JULY 1, 2009, IF BORROWER HAS NOT, PRIOR TO END
OF THE MONTH PRECEDING SUCH ISSUANCE DATE, (I) REPAID ALL OUTSTANDING AMOUNTS,
(II) TERMINATED THIS AGREEMENT AND (III) OBTAINED A FULL RELEASE OF LENDER AS A
GUARANTOR OF BORROWER'S OBLIGATIONS UNDER THE COMERICA AGREEMENT.
EACH MONTHLY
WARRANT SHALL BE EXERCISABLE FOR 700,000 SHARES OF COMMON STOCK AT AN EXERCISE
PRICE OF $0.01 PER SHARE, AND SHALL OTHERWISE BE IN THE FORM OF EXHIBIT B
ATTACHED HERETO.
(D)
PRIOR MEZZANINE FACILITY WARRANTS.
PURSUANT TO THE PRIOR
MEZZANINE FACILITY, BORROWER ISSUED TO LENDER WARRANTS (SUCH WARRANTS, THE
"PRIOR FACILITY WARRANTS") TO PURCHASE AN AGGREGATE OF 3,843,750 SHARES OF
COMMON STOCK AT AN EXERCISE PRICE OF $.01 PER SHARE.
(E)
REGISTRABLE SECURITIES.
THE REGISTRATION RIGHTS AGREEMENT BETWEEN
BORROWER AND LENDER DATED AS OF MARCH 14, 2008 SHALL BE AMENDED AND RESTATED (AS
AMENDED AND RESTATED, THE "REGISTRATION RIGHTS AGREEMENT") IN CONNECTION WITH
THE CLOSING SO THAT ALL OF THE COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE
WARRANTS SHALL CONSTITUTE REGISTRABLE SECURITIES THEREUNDER.
3.
CLOSING; DELIVERIES; CONDITIONS TO
ADVANCE.
3.1.
CLOSING DATE.
THE CLOSING OF THIS AGREEMENT (THE "CLOSING") IS TAKING
PLACE ON THE DATE HEREOF ("CLOSING DATE") AND IS BEING HELD AT THE OFFICES OF
SAFEGUARD SCIENTIFICS, INC., 435 DEVON PARK DRIVE, BUILDING 800, WAYNE,
PENNSYLVANIA, CONTEMPORANEOUSLY WITH THE EXECUTION OF THIS AGREEMENT.
3.2.
CLOSING DELIVERIES AND ACTIONS.
THE PARTIES SHALL MAKE THE FOLLOWING
DELIVERIES AND TAKE THE FOLLOWING ACTIONS AT THE CLOSING:
9
(A)
BORROWER SHALL DELIVER OR CAUSED TO BE DELIVERED TO LENDER (I) A
COUNTERPART OF THIS AGREEMENT, (II) THE NOTE, (III) THE NEW WARRANTS, AND (IV) A
COUNTERPART TO THE REGISTRATION RIGHTS AGREEMENT, EACH FULLY EXECUTED;
(B)
COUNSEL TO BORROWER SHALL DELIVER TO LENDER A LEGAL OPINION IN
FORM AND SUBSTANCE REASONABLY ACCEPTABLE TO LENDER
(C)
LENDER SHALL DELIVER OR CAUSED TO BE DELIVERED TO BORROWER A FULLY
EXECUTED COUNTERPART TO THIS AGREEMENT AND THE REGISTRATION RIGHTS AGREEMENT;
(D)
BORROWER SHALL DELIVER A CERTIFICATE, EXECUTED ON BEHALF OF
BORROWER BY THE SECRETARY THEREOF, DATED AS OF THE CLOSING, CERTIFYING THE
INCUMBENCY OF EACH OF THE OFFICERS OF BORROWER EXECUTING THIS AGREEMENT, AND ALL
OTHER DOCUMENTS, INSTRUMENTS OR CERTIFICATES TO BE EXECUTED AND DELIVERED BY
BORROWER IN CONNECTION THEREWITH, AND ATTACHING CERTIFIED COPIES OF (I) THE
RESOLUTIONS OF A SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF BORROWER
APPROVING THIS AGREEMENT, THE NEW WARRANTS, AND THE OTHER TRANSACTIONS
CONTEMPLATED HEREBY, (II) TRUE, COMPLETE, AND ACCURATE COPIES OF EACH OF (X) THE
CERTIFICATE OF INCORPORATION OF BORROWER, CERTIFIED BY THE SECRETARY OF STATE OF
THE STATE OF DELAWARE, AND (Y) THE BYLAWS OF BORROWER, EACH OF WHICH REMAIN IN
FULL FORCE AND EFFECT, WITHOUT MODIFICATION, AS OF THE DATE OF THE CLOSING, AND
(III) A CERTIFICATE OF GOOD STANDING, ISSUED BY THE SECRETARY OF STATE OF THE
STATES OF DELAWARE AND CALIFORNIA, CERTIFYING THAT BORROWER IS IN GOOD STANDING,
AS OF A RECENT DATE PRIOR TO THE CLOSING, IN EACH SUCH JURISDICTION;
(E)
BORROWER SHALL DELIVER A CERTIFICATE, EXECUTED