Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be original and all of which taken together
shall constitute one and the same agreement.

         (g)      Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.

         (h)      Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

         (i)      Severability. If any term provision, covenant or restriction
of this Agreement is held to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated thereby, and the parties hereto shall use their reasonable best
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction, it being intended that all of the rights and privileges
of the parties shall be enforceable to the fullest extent permitted by law.

         (j)      Entire Agreement. This Agreement is intended by the parties as
a final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Registrable Securities. Except as
provided in the Purchase Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
undertakings among the parties with respect to such registration rights. No
party hereto shall have any rights, duties or obligations other than those
specifically set forth in this Agreement.

         (k)      Termination. This Agreement and the obligations of the parties
hereunder shall terminate upon the end of the Effectiveness Period, except for
any liabilities or obligations under Section 4, 5 or 6 hereof and the
obligations to make

                                       22
<PAGE>

payments of and provide for the Liquidated Damages Amount under Section 2(e)
hereof to the extent such amount accrues prior to the end of the Effectiveness
Period, each of which shall remain in effect in accordance with its terms.

                                       23
<PAGE>

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

                                    SAFEGUARD SCIENTIFICS, INC.

                                    By: CHRISTOPHER J. DAVIS
                                        ----------------------------------------
                                        Name: Christopher J. Davis
                                        Title: Managing Director & Chief
                                               Financial Officer

                                       24
<PAGE>

Confirmed and accepted as of
the date first above written:

WACHOVIA CAPITAL MARKETS, LLC

Initial Purchaser named in the Purchase
    Agreement

By: MARY LOUISE GUTTMANN
    --------------------------------------
    Name: Mary Louise Guttman
    Title: Senior Vice President