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                                                                    EXHIBIT 4.11

                                  $125,000,000

                           SAFEGUARD SCIENTIFICS, INC.

                  2.625% CONVERTIBLE SENIOR DEBENTURES DUE 2024

                               PURCHASE AGREEMENT

                                                               February 11, 2004

Wachovia Capital Markets, LLC
301 South College Street, 4th Floor
Charlotte, North Carolina 28288-0735

Dear Sirs and Mesdames:

         Safeguard Scientifics, Inc., a Pennsylvania corporation (the "COMPANY")
confirms its agreement with respect to the proposed issuance and sale to
Wachovia Capital Markets, LLC (the "INITIAL PURCHASER") of $125,000,000
principal amount of the Company's 2.625% Convertible Senior Debentures Due 2024
(the "FIRM SECURITIES") to be issued pursuant to the provisions of an Indenture
(the "INDENTURE") between the Company and Wachovia Bank, National Association,
as Trustee (the "TRUSTEE"). The Company also proposes to issue and sell to the
Initial Purchaser not more than an additional $25,000,000 principal amount of
its 2.625% Convertible Senior Debentures Due 2024 (the "ADDITIONAL SECURITIES,"
and together with the Firm Securities, the "SECURITIES") if and to the extent
that you shall have determined to exercise the right to purchase such Additional
Securities granted in Section 2 hereof. The Securities will be convertible into
shares of common stock, par value $0.10 per share, of the Company (the
"UNDERLYING SECURITIES"), together with the rights (the "RIGHTS") evidenced by
such common stock to the extent provided in the Shareholder Rights Agreement
dated March 1, 2000, as amended, between the Company and ChaseMellon Shareholder
Services, LLC , as rights agent (the "RIGHTS AGREEMENT").

         The Securities and the Underlying Securities will be offered without
being registered under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), to qualified institutional buyers in compliance with the exemption from
registration provided by Rule 144A under the Securities Act.

         The Initial Purchaser and its direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement dated the Closing
Date (as

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defined in Section 4 hereof) between the Company and the Initial Purchaser (the
"REGISTRATION RIGHTS AGREEMENT").

         In connection with the sale of the Securities, the Company has prepared
an offering memorandum dated as of the date hereof (the "MEMORANDUM") including
or incorporating by reference a description of the terms of the Securities and
the Underlying Securities, the terms of the offering and a description of the
Company. As used herein, the term "Memorandum" shall include in each case the
documents incorporated by reference therein. The terms "SUPPLEMENT", "AMENDMENT"
and "AMEND" as used herein with respect to the Memorandum shall include all
documents deemed to be incorporated by reference in the Memorandum that are
filed subsequent to the date of the Memorandum with the Securities and Exchange
Commission (the "COMMISSION") pursuant to the Securities Exchange Act of 1934,
as amended (the "EXCHANGE ACT").

         1.       Representations and Warranties. The Company jointly represents
and warrants to, and agrees with, you that:

                  (a)      (i) Each document, if any, filed or to be filed
         pursuant to the Exchange Act and incorporated by reference in the
         Memorandum complied or will comply when so filed in all material
         respects with the Exchange Act and the applicable rules and regulations
         of the Commission thereunder and (ii) the Memorandum, as if its date
         and as of the Closing Date, does not and will not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements therein, in the light of the circumstances under
         which they were made, not misleading, except that the representations
         and warranties set forth in this paragraph do not apply to statements
         in, or omissions from, the Memorandum made in reliance upon and in
         conformity with the information relating to the Initial Purchaser
         furnished to the Company in writing by the Initial Purchaser expressly
         for use therein, it being understood and agreed that the only such
         information is that described as such in Schedule I.

                  (b)      The Company has been duly incorporated, is validly
         subsisting as a corporation in good standing under the laws of the
         Commonwealth of Pennsylvania, has the corporate power and authority to
         own its property and to conduct its business as described in the
         Memorandum and is duly qualified to transact business and is in good
         standing in each jurisdiction in which the conduct of its business or
         its ownership or leasing of property requires such qualification,
         except to the extent that the failure to be so qualified or be in good
         standing would not result in a material adverse change in the
         condition, financial or otherwise, or in the earnings, business affairs
         or business of the Company, its wholly-owned subsidiaries (the
         "SUBSIDIARIES") and the companies listed in Schedule II (each, a
         "MATERIAL HOLDING" and collectively, the "MATERIAL HOLDINGS"),
         considered together as one enterprise reflecting the

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         Company's ownership interests in the Subsidiaries and the Material
         Holdings, whether or not arising in the ordinary course of business (a
         "MATERIAL ADVERSE EFFECT"); the Company is not required to be duly
         qualified to transact business in any U.S. jurisdiction.

                  (c)      Each of the Subsidiaries and each of the Material
         Holdings have been duly organized and are validly existing as a
         corporation in good standing under the laws of the jurisdiction of its
         incorporation; each of the Subsidiaries, and, to the knowledge of the
         Company, each of the Material Holdings, have corporate power and
         authority to own, lease and operate their properties and to conduct
         their business as described in the Memorandum, are duly qualified as a
         foreign corporation to transact business and are in good standing in
         each jurisdiction in which such qualification is required, whether by
         reason of the ownership or leasing of property or the conduct of
         business, except where the failure so to qualify or to be in good
         standing would not result in a Material Adverse Effect; the issued and
         outstanding capital stock of each of the Subsidiaries and each of the
         Material Holdings held directly or indirectly by the Company has been
         duly authorized and validly issued, is fully paid and non-assessable,
         and the Company owns its interests in the Subsidiaries and the Material
         Holdings, in each case in the percentages (subject to rounding)
         disclosed in the Memorandum as of the date stated therein, directly or
         indirectly, free and clear of any security interest, mortgage, pledge,
         lien, encumbrance or claim (other than any transfer restriction arising
         under federal or state securities laws); none of the outstanding shares
         of capital stock of any of the Subsidiaries or any of the Material
         Holdings held directly or indirectly by the Company was issued in
         violation of the preemptive or similar rights of any securityholder of
         such Subsidiary or such Material Holding.

                  (d)      This Agreement has been duly authorized, executed and
         delivered by the Company.

                  (e)      The authorized capital stock of the Company is as set
         forth in the description thereof contained in the Memorandum.

                  (f)      The shares of common stock of the Company outstanding
         prior to the issuance of the Securities have been duly authorized and
         are validly issued, fully paid and non-assessable.

                  (g)      The Securities have been duly authorized and, when
         duly executed, authenticated, issued and delivered in accordance with
         the provisions of the Indenture and paid for by the Initial Purchaser
         in accordance with the terms of this Agreement, will be valid and
         binding obligations of the Company, enforceable in accordance with
         their terms, subject to applicable bankruptcy, insolvency and similar
         laws affecting creditors' rights generally and equitable principles of
         general applicability

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         (the "ENFORCEABILITY EXCEPTIONS"), and will be entitled to the benefits
         of the Indenture and the Registration Rights Agreement.

                  (h)      The Underlying Securities issuable upon conversion of
         the Securities have been duly authorized and reserved and, when issued
         upon conversion of the Securities in accordance with the terms of the
         Securities and the Indenture, will be validly issued, fully paid and
         non-assessable, and the issuance of the Underlying Securities will not
         be subject to any preemptive or similar rights.

                  (i)      The Rights, if any, issuable upon conversion of the
         Securities have been duly authorized and, when and if issued upon
         conversion of the Securities in accordance with the Rights Agreement,
         will have been validly issued.

                  (j)      Except for the registration rights contained in the
         Registration Rights Agreement, the Company has not granted or agreed to
         grant to any person any rights (including "piggy-back" registration
         rights) to have any securities of the Company registered with the
         Commission or any other governmental authority that have not been
         satisfied.

                  (k)      Except for the agreement dated May 24, 2001 among
         Mantas, Inc., SRA International, Inc., System Research and Applications
         Corporation, the National Association of Securities Dealers, Inc. and
         Safeguard 2001 Capital, L.P., there are no voting agreements, voting
         trusts, proxies or other agreements or understandings with respect to
         the voting of any capital stock of any of the Company, the Subsidiaries
         or, to the knowledge of the Company, the Material Holdings of which any
         of the Company, the Subsidiaries or the Material Holdings is a party.

                  (l)      Each of the Indenture and the Registration Rights
         Agreement has been duly authorized, and when each agreement is duly
         executed and delivered by the Company and each of the parties thereto
         in accordance with its terms, each agreement will constitute a valid
         and binding agreement of the Company enforceable in accordance with its
         terms, subject to the Enforceability Exceptions and except as rights to
         indemnification and contribution under the Registration Rights
         Agreement may be limited under applicable law.

                  (m)      The execution and delivery by the Company, and the
         performance by the Company of its obligations under, this Agreement,
         the Indenture, the Registration Rights Agreement and the Securities
         will not contravene any provision of (i) applicable law, (ii) the
         certificate of incorporation or by-laws of the Company, (iii) any
         agreement or other instrument binding upon the Company or (iv) any
         judgment, order or decree of any governmental body, agency or court
         having jurisdiction over the Company, except in the case of (i), (iii)
         and (iv) above as would not

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         have a Material Adverse Effect; no consent, approval, authorization or
         order of, or qualification with, any governmental body or agency is
         required for the performance by the Company of its obligations under
         this Agreement, the Indenture, the Registration Rights Agreement or the
         Securities, except such as may be required by the securities or Blue
         Sky laws of the various states in connection with the offer and sale of
         the Securities and by Federal and state securities laws with respect to
         the obligations of the Company under the Registration Rights Agreement.

                  (n)      There has not occurred any material adverse change in
         the condition, financial or otherwise, or in the earnings, business
         affairs or business of the Company, the Subsidiaries and the Material
         Holdings, considered together as one enterprise reflecting the
         Company's ownership interests in the Subsidiaries and the Material
         Holdings, whether or not arising in the ordinary course of business,
         since the respective dates as to which information is given in the
         Memorandum, except as stated therein (a "MATERIAL ADVERSE CHANGE").

                  (o)      None of the Company, any of the Subsidiaries or, to
         the knowledge of the Company, any of the Material Holdings is in
         violation of its charter or by-laws or in default in the performance of
         any obligation, agreement, covenant or condition contained in any
         indenture, loan agreement, mortgage, lease or other agreement or
         instrument that is material to such entity and to which such entity is
         a party or by which such entity or its property is bound, except for
         such defaults that would not, singly or in the aggregate, have a
         Material Adverse Effect.

                  (p)      There are no legal or governmental proceedings
         pending or threatened to which the Company, any of the Subsidiaries or,
         to the knowledge of the Company, any of the Material Holdings is a
         party or to which any of the properties of such entity is subject other
         than the proceedings set forth in the Memorandum and proceedings that
         would not have a material adverse effect on the power or ability of the
         Company to perform its obligations under this Agreement, the Indenture,
         the Registration Rights Agreement or the Securities or to consummate
         the transactions contemplated by the Memorandum.

                  (q)      Except as described in the Memorandum and except as
         would not, singly or in the aggregate, have a Material Adverse Effect,
         (A) neither the Company nor any of the Subsidiaries nor, to the
         knowledge of the Company, any of the Material Holdings is in violation
         of any federal, state, local or foreign statute, law, rule, regulation,
         ordinance, code, policy or rule of common law or any judicial or
         administrative interpretation thereof, including any judicial or
         administrative order, consent, decree or judgment, relating to
         pollution or protection of human health, the environment (including,
         without limitation, ambient air, surface water, groundwater, land
         surface or subsurface strata) or wildlife, including,

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         without limitation, laws and regulations relating to the release or
         threatened release of chemicals, pollutants, contaminants, wastes,
         toxic substances, hazardous substances, petroleum or petroleum products
         (collectively, "HAZARDOUS MATERIALS") or to the manufacture,
         processing, distribution, use, treatment, storage, disposal, transport
         or handling of Hazardous Materials (collectively, "ENVIRONMENTAL
         LAWS"), (B) the Company, the Subsidiaries and, to the knowledge of the
         Company, the Material Holdings have all permits, authorizations and
         approvals required under any applicable Environmental Laws and are each
         in compliance with their requirements, (C) there are no pending or
         threatened administrative, regulatory or judicial actions, suits,
         demands, demand letters, claims, liens, notices of noncompliance or
         violation, investigation or proceedings relating to any Environmental
         Law against the Company, any of the Subsidiaries or any of the Material
         Holdings and (D) there are no events or circumstances that might
         reasonably be expected to form the basis of an order for clean-up or
         remediation, or an action, suit or proceeding by any private party or
         governmental body or agency, against or affecting the Company, any of
         the Subsidiaries or, to the knowledge of the Company, any of its
         Material Holdings relating to Hazardous Materials or any Environmental
         Laws.

                  (r)      The Company is not, and after giving effect to the
         offering and sale of the Securities and the application of the proceeds
         thereof as described in the Memorandum will not be, required to
         register as an "investment company" as such term is defined in the
         Investment Company Act of 1940, as amended.

                  (s)      Neither the Company nor any of its affiliates (as
         defined in Rule 501(b) of Regulation D under the Securities Act, each
         an "AFFILIATE") has directly, or through any agent (other than the
         Initial Purchaser, as to which no representation is being made), (i)
         sold, offered for sale, solicited offers to buy or otherwise negotiated
         in respect of, any security (as defined in the Securities Act) which is
         or will be integrated with the sale of the Securities in a manner that
         would require the registration under the Securities Act of the
         Securities or (ii) offered, solicited offers to buy or sold the
         Securities by any form of general solicitation or general advertising
         (as those terms are used in Regulation D under the Securities Act) or
         in any manner involving a public offering within the meaning of Section
         4(2) of the Securities Act.

                  (t)      Assuming the accuracy of the representations and
         warranties of the Initial Purchaser contained in Section 7 hereof and
         its compliance with its agreements set forth therein, it is not
         necessary in connection with the offer, sale and delivery of the
         Securities to the Initial Purchaser in the manner contemplated by this
         Agreement to register the Securities under the Securities Act or to
         qualify the Indenture under the Trust Indenture Act of 1939, as
         amended.

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                  (u)      The Securities satisfy the requirements set forth in
         Rule 144A(d)(3) under the Securities Act.

                  (v)      The Company, each Subsidiary that is an entity
         registered pursuant to Section 13 or 15(d) of the Exchange Act (a
         "REPORTING ENTITY") and, to the knowledge of the Company, each of the
         Material Holdings that is a Reporting Entity have established and
         maintained disclosure controls and procedures (as defined in Exchange
         Act Rules 13a-14 and 15d-14) that are adequate and effective and
         designed to ensure that material information relating to the Company is
         made known to its Chief Executive Officer and Chief Financial Officer
         by others within those entities.

                  (w)      The books, records and accounts of the Company, each
         of the Subsidiaries and, to the knowledge of the Company, each of the
         Material Holdings accurately and fairly reflect, in reasonable detail
         and in all material respects, the transactions in, and dispositions of,
         the assets of, and the results of operations of, such entity. The
         Company, each of the Subsidiaries and, to the knowledge of the Company,
         each of the Material Holdings maintain a system of accounting controls
         sufficient to provide reasonable assurances that (a) transactions are
         executed in accordance with management's general or specific
         authorization, (b) transactions are recorded as necessary to permit
         preparation of financial statements in conformity with generally
         accepted accounting principles and to maintain accountability for
         assets, (c) access to assets is permitted only in accordance with
         management's general or specific authorization and (d) the recorded
         accountability for assets is compared with existing assets at
         reasonable intervals and appropriate action is taken with respect to
         any differences.

                  (x)      The Company, each of the Subsidiaries and, to the
         knowledge of the Company, each of the Material Holdings own or possess,
         or can acquire on reasonable terms, all material patents, patent
         rights, licenses, inventions, copyrights, know-how (including trade
         secrets and other unpatented and/or unpatentable proprietary or
         confidential information, systems or procedures), trademarks, service
         marks and trade names currently employed or required by such entity in
         connection with the business currently conducted by such entity, as
         described in the Memorandum, except such as the failure to so own or
         possess would not have, singly or in the aggregate, a Material Adverse
         Effect. To the knowledge of the Company, there are no valid and
         enforceable United States patents that are infringed by the business
         currently conducted by the Company, each of the Subsidiaries and each
         of the Material Holdings, as described in the Memorandum and which
         would have a Material Adverse Effect. The Company, each of the
         Subsidiaries and, to the knowledge of the Company, each of the Material
         Holdings are not subject to any judgment, order, writ, injunction or
         decree of any court or any Federal,

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         state, local, foreign or other governmental department, commission,
         board, bureau, agency or instrumentality, domestic or foreign, or any
         arbitrator, nor have they entered into or are a party to any contract,
         which restricts or impairs the use of any of the foregoing which would
         have a Material Adverse Effect. None of the Company, any of the
         Subsidiaries or, to the knowledge of the Company, any of the Material
         Holdings has received any written notice of infringement of or conflict
         with asserted rights of any third party with respect to the business
         currently conducted by them as described in the Memorandum and which
         would have a Material Adverse Effect.

                  (y)      The Company, each of the Subsidiaries and, to the
         knowledge of the Company, each of the Material Holdings have such
         permits, licenses, consents, exemptions, franchises, authorizations and
         other approvals (each, an "AUTHORIZATION") of, and have made all
         filings with and notices to, all appropriate federal, state, local or
         foreign governmental or regulatory authorities and self regulatory
         organizations and all courts and other tribunals, as are necessary to
         own, lease, license and operate its respective properties and to
         conduct their respective business, except to the extent the failure to
         have any such Authorization or to make any such filing or notice would
         not, singly or in the aggregate, have a Material Adverse Effect. Each
         such Authorization is valid and in full force and effect and such
         entity is in compliance with all the terms and conditions thereof and
         with the rules and regulations of the authorities and governing bodies
         having jurisdiction with respect thereto; and no event has occurred
         (including, without limitation, the receipt of any notice from any
         authority or governing body) which allows or, after notice or lapse of
         time or both, would allow, revocation, suspension or termination of any
         such Authorization or results or, after notice or lapse of time or
         both, would result in any other impairment of the rights of the holder
         of any such Authorization; except to the extent such failure to be
         valid and in full force and effect or to be in compliance, the
         occurrence of any such event or the presence of any such restriction
         would not, singly or in the aggregate, have a Material Adverse Effect.

                  (z)      Except as listed in Schedule III, as of December 31,
         2003, there are no outstanding subscriptions, rights, warrants,
         options, calls, convertible securities, commitments of sale or liens
         granted or issued by the Company, any of the Subsidiaries or, to the
         knowledge of the Company, any of the Material Holdings relating to or
         entitling any person to purchase or otherwise to acquire any shares of
         the capital stock of such entity, except for options granted to
         directors and employees of such entity in the ordinary course of
         business.

                  (aa)     The financial statements included or incorporated by
         reference in the Memorandum, together with related schedules and notes,
         present fairly, in all material respects, the financial position,
         results of

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         operations and changes in financial position of the Company on the
         basis stated therein at the respective dates or for the respective
         periods to which they apply; such statements and related schedules and
         notes have been prepared in accordance with generally accepted
         accounting principles consistently applied throughout the periods
         involved; and the other financial and statistical information and data
         set forth in the Memorandum are, in all material respects, accurately
         presented and prepared on a basis consistent with such financial
         statements and the books and records of the Company. The financial
         information set forth under the captions "Summary Consolidated
         Financial Data" and "Capitalization" in the Memorandum are derived from
         the accounting records of the Company and its consolidated subsidiaries
         and fairly present, on the basis stated in the Final Memorandum and in
         all material respects, the information included therein.

                  (bb)     There are no existing or, to the knowledge of the
         Company, threatened labor disputes with the employees of the Company,
         any of the Subsidiaries or any of the Material Holdings which would
         have a Material Adverse Effect.

                  (cc)     Except as would not result in a Material Adverse
         Effect, there are no adverse orders, judgments, writs, injunctions,
         decrees, or demands of any court or administrative body, domestic or
         foreign, or of any governmental agency or instrumentality, domestic or
         foreign, outstanding against the Company, any of the Subsidiaries or,
         to the knowledge of the Company, any of the Material Holdings.

                  (dd)     Neither the Company, nor to its knowledge, any of its
         officers, directors or affiliates has taken, or will take, directly or
         indirectly, any action designed to or which might reasonably be
         expected to cause or result in, or which has constituted or which might
         reasonably be expected to constitute, the stabilization or manipulation
         of the price of the common stock of the Company or any security
         convertible into or exchangeable for common stock of the Company to
         facilitate the sale or resale of any of the Securities.

                  (ee)     The Company, each of the Subsidiaries and, to the
         knowledge of the Company, each of the Material Holdings have filed all
         Federal, state, local and foreign tax returns which are required to be
         filed through the date hereof (except where the failure to so file
         would not be reasonably likely to have a Material Adverse Effect),
         which returns are true and correct in all material respects, or have
         received extensions thereof, and have paid all taxes shown on such
         returns and all assessments received by them to the extent that the
         same are material and have become due, other than those being contested
         in good faith or for which adequate reserves have been provided. There
         are no tax audits or investigations pending (other than a joint
         committee review of the Company's 2001 tax

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         refund), which if adversely determined, would have a Material Adverse
         Effect.

                  (ff)     The Company, each of the Subsidiaries and, to the
         knowledge of the Company, each of the Material Holdings are insured
         against such losses and risks and in such amounts as are customary in
         the businesses in which they are engaged including but not limited to,
         insurance covering real or personal property owned or leased against
         theft, damage, destruction, act of vandalism and all other risks
         customarily insured against. All policies of insurance and fidelity or
         surety bonds insuring the Company, each of the Subsidiaries and, to the
         knowledge of the Company, each of the Material Holdings, and such
         entity's businesses, assets, employees, officers and directors, are in
         full force and effect. The Company, each of the Subsidiaries and, to
         the knowledge of the Company, each of the Material Holdings are in
         compliance with the terms of such policies and instruments in all
         material respects. None of the Company, any of the Subsidiaries or, to
         the knowledge of the Company, any of the Material Holdings has reason
         to believe that it will not be able to renew its existing insurance
         coverage as and when such coverage expires or to obtain similar
         coverage from similar insurers as may be necessary to continue its
         business at a cost that would not have a Material Adverse Effect.

                  (gg)     None of the Company, any of the Subsidiaries or, to
         the knowledge of the Company, any of the Material Holdings, or any
         other person associated with or acting on behalf of such entity
         including, without limitation, any director, officer, agent or employee
         of such entity has, directly or indirectly, while acting on behalf of
         such entity (i) used any corporate funds for unlawful contributions,
         gifts, entertainment or other unlawful expenses relating to political
         activity; (ii) made any unlawful payment to foreign or domestic
         government officials or employees or to foreign or domestic political
         parties or campaigns from corporate funds; (iii) violated any provision
         of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made
         any other unlawful payment.

                  (hh)     The Company, the Subsidiaries and, to the knowledge
         of the Company, the Material Holdings have good and marketable title to
         all real property owned by them and good title to all other properties
         owned by them, in each case, free and clear of all mortgages, pledges,
         liens, security interested, claims, restrictions or encumbrances of any
         kind except such as will not, singly or in the aggregate, have a
         Material Adverse Effect; and all of the leases and subleases material
         to the business of the Company, the Subsidiaries and the Material
         Holdings, considered together as one enterprise reflecting the
         Company's ownership interests in the Subsidiaries and the Material
         Holdings, and under which the Company, any of the Subsidiaries or any
         of the Material Holdings holds

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         properties described in the Memorandum, are in full force and effect,
         except to the extent that such failure to be in full force and effect
         would not, singly or in the aggregate, have a Material Adverse Effect;
         and, neither the Company nor any Subsidiary nor, to the knowledge of
         the Company, and Material Holding has any notice of any material claim
         of any sort that has been asserted by anyone adverse to the rights of
         the Company, any of the Subsidiaries or any of the Material Holdings
         under any of the leases or subleases mentioned above, or affecting or
         questioning the rights of the Company, such Subsidiary or such Material
         Holding to the continued possession of the leased or subleased premises
         under any such lease or sublease, except to the extent that such claim
         would not, singly or in the aggregate, have a Material Adverse Effect.

         2.       Agreements to Sell and Purchase. The Company hereby agrees to
sell to the Initial Purchaser, and the Initial Purchaser, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees to purchase from the Company $125,000,000 aggregate
principal amount of Firm Securities at a purchase price of 97.000% (the
"PURCHASE PRICE") plus accrued interest, if any, to the Closing Date (as defined
below).

         On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Initial Purchaser the Additional Securities, and the Initial Purchaser
shall have the right to purchase up to $25,000,000 principal amount of
Additional Securities at the Purchase Price plus accrued interest, if any, to
the date of payment and delivery. You may exercise this right in whole or from
time to time in part by giving written notice to the Company not later than 30
days after the Closing Date. Any exercise notice shall specify the principal
amount of Additional Securities to be purchased by the Initial Purchaser and the
date on which such Additional Securities are to be purchased (an "OPTION CLOSING
DATE"). Each purchase date must be at least one business day after the written
notice is given and may not be earlier than the Closing Date for the Firm
Securities nor later than ten business days after the date of such notice.

         The Company hereby agrees that, without the prior written consent of
the Initial Purchaser, it will not, during the period ending 90 days after the
date of the Memorandum, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, any shares of common stock of the Company or any
securities convertible into or exercisable or exchangeable for common stock of
the Company or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
the common stock of the Company, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of common stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the

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issuance and sale of the Securities under this Agreement, (B) the issuance by
the Company of shares of common stock upon the exercise of an option or warrant
or the conversion of a security outstanding on the date hereof of which the
Initial Purchaser has been advised in writing, (C) grant of options for common
stock pursuant to employee benefit plans existing on the date of this Agreement,
(D) the issuance of shares of common stock that are exempt from registration
under the Securities Act pursuant to Section 3(a)(9) in exchange for all or a
portion of the Company's 5% Convertible Subordinated Notes due June 15, 2006,
(E) the issuance of shares of common stock upon the conversion or repurchase of
the Securities or (F) the issuance of common stock or securities convertible
into common stock in connection with acquisition transactions by the Company.

         3.       Terms of Offering. The Initial Purchaser has advised the
Company that it will make an offering of the Securities purchased by the Initial
Purchaser hereunder on the terms to be set forth in the Memorandum, as soon as
practicable after this Agreement is entered into as in your judgment is
advisable.

         4.       Payment and Delivery. Payment for the Firm Securities shall be
made to the Company in Federal or other funds immediately available in New York
City against delivery of such Firm Securities for the account of the Initial
Purchaser at 10:00 a.m., New York City time, on February 18, 2004, or at such
other time on the same or such other date, not later than March 3, 2004, as
shall be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "CLOSING DATE."

         Payment for any Additional Securities shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Securities for the account of the Initial Purchaser at 10:00
a.m., New York City time, on the date specified in the corresponding notice
described in Section 2 or at such other time on the same or on such other date,
in any event not later than April 2, 2004 as shall be designated in writing by
you.

         The Securities shall be in definitive form or global form, as specified
by you, and registered in such names and in such denominations as you shall
request in writing not later than one full business day prior to the Closing
Date or the applicable Option Closing Date, as the case may be. The Securities
shall be delivered to you on the Closing Date or an Option Closing Date, as the
case may be, for the account of the Initial Purchaser, with any transfer taxes
payable in connection with the transfer of the Securities to the Initial
Purchaser duly paid, against payment of the Purchase Price therefor plus accrued
interest, if any, to the date of payment and delivery.

         5.       Conditions to the Initial Purchaser's Obligations. The
obligations of the Initial Purchaser to purchase and pay for the Firm Securities
on the Closing Date is subject to the following conditions:

                                       12
<PAGE>

                  (a)      Subsequent to the execution and delivery of this
         Agreement and prior to the Closing Date, there shall not have occurred
         a Material Adverse Change that, in your judgment, makes it, in your
         judgment, impracticable to market the Securities on the terms and in
         the manner contemplated in the Memorandum.

                  (b)      The Initial Purchaser shall have received on the
         Closing Date a certificate, dated the Closing Date and signed by an
         executive officer of the Company, to the effect set forth in Section
         5(a) and to the effect that the representations and warranties of the
         Company contained in this Agreement are true and correct as of the
         Closing Date and that the Company has complied with all of the
         agreements and satisfied all of the conditions on its part to be
         performed or satisfied hereunder on or before the Closing Date.

                  (c)      The Initial Purchaser shall have received on the
         Closing Date an opinion of Morgan, Lewis & Bockius LLP, outside counsel
         for the Company, dated the Closing Date, to the effect set forth in
         Exhibit A. Such opinion shall be rendered to the Initial Purchaser at
         the request of the Company and shall so state therein.

                  (d)      The Initial Purchaser shall have received on the
         Closing Date an opinion of Karen Keating, Senior Corporate Counsel to
         the Company, dated the Closing Date, to the effect set forth in Exhibit
         B. Such opinion shall be rendered to the Initial Purchaser at the
         request of the Company and shall so state therein.

                  (e)      The Initial Purchaser shall have received on the
         Closing Date an opinion of Davis Polk & Wardwell, counsel for the
         Initial Purchaser, dated the Closing Date, to the effect set forth in
         Exhibit C.

                  (f)      The Initial Purchaser shall have received on each of
         the date hereof and the Closing Date a letter, dated the date hereof or
         the Closing Date, as the case may be, in form and substance
         satisfactory to the Initial Purchaser, from KPMG LLP, independent
         public accountants, containing statements and information of the type
         ordinarily included in accountants' "comfort letters" to underwriters
         with respect to the financial statements and certain financial
         information contained in or incorporated by reference into each
         Memorandum; provided that the letter delivered on the Closing Date
         shall use a "cut-off date" not earlier than the date hereof.

                  (g)      The "lock-up" agreements, each substantially in the
         form of Exhibit D hereto, between you and certain executive officers
         and directors of the Company relating to sales and certain other
         dispositions of shares of common stock or certain other securities,
         delivered to you on or before the date hereof, shall be in full force
         and effect on the Closing Date.

                                       13
<PAGE>

                  (h)      The Company shall, prior to the Closing Date, obtain
         all of the necessary waivers or consents under its Loan Agreement dated
         as of May 10, 2002, as amended, among the Company, Safeguard Delaware,
         Inc., Safeguard Scientifics (Delaware), Inc. and Comerica
         Bank-California (the "CREDIT AGREEMENT") such that the consummation of
         the transactions contemplated hereby will not violate any of the terms
         and conditions set forth in the Credit Agreement as of the Closing
         Date.

         The obligation of the Initial Purchaser to purchase Additional
Securities hereunder is subject to satisfaction of the condition set forth in
Section 5(a) during the period from the date of this Agreement to the applicable
Option Closing Date and the delivery to you on the applicable Option Closing
Date of supplemental certificates, opinions and letters confirming as of the
applicable Option Closing Date the certificates, opinions and letters delivered
on the Closing Date under this Section 5.

         6.       Covenants of the Company. In further consideration of the
agreements of the Initial Purchaser contained in this Agreement, the Company
covenants with the Initial Purchaser as follows:

                  (a)      The Company will furnish to you in New York City,
         without charge, prior to 10:00 a.m. New York City time on the business
         day next succeeding the date of this Agreement and during the period
         mentioned in Section 6(c), as many copies of the Memorandum, any
         documents incorporated by reference therein and any supplements and
         amendments thereto as you may reasonably request.

                  (b)      Before amending or supplementing the Memorandum, the
         Company will furnish to you a copy of each such proposed amendment or
         supplement and will not use any such proposed amendment or supplement
         to which you reasonably object.

                  (c)      If, during such period after the date hereof and
         prior to the date on which all of the Securities shall have been sold
         by the Initial Purchaser, any event shall occur or condition exist as a
         result of which it is necessary to amend or supplement the Memorandum
         in order to make the statements therein, in the light of the
         circumstances when the Memorandum is delivered to a purchaser, not
         misleading, or if, in the opinion of counsel for the Initial Purchaser,
         it is necessary to amend or supplement the Memorandum to comply with
         applicable law, the Company will prepare and furnish, at its own
         expense, to the Initial Purchaser, either amendments or supplements to
         the Memorandum so that the statements in the Memorandum as so amended
         or supplemented will not, in the light of the circumstances when the
         Memorandum is delivered to a purchaser, be misleading or so that the
         Memorandum, as amended or supplemented, will comply with applicable
         law.

                                       14
<PAGE>

                  (d)      The Company shall cooperate with the Initial
         Purchaser to qualify the Securities for offer and sale under the
         securities or Blue Sky laws of such jurisdictions as the Initial
         Purchaser shall reasonably request and will continue such
         qualifications in effect so long as required for the offering and
         resale of the Securities; provided that the Company shall not be
         required to (i) qualify as a foreign corporation or as a dealer in
         securities in any such jurisdiction where it would not otherwise be
         required to so qualify, (ii) file any general consent to service of
         process in any such jurisdiction or (iii) subject itself to taxation in
         any such jurisdiction if it is not otherwise so subject.

                  (e)      Whether or not the transactions contemplated in this
         Agreement are consummated or this Agreement is terminated, the Company
         shall pay or cause to be paid all expenses incident to the performance
         of its obligations under this Agreement, including: (i) the fees,
         disbursements and expenses of the Company's counsel and the Company's
         accountants in connection with the issuance and sale of the Securities
         and all other fees or expenses in connection with the preparation of
         each Memorandum and all amendments and supplements thereto, including
         all printing costs associated therewith, and the delivering of copies
         thereof to the Initial Purchaser, in the quantities herein above
         specified, (ii) all costs and expenses related to the transfer and
         delivery of the Securities to the Initial Purchaser, including any
         transfer or other taxes payable thereon, (iii) the cost of printing or
         producing any Blue Sky or legal investment memorandum in connection
         with the offer and sale of the Securities under state securities laws
         and all expenses in connection with the qualification of the Securities
         for offer and sale under state securities laws as provided in Section
         6(d) hereof, including filing fees and the reasonable fees and
         disbursements of counsel for the Initial Purchaser in connection with
         such qualification and in connection with the Blue Sky or legal
         investment memorandum, (iv) the fees and expenses, if any, incurred in
         connection with the admission of the Securities for trading in PORTAL
         or any appropriate market system, (v) the costs and charges of the
         Trustee and any transfer agent, registrar or depositary, (vi) the cost
         of the preparation, issuance and delivery of the Securities, (vii) the
         costs and expenses relating to the charter, lease or use by the Company
         of any non-commercial aircraft, (viii) the document production charges
         and expenses associated with printing this Agreement and (ix) all other
         costs and expenses incident to the performance of the obligations of
         the Company hereunder for which provision is not otherwise made in this
         Section. It is understood, however, that except as provided in this
         Section, Section 8, and the last paragraph of Section 10, the Initial
         Purchaser will pay all of its costs and expenses, including fees and
         disbursements of its counsel, transfer taxes payable on resale of any
         of the Securities by it and any advertising expenses connected with any
         offers it may make.

                                       15
<PAGE>

                  (f)      Neither the Company nor any Affiliate will sell,
         offer for sale or solicit offers to buy or otherwise negotiate in
         respect of any security (as defined in the Securities Act) which could
         be integrated with the sale of the Securities in a manner which would
         require the registration under the Securities Act of the Securities.

                  (g)      The Company will not solicit any offer to buy or
         offer or sell the Securities or the Underlying Securities by means of
         any form of general solicitation or general advertising (as those terms
         are used in Regulation D under the Securities Act) or in any manner
         involving a public offering within the meaning of Section 4(2) of the
         Securities Act.

                  (h)      While any of the Securities or the Underlying
         Securities remain "restricted securities" within the meaning of the
         Securities Act, the Company will make available, upon request, to any
         seller of such Securities the information specified in Rule 144A(d)(4)
         under the Securities Act, unless the Company is then subject to Section
         13 or 15(d) of the Exchange Act.

                  (i)      If requested by you, the Company will use its
         reasonable best efforts to permit the Securities to be designated
         PORTAL securities in accordance with the rules and regulations adopted
         by the National Association of Securities Dealers, Inc. relating to
         trading in the PORTAL Market.

                  (j)      During the period of two years after the Closing Date
         or any Option Closing Date, if later, the Company will not, and will
         not permit any of its affiliates (as defined in Rule 144 under the
         Securities Act) to resell any of the Securities or the Underlying
         Securities which constitute "restricted securities" under Rule 144 that
         have been reacquired by any of them.

                  (k)      The Company will not take any action prohibited by
         Regulation M under the Exchange Act in connection with the distribution
         of the Securities contemplated hereby.

         7.       Offering of Securities; Restrictions on Transfer. The Initial
Purchaser represents and warrants that the Initial Purchaser is a qualified
institutional buyer as defined in Rule 144A under the Securities Act (a "QIB").
The Initial Purchaser agrees with the Company that (i) it will not solicit
offers for, or offer or sell, such Securities by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act and (ii) it will solicit
offers for such Securities only from, and will offer such Securities only to,
persons that it reasonably believes to be QIBs that in purchasing such
Securities are deemed to have represented and agreed as provided in the
Memorandum under the caption "Transfer Restrictions".

                                       16
<PAGE>

         8.       Indemnity and Contribution. The Company agrees to indemnify
and hold harmless the Initial Purchaser, each person, if any, who controls the
Initial Purchaser within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act, and each affiliate of the Initial Purchaser
within the meaning of Rule 405 under the Securities Act from and against any and
all losses, claims, damages and liabilities (including, without limitation, any
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 the Memorandum (as
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto, or any preliminary form of the Memorandum), or caused by
any omission or alleged omission to state therein a material fact necessary to
make the statements therein in the light of the circumstances under which they
were made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to the Initial
Purchaser furnished to the Company in writing by the Initial Purchaser expressly
for use therein; provided, however, that the foregoing indemnity agreement with
respect to any preliminary offering memorandum shall not inure to the benefit of
the Initial Purchaser from whom the person asserting any such losses, claims,
damages or liabilities purchased Securities, or any person controlling the
Initial Purchaser, if a copy of the Memorandum (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto) was
not sent or given by or on behalf of the Initial Purchaser to such person, if
required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Securities to such person, and if the Memorandum
(as so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities, unless such failure is the result of
noncompliance by the Company with Section 6(c) hereof.

                  (b)      The Initial Purchaser agrees, severally and not
         jointly, to indemnify and hold harmless the Company 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 to the same extent as the foregoing indemnity from the
         Company to the Initial Purchaser, but only with reference to
         information relating to the Initial Purchaser furnished to the Company
         in writing by the Initial Purchaser expressly for use in the Memorandum
         or any amendments or supplements thereto.

                  (c)      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 8(a) or 8(b), 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

                                       17
<PAGE>

         may designate in such proceeding and shall pay the 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 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 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 the Initial Purchaser, in the case of parties
         indemnified pursuant to Section 8(a), and by the Company, in the case
         of parties indemnified pursuant to Section 8(b). 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. 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 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)      To the extent the indemnification provided for in
         Section 8(a) or 8(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 in such
         proportion as is appropriate to reflect the relative benefits received
         by the Company on the one hand and the Initial Purchaser on the other
         hand from the offering of the Securities or (ii) if the allocation
         provided by clause 8(d)(i) above is not permitted by applicable law, in
         such proportion as is appropriate to reflect not only the

                                       18
<PAGE>

         relative benefits referred to in clause 8(d)(i) above but also the
         relative fault of the Company on the one hand and of the Initial
         Purchaser 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 on the one hand and the Initial
         Purchaser on the other hand in connection with the offering of the
         Securities shall be deemed to be in the same respective proportions as
         the net proceeds from the offering of the Securities (before deducting
         expenses) received by the Company under this Agreement and the total
         discounts and commissions received by the Initial Purchaser, bear to
         the aggregate offering price of the Securities. The relative fault of
         the Company on the one hand and of the Initial Purchaser 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 Company or by the Initial Purchaser and the
         parties' relative intent, knowledge, access to information and
         opportunity to correct or prevent such statement or omission.

                  (e)      The Company and the Initial Purchaser agree that it
         would not be just or equitable if contribution pursuant to this Section
         8(d) were determined by pro rata allocation or by any other method of
         allocation that does not take account of the equitable considerations
         referred to in Section 8(d). The amount paid or payable by an
         indemnified party as a result of the losses, claims, damages and
         liabilities referred to in Section 8(d) shall be deemed 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
         the provisions of this Section 8, the Initial Purchaser shall not be
         required to contribute any amount in excess of the amount by which the
         total price at which the Securities resold by it in the initial
         placement of such Securities were offered to investors exceeds the
         amount of any damages that the Initial Purchaser 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. The remedies
         provided for in this Section 8 are not exclusive and shall not limit
         any rights or remedies which may otherwise be available to any
         indemnified party at law or in equity.

                  (f)      The indemnity and contribution provisions contained
         in this Section 8 and the representations, warranties and other
         statements of the Company contained in this Agreement 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 the Initial Purchaser, any person controlling the Initial
         Purchaser or any affiliate of the Initial Purchaser or by or on behalf
         of the Company, its officers, directors or the person controlling the
         Company and (iii) acceptance of and payment for any of the Securities.

                                       19
<PAGE>

         9.       Termination. The Initial Purchaser may terminate this
Agreement by written notice given by you to the Company, if after the execution
and delivery of this Agreement and prior to the Closing Date (i) trading
generally shall have been suspended or materially limited on, or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange or the
Nasdaq National Market, (ii) trading of any securities of the Company shall have
been suspended on any exchange or in any over-the-counter market, (iii) a
material disruption in securities settlement, payment or clearance services in
the United States shall have occurred, (iv) any moratorium on commercial banking
activities shall have been declared by Federal or New York State authorities or
(v) there shall have occurred any outbreak or escalation of hostilities, or any
change in financial markets or any calamity or crisis that, in your judgment, is
material and adverse and which, singly or together with any other event
specified in this clause (v), makes it, in your judgment, impracticable or
inadvisable to proceed with the offer, sale or delivery of the Securities on the
terms and in the manner contemplated in the Memorandum.

         10.      Effectiveness, etc. This Agreement shall become effective upon
the execution and delivery hereof by the parties hereto.

         If this Agreement shall be terminated by the Initial Purchaser because
of any failure or refusal on the part of the Company to comply with the terms or
to fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Initial Purchaser for all out-of-pocket expenses
(including the fees and disbursements of its counsel) reasonably incurred by the
Initial Purchaser in connection with this Agreement or the offering contemplated
hereunder.

         11.      Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

         12.      Applicable Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.

         13.      Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.

         14.      Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted and confirmed by any standard form of telecommunication. Notices to
the Initial Purchaser shall be given to Wachovia Capital Markets, LLC, 53 Forest
Avenue, Old Greenwich, CT 06870; Attention: Convertible Syndicate. Notices to
the Company shall be given to it at 800 The Safeguard Building, 435 Devon Park
Drive, Wayne, Pennsylvania 19087; Attention: Christopher J. Davis.

                                       20
<PAGE>

         15.      Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and any controlling persons referred to herein, and the
affiliates, officers and directors of the Initial Purchaser and the Company
referred to in Section 8 hereof. Nothing in this Agreement is intended or shall
be construed to give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
No purchaser of Securities from the Initial Purchaser shall be deemed to be
successor merely by reason of such purchase.

         16.      Amendments or Waivers. No amendment or waiver of any provision
of this Agreement, nor any consent or approval to any departure therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
parties hereto.

                                       21
<PAGE>

                                        Very truly yours,

                                        SAFEGUARD SCIENTIFICS, INC.

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

<PAGE>

Accepted as of the date hereof:

WACHOVIA CAPITAL MARKETS, LLC

By: CATHLEEN BURKE
    ---------------------------------
    Name:  Cathleen Burke
    Title: Director

<PAGE>

                                                                      SCHEDULE I

         INFORMATION IN THE MEMORANDUM PROVIDED BY THE INITIAL PURCHASER

a)       The third paragraph under the caption "Plan of Distribution" in the
         Memorandum concerning the terms of the offering.

b)       The tenth paragraph under the caption "Plan of Distribution" in the
         Memorandum concerning stabilization activities.

<PAGE>

                                                                     SCHEDULE II

                            LIST OF MATERIAL HOLDINGS

Compucom Systems, Inc.
Alliance Consulting Group Associates, Inc.
ChromaVision Medical Systems, Inc.
Mantas, Inc.
Pacific Title and Art Studio, Inc.

<PAGE>

                                                                    SCHEDULE III

                LIST OF OUTSTANDING RIGHTS TO PURCHASE SECURITIES

<TABLE>
<CAPTION>
                                                                       COMMON STOCK ISSUABLE
                                                                       ---------------------
                                                                               SAFEGUARD
                                                                             SCIENTIFICS,
          COMPANY                    SECURITY TYPE               TOTAL           INC.           OTHER
---------------------------  ------------------------------   ----------    ----------------   -------
<S>                          <C>                              <C>           <C>                <C>
Alliance                     Series A Preferred Stock         49,714,694      49,556,442       158,252

ChromaVision                 Warrants                          1,577,685       1,036,915       540,770

CompuCom                     Series B Preferred Stock          2,215,657       2,215,657            --

Mantas                       Series A-1 Preferred Stock        5,982,906       5,982,906            --

                             Series B-1 Preferred Stock        2,258,031       2,258,031            --

                             Series B-3 Preferred Stock       10,913,821      10,913,821            --

                             Series C-1 Preferred Stock       14,767,979      14,767,979            --

                             Warrants                            506,764              --       506,764

Safeguard Scientifics, Inc.  Convertible Subordinated Notes    8,294,109       8,294,109            --
</TABLE>

<PAGE>

                                                                       EXHIBIT A

                     OPINION OF MORGAN, LEWIS & BOCKIUS LLP

         The opinion of Morgan, Lewis & Bockius LLP to be delivered pursuant to
Section 5(c) of the Purchase Agreement shall be to the effect that:

1.       The Company is a corporation duly incorporated, validly subsisting and
         in good standing under the laws of the Commonwealth of Pennsylvania,
         with the corporate power and authority to own, lease and operate its
         properties, to conduct its business as described in the Memorandum and
         to execute and deliver the Purchase Agreement and perform its
         obligations thereunder.

2.       Each of the Purchase Agreement, the Indenture and the Registration
         Rights Agreement have been duly authorized, executed and delivered by
         the Company, and each is the valid and binding obligation of the
         Company enforceable against the Company in accordance with its terms,
         except as enforcement of rights to indemnity and contribution
         thereunder may be limited by federal or state securities laws or
         principles of public policy, and subject to the qualification that the
         enforceability of obligations of the Company thereunder may be limited
         by bankruptcy, insolvency, fraudulent conveyance and similar laws
         affecting rights and remedies of creditors generally, and by general
         principles of equity.

3.       The Securities have been duly authorized by the Company and, when
         executed and authenticated in accordance with the provisions of the
         Indenture and delivered by the Company to, and paid for by, the Initial
         Purchaser in accordance with the terms of the Purchase Agreement, will
         be valid and binding obligations of the Company, enforceable against
         the Company in accordance with its terms, subject to the qualification
         that the enforceability of obligations of the Company thereunder may be
         limited by bankruptcy, insolvency, fraudulent conveyance and similar
         laws affecting rights and remedies of creditors generally, and by
         general principles of equity.

4.       The authorized capital stock of the Company is as set forth in the
         Memorandum under the caption entitled "Description of Capital Stock"
         and the outstanding shares of Common Stock have been duly authorized
         and validly issued and are, to our knowledge, fully paid and
         nonassessable.

5.       The Underlying Securities issuable upon conversion of the Securities
         have been duly authorized and reserved for issuance and, when issued
         and

<PAGE>

         delivered by the Company in accordance with the provisions of the
         Securities and the Indenture, will be validly issued, fully paid and
         nonassessable.

6.       The Rights, if any, issuable upon conversion of the Securities have
         been duly authorized and, when and if issued upon conversion of the
         Securities in accordance with the Rights Agreement, will have been duly
         issued.

7.       The issuance and sale by the Company of the Securities and the
         compliance by the Company with all of the provisions of the Securities,
         the Indenture, the Registration Rights Agreement and the Purchase
         Agreement, and the consummation of the transactions therein
         contemplated, will not result in any breach of, constitute a default
         under (nor constitute any event that, with notice, lapse of time, or
         both, would result in any breach of or default under), or conflict with
         any of the terms or provisions of any indenture, mortgage, deed of
         trust, loan agreement or other agreement or instrument filed as an
         exhibit to the Company's Annual Report on Form 10-K for the year ended
         December 31, 2002 or to any of the Company's Quarterly Reports on Form
         10-Q for the quarters ended March 31, 2003, June 30, 2003 and September
         30, 2003, nor will such actions conflict with any of the provisions of
         the articles of incorporation or by-laws, as amended, of the Company or
         any U.S. federal securities law, Pennsylvania Business Corporation Law,
         rule or regulation that, in the experience of such counsel, is
         generally applicable to transactions in the nature of those
         contemplated by the Purchase Agreement, or, to the knowledge of such
         counsel, any decree, judgment or order of any court.

8.       No consent, approval, authorization, order, registration or
         qualification of or with any court or federal or state governmental
         agency or body is required to be obtained or made by the Company in
         connection with the issuance and sale of the Securities, or the
         consummation by the Company of the transactions contemplated by the
         Purchase Agreement, the Registration Rights Agreement and the
         Indenture, except for (i) such as may be required under the Securities
         Act in connection with the resale, by the holders thereof, of the
         Securities or the shares of Underlying Securities issuable upon
         conversion or repurchase of the Securities, (ii) such as may be
         required under the Trust Indenture Act of 1939, as amended, in respect
         of qualification of the Indenture, (iii) the approval of the Underlying
         Securities issuable upon conversion or repurchase of the Securities for
         listing on the New York Stock Exchange, (iii) such as have already been
         obtained, or (iv) such consents, approvals, authorizations,
         registrations or qualifications as may be required under state
         securities or Blue Sky laws in connection with the purchase and
         distribution of the Securities by the Initial Purchasers or the resale,
         by the holders thereof, of the Securities or

<PAGE>

         the shares of Underlying Securities issuable upon conversion of the
         Securities.

9.       To our knowledge, there are no actions, suits, claims, investigations
         or proceedings pending or threatened to which the Company is subject,
         or by which any of its respective properties are bound, before or by
         any federal or state governmental or regulatory commission, board,
         body, authority or agency which are required to be described or
         incorporated by reference in the Memorandum and which are not so
         described or incorporated by reference as required.

10.      Such counsel has read the statements in the Memorandum under the
         captions "Description of the Debentures" and "Description of Capital
         Stock" and insofar as such statements constitute summaries of legal
         matters, contracts, agreements, documents or proceedings referred to
         therein or summaries of certain provisions of the articles of
         incorporation and by-laws of the Company, or refer to statements of law
         or legal conclusions, such statements are accurate in all material
         respects and fairly present the information purported to be shown.

11.      The statements in the Memorandum under the caption "Material U.S.
         Federal Income Tax Considerations", insofar that they constitute
         summaries of matters of U.S. federal income tax law or refer to legal
         conclusions with respect thereto, are accurate in all material
         respects.

12.      The documents incorporated by reference in the Memorandum (other than
         the financial statements, financial schedules and other financial
         information therein, as to which such counsel expresses no opinion),
         when they were filed with the Commission, complied as to form in all
         material respects with the requirements of the Exchange Act, and the
         rules and regulations of the Commission thereunder.

13.      No registration of the Securities under the Securities Act, and no
         qualification of an indenture under the Trust Indenture Act of 1939
         with respect thereto, is required for the offer and sale by the Company
         and the offer and initial resale of the Securities by the Initial
         Purchaser in the manner contemplated by, and based upon the
         representations, warranties and covenants of the Company and the
         Initial Purchaser contained in, the Purchase Agreement.

14.      The Company is not, and after giving effect to the offering and sale of
         the Securities and the application of the proceeds thereof as described
         in the Memorandum will not be, required to register as an "investment
         company" as such term is defined in the Investment Company Act of 1940,
         as amended.

<PAGE>

         In addition to the foregoing opinions, such counsel advises the Initial
Purchaser that it has participated in conferences with officers and other
representatives of the Company, representatives of the Initial Purchaser and
their counsel, and representatives of the independent public accountants of the
Company, at which conferences the contents of the Memorandum were discussed.
Although such counsel does not generally represent the Company with respect to
intellectual property matters and is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Memorandum (except as and to the extent set forth in paragraphs
5 and 11 above), on the basis of the foregoing and the information disclosed to
such counsel, but without independent check and verification, and relying as to
materiality on representations and statements of officers and other
representatives of the Company, such counsel confirms to the Initial Purchaser
that no fact has come to its attention that has led it to believe that the
Memorandum, as of its date or as of the Closing Date, contained or contains any
untrue statement of a material fact, or omitted or omits to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (it being understood that such counsel does not express any belief
with respect to the financial statements, schedules, notes, or other financial
and accounting data, or statistical data derived therefrom, included in the
Memorandum, or with respect to the validity, enforceability or non-infringement
of any intellectual property).

<PAGE>

                                                                       EXHIBIT B

                            OPINION OF KAREN KEATING

The opinion of Karen Keating, Senior Corporate Counsel to the Company, to be
delivered pursuant to Section 5(d) of the Purchase Agreement shall be to the
effect that:

1.       To the knowledge of such counsel, none of the Company, the Subsidiaries
         or the Material Holdings is in violation of its respective charter or
         bylaws.

2.       Each of the Subsidiaries and each of the Material Holdings have been
         duly organized and are validly existing as a corporation in good
         standing under the laws of their respective jurisdiction of
         incorporation; each of the Subsidiaries, and, to the knowledge of such
         counsel, each of the Material Holdings, have corporate power and
         authority to own, lease and operate their properties and to conduct
         their business as described in the Memorandum, are duly qualified as a
         foreign corporation to transact business and are in good standing in
         each jurisdiction in which such qualification is required, whether by
         reason of the ownership or leasing of property or the conduct of
         business, except where the failure so to qualify or to be in good
         standing would not result in a Material Adverse Effect; the issued and
         outstanding capital stock of each of the Subsidiaries and each of the
         Material Holdings held directly or indirectly by the Company has been
         duly authorized and validly issued, is fully paid and non-assessable,
         and, to the knowledge of such counsel, the Company owns its interests
         in the Subsidiaries and the Material Holdings, directly or indirectly,
         free and clear of any security interest, mortgage, pledge, lien,
         encumbrance or claim; none of the outstanding shares of capital stock
         of any of the Subsidiaries or any of the Material Holdings held
         directly or indirectly by the Company was issued in violation of any
         statutory preemptive or similar rights known to such counsel.

3.       The execution, delivery and performance of the Purchase Agreement and
         the consummation of the transactions contemplated in the Purchase
         Agreement and in the Memorandum (including the issuance and sale of the
         Securities and the intended use of the proceeds from the sale of the
         Securities as described in the Memorandum under the caption "Use Of
         Proceeds") and compliance by the Company with its obligations
         thereunder do not and will not, whether with or without the giving of
         notice or lapse of time or both, conflict with or constitute a breach
         of, or default under, or result in an event or condition which gives
         the holder of any note, debenture or other evidence of indebtedness (or
         any person acting on such holder's behalf) the right to require the
         repurchase, redemption or repayment of all or a portion of such
         indebtedness by the

<PAGE>

         Company, any of the Subsidiaries or any of the Material Holdings, or
         result in the creation or imposition of any lien, charge or encumbrance
         upon any property or assets of the Company or any Material Holding of
         the Company pursuant to any contract, indenture, mortgage, deed of
         trust, loan or credit agreement, note, lease or any other agreement or
         instrument filed as an exhibit to the Company's Annual Report on Form
         10-K for the year ended December 31, 2002 or to any of the Company's
         Quarterly Reports on Form 10-Q for the quarters ended March 31, 2003,
         June 30, 2003 and September 30, 2003 to which the Company or any
         Material Holding of the Company is a party or by which it or any of
         them may be bound, or to which any of the property or assets of the
         Company or any Material Holding of the Company is subject (except for
         such conflicts, breaches or defaults or liens, charges or encumbrances
         that would not have a Material Adverse Effect), nor will such action
         result in any violation of the provisions of the charter or by-laws of
         the Company or any Material Holding of the Company or any applicable
         law, statute, rule regulation, judgment, order, writ or decree, known
         to us, of any government, government instrumentality or court, domestic
         or foreign, having jurisdiction over the Company or any Material
         Holding of the Company or any of their respective properties, assets or
         operations.

4.       To the knowledge of such counsel, there are no actions, suits, claims,
         investigations or proceedings pending or threatened to which the
         Company, any of its subsidiaries or any of the Material Holdings is
         subject, or by which any of its respective properties are bound, before
         or by any federal or state governmental or regulatory commission,
         board, body, authority or agency which are required to be described or
         incorporated by reference in the Memorandum and which are not so
         described or incorporated by reference as required.

5.       Such counsel advises that there are no pending or threatened claims of
         infringement of any material patent, trademark, service mark or
         copyright or of misappropriation of trade secrets, necessary for the
         Company to conduct the business currently conducted by it, the
         unfavorable outcome of which could reasonably be expected to have a
         material adverse effect on the Company and that are required to be
         described in the Memorandum but are not described as required.

6.       Such counsel advises that it has no knowledge that the Company will be
         unable to operate under any current license of a patent, trademark,
         service mark, copyright or trade secret, which license is necessary for
         the Company to conduct the business currently conducted by it.

7.       Nothing has come to the attention of such counsel that causes such
         counsel to believe that (i) each document incorporated by reference in
         the

<PAGE>

         Memorandum (except for the financial statements, schedules, notes or
         other financial and statistical data included therein or statistical
         data derived therefrom, as to which such counsel need not express any
         belief), did not comply as to form when filed with the Commission in
         all material respects with the Exchange Act and the rules and
         regulations of the Commission thereunder or (ii) the Memorandum (except
         for the financial statements, schedules, notes or other financial and
         statistical data included therein or statistical data derived
         therefrom, as to which such counsel need not express any belief), as of
         its date and as of the Closing Date, contained or contains, any untrue
         statement of a material fact or omitted or omits to state a material
         fact required to be stated therein or necessary in order to make the
         statements therein, in the light of the circumstances under which they
         were made, not misleading.

<PAGE>

                                                                       EXHIBIT C

                        OPINION OF DAVIS POLK & WARDWELL

         The opinion of Davis Polk & Wardwell to be delivered pursuant to
Section 5(d) of the Purchase Agreement shall be to the effect that:

         1.       Assuming that the Securities have been duly authorized by the
                  Company, the Securities, when executed and authenticated in
                  accordance with the provisions of the Indenture and delivered
                  to and paid for by the Initial Purchaser in accordance with
                  the terms of the Purchase Agreement, will be valid and binding
                  obligations of the Company, enforceable in accordance with
                  their terms, subject to applicable bankruptcy, insolvency and
                  similar laws affecting creditors' rights generally and
                  equitable principles of general applicability, and will be
                  entitled to the benefits of the Indenture and the Registration
                  Rights Agreement pursuant to which such Securities are to be
                  issued.

         2.       Assuming that each of the Indenture and Registration Rights
                  Agreement has been duly authorized, executed and delivered by
                  the Company, each of the Indenture and the Registration Rights
                  Agreement is a valid and binding agreement of the Company,
                  enforceable in accordance with its terms, subject to
                  applicable bankruptcy, insolvency and similar laws affecting
                  creditors' rights generally and equitable principles of
                  general applicability, and except as rights to indemnification
                  and contribution under the Registration Rights Agreement may
                  be limited under applicable law.

         3.       The statements relating to legal matters, documents or
                  proceedings included in the Memorandum under the captions
                  "Description of Debentures", "Plan of Distribution" and
                  "Notice to Investors", fairly summarize in all material
                  respects such matters, documents or proceedings.

         4.       Based upon the representations, warranties and agreements of
                  the Company and of the Initial Purchaser in the Purchase
                  Agreement, it is not necessary in connection with the offer,
                  sale and delivery of the Securities to the Initial Purchaser
                  under the Purchase Agreement or in connection with the initial
                  resale of such Securities by the Initial Purchaser in
                  accordance with the Purchase Agreement to register the
                  Securities under the Securities Act of 1933 or to qualify the
                  Indenture under the Trust Indenture Act of 1939, it being
                  understood

<PAGE>

                  that no opinion is expressed as to any subsequent resale of
                  any Security or Underlying Security.

         5.       Nothing has come to the attention of such counsel to cause
                  such counsel to believe that (except for the financial
                  statements and financial schedules and other financial and
                  statistical data, as to which such counsel need not express
                  any belief) the Memorandum when issued contained, or as of the
                  date such opinion is delivered contains, any untrue statement
                  of a material fact or omitted or omits to state a material
                  fact necessary in order to make the statements therein, in the
                  light of the circumstances under which they were made, not
                  misleading.

         With respect to the matters referred to in the paragraph above, Davis
Polk & Wardwell may state that their beliefs are based upon their participation
in the preparation of the Memorandum (and any amendments or supplements thereto)
and review and discussion of the contents thereof (including the review of, but
not participation in the preparation of, the incorporated documents), but are
without independent check or verification except as specified.

<PAGE>

                                                                       EXHIBIT D

                            FORM OF LOCKUP AGREEMENT<PAGE>
                                                                    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

<PAGE>

         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.

<PAGE>

         "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

                                       2
<PAGE>

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.

                                       3
<PAGE>

         "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

                                       4
<PAGE>

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

                                       5

<PAGE>

                  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,

                                       6
<PAGE>

                           (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>

                                       7
<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

                                       8
<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.

                                       9
<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.

                                       10
<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

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