Document:

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                                                                    EXHIBIT 10.1

                COMMUTATION, PREPAYMENT AND REDEMPTION AGREEMENT

                COMMUTATION, PREPAYMENT AND REDEMPTION AGREEMENT, dated as of
September 14, 2001 (this "Agreement"), by and among Delphi Financial Group,
Inc., a Delaware corporation ("DFG"), Safety National Casualty Corporation, a
Missouri corporation ("SNCC"), Reliance Standard Life Insurance Company, an
Illinois corporation ("RSL" and, together with DFG and SNCC, the "DFG
Companies"), Y.M. King Trust, a Liechtenstein trust (the "Trust"), Delphi
International Ltd., a Bermuda exempted company ("DI"), and Oracle Reinsurance
Company Ltd., a Bermuda exempted company ("Oracle" and, together with DI, the
"DI Companies").

                              W I T N E S S E T H :

                WHEREAS, SNCC and RSL are indirect wholly-owned subsidiaries of
DFG and Oracle is a wholly-owned subsidiary of DI; and

                WHEREAS, SNCC is party to a Casualty Excess of Loss Reinsurance
Agreeement with Oracle (the "SNCC Reinsurance Agreement"), pursuant to which
SNCC has, effective January 23, 1998, ceded certain excess workers' compensation
and other insurance liabilities to Oracle on an indemnity reinsurance basis; and

                WHEREAS, pursuant to the provisions of Article XVII of the SNCC
Reinsurance Agreement, SNCC has requested that such agreement be commuted, and
SNCC and Oracle have reviewed the losses reinsured thereunder and have reached a
settlement by mutual agreement to commute such agreement effective as of
September 30, 2001 (the "Commutation Effective Date") for the consideration set
forth herein; and

                WHEREAS, RSL is party to a Reinsurance Agreement with Oracle
(the "RSL Reinsurance Agreement"), pursuant to which RSL has, effective January
1, 1998, ceded certain long-term disability insurance liabilities to Oracle on
an indemnity reinsurance basis, which agreement has been the subject of previous
partial commutations effective March 31, 1999 and January 1, 2000; and

                WHEREAS, pursuant to the provisions of the RSL Reinsurance
Agreement, RSL and Oracle have mutually agreed to

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commute such agreement in its entirety effective as of the Commutation Effective
Date for the consideration set forth herein;

                WHEREAS, SNCC's and RSL's agreements to the foregoing matters
are contingent on the prepayment by DI of its oligations to SNCC and RSL,
respectively, pursuant to those certain Promissory Notes issued by DI to the DFG
Companies, each due January 26, 2028, in the aggregate outstanding principal
amount of $33,275,558 (such notes, collectively, the "DI Notes"), and DFG wishes
that DI's obligations to DFG under the DI Notes (such obligations, together with
the obligations to SNCC and RSL under such notes, the "DI Note Obligations") be
prepaid;

                WHEREAS, the Trust is the owner of 118,855 Series A Redeemable
Preference Shares of DI (the "Preference Shares"), which shares are redeemable
at the option of DI, and the Trust wishes that such shares be redeemed;

                WHEREAS, in consideration for DI's making payment of the DI Note
Obligations prior to their maturity date, DFG has agreed to waive a portion of
the DI Note Obligations owing to it to the extent set forth herein;

                WHEREAS, in consideration for DI's redeeming the Preference
Shares, the Trust has agreed to waive a portion of the amount payable pursuant
to the terms of such shares in connection with their redemption to the extent
set forth herein; and

                WHEREAS, in addition to the note prepayment and share redemption
described above, DI has agreed to make contingent payments to DFG and the Trust,
as set forth herein; and

                WHEREAS, it is anticipated that DI's prepayment of the DI Note
Obligations, redemption of the Preference Shares and contingent payment, if any,
will be effected in connection with and pursuant to the voluntary winding up and
liquidation of the DI Companies and each of their subsidiaries (collectively,
the "Liquidating Companies") pursuant to the Bermuda Companies Act of 1981 and
the other applicable statues, rules and regulations (collectively, the "Act");

                NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained, the parties hereto, intending
to be legally bound, agree as follows:

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                                    ARTICLE I

          REINSURANCE COMMUTATIONS, PREPAYMENT OF NOTES, REDEMPTION OF
                    PREFERENCE SHARES AND CONTINGENT PAYMENT

                1.1 SNCC Commutation Payment and Retention. On the Commutation
Closing Date (as defined in Section 5.1(b)), Oracle, either singly or together
with DI, shall pay to SNCC the amount of $74,253,770. SNCC and Oracle
acknowledge that such amount is net of an Advance Underwriting Cash Flow Profit
Commission in the amount of $11,483,411 presently held by SNCC, which amount
shall be retained by SNCC in its entirety and as to which Oracle shall,
effective as of the Commutation Closing Date, waive all rights and claims.

                1.2 RSL Commutation Payment. On the Commutation Closing Date,
Oracle, either singly or together with DI, shall pay to RSL the amount of
$9,711,876.

                1.3 Termination. On the Commutation Closing Date, all
obligations of the parties contained in, arising from or resulting under the
SNCC Reinsurance Agreement and the RSL Reinsurance Agreement, respectively
(whether due or to become due), shall, effective as of the Commutation Effective
Date, be deemed to have terminated and expired and the respective parties
thereto shall have no further obligation to or rights against each other
thereunder.

                1.4 Letters of Credit Termination Notices. On the Commutation
Closing Date, SNCC and RSL shall provide certifications to Bank of America,
N.A., as letter of credit agent (the "Agent"), with respect to the terminations
of the SNCC Reinsurance Agreement and the RSL Reinsurance Agreement,
respectively, in the forms contemplated by Annex 1 to the respective letters of
credit, each dated January 27, 1998, issued in their favor by the Agent and
return such letters of credit to the Agent.

                1.5 DI Note Prepayments. On the Winding Up Completion Date (as
defined in Section 5.1(b) hereof), DFG will waive its right to receive a portion
(such portion, the "Note Waiver Amount") of the total principal amounts owing to
it under the DI Notes, the Note Waiver Amount to be determined as set forth in
Section 1.7 hereof and to be allocated among the DI Notes pro rata in accordance
with the respective principal amounts owing to DFG under such notes, and DI will
prepay all principal and interest then owing under the DI Notes other than the
Note Waiver Amount. The DFG Companies shall deliver to DI each of the DI Notes,
marked "paid and cancelled".

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                1.6 Redemption of Preference Shares. On the Winding Up
Completion Date, the Trust will waive its right to receive a portion (such
portion, the "Preference Share Waiver Amount" and, taken together with the Note
Waiver Amount, the "Aggregate Waiver Amount") of the aggregate price payable on
redemption of the Preference Shares pursuant to the provisions of the
Certificate of Designation thereof, the Preference Share Waiver Amount to be
determined pursuant to Section 1.7 hereof, and DI will redeem the Preference
Shares at their stated redemption price plus accrued dividends, less the
Preference Share Waiver Amount. The Trust shall deliver to DI each of the
certificates representing the Preferred Shares.

                1.7 Waiver Amounts; DI Contingent Payment.

                (a) The Aggregate Waiver Amount shall be equal to such amount
as, when subtracted from the total outstanding principal amount of the DI Notes
and the total price payable on redemption of the Preference Shares, will cause
the sum of (i) the amounts payable in respect of the DI Notes (inclusive of
accrued interest) and pursuant to the redemption of the Preference Shares
(inclusive of accrued dividends), (ii) the total amount of all costs, charges
and expenses of the winding up of the Liquidating Companies payable pursuant to
the Act and (iii) the total amount of all other liabilities of the Liquidating
Companies remaining to be satisfied in accordance with the Act, all as
determined as of the Winding Up Completion Date (such sum, the "Aggregate
Winding Up Amount"), to be such as, after payment and satisfaction of the
Aggregate Winding Up Amount, will result in an amount being distributable to the
members of DI (other than the Trust and any other holders of preference shares
of DI) pursuant to the Act (the "Distributable Amount") that is equal to
US$12,237,042 (the "Stated Distribution Amount"). If the Distributable Amount
equals or exceeds the Stated Distribution Amount as of the Winding Up Completion
Date, without taking into account the waivers contemplated by Sections 1.5 and
1.6 hereof, the Aggregate Waiver Amount shall be zero.

                (b) The Aggregate Waiver Amount, if any, shall be allocated on a
modified pro rata basis as between the Note Waiver Amount and the Preference
Share Waiver Amount based on the total principal amount owing under the DI Notes
(the "Note Amount"), on one hand, and the total stated redemption price of the
Preference Shares, without regard to accrued dividends (the "Preference Share
Amount"), on the other hand, all as determined of the Winding Up Completion
Date, such that the ratio of the Note Waiver Amount to the Note Amount is
one-half of the ratio of the Preference Share Waiver Amount to the Preference
Share Amount.

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                (c) In further consideration of the agreements of DFG and the
Trust set forth in Sections 1.05 and 1.06 hereof, respectively, DI agrees that
if, as of the Winding Up Completion Date, the Distributable Amount is in excess
of the Stated Distribution Amount, without taking into account the waivers
contemplated by Sections 1.5 and 1.6 hereof, DI shall pay to DFG and the Trust
the amount of such excess, such payment to be allocated between DFG and the
Trust pro rata in the same manner as set forth in Section 1.7(b).

                                   ARTICLE II

         REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DFG COMPANIES

                Each of the DFG Companies severally represents and warrants as
follows:

                2.1 Authority Relative to this Agreement. Such company has full
power and authority to enter into this Agreement and the transactions
contemplated hereby and to perform its obligations hereunder. This Agreement has
been duly executed and delivered by such company, and this Agreement
constitutes, assuming the due authorization, execution and delivery thereof by
each of the other parties to this Agreement, the legal, valid and binding
obligation of such company, enforceable against such company in accordance with
its terms, except (i) as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, or other similar
laws affecting the enforcement of creditors' rights generally, and (ii) as
enforcement thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity). The
execution and delivery of this Agreement by such company and performance of its
obligations hereunder will not conflict with or result in a breach, default (or
an event which, with notice or lapse of time or both, would constitute a
default) or violation of any of the terms, provisions or conditions of any
agreement, document or instrument, or any judgment, decree, court order,
statute, regulation, ordinance or law to which such company is subject. No
permit, authorization, consent or approval of, or filing with or notification
to, any court or public body or authority or expiration of any governmentally
imposed waiting period, and no authorization, consent, or approval of, or
release by, any other third party, is necessary for the execution and delivery
of this Agreement by such company and the consummation by such company of the
actions contemplated by this Agreement and the performance of its obligations
hereunder (except for any approvals, filings or

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notifications which may be required under state insurance regulatory laws).

                2.2 No Transfers of DI Notes. Such company has not sold,
assigned or transferred, or otherwise granted any interest to any person
(collectively, "Transfers") with respect to, its interest in the DI Notes other
than to another DFG other than another DFG Company. Such company will not make
any Transfer of its interest in any of the DI Notes prior to the prepayment of
the DI Notes as contemplated hereby.

                                   ARTICLE III

             REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE TRUST

                3.1 Authority Relative to this Agreement. The Trust represents
and warrants that (a) it has full power and authority to enter into this
Agreement and the transactions contemplated hereby and to perform its
obligations hereunder; (b) this Agreement has been duly executed and delivered
by it, and this Agreement constitutes, assuming the due authorization, execution
and delivery thereof by each of the other parties to this Agreement, its legal,
valid and binding obligation, enforceable against it in accordance with its
terms, except (i) as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, or other similar
laws affecting the enforcement of creditors' rights generally, and (ii) as
enforcement thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity); (c) the
execution and delivery of this Agreement by it and performance of its
obligations hereunder will not conflict with or result in a breach, default (or
an event which, with notice or lapse of time or both, would constitute a
default) or violation of any of the terms, provisions or conditions of any
agreement, document or instrument, or any judgment, decree, court order,
statute, regulation, ordinance or law to which it is subject and (d) no permit,
authorization, consent or approval of, or filing with or notification to, any
court or public body or authority or expiration of any governmentally imposed
waiting period, and no authorization, consent, or approval of, or release by,
any other third party, is necessary for the execution and delivery of this
Agreement and the consummation by it of the actions contemplated by this
Agreement and the performance of its obligations hereunder.

                3.2 No Transfers of Preference Shares. The Trust has not
effected any Transfers with respect to its interest in the preference shares
other than such Transfers as have previously been disclosed to DI. The Trust
shall not effect any

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further Transfers of its interest in any of the preference shares prior to the
redemption thereof as contemplated hereby.

                                   ARTICLE IV

         REPRESENTATIONS, WARRANTIES AND CONVENANTS OF THE DI COMPANIES

                4.1 Authority Relative to this Agreement. Each of the DI
Companies severally represents and warrants that (a) it has full power and
authority to enter into this Agreement and the transactions contemplated hereby
and to perform its obligations hereunder; (b) this Agreement has been duly
executed and delivered by it, and this Agreement constitutes, assuming the due
authorization, execution and delivery thereof by each of the other parties to
this Agreement, the legal, valid and binding obligation of such company,
enforceable against it in accordance with its terms, except (i) as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, or other similar laws affecting the enforcement of
creditors' rights generally, and (ii) as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding at law or in equity); (c) the execution and delivery of this
Agreement by it and performance of its obligations hereunder will not conflict
with or result in a breach, default (or an event which, with notice or lapse of
time or both, would constitute a default) or violation of any of the terms,
provisions or conditions of any agreement, document or instrument, or any
judgment, decree, court order, statute, regulation, ordinance or law to which it
is subject; provided, however, that the winding up and liquidation of the
Liquidating Companies will be subject to shareholder approval in accordance with
the Act, and (d) no permit, authorization, consent or approval of, or filing
with or notification to, any court or public body or authority or expiration of
any governmentally imposed waiting period, and no authorization, consent, or
approval of, or release by, any other third party, is necessary for the
execution and delivery of this Agreement and the consummation by it or any of
the other Liquidating Companies of the actions contemplated by this Agreement
and the performance of its obligations hereunder.

                4.2 Interim Period Covenants. With respect to the period
commencing on the Commutation Closing Date and ending on the date that the
transactions described in Sections 1.5 through 1.7 hereof are consummated, it is
hereby agreed as follows:

                (a) All capitalized terms used but not defined in this Section
4.2 shall have the respective meanings given to

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them in the Letter of Credit Agreement (the "LOC Agreement") dated as of January
27, 1998, as amended, among Oracle, the financial institutions signatory thereto
and the Agent, as Administrative Agent.

                (b) DI and Oracle shall, notwithstanding the termination of the
LOC Agreement on the Commutation Closing Date, be bound by and observe the
covenants contained in Sections 6.4 through 6.11, Section 7.1, Sections 7.3
through 7.5, Sections 7.7 through 7.10, and Sections 7.17 through 7.24 of the
LOC Agreement (as to DI, in each case, as if such covenants by their terms
applied directly to DI, except that nothing therein shall be in any way
construed to limit or restrict the performance by DI of its obligations
hereunder), each of which covenants, inclusive of the applicable definitions and
other provisions of the LOC Agreement utilized or referenced therein, is
incorporated herein by reference.

                4.3 Winding Up and Liquidation. DI shall take or cause to be
taken all actions within its control that may be necessary or appropriate to
facilitate the winding up and liquidation of the Liquidating Companies in an
expeditious manner, including but not limited to the seeking of all requisite
shareholder approvals.

                                    ARTICLE V

                              CONDITIONS TO CLOSING

                5.1 Closings. (a) A closing with respect to the transactions
contemplated by Sections 1.1 through 1.4 hereof (the "Commutation Closing" and
the date and time thereof being the "Commutation Closing Date") will be held as
soon as reasonably practicable after the conditions set forth in Sections 5.2
through 5.5 hereof shall have been satisfied or waived with respect to such
transactions.

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                (b) A closing (the "Final Closing" and the date and time thereof
being the "Closing Date") with respect to the transactions contemplated by
Sections 1.5 through 1.7 hereof will be held on the later of the Winding Up
Completion Date or the date upon which the conditions set forth in Sections 5.2
through 5.5 hereof shall have been satisfied or waived with respect to such
transactions. For purposes hereof, the "Winding Up Completion Date" shall be the
date on which all necessary actions have been taken so as to permit liquidating
distributions to be made to the members of DI pursuant to the Act.

                5.2 Conditions to Each Party's Obligations. The obligation of
each party hereto to consummate the transactions contemplated by this Agreement
on the Commutation Closing Date and the Final Closing Date (collectively, the
"Closing Dates"), as applicable, is subject to the satisfaction or waiver on or
prior to such date of the following condition:

                (a) No Injunctions or Restraints. No material judgment, order,
decree, statute, law, ordinance, rule or regulation entered, enacted,
promulgated, enforced or issued by any court or other governmental entity of
competent jurisdiction (collectively, "Governmental Authorities") or other legal
restraint or prohibition shall be in effect preventing the consummation of the
transactions contemplated hereby, and any approvals of shareholders and of
Governmental Authorities required to be obtained by such party in connection
with such transactions shall have been obtained.

                5.3 Conditions to Obligations of the DFG Companies. The
obligations of the DFG Companies to consummate the transactions contemplated by
this Agreement are further subject to satisfaction or waiver of the following
conditions:

                (a) Representations and Warranties. The representations and
warranties of the Trust and the DI Companies set forth herein shall be true and
correct in all respects as of the date of this Agreement and at and as of each
Closing Date as if made at and as of such time.

                (b) Performance of Other Parties' Obligations. Each of the Trust
and the DI Companies shall have performed all obligations required to be
performed by them under this Agreement at or prior to such Closing Date.

                5.4 Conditions to Obligations of the Trust. The obligation of
the Trust to consummate the transactions contemplated by this Agreement is
further subject to satisfaction or waiver of the following conditions:

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                (c) Representations and Warranties. The representations and
warranties of the DFG Companies and the DI Companies set forth herein shall be
true and correct in all respects as of the date of this Agreement and at and as
of the Final Closing Date as if made at and as of such time.

                (d) Performance of Other Parties' Obligations. Each of the DFG
Companies and the DI Companies shall have performed all obligations required to
be performed by them under this Agreement at or prior to the Final Closing Date.

                5.5 Conditions to Other Parties' Obligations. The obligations of
the DI Companies to consummate the transactions contemplated by this Agreement
are further subject to satisfaction or waiver of the following conditions:

                (a) Representations and Warranties. The representations and
warranties of the DFG Companies and the Trust, respectively, set forth herein
shall be true and correct in all respects as of the date of this Agreement and
at and as of each Closing Date as if made at and as of such time.

                (b) Performance of Other Parties' Obligations. Each of the DFG
Companies and the Trust, respectively, shall have performed all obligations
required to be performed by them under this Agreement at or prior to the
applicable Closing Date.

                                   ARTICLE VI

                                  MISCELLANEOUS

                6.1 Notices.

                (a) Any notice or communication to any party hereto shall be
duly given if in writing and delivered in person or mailed by first class mail
(registered or certified, return receipt requested), facsimile or overnight air
courier guaranteeing next day delivery, to such other party's address, as
follows: (a) if to DFG, 1105 North Market Street, Suite 1230, Wilmington,
Delaware 19801, facsimile number (302) 427-7663, attention: Vice President and
Treasurer, with a copy to Delphi Capital Management, Inc., 153 East 53rd Street,
Suite 4900, New York, New York 10022, facsimile number (212) 838-7598,
attention: Chad W. Coulter, Vice President and General Counsel; (b) if to SNCC,
2043 Woodland Parkway, Suite 200, St. Louis, Missouri 63146, facsimile number:
(314) 995-6817, attention: Duane Hercules, Executive Vice President; (c) if to
RSL, 2001 Market Street, Suite 1500, Philadelphia, Pennsylvania 19103, facsimile
number: (267) 256-3556, attention: Thomas Burghart, Vice President and
Treasurer; (d)

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if to the Trust, c/o Interfiducia Trust Reg., Aeulestrasse 74, Post FL9490,
Vaduz, Liechtenstein, facsimile number 011 41 75 232 4343, attention: Trustee;
(e) if to DI, 3rd Floor, Chevron House, 11 Church Street, Hamilton HM 11,
Bermuda, facsimile number: (441) 292-3877, attention: Colin O'Connor, President;
and (f) if to Oracle, 3rd Floor, Chevron House, 11 Church Street, Hamilton HM
11, Bermuda, facsimile number: (441) 292-3877, attention: Colin O'Connor,
President.

                (b) All notices and communications will be deemed to have been
duly given: at the time delivered by hand, if personally delivered; three
business days after being deposited in the mail, if mailed; when sent, if sent
by facsimile (with receipt confirmed); and the next business day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery postage pre-paid or billed to sender.

                6.1 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

                6.2 Interpretation. The headings of articles and sections herein
are for convenience of reference, do not constitute a part of this Agreement,
and shall not be deemed to limit or affect any of the provisions hereof. 6.3
Amendment. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties affected thereby.

                6.4 Assignment. This Agreement may not be assigned by any party
hereto except with the prior written consent of the non-assigning parties.

                6.5 No Third Party Beneficiaries. Nothing in this Agreement
shall confer any rights upon any person or entity which is not a party or
permitted assignee of a party to this Agreement.

                6.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws.

                6.7 Entire Agreement. This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter hereof and
thereof, and supersedes all prior agreements or understandings as to such
subject matter. No party hereto has made any representation or warranty or given

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any covenant to the other except as set forth in this Agreement.

                6.8 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect. In case any provision of this Agreement shall be invalid, illegal or
unenforceable, it shall, to the extent possible, be modified in such manner as
to be valid, legal and enforceable but so as to most nearly retain the intent of
the parties. If such modification is not possible, such provision shall be
severed from this Agreement. In either case the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby

                IN WITNESS WHEREOF, the parties hereto have caused this
Commutation, Prepayment and Redemption Agreement to be duly executed as of the
day and year first above written.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS.]

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                                       DELPHI FINANCIAL GROUP, INC.

                                       By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                       SAFETY NATIONAL CASUALTY CORPORATION

                                       By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                       RELIANCE STANDARD LIFE INSURANCE COMPANY

                                       By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                       Y.M. KING TRUST

                                       By:  Interfiducia Trust Reg.,
                                              as Trustee

                                       By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                       DELPHI INTERNATIONAL LTD.

                                       By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                       ORACLE REINSURANCE COMPANY LTD.

                                       By:
                                             -----------------------------------
                                             Name:
                                             Title:

                                       13<PAGE>
                                                                    Exhibit 10.9

                                                      July 10, 2001

Mr. Jerry L. Johnson
1075 Green Valley Road
Bryn Mawr, PA   19010

Dear Mr. Johnson:

         Safeguard Scientifics, Inc. ("Safeguard") considers it essential to the
best interests of its stockholders to attract and foster the continuous
employment of key management personnel of Safeguard.

         To further such interests, Safeguard will provide you the benefits set
forth in this letter in the event your employment with Safeguard is
involuntarily terminated without cause or you terminate your employment with
Safeguard for good reason within 12 months from the hire date of a new Chief
Executive Officer. Such benefits will be provided in accordance with the terms
and conditions of this letter.

     Subject to the terms and conditions of this letter, in the event Safeguard
involuntarily terminates your employment without cause, or you terminate your
employment with good reason, prior to the first anniversary hereof or, if later,
the first anniversary of the hire date of a new Chief Executive Officer,
Safeguard will provide you the following benefits which shall be the only
severance benefits or other payments in respect of your employment with
Safeguard to which you shall be entitled. Without limiting the generality of the
foregoing, these benefits are in respect of all salary, accrued vacation and
other rights which you may have against Safeguard or its affiliates.

     -   You will receive a lump sum payment equal to the product of (i) 1.5
         multiplied by (ii) the sum of your annual base salary (of at least
         $310,000) plus your annual base bonus (calculated at 70 percent of
         annual base salary).

     -   You will become vested in all stock options granted to you and may
         exercise those stock options during the 36-month period following your
         termination of employment (unless any of the options would by their
         terms expire sooner, in which case you may exercise such options at
         any time before their expiration).
<PAGE>
     -   Vesting of your interest in the various LTIPs in which you participate
         will cease on the date of termination of your employment and you will
         receive benefits under the various LTIP's in accordance with the terms
         and conditions of such plans.

     -   You will receive up to 18-month's continued coverage under Safeguard's
         medical and health plans and life insurance plans; coverage will end
         if you obtain coverage from a subsequent employer. You should consult
         with Safeguard's Manager of Human Resources concerning the process for
         assuming ownership of and continued premium payments for any whole
         life policy at the end of such 18 month period.

     -   You will receive up to $1,500 a month for up to 12 months for
         outplacement services or office space which you secure.

     -   You will be reimbursed promptly for all your reasonable and necessary
         business expenses incurred on behalf of Safeguard prior to your
         termination date.

         All compensation and benefits described above will be contingent on
your execution of a release of all claims against Safeguard substantially in the
form attached to this letter.

         Safeguard will pay you the lump sum payments described above within
five business days of the date on which the release you execute becomes
effective. (Safeguard will prepare the final release (which will be
substantially in the form attached as Exhibit A to this letter) within five
business days of your termination of employment. You will have 21 days in which
to consider the release although you may execute it sooner. Please note that the
release has a recission period of seven days.) All other payments will be made
to you within five business days of the date on which they become due or, in the
case of payments payable on notice from you, within five business days of such
notice.

         Safeguard will pay interest on late payments at the prime rate at
Safeguard's agent bank plus 2 percent compounded monthly. In addition, Safeguard
will pay all reasonable costs and expenses (including reasonable attorney's fees
and all costs of arbitration) incurred by you to enforce this agreement or any
obligation hereunder.

         In this letter, the term "cause" means (a) your failure to adhere to
any written Safeguard policy if you have been given a reasonable opportunity to
comply with such policy or cure your failure to comply (which reasonable
opportunity must be granted during the ten-day period preceding termination of
this Agreement); (b) your appropriation (or attempted appropriation) of a
material business opportunity of Safeguard, including attempting to secure or
securing
<PAGE>
any personal profit in connection with any transaction entered into on behalf of
Safeguard; (c) your misappropriation (or attempted misappropriation) of any of
Safeguard's funds or property; or (d) your conviction of, indictment for (or its
procedural equivalent), or your entering of a guilty plea or plea of no contest
with respect to, a felony, the equivalent thereof, or any other crime with
respect to which imprisonment is a possible punishment.

         In this letter, the term "good reason" means (a) (i) your assignment
(without your consent) to a position, title, responsibilities, or duties of a
materially lesser status or degree of responsibility than your current position,
responsibilities, or duties; or (ii) a reduction of your base salary; (b) the
relocation of Safeguard's principal executive offices to a location which is
more 30 miles outside of center city Philadelphia; or (c) your assignment
(without your consent) to be based anywhere other than Safeguard's principal
executive offices.

         The agreement will inure to the benefit of your personal
representatives, executors, and heirs. In the event you die while any amount
payable under this agreement remains unpaid, all such amounts will be paid in
accordance with the terms and conditions of this letter.

         No term or condition set forth in this letter may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing and signed by you and the Chief Executive Officer of Safeguard or
another duly authorized officer of Safeguard.

         You will not be required to mitigate the amount of any payment provided
for in this letter by seeking other employment or otherwise.

         You acknowledge that the arrangements described in this letter will be
the only obligations of Safeguard or its affiliates in connection with any
determination by Safeguard to terminate your employment with Safeguard. This
letter does not terminate, alter, or affect your rights under any plan or
program of Safeguard in which you may participate, except as explicitly set
forth herein. Your participation in such plans or programs will be governed by
the terms of such plans and programs.

         This agreement will be construed and enforced in accordance with the
law of the Commonwealth of Pennsylvania without regard to the conflicts of laws
rules of any state.

         Any controversy or claim arising out of or relating to this agreement,
or the breach thereof, will be settled by arbitration in Philadelphia,
Pennsylvania, in accordance with the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association, using one
arbitrator, and judgment upon the award rendered by the arbitrator may be
entered in any court of competent jurisdiction.
<PAGE>
         The obligations of Safeguard set forth in this letter are absolute and
unconditional and will not be subject to any right of set-off, counterclaim,
recoupment, defense, or other right which Safeguard may have against you,
subject to, in the event of your termination of employment, your execution of
the relevant release of claims against Safeguard in the form attached to this
letter.

         Safeguard may withhold applicable taxes and other legally required
deductions from all payments to be made hereunder.

         Safeguard's obligations to make payments under this letter are unfunded
and unsecured and will be paid out of the general assets of Safeguard.

         If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to us the enclosed copy of this letter which will then
constitute our legally binding agreement on this subject.

                                       Sincerely,

                                       /s/ Vincent Bell
                                      ----------------------------------------
                                       Safeguard Scientifics, Inc.
                                       By:  Vincent Bell
                                       Title:

I agree to the terms and conditions of this letter

/s/ Jerry L. Johnson
--------------------------
Jerry L. Johnson

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