Document:

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                                                                    Exhibit 10.2

                               SERVICES AGREEMENT

         This Services Agreement ("Agreement") is made and entered into as of
the 1st day of January, 2000, by and between INTELLIGROUP, INC., a New Jersey
corporation ("ITIG") and SERANOVA, INC., a New Jersey corporation ("SERANOVA").
The parties agree to be legally bound as follows:

1. SERVICES. ITIG will provide SERANOVA with various types of services
("Services") listed in Exhibit A, which is attached hereto and incorporated by
reference. Such Exhibit A may be amended from time to time by written agreement
between the parties. The Retained Employees (as defined in Section 5(a)(ii))
shall exclusively provide Services to SERANOVA and/or SERANOVA's clients as
directed by SERANOVA and pursuant to Exhibit A.

2. TERMS OF AGREEMENT. This Agreement shall become effective on January 1, 2000
(the "Effective Date"), and shall remain in full force and effect for a period
of one (1) year thereafter, unless earlier terminated pursuant to the provisions
of this Agreement. This Agreement shall automatically renew for additional
consecutive renewal terms of one (1) year unless either ITIG or SERANOVA gives
written notice of its intent not to renew the terms of this Agreement sixty (60)
days prior to the expiration of the then expiring term. The initial one year
term and any renewal period(s) thereafter shall collectively be referred to as
the "Term."

3.       TERMINATION OF AGREEMENT.

         (a)      This Agreement or any portion thereof may be terminated by
                  either party, for any reason, with thirty (30) days prior
                  written notice to the other party.

         (b)      This Agreement or any portion thereof may be terminated by
                  either party (the "non-defaulting party") if any of the
                  following events occur by or with respect to the other party
                  (the "defaulting party"): (i) the defaulting party commits a
                  material breach of any of its obligations hereunder and fails
                  to cure such breach within thirty (30) days of receipt of
                  written notice from non-defaulting party; or (ii) any
                  insolvency of the defaulting party, any filing of a petition
                  in bankruptcy by or against the defaulting party, any
                  appointment of a receiver for the defaulting party, or any
                  assignment for the benefit of the defaulting party's
                  creditors; provided, however, that in the case of any
                  involuntary bankruptcy proceeding such right to terminate
                  shall only become effective if the proceeding is not dismissed
                  within sixty (60) days after the filing thereof.

Termination under this Section 3 or otherwise shall have no effect on the
respective obligations to make any payment required to be made pursuant to the
terms of this Agreement or any other obligation hereunder that survives the
termination of this Agreement. Neither party shall have any liability to the
other party for terminating the Agreement pursuant to this Section 3.

4. TRANSITION ASSISTANCE. Other than for termination by SERANOVA pursuant to
Section 3(a) or by ITIG under Section 3(b)(ii), ITIG agrees to provide SERANOVA
with transition

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assistance for up to 180 days (or such shorter period as SERANOVA may elect)
after the expiration of the Term, or upon the termination of this Agreement by
either ITIG or SERANOVA. Transition assistance shall include the following: (i)
ITIG shall reasonably cooperate with SERANOVA or any relevant third party for
transferring of the Services to SERANOVA or any such third party that SERANOVA
selects; (ii) ITIG shall perform any new types of services, at a fee agreed upon
in writing by the parties, that are reasonably required to assist in
transferring of the Services to SERANOVA or any such third party that SERANOVA
selects; (iii) ITIG shall provide to SERANOVA, upon SERANOVA's reasonable
request, any records or other information relating to said Services; and (iv)
comply with SERANOVA's reasonable requests for assistance in engaging or
training another person or persons to provide the Services rendered by ITIG. So
long as ITIG is providing SERANOVA with transition assistance, SERANOVA shall be
obligated to provide compensation to ITIG pursuant to Exhibit A.

5.       INVOICING AND PAYMENTS.

         (a)      (i) SERANOVA shall remit payment of the monthly fee set forth
                  on Exhibit A to ITIG on or before the first day of each month
                  for the preceding month's Services. The first such payment
                  shall commence on the first day of the first month following
                  the Effective Date. Payment for any Services provided for a
                  partial month period preceding or following the initial
                  payment shall be prorated accordingly based on the number of
                  days in a given month. Notwithstanding any other provision of
                  this Section 5, ITIG shall make all payments to third parties
                  as necessary to ensure continued Services of the types
                  contemplated in this Agreement.

                  (ii) ITIG shall pay wages, provide benefits and make employer
                  contributions on behalf of the ITIG employees listed on
                  Exhibit B, which is attached hereto and incorporated by
                  reference ("Retained Employees") until each Retained Employee
                  resigns his/her employment with ITIG or is transferred and
                  becomes an employee of SERANOVA (the "Transfer Date") and
                  SERANOVA shall reimburse ITIG for all such wages, benefits and
                  employer contributions paid by ITIG from the Effective Date
                  until the Transfer Date. ITIG's obligations to continue to pay
                  wages, provide benefits and make employer's contributions
                  shall terminate on each individual Retained Employee's
                  Transfer Date or upon termination or resignation of employment
                  of such Retained Employee. In light of SERANOVA's total
                  control over the terms and conditions of such Retained
                  Employees, SERANOVA retains the right to request the
                  termination of any Retained Employee when necessary and
                  appropriate. All amounts payable to any Retained Employee
                  terminates under this Section 5(a)(ii) by virtue of such
                  termination, including but not limited to severance pay,
                  accrued wages, accrued vacation or leave pay, shall be
                  reimbursed to ITIG by SERANOVA. Such Exhibit B may be amended
                  from time to time.

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         (b)      SERANOVA agrees to pay amounts equal to any Federal, state or
                  local sales, use, excise, privilege or other taxes or
                  assessments, however designated or levied, relating to any
                  amounts payable by SERANOVA to ITIG hereunder, this Agreement
                  or any Services provided by ITIG to SERANOVA pursuant hereto
                  and any taxes or amounts in lieu thereof paid or payable by
                  ITIG, exclusive of taxes based on ITIG's net income for the
                  Services or for any employees, agents or subcontractor of
                  ITIG. ITIG will invoice SERANOVA for any taxes payable by
                  SERANOVA that are required to be collected by ITIG pursuant to
                  any applicable law, rule, regulation or other requirement of
                  law.

6.       OBLIGATIONS.

         (a)      Certain Information. SERANOVA shall provide to ITIG any
                  information needed by ITIG to perform the Services. If the
                  failure to provide such information renders the performance of
                  any requested Services impossible or unreasonably difficult,
                  ITIG may upon reasonable prior written notice to SERANOVA and
                  without incurring any liability refuse to provide such
                  Services until such time as SERANOVA has provided ITIG with
                  the requisite information.

         (b)      Further Assurances. During the term of this Agreement, ITIG
                  and SERANOVA shall use commercially reasonable efforts to: (i)
                  preserve their respective and mutual reputations and market
                  positions in strategic markets; (ii) promote their mutual
                  businesses and cause the retention and expansion of their
                  customers; (iii) refrain from taking any action which may
                  jeopardize any such customer relationship without the prior
                  written consent of the other party; and (iv) execute and
                  deliver any further legal instruments which may become
                  necessary to effect the purposes of this Agreement.

         (c)     Scope of Services. If ITIG and SERANOVA agree that it is
                  functionally impossible to continue to provide a Service under
                  this Agreement, or otherwise agree to eliminate or reduce one
                  or more Services provided hereunder, then ITIG shall
                  discontinue said Service at the time and in the manner agreed
                  to by the parties. In the event ITIG discontinues a Service
                  provided hereunder, SERANOVA's Service fee shall be prorated
                  based on a reasonable allocation of the costs as mutually
                  agreed by the parties. In the event that SERANOVA requires a
                  reasonable increase of the Services, ITIG shall increase the
                  amount of Services accordingly. The parties agree to negotiate
                  in good faith relating to ITIG's rendering of increased
                  services to SERANOVA and if the parties cannot agree on a
                  price, ITIG has no obligation to perform such increased
                  services.

7. OWNERSHIP. All deliverables generated pursuant to the Services as set forth
in Exhibit A ("Work Product") shall be deemed works made for hire under the
applicable copyright laws, and that all Work Product shall be the sole and
exclusive property of SERANOVA. To the extent that any Work Product is not
considered a work for hire under the applicable copyright laws, ITIG hereby
assigns all of its rights, title or interest in the Work Product and in all
related

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patents, copyrights, trademarks, trade secrets, rights of priority and other
proprietary rights to SERANOVA. ITIG shall make full disclosure to SERANOVA of
all such Work Product, and reasonably assist and cooperate with SERANOVA, at
SERANOVA's expense, in all respects and will execute documents, give testimony,
and take all further acts requested by SERANOVA to obtain, maintain, perfect and
enforce for SERANOVA patent, copyright, trademark, trade secret or other legal
protection for the Work Product, as well as all reissues, renewals and
extensions thereof.

8. SUBCONTRACTING SERVICES. ITIG may, with the consent or approval of SERANOVA,
subcontract certain Services, in whole or in part, provided to SERANOVA pursuant
to this Agreement. To the extent that ITIG subcontracts certain or all Services,
ITIG shall remain solely responsible to SERANOVA for the execution and quality
of said Services.

9.       RECORD KEEPING.

         (a)      Processing. Upon ten (10) days prior written notice from
                  SERANOVA, ITIG shall provide SERANOVA and/or its
                  representatives or any regulatory agency having jurisdiction
                  reasonable access during normal business hours to ITIG's
                  facilities for the purpose of performing audits or inspections
                  of the business of ITIG relating to the Services. ITIG shall
                  provide any reasonable assistance as may be required by
                  SERANOVA and/or its representatives or any regulatory agency
                  having jurisdiction. ITIG shall not be required to provide
                  SERANOVA and/or its representatives or any regulatory agency
                  having jurisdiction access to ITIG's data of ITIG's customer's
                  data other than SERANOVA. If any audit by an auditor
                  designated by SERANOVA or any regulatory agency having
                  jurisdiction finds ITIG not in compliance with any audit
                  requirement relating to the Services, ITIG shall meet with
                  SERANOVA and the parties will agree on what actions ITIG must
                  take to be in compliance with the audit requirements. SERANOVA
                  shall be responsible for the cost of such audit.

         (b)      Charges. Upon ten (10) days prior written notice from
                  SERANOVA, ITIG shall provide SERANOVA and/or its
                  representatives reasonable access during normal business hours
                  to ITIG's facilities for the purpose of performing audits or
                  inspections to verify the accuracy of the amounts charged by
                  ITIG to SERANOVA for the Services. If, as a result of such
                  audit, it is determined that ITIG has overcharged SERANOVA,
                  SERANOVA shall notify ITIG of the amount of such overcharge
                  and ITIG shall promptly pay to SERANOVA the amount of the
                  overcharge, plus interest of one percent (1%) per month, but
                  in no event to exceed the highest lawful rate of interest,
                  calculated from the date of receipt by ITIG of the overcharged
                  amount until the date of payment to SERANOVA. In addition, in
                  the event any such audit reveals an overcharge to SERANOVA by
                  ITIG of five percent (5%) or more, ITIG shall reimburse
                  SERANOVA for cost of such audit.

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10.      WARRANTY.

         (a)      ITIG represents and warrants that during the performance of
                  and for a period of sixty (60) days after performance, the
                  Services will be provided in a professional and workmanlike
                  manner in accordance with industry standards and the Services
                  will materially conform to Exhibit A. In the event the Service
                  fails to conform to the foregoing warranties in any material
                  respect, the sole and exclusive remedy of SERANOVA, and ITIG's
                  liability, as a result thereof will be for ITIG, at its
                  expense, to use its commercially reasonable efforts to cure or
                  correct such failure as soon as reasonably practical or refund
                  any monies paid by SERANOVA to ITIG for the nonconforming
                  portion of the Services.

         (b)      ITIG represents and warrants that to its knowledge, the
                  rendering of Services will not infringe on any US patents,
                  copyrights or trademarks.

         (c)      Each party represents and warrants that it shall comply with
                  all applicable federal, state and local laws and regulations
                  applicable to the Services and shall obtain all applicable
                  permits, registrations and licenses required of it in
                  connection with its obligations under this Agreement.

         (d)      EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, ITIG DOES NOT
                  MAKE ANY REPRESENTATION OR WARRANTY OF ANY KIND, WHETHER SUCH
                  WARRANTY BE EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF
                  MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY
                  WARRANTY FROM COURSE OF DEALING OR USAGE OF TRADE.

11. LIMITATION OF LIABILITY. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE
OTHER PARTY FOR ANY SPECIAL, EXEMPLARY, INDIRECT, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES OF ANY KIND OR NATURE WHATSOEVER (INCLUDING, WITHOUT
LIMITATION, LOST REVENUES, PROFITS, SAVINGS OR BUSINESS), WHETHER IN AN ACTION
BASED ON CONTRACT, WARRANTY, STRICT LIABILITY, TORT (INCLUDING, WITHOUT
LIMITATION, NEGLIGENCE) OR OTHERWISE, EVEN IF SUCH PARTY HAS BEEN INFORMED IN
ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES OR SUCH DAMAGES COULD HAVE BEEN
REASONABLY FORESEEN BY SUCH PARTY. In no event shall either party's aggregate
liability to the other party exceed the total fees paid by SERANOVA to ITIG for
the twelve (12) month period immediately preceding the event that gave rise to
the liability, whether such liability is based on an action in contract,
warranty, strict liability or tort (including, without limitation, negligence)
or otherwise. Each party's entire liability under this Agreement shall be as set
out in this Section 11. The parties have agreed that the limitations specified
in this Section 11 will survive and apply even if any limited remedy specified
in this Agreement is found to have failed of its essential purpose.

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12.      INDEMNIFICATION.

         (a)      Indemnity by SERANOVA. SERANOVA shall indemnify ITIG from and
                  defend ITIG against, any liability or expenses (including
                  reasonable attorneys' fees) arising out of or relating to any
                  claim, loss, damage, cost, liability, or expense ("Claim"):

                  1.     Relating to the employment or termination thereof of
                          any Retained Employee;

                  2.    Relating to (a) a violation of Federal, state, or other
                        laws (including common law) or regulations, including
                        but not limited to a violation of Federal, state, or
                        other laws (including common law) or regulations for the
                        protection of persons or members of a protected class or
                        category of persons by SERANOVA, its employees, or
                        agents, (b) sexual discrimination or harassment by
                        SERANOVA, its employees, or agents, and (c) work-related
                        injury except as maybe covered by SERANOVA's worker's
                        compensation or death caused by SERANOVA, its employees,
                        or agents;

                  3.    Relating to amounts, including taxes, interest, and
                        penalties, assessed against ITIG which are the
                        obligations of SERANOVA pursuant to Section 5(b); and

                  4.    the extent directly related to personal injury or
                        tangible personal property, damage resulting from any
                        Retained Employee's (prior to such Retained Employee's
                        Transfer Date but after SERANOVA becomes a publicly held
                        entity) and SERANOVA's negligent acts or omissions.

         (b)      Indemnity by ITIG. ITIG shall indemnify SERANOVA from and
                  defend SERANOVA against, any liability or expenses (including
                  reasonable attorneys' fees) arising out of or relating to any
                  Claim:

                  1.    Relating to (a) a violation of Federal, state, or other
                        laws (including common law) or regulations, including
                        but not limited to a violation of Federal, state, or
                        other laws or regulations for the protection of persons
                        or members of a protected class or category of persons
                        by ITIG, its employees, or agents, (b) sexual
                        discrimination or harassment by ITIG, its employees, or
                        agents, and (c ) work-related injury except as may be
                        covered by ITIG's worker's compensation or death caused
                        by ITIG, its employees, or agents;

                  2.    Relating to amounts, including taxes, interest, and
                        penalties, assessed against SERANOVA which are the
                        obligations of ITIG pursuant to Section 5(b);

                  3.    Relating to ITIG's non-compliance with legal or
                        regulatory requirements applicable to ITIG; and

                  4.    To the extent directly related to personal injury or
                        tangible personal property damage resulting from ITIG's
                        negligent acts or omissions excluding the acts or
                        omissions of any Retained Employees (prior to such
                        Retained Employee's Transfer Date but after SERANOVA
                        becomes a publicly held entity).

         (c)      The party seeking indemnification under any provision of this
                  Agreement shall promptly notify the party against whom the
                  indemnification is sought in writing of any claim for
                  indemnification, specifying in detail the basis of such claim,
                  the
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                  facts pertaining thereto and, if known, the amount, or an
                  estimate of the amount, of the liability arising therefrom;
                  provided however, that failure to give such notice shall not
                  affect the indemnification provided hereunder except to the
                  extent that the indemnifying party can demonstrate actual
                  monetary prejudice as a direct result of such failure. The
                  indemnified party shall provide to the indemnifying party as
                  promptly as practicable thereafter all information and
                  documentation necessary to support and verify the claim
                  asserted and the indemnifying party shall be given reasonable
                  access to all books and records in the possession or control
                  of the indemnified party or any of its affiliates which the
                  indemnifying party reasonably determines to be related to such
                  claim.

         (d)      The indemnifying party shall have sole control over the
                  defense and/or settlement of any claim and the indemnified
                  party will, at the indemnifying party's sole expense, provide
                  reasonable assistance to the indemnifying party. If the
                  indemnified party takes any overt action that unreasonably
                  compromises the indemnifying party's defense or settlement of
                  any claim, the indemnifying party shall be relieved of its
                  indemnification obligations for such particular claim.

13.      PARTIES' RELATIONSHIP.

         (a)      Independent. The parties are independent entities with each
                  having sole authority and control of the manner of, and is
                  responsible for, its performance of this Agreement. This
                  Agreement does not create or evidence a partnership or joint
                  venture between the parties. Neither party has the right or
                  authority to enter into any contract, warranty, guaranty or
                  other undertaking in the name or for the account of the other
                  party, or to assume or create any obligation or liability of
                  any kind, express or implied, on behalf of the other party, or
                  to bind the other party in any manner whatsoever, or to hold
                  itself out as having any right, power or authority to create
                  any such obligation or liability on behalf of the other or to
                  bind the other party in any manner whatsoever (except as
                  otherwise provided by this Agreement or as to any other
                  actions taken by either party at the express written request
                  and direction of the other party).

         (b)      Employees. Except as otherwise described herein, for the
                  purposes of this Agreement each party is solely responsible
                  for its own employees or agents, including the actions or
                  omissions and the payment of compensation, taxes and benefits
                  of those employees and agents.

         (c)      Access. To the extent reasonably required for SERANOVA's
                  personnel to perform their job functions, ITIG shall provide
                  SERANOVA's personnel with reasonable access to its equipment,
                  office facilities and any other areas and equipment for which
                  SERANOVA has provided compensation to ITIG under the terms of
                  this Agreement. In addition, the employees of SERANOVA shall
                  have reasonable access to those employees of ITIG who perform
                  any of the Services.

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         (d)      Non Solicitation. During the Term hereof and for a period of
                  twelve (12) months thereafter, neither party shall, directly
                  or indirectly, solicit for employment or employ, or accept
                  services provided by, any employee, officer or independent
                  contractor of the other party who performed any work in
                  connection with or related to the Services without the prior
                  written consent of the other party and such consent shall not
                  be unreasonably withheld.

14. DISPUTE RESOLUTION PROCEDURE. Except as otherwise stated in this Agreement,
the parties shall resolve all disputes in accordance with the following
procedure:

         (a)      Each party shall promptly negotiate in good faith to resolve
                  all disputes, controversies or claims arising out of or
                  relating to this Agreement or the performance hereunder (a
                  "Dispute"). In the event that the parties cannot resolve the
                  Dispute in such manner, they shall immediately refer the
                  Dispute to each party's CFO or such other senior executives as
                  may be mutually agreed upon by the parties from time to time.
                  If such executives do not agree upon a decision within a
                  reasonable amount of time after referral of the Dispute to
                  them (but in no event more than thirty (30) days from the date
                  the party that determines there is a Dispute becomes aware of
                  such dispute) they shall submit the Dispute to the following
                  binding arbitration procedures:

                  1.    Any Dispute shall be submitted to binding arbitration,
                  in accordance with the dispute resolution procedures specified
                  in this Section 14. If any of these procedures are determined
                  to be invalid or unenforceable, the remaining procedures shall
                  remain in effect and binding on the parties to the fullest
                  extent permitted by law.

                  2.    The arbitration shall be conducted in accordance with
                  the procedures specified in this Section 14 and the
                  Arbitration Rules for Professional Accounting and Related
                  Services Disputes of the AAA ("AAA Rules"). In the event of a
                  conflict, the provisions of this Section 14 shall control. The
                  arbitration shall be conducted before a panel of three
                  arbitrators, regardless of the size of the Dispute, to be
                  selected as provided in the AAA Rules.

                  3.    Any issue concerning the extent to which any Dispute is
                  subject to arbitration, or concerning the applicability,
                  interpretation, or enforceability of these procedures,
                  including any contention that all or part of these procedures
                  are invalid or unenforceable, shall be governed by the Federal
                  Arbitration Act and resolved by the arbitrators. No potential
                  arbitrator may serve on the panel unless first agreeing in
                  writing to abide and be bound by these procedures. The
                  arbitrators may not award non-monetary or equitable relief of
                  any sort. They shall have no power to award damages
                  inconsistent with the Agreement or punitive damages or any
                  other damages not measured by the prevailing party's actual
                  damages, and the parties expressly waive their right to obtain
                  such damages in arbitration or in any other forum. In no
                  event, even if any other portion of these procedures is
                  adjudged invalid or unenforceable, shall the arbitrators have
                  power

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                  to make an award or impose a remedy that could not be made or
                  imposed by a court deciding the matter in the same
                  jurisdiction.

                  4.    No discovery shall be permitted in connection with the
                  arbitration unless expressly authorized by the arbitration
                  panel upon a showing of substantial need by the party seeking
                  discovery. All aspects of the arbitration shall be treated as
                  confidential. Neither the parties nor the arbitrators may
                  disclose the existence, content or results of the arbitration,
                  except as necessary to comply with legal or regulatory
                  requirements. Before making any such disclosure, a party shall
                  give written notice to all other parties and afford such
                  parties a reasonable opportunity to protect their interest.
                  The result of the arbitration shall be a final decision that
                  is binding on the parties, and judgment on the arbitrators'
                  award may be entered in any court having jurisdiction.

15.      CONFIDENTIALITY.

         (a)      SERANOVA and ITIG shall each (i) hold the Confidential
                  Information (as defined below) of the other in trust and
                  confidence and avoid the disclosure or release thereof to any
                  other person or entity by using the same degree of care as it
                  uses to avoid unauthorized use, disclosure, or dissemination
                  of its own Confidential Information of a similar nature, but
                  not less than reasonable care, and (ii) not use the
                  Confidential Information of the other party for any purpose
                  whatsoever except as expressly contemplated under this
                  Agreement. Each party shall disclose the Confidential
                  Information of the other only to those of its employees having
                  a need to know such Confidential Information and shall take
                  all reasonable precautions to ensure that its employees comply
                  with the provisions of this Section 15.

         (b)      The term "Confidential Information" shall mean any and all
                  information or proprietary materials (in every form and media)
                  not generally known in the relevant trade or industry and
                  which has been or is hereafter disclosed or made available by
                  either party (the "disclosing party") to the other (the
                  "receiving party") in connection with the efforts contemplated
                  hereunder, including (i) all trade secrets, (ii) existing or
                  contemplated products, services, designs, technology,
                  processes, technical data, engineering, techniques,
                  methodologies and concepts and any information related
                  thereto, and (iii) information relating to business plans,
                  sales or marketing methods and customer lists or requirements.

         (c)      The obligations of either party under this Section 15 will not
                  apply to information that the receiving party can demonstrate
                  (i) was in its possession at the time of disclosure and
                  without restriction as to confidentiality, (ii) at the time of
                  disclosure is generally available to the public or after
                  disclosure becomes generally available to the public through
                  no breach of agreement or other wrongful act by the receiving
                  party, (iii) has been received from a third party without
                  restriction on disclosure and without breach of agreement or
                  other

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                  wrongful act by the receiving party, (iv) is independently
                  developed by the receiving party without regard to the
                  Confidential Information of the other party, or (v) is
                  required to be disclosed by law or order of a court of
                  competent jurisdiction or regulatory authority, provided that
                  the receiving party shall furnish prompt written notice of
                  such required disclosure and reasonably cooperate with the
                  disclosing party, at the disclosing party's cost and expense,
                  in any effort made by the disclosing party to seek a
                  protective order or other appropriate protection of its
                  Confidential Information.

16. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned by either party hereto
without the prior written consent of the other party except ITIG may, upon prior
written notice to SERANOVA (but without any obligation to obtain the consent of
SERANOVA), assign this Agreement or any of its rights hereunder to any affiliate
of ITIG, or to any entity who succeeds (by purchase, merger, operation of law or
otherwise) to all or substantially all of the capital stock, assets or business
of ITIG, if such entity agrees in writing to assume and be bound by all of the
obligations of ITIG under this Agreement.

17. NO THIRD-PARTY BENEFICIARIES. Nothing expressed or implied in this Agreement
shall be construed to give any person or entity other than the parties any legal
or equitable rights under this Agreement.

18. WAIVERS. No term or provision hereof shall be deemed waived and no breach
excused unless such waiver or consent shall be in writing and signed by an
authorized representative of the party claiming to have waived or consented. No
consent by either party to, or waiver of, a breach by the other, whether express
or implied, shall constitute a consent to, waiver of, or excuse for any
different or subsequent breach.

19. NOTICES. All notices given in connection with this Agreement shall be in
writing and transmitted by (i) hand delivery; (ii) courier delivery; (iii) U.S.
certified mail, return receipt requested, postage prepaid; or (iv) telecopier to
the addressed listed below. Delivery of said notices shall be deemed given upon
the date of (a) receipt of courier delivery; (b) certified mail return receipt
is signed or delivery is rejected; or (c) receipt of written confirmation of
telecopier transmittal.

         If to ITIG:                Intelligroup, Inc.
                                    499 Thornall Street
                                    Edison, New Jersey 08837
                                    Attn: President
                                    Fax No.: (732) 362-2100

         If to SERANOVA:            SeraNova, Inc.
                                    499 Thornall Street

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                                    Edison, New Jersey 08837
                                    Attn: President
                                    Fax No.: (732) 362-2100

20. FORCE MAJEURE. No delay or failure of a party to perform any of its
obligations, other than payment obligations, under this Agreement due to causes
beyond its reasonable control shall constitute a breach of this Agreement or
render that party liable for that delay or failure. Causes beyond a party's
reasonable control include, but are not limited to: (i) events or circumstances
that the party, even though using all, reasonable efforts, is unable to prevent
or overcome; or (ii) labor disputes, strikes, or other similar disturbances,
acts of God, utilities or communications failures, acts of the public enemy,
riots, insurrections, sabotage or vandalism.

21. SEVERABILITY. The invalidity, illegality or unenforceability of any
provision in this Agreement shall not in any way affect the validity, legality
or enforceability of any other provision of this Agreement. This Agreement shall
be reformed and construed in all respects as if such invalid or unenforceable
provision had never been in the Agreement and such provision shall be reformed
so that it will be valid, legal and enforceable to the extent possible.

22. GOVERNING LAW, VENUE AND JURISDICTION. This Agreement shall be construed in
accordance with and governed by the laws of the State of New Jersey, without
regard to its conflict of laws principles. Subject to Section 14, the parties
consent to jurisdiction and venue in the state courts of Middlesex County, New
Jersey, or if there is exclusive federal jurisdiction, the U.S. District Court
for the District of New Jersey, shall have exclusive jurisdiction and venue over
any dispute arising out of this Agreement.

23. HEADINGS. Headings in this Agreement are included for convenience of
reference only and do not constitute a part of this Agreement for any other
purpose.

24. ENTIRE AGREEMENT. This Agreement constitutes the entire understanding
between the parties with respect to the subject matter contained herein and
supersedes all prior communications, representations and agreements. It shall
not be varied except by a modification in writing which is duly executed by
authorized representatives of the parties subsequent to the date first appearing
herein

25. COUNTERPARTS. This Agreement may be executed in counterparts, each of which
shall be deemed an original and of equal force and effect.

26.      INSURANCE. ITIG and SERANOVA (after SERANOVA becomes a publicly held
         entity) agree to maintain insurance in accordance with the following:

      -     Workers Compensation & Employer's Liability: As required under the
            law of the state in which the work is performed with each party's
            liability limit not less than $500,000 per occurrence/annual
            aggregate.

      -     Commercial General Liability: Covering all operations

                                      -11-
<PAGE>   12

            of each party including product and completed operations and
            contractual liability against claims for personal bodily injury and
            property damage with a liability limit not less than $1,000,000 per
            occurrence/annual aggregate.

      -     Errors & Omission Insurance: Covering loss or damage arising out of
            negligent acts or errors or omissions which arise from professional
            Services provided by ITIG under this Agreement and any services
            provided by SERANOVA (using the Retained Employees after SERANOVA
            becomes a publicly held entity but prior to such employee's Transfer
            Date) with limits no less than $1,000,000 per occurrence.

         Such insurance coverage as is required under this Agreement shall be in
         form and with insurance carriers licensed to do business in the state
         where the services are provided, unless otherwise provided herein. As
         evidence of said coverage, ITIG shall forward Certificates of
         Insurance, or copies of insurance policies, to SERANOVA, which shall
         contain a provision to endeavor to notify SERANOVA in writing of a
         cancellation or nonrenewal of said coverages not less than thirty (30)
         days before its effective date. The foregoing statements as to the
         types and limits of insurance coverage to be maintained by ITIG, is not
         intended to and shall not in any manner limit or qualify the
         liabilities and obligations otherwise assumed by ITIG pursuant to this
         Agreement, including but not limited to the provisions concerning
         indemnification.

27. PUBLICITY. Neither party shall use the name of the other party in any
materials, statements or press releases without the prior written consent of the
other party.

         IN WITNESS WHEREOF, this Agreement has been executed effective as of
the date first above written.

WITNESSES                                INTELLIGROUP, INC.

_____________________________

_____________________________             BY:     /s/ Ashok  Pandey
                                                  _____________________________
                                                  Ashok Pandey
                                                  Co-Chief Executive Officer

                                         SERANOVA, INC.
_____________________________

_____________________________             By:     Raj Koneru
                                                  _____________________________
                                                  Raj Koneru, CEO

                                      -12-
<PAGE>   13

                                    EXHIBIT A
               DESCRIPTION OF SUPPORT SERVICES AND APPLICABLE FEES

INFORMATION SYSTEMS & SUPPORT

Monthly Access and Support Fee for SAP system:

-     Fixed charge of $4,000 per month;

-     Includes application support and consultation;

-     Does not include enhancement or modification of the underlying software or
      configuration, except as needed to correct for system malfunction or
      programming "bugs".

PC Applications and Hardware Support Services/Procurement:

-     Fixed monthly charge of $10,000 for January; $8,000 per month thereafter;

-     Support for desktop systems and network management applications for
      Edison, N.J. location o Ordering, receiving and configuring of new PC's
      and Laptops as needed (exclusive of actual cost of hardware and software
      components).

-     Continued access and support for Lotus Notes e-mail system currently
      installed;

-     Additional charges may be invoiced for the actual cost incurred to extend
      or add user licenses should these be required (based upon increases in
      registered users over baseline number, determined as of December 31,
      1999).

The parties acknowledge that Intelligroup has entered into contractual
relationships with various software vendors for use of the software.
Intelligroup will permit SeraNova a right to use the software or provide
services to SeraNova to the extent Intelligroup is permitted under its
applicable agreements with the software vendors. SeraNova will take all
reasonable actions requested by Intelligroup, so that SeraNova may use the
software or receive services from Intelligroup. Upon SeraNova becoming a
publicly held entity, SeraNova, at its sole cost and expense, may have to enter
into separate agreements with such software vendors and may no longer have the
right to use the software or receive services from Intelligroup.

GENERAL ADMINISTRATIVE SUPPORT

Mail Delivery & Facilities Management

-     Fixed charge of $3,000 per month, adjustable upon mutual agreement to
      reflect changes in usage or underlying costs to Intelligroup;

-     Monthly charge includes handling and distribution of mail and other
      deliveries, incidental office supplies, copy machine usage, and general
      facilities management;

-     Additional charges will be invoiced for actual costs of "expressmails"
      (including but not limited to Federal Express, U.S. Postal Service Exerts
      Mail, Airborne Express);

-     Additional charge of $1,000 per month for postage, adjustable upon mutual
      agreement to reflect changes in usage or underlying costs to Intelligroup;

Receptionist

-     Fixed charge of $1,700 per month.

<PAGE>   14

Human Resources

-     Fixed charge of $2,500 per month, adjustable upon mutual agreement to
      reflect changes in underlying employee mix;

-     Administrative support related to 401(k) Plans, applicable medical benefit
      plans, employee manual; o Employee orientation and hiring support will be
      invoiced at a rate of $100 per new "in-house" employee hired (covers such
      incidentals as key cards, name plates, etc

Billing Support

-     Fixed monthly charge of $1,000;

-     Provides assistance with setting up and transferring A/R, and Billing
      functions from Intelligroup; o Covers the cost of continued invoice
      processing by Intelligroup required to clear historical amounts.

Payroll Support

-     Fixed charge of $1,500 per month for the months of January through March,
      2000; then at a rate of $500 per month thereafter;

-     Provides administrative and processing assistance for the months of
      January through March, 2000, including assistance with quarterly tax
      reporting;

-     Also provides for on-going advisory support in connection with payroll
      processing; o External charges (such as Ceridian Payroll Service) are to
      be directly billed to SeraNova.

Immigration

-     Per case charge of $100 to cover administrative costs and access to
      Immigration Staff;

-     All external charges, including but not limited to legal (Fragomen) and
      I.N.S. fees are to be directly billed to SeraNova.

Other Support and Administrative Costs

The above assumes that certain external costs will be directly invoiced to
SeraNova. In the event that any such costs, directly attributable to SeraNova,
are invoiced by a third party to Intelligroup, these will be recoverable by
Intelligroup upon presentment of such costs to SeraNova in the form of an
invoice or other written request for payment (which will detail the costs and
purposes for such costs).

Certain other costs may be incurred by Intelligroup on behalf of both parties,
which may include but are not be limited to (i) cost of general liability,
property and casualty, and other business insurance coverages (prior to SeraNova
becoming a publicly held entity); and (ii) costs of outside retained recruiting
firms. Intelligroup may recover a proportionate share of such costs from
SeraNova upon presentment to SeraNova in the form of an invoice or other written
request for payment (which will detail the costs and purposes for such costs).
Such proportion will be determined by mutual agreement of the parties.

<PAGE>   15
INTELLIGROUP MONTHLY BILLING SCHEDULE FOR 2000
FOR CHARGES UNDER EXHIBIT A OF THE SERVICES AGREEMENT

<TABLE>
<CAPTION>
                                                                 Jan-00        Feb-00        Mar-00        Apr-00       May-00
                                                                 ------        ------        ------        ------       ------
Monthly Fixed Charges

        Information Systems and Support

<S>                                                              <C>           <C>           <C>           <C>         <C>
              SAP systems access and support                         $5,500        $5,500        $5,500        $5,500      $5,500

              PC applications and H/W support                       $11,000       $11,000       $11,000       $11,000     $11,000

        General Administrative Support

              Mail room and facilities                               $3,000        $3,000        $3,000        $3,000      $3,000

              Postage                                                $1,000        $1,000        $1,000        $1,000      $1,000

              Receptionist                                           $1,700        $1,700        $1,700        $1,700      $1,700

              H/R support                                            $3,500        $3,500        $3,500        $3,500      $3,500

              Billing support                                        $1,000        $1,000        $1,000        $1,000      $1,000

              Payroll support                                        $1,500        $1,500        $1,500          $500        $500

                                                              ===================================================================
Total Fixed Charges for Services                                    $28,200       $28,200       $28,200       $27,200     $27,200
                                                              ===================================================================

Variable ("Per drink") charges

              H/R support - $100 per new in-house hire

              Immigration support - $100 per case

</TABLE>

<TABLE>
<CAPTION>
                                                                     Jun-00      Jul-00      Aug-00       Sep-00      Oct-00
                                                                     ------      ------      ------       ------      ------
Monthly Fixed Charges

        Information Systems and Support

<S>                                                                 <C>         <C>         <C>          <C>         <C>
              SAP systems access and support                            $5,500      $5,500      $5,500       $5,500      $5,500

              PC applications and H/W support                          $11,000     $11,000     $11,000      $11,000     $11,000

        General Administrative Support

              Mail room and facilities                                  $3,000      $3,000      $3,000       $3,000      $3,000

              Postage                                                   $1,000      $1,000      $1,000       $1,000      $1,000

              Receptionist                                              $1,700      $1,700      $1,700       $1,700      $1,700

              H/R support                                               $3,500      $3,500      $3,500       $3,500      $3,500

              Billing support                                           $1,000      $1,000      $1,000       $1,000      $1,000

              Payroll support                                             $500        $500        $500         $500        $500

                                                                 ================================================================
Total Fixed Charges for Services                                       $27,200     $27,200     $27,200      $27,200     $27,200
                                                                 ================================================================

Variable ("Per drink") charges

              H/R support - $100 per new in-house hire

              Immigration support - $100 per case

</TABLE>

<TABLE>
<CAPTION>
                                                                  Nov-00       Dec-00
                                                                  ------       ------
Monthly Fixed Charges

        Information Systems and Support

<S>                                                              <C>          <C>
              SAP systems access and support                         $5,500       $5,500

              PC applications and H/W support                       $11,000      $11,000

        General Administrative Support

              Mail room and facilities                               $3,000       $3,000

              Postage                                                $1,000       $1,000

              Receptionist                                           $1,700       $1,700

              H/R support                                            $3,500       $3,500

              Billing support                                        $1,000       $1,000

              Payroll support                                          $500         $500

                                                                 ========================
Total Fixed Charges for Services                                    $27,200      $27,200
                                                                 ========================
</TABLE>

<PAGE>   16
<TABLE>

<S>                                                              <C>          <C>
Variable ("Per drink") charges

              H/R support - $100 per new in-house hire

              Immigration support - $100 per case

</TABLE>

<TABLE>
<CAPTION>

INTELLIGROUP MONTHLY BILLING SCHEDULE
FOR RENT AND UTILITIES CHARGES UNDER THE SPACE SHARING AGREEMENT
                                                                    Jan-00        Feb-00     Mar-00     Apr-00    May-00      Jun-00
                                                                    ------        ------     ------     ------    ------      ------
<S>                                                                 <C>           <C>        <C>        <C>       <C>          <C>
</TABLE>

INTELLIGROUP MONTHLY BILLING SCHEDULE
FOR RENT AND UTILITIES CHARGES UNDER THE SPACE SHARING AGREEMENT

<TABLE>
<CAPTION>
                                                                   Jul-00      Aug-00    Sep-00      Oct-00      Nov-00       Dec-00
                                                                   ------      ------    ------      ------      ------       ------
<S>                                                                <C>         <C>       <C>         <C>         <C>          <C>
</TABLE>

<PAGE>   17

                                                     EXHIBIT B
                                                RETAINED EMPLOYEES

<TABLE>
<CAPTION>

NAME                                       ID#                   NAME                            ID#

<S>                                        <C>                   <C>                             <C>
Badola, Anil                               # 2280                Natarajan, Sambamoorthy         # 228
Balakrishnan, Sridhar                      # 2036                Nath, Mohan                     # 706
Boghra, Arunkumar                          # 479                 Padmala, Srinivas Rao           # 1816
Chandran, Karthikeyan                      # 2010                Palvai, Sreedhar                # 1898
Dasari, Nageswararao                       # 2251                Parekh, Hitesh                  # 1683
Desai, Sheetal                             # 2221                Pavuluri, Kiran                 # 1509
Errangutla, Mahesh                         # 606                 Prasani, Vineet Rayroth         # 159
Gadre, Veerdhaval                          # 761                 Rajagopal, Raghu                # 326
Gaur, Harish                               # 1970                Ramachandran, Aravind           # 1554
Gorde, Ajay                                # 285                 Ramaswamy, Prakash              # 2300
Guduru, Vidyasaagar                        # 2298                Rao, Shashikant                 # 1859
Kalapatapu, Rama Sastry                    # 827                 Ray, Pragnesh                   # 1813
Kalvit, Hemant                             # 910                 Reddy, Venugopal                # 97
Kanyan, Mathew                             # 1847                Roche, Conrad                   # 2290
Kelwalkar, Anil Balakrishna                # 1931                Roy, Ashok                      # 1596
Keswani, Haresh                            # 1635                Sahoo, Rabi Narayan             # 1877
Kolukuluri, Trivikram                      # 808                 Sahu, Gajendra Kumar            # 2163
Koneru, Padma                              # 628                 Sawant, Sudhir                  # 535
Krishnan, Vilayanur P.                     # 2155                Sheth, Tushar                   # 1592
Kumar, Manish                              # 2128                Sindhwani, Manesh               # 1846
Kumar, Raj                                 # 629                 Soman, Kshitish                 # 708
Kuttalingam, Vannamuthu                    # 1524                Srinivasan, Girish              # 1958
Lanka     , Kutumba                        # 413                 Srinivasan, Sridhar             # 562
Madhavi, Nandyala                          # 767                 Suki, Geetanjali                # 2023
Madhineni, Madhukar                        # 684                 Sunkam, Sreehari                # 638
Mathur, Praveen                            # 1932                Susarla, Bharat                 # 1710
Mohammad, Asif                             # 348                 Thirugnanam, Gomathi            # 1963
Mopati, Krishna                            # 369                 Vedavyas, Balram                # 725
Morarji, Dhirendra                         # 1522                Wahi, Saurabh                   # 181
Mysore, Prashanth                          # 1924                Zentelis  , Nicolas             # 1927
Nagwekar, Suraj                            # 1508                Kanthi, Hanumanth               not assigned
Nair, Rajan                                # 732                 Guntupalli, Bharat              not assigned
Nallapaneni, Netaji                        # 831                 Aruminathan, William S          not assigned
Narne, Aravind                             # 2327                Sharan, Jaya                    not assigned
</TABLE><PAGE>   1
                                                                   Exhibit 10.40

               SAILS MANDATORILY EXCHANGEABLE SECURITIES CONTRACT

                                   dated as of

                                 March 25, 1999

                                      among

                          SAFEGUARD SCIENTIFICS, INC.,

                     SAFEGUARD SCIENTIFICS (DELAWARE), INC.,

                        CREDIT SUISSE FINANCIAL PRODUCTS

                                       and

                          CSFP CAPITAL, INC., as Agent

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                 PAGE

<S>                                                                             <C>
                                    ARTICLE 1
                                   DEFINITIONS

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

                                    ARTICLE 2
                                SALE AND PURCHASE

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

                                    ARTICLE 3
                             TERMINATION BY SELLERS

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

                                    ARTICLE 4
                    REPRESENTATIONS AND WARRANTIES OF SELLERS

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

                                    ARTICLE 5
                        CONDITIONS TO BUYER'S OBLIGATIONS

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

                                    ARTICLE 6
                                    COVENANTS

SECTION 6.01.  Taxes ..........................................................    11
SECTION 6.02.  Forward Contract ...............................................    12
SECTION 6.03.  Notices ........................................................    12
SECTION 6.04.  Further Assurances .............................................    12
SECTION 6.05.  Actions That Could Cause Either Seller to Become an Affiliate ..    13
SECTION 6.06.  Securities Contract ............................................    13
SECTION 6.07.  Sales of Common Stock ..........................................    13
</TABLE>

                                       ii
<PAGE>   3

<TABLE>
<CAPTION>
                                    ARTICLE 7
                                   ADJUSTMENTS

<S>                                                                             <C>
SECTION 7.01.  Dilution Adjustments ...........................................    14
SECTION 7.02.  Reorganization Events ..........................................    15
SECTION 7.03.  Provisions Relating to Reorganization Events and Spin-Offs .....    16
SECTION 7.04.  Termination and Payment ........................................    16

                                    ARTICLE 8
                                  ACCELERATION

SECTION 8.01.  Acceleration ...................................................    17

                                    ARTICLE 9
                                  MISCELLANEOUS

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

                                      iii
<PAGE>   4

               SAILS MANDATORILY EXCHANGEABLE SECURITIES CONTRACT

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

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

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

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

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

                                    ARTICLE 1

                                   DEFINITIONS

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

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

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

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

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

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

     "BASE AMOUNT" has the meaning provided in Section 2.01.
<PAGE>   5

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

     "CALCULATION AGENT" means Credit Suisse Financial Products.

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

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

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

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

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

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

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

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

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

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

     "MARKET DISRUPTION EVENT" means the occurrence or the existence on any
Exchange Business Day during the one-half hour period ending at the close of
trading on the relevant exchange of any suspension of or limitation in trading
(by reason of movements in price exceeding limits permitted by the relevant
exchange or otherwise) in

                                       2
<PAGE>   6

the Common Stock or in listed options on the Common Stock, if any, if, in the
determination of the Calculation Agent, such suspension or limitation is
material.

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

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

     "MATURITY DATE" means March 28, 2002.

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

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

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

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

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

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

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

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

                                       3
<PAGE>   7

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

     "PURCHASE PRICE" has the meaning provided in Section 2.02.

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

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

     "RESTRICTION TERMINATION DATE" means the earliest of (i) August 3, 1999,
and (ii) if this Agreement shall terminate pursuant to Section 7.02, or if an
Acceleration Date shall occur pursuant to Article 8, the date that Buyer, in its
discretion, notifies Seller in writing that sales of Common Stock (and security
entitlements in respect thereof) are permissible.

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

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

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

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

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

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

     "TRANSFER RESTRICTION" means, with respect to any share of Common Stock (or
security entitlements in respect thereof) or other item of collateral pledged
under the Pledge Agreement, any condition to or restriction on the ability of
the holder thereof to sell, assign or otherwise transfer such share of Common
Stock (or security entitlements in respect thereof) or other item of collateral
or to enforce the provisions thereof or of any document related thereto whether
set forth in such item of Collateral itself or in any document related thereto,
including, without limitation, (i) any requirement that any sale, assignment or
other transfer or enforcement of such share of Common Stock (or security
entitlements in respect thereof) or other item of collateral be consented to or
approved by any Person, including, without limitation, the issuer thereof or any
other obligor thereon, (ii) any limitations on the type or status, financial or
otherwise, of any purchaser, pledgee, assignee or transferee of such share of
Common Stock (or security entitlements in respect thereof) or other item of
collateral, (iii) any requirement of the delivery of any certificate, consent,
agreement, opinion of counsel, notice or any other document of any Person to the
issuer of, any other obligor on or any registrar or transfer agent for, such
share of Common Stock (or security entitlements in respect thereof) or other
item of collateral, prior to the sale, pledge, assignment or other transfer or
enforcement of such share of Common Stock (or security entitlements in respect
thereof) or other item of collateral and (iv) any registration or qualification
requirement or prospectus delivery requirement for such share of Common Stock
(or security entitlements in respect thereof) or other item of

                                       4
<PAGE>   8
collateral pursuant to any federal, state or foreign securities law (including,
without limitation, any such requirement arising as a result of Rule 144 or Rule
145 under the Securities Act); provided that the required delivery of any
assignment, instruction or entitlement order from the seller, pledgor, assignor
or transferor of such share of Common Stock (or security entitlements in respect
thereof) or other item of collateral, together with any evidence of the
corporate or other authority of such Person, shall not constitute a "TRANSFER
RESTRICTION".

                                    ARTICLE 2

                                SALE AND PURCHASE

     SECTION 2.01. Sale and Purchase. Upon the terms and subject to the
conditions of this Agreement, Sellers jointly and severally agree to sell to
Buyer, and Buyer agrees to purchase and acquire from Sellers, the number of
shares of Common Stock (or security entitlements in respect thereof) equal to
the product of 1,000,000 (subject to reduction as provided in Section 3.01, the
"BASE AMOUNT") and the Exchange Rate.

     SECTION 2.02. Purchase Price. The purchase price (the "PURCHASE PRICE")
shall be $71,205,076.20 in cash.

     SECTION 2.03. Payment for and Delivery of Contract Shares. (a) Upon the
terms and subject to the conditions of this Agreement, Buyer shall deliver to
Subsidiary the Purchase Price on March 30, 1999 (the "PAYMENT DATE") at the
offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York
10017, or at such other place as shall be agreed upon by Buyer and Sellers, paid
by certified or official bank check or checks duly endorsed to, or payable to
the order of, Subsidiary, or in immediately available funds by wire transfer to
an account designated by Subsidiary.

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

                                       5
<PAGE>   9

of Section 8.01, if Sellers give notice of their election to deliver cash in
lieu of shares of Free Stock on the Maturity Date pursuant to Section 2.04 and
fails to deliver the Cash Settlement Amount on the Maturity Date as provided in
Section 2.04, Sellers shall be in breach of this Agreement and shall be liable
to Buyer for any losses incurred by Buyer or its affiliates as a result of such
breach, including without limitation losses incurred in connection with any
decrease in the Closing Price of the Common Stock subsequent to the fifth
Exchange Business Day immediately preceding the Maturity Date.

     (c) The "EXCHANGE RATE" shall be determined by the Calculation Agent in
accordance with the following formula, and is subject to adjustment as a result
of certain events as provided in Article 7 and as provided in Section 6(i) of
the Pledge Agreement: (i) if the Maturity Price is less than the Threshold Price
but greater than $90.5917 (the "ISSUE PRICE"), the Exchange Rate shall be a
ratio (rounded upward or downward to the nearest 1/10,000th or, if there is not
a nearest 1/10,000th, to the next lower 1/10,000th) equal to the Issue Price
divided by the Maturity Price, (ii) if the Maturity Price is equal to or greater
than the Threshold Price, the Exchange Rate shall be a ratio (rounded upward or
downward to the nearest 1/10,000th or, if there is not a nearest 1/10,000th, to
the next lower 1/10,000th) equal to the Issue Price divided by the Threshold
Price and (iii) if the Maturity Price is equal to or less than the Issue Price,
the Exchange Rate shall be one (1). "THRESHOLD PRICE" means $111.4278, provided
that if for any period during the term of this Agreement a Rehypothecation
Unavailability (as defined in the Pledge Agreement) shall not have occurred or
shall not be continuing, then the Threshold Price shall be increased by an
amount equal to the product of $1.8118 and a fraction, the numerator of which
shall equal the number of days during the term of this Agreement on which a
Rehypothecation Unavailability shall not have occurred or shall not be
continuing and the denominator of which shall equal 1084.

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

                                    ARTICLE 3

                             TERMINATION BY SELLERS

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

                                       6
<PAGE>   10

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

                                       7
<PAGE>   11

                                    ARTICLE 4

                    REPRESENTATIONS AND WARRANTIES OF SELLERS

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

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

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

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

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

          (e) No Acceleration Event or event that, with the giving of notice or
     the lapse of time or both, would constitute an Acceleration Event has
     occurred and is continuing and no such event would occur as a result of its
     entering into or

                                       8
<PAGE>   12

     performing its obligations under this Agreement or (in the case of
     Subsidiary) the Pledge Agreement.

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

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

          (h) It is not an "affiliate", within the meaning of Rule 144 under the
     Securities Act, of the Issuer. From the date three months prior to the date
     hereof until the Restriction Termination Date, Seller has not, without the
     written consent of Buyer, sold any shares of Common Stock (or security
     entitlements in respect thereof) or hedged (through swaps, options, short
     sales or otherwise) any long position in the Common Stock (or security
     entitlements in respect thereof), other than sales or hedges that would
     not, if aggregated with sales of a number of shares of Common Stock equal
     to the Base Amount, exceed the volume limits set forth in Rule 144(e) under
     the Securities Act for any three month period. Seller does not know or have
     any reason to believe that the Company has not complied with the reporting
     requirements contained in Rule 144(c)(1) under the Securities Act.

                                       9
<PAGE>   13

          (i) Delivery of shares of Common Stock (or security entitlements in
     respect thereof) by it pursuant to Section 2.03(b) or Section 8.01 will
     pass to Buyer title to such shares (or security entitlements) free and
     clear of any Liens or Transfer Restrictions, except for those created
     pursuant to the Pledge Agreement.

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

                                    ARTICLE 5

                        CONDITIONS TO BUYER'S OBLIGATIONS

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

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

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

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

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

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

                                    ARTICLE 6

                                    COVENANTS

     SECTION 6.01. Taxes. Sellers shall pay any and all documentary, stamp,
transfer or similar taxes and charges that may be payable in respect of the
entry into this Agreement and the transfer and delivery of any Common Stock (or
security entitlements in respect thereof) pursuant hereto. Sellers further agree
to make all payments in respect of this Agreement free and clear of, and without
withholding or deduction for or on account of,

                                       10
<PAGE>   14

any present or future taxes, duties, fines, penalties, assessments or other
governmental charges of whatsoever nature (or interest on any taxes, duties,
fines, penalties, assessments or other governmental charges of whatsoever
nature) imposed, levied, collected, withheld or assessed by, within or on behalf
of (a) the United States or any political subdivision or governmental authority
thereof or therein having power to tax or (b) any jurisdiction from or through
which payment on the Agreement is made by the either Seller, or any political
subdivision or governmental authority thereof or therein having power to tax. In
the event such withholding or deduction is imposed, Sellers jointly and
severally agree to indemnify the Buyer for the full amount of such withholding
or deduction, as well as any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto.

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

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

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

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

     SECTION 6.04. Further Assurances. From time to time from and after the date
hereof through the Maturity Date, each of the parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things

                                       11
<PAGE>   15

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

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

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

     SECTION 6.07. Sales of Common Stock. Seller agrees that it shall not,
without the prior written consent of Buyer, sell any shares of Common Stock (or
security entitlements in respect thereof) or hedge (through swaps, options,
short sales or otherwise) any long position in the Common Stock (or security
entitlements in respect thereof), other than sales or hedges that would not, if
aggregated with sales of a number of shares of Common Stock equal to the Base
Amount, exceed the volume limits set forth in Rule 144(e) under the Securities
Act for any three month period, until the Restriction Termination Date.

                                    ARTICLE 7

                                   ADJUSTMENTS

     SECTION 7.01. Dilution Adjustments. (a) Following the declaration by the
Issuer of the terms of any Potential Adjustment Event occurring prior to the
Maturity Date, the

                                       12
<PAGE>   16

Calculation Agent will determine whether such Potential Adjustment Event has a
diluting or concentrative effect on the theoretical value of the Common Stock
and, if so, will (i) make the corresponding adjustment, if any, to any one or
more of the Base Amount, the Exchange Rate, the Threshold Price, the Issue
Price, the Maturity Price, the Cash Settlement Amount, any Closing Price and any
other variable relevant to the exercise, settlement or payment terms hereof or
of the Pledge Agreement as the Calculation Agent determines appropriate to
account for that diluting or concentrative effect and (ii) determine the
effective date of the adjustment. The Calculation Agent may (but need not)
determine the appropriate adjustment by reference to the adjustment in respect
of such Potential Adjustment Event made by an options exchange to options on the
Common Stock traded on that options exchange.

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

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

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

          (iii) a cash dividend;

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

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

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

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

                                       13
<PAGE>   17

     (c) Notwithstanding the foregoing, in the event of a distribution of shares
of capital stock of a subsidiary of the Issuer that is a Publicly-Traded Entity
(a "SPIN-OFF") made to holders of shares of Common Stock, the Exchange Rate in
effect immediately prior to such Spin-Off shall be adjusted so that Buyer shall
thereafter be entitled to receive, on the Maturity Date, in addition to the
number of shares of Common Stock required to be delivered on the Maturity Date,
the number of shares of common stock of such Publicly-Traded Entity that Buyer
would have owned or been entitled to receive immediately following such Spin-Off
had the shares of Common Stock required to be delivered to Buyer hereunder on
the Maturity Date been delivered immediately prior to such Spin-Off. Following a
Spin-Off, "Original Common Stock" shall mean the common stock of the Issuer and
"New Common Stock" shall mean the common equity securities of the
Publicly-Traded Entity resulting from such Spin-Off.

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

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

     SECTION 7.04. Termination and Payment. Following termination of this
Agreement as a result of any Reorganization Event, the Calculation Agent shall
determine the Replacement Value in the manner provided in Section 8.01
(calculated, for purposes of this Section 7.04, as if the Termination Date were
the Acceleration Date, and

                                       14
<PAGE>   18

representing the fair replacement value (including both intrinsic and time
value) to Buyer of an agreement with terms that would preserve for Buyer the
economic equivalent of the payments and deliveries that Buyer and its affiliates
would, but for the occurrence of the Reorganization Event, have been entitled to
receive after the Termination Date hereunder). As promptly as reasonably
practicable after calculation of the Replacement Value, the Calculation Agent
shall deliver to Buyer and Sellers a notice (the "TERMINATION AMOUNT NOTICE")
specifying the Replacement Value. Not later than three Business Days following
delivery of a Termination Amount Notice, Sellers shall make a cash payment, by
wire transfer of immediately available funds to an account designated by Buyer,
to Buyer in an amount equal to the Replacement Value. Notwithstanding the
foregoing, to the extent that any Marketable Securities are received by holders
of Common Stock in such Reorganization Event, then in lieu of delivering cash as
provided in the immediately preceding sentence, Sellers may deliver Marketable
Securities with an equal value (as determine by the Calculation Agent in its
discretion in a commercially reasonable manner).

                                    ARTICLE 8

                                  ACCELERATION

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

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

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

          (c) at any time, any representation made or repeated or deemed to have
     been made or repeated by either Seller under this Agreement or the Pledge
     Agreement or any certificate delivered pursuant hereto or thereto would be
     incorrect or misleading if made or repeated as of such time in any respect
     that, in

                                       15
<PAGE>   19

     the reasonable judgment of Buyer, would have a material adverse effect on
     Buyer in respect of the transactions contemplated hereby;

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

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

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

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

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

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

then, upon notice to Sellers from Buyer at any time following an Acceleration
Event, an "ACCELERATION DATE" shall occur, and Sellers shall become obligated to
deliver to Buyer immediately upon receipt of the Acceleration Amount Notice a
number of shares of Free Stock equal to the Acceleration Amount; provided that
if the Collateral Agent proceeds to

                                       16
<PAGE>   20

realize upon any collateral pledged under the Pledge Agreement and to apply the
proceeds of such realization as provided in paragraph second of Section 8(d)
thereof, then, to the extent of such application of proceeds, Sellers'
obligation to deliver Free Stock pursuant to this paragraph shall be deemed to
be an obligation to deliver an amount of cash equal to the aggregate Market
Value of such Free Stock on the Acceleration Date. The "ACCELERATION AMOUNT"
means the quotient obtained by dividing: (i) the Replacement Value by (ii) the
Market Value per share of the Common Stock on the Acceleration Date, provided
that the Acceleration Amount shall not be greater than the Base Amount.

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

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

                                    ARTICLE 9

                                  MISCELLANEOUS

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

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

                                       17
<PAGE>   21

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

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

     SECTION 9.03. Confidentiality. Except as required by law or judicial or
administrative process, or as requested by a regulatory authority or
self-regulatory organization, each party hereto agrees to keep this Agreement
and the Pledge Agreement and the transactions contemplated hereby and thereby
confidential. In the event disclosure is permitted pursuant to the preceding
sentence, the disclosing party shall (i) provide prior notice of such disclosure
to the other party, (ii) use its best efforts to minimize the extent of such
disclosure and (iii) comply with all reasonably requests of the other party to
minimize the extent of such disclosure. This Section 9.03 shall not prevent
either Seller or Buyer from disclosing information as necessary to third-party
advisors in connection with the transactions contemplated hereby or in the
Pledge Agreement; provided that such Seller or Buyer, as the case may be, shall
cause such advisors comply with the provisions of this Section 9.03 as if a
party hereto.

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

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

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

                                       18
<PAGE>   22

parties hereto; provided that Buyer may assign any of its rights or duties
hereunder to any of its affiliates without the prior written consent of Seller.

     SECTION 9.07. Calculation Agent. The determinations and calculations of the
Calculation Agent shall be binding in the absence of manifest error. The
Calculation Agent will have no responsibility for good faith errors or omissions
in the determination of any Closing Price, the Maturity Price, the Exchange
Rate, the Cash Settlement Amount or any other amount as provided herein.

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

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

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

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

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

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

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

                                       SELLER:

                                       SAFEGUARD SCIENTIFICS, INC.

                                       19
<PAGE>   23

                      By: /s/ Michael W. Miles
                         ------------------------------------------
                         Name:  Michael W. Miles
                         Title: Senior Vice President

                      SELLER:

                      SAFEGUARD SCIENTIFICS
                       (DELAWARE), INC.

                      By: /s/ Michael W. Miles
                         ------------------------------------------
                         Name:  Michael W. Miles
                         Title: Vice President

                      BUYER:

                      CREDIT SUISSE FINANCIAL
                      PRODUCTS

                      By: /s/ Edmond Curtin
                         ------------------------------------------
                         Name:  Edmond Curtin
                         Title: Director - Legal and Compliance Department

                      By: /s/ Therese Cochrane
                         ------------------------------------------
                         Name:  Therese Cochrane
                         Title: Director - Legal and Compliance Department

                                       20
<PAGE>   24

                                            AGENT:

                                            CSFP CAPITAL, INC.

                                            By: /s/ Manuel J. Alvarez
                                                ----------------------------
                                                Name:  Manuel J. Alvarez
                                                Title: Director

                                       21

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