SAFEGUARD SCIENTIFICS INC ET AL
LOAN AGREEMENT DATED MAY 10, 2002
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>w63008exv10w1.txt
<DESCRIPTION>LOAN AGREEMENT DATED MAY 10, 2002
<TEXT>
<PAGE>

                                                                    EXHIBIT 10.1

                            SAFEGUARD DELAWARE, INC.

                     SAFEGUARD SCIENTIFICS (DELAWARE), INC.

                                 LOAN AGREEMENT
<PAGE>
         This LOAN AGREEMENT is entered into as of May 10,2002, by and between
COMERICA BANK-CALIFORNIA ("Bank") and SAFEGUARD DELAWARE, INC. ("Safeguard
Delaware") and SAFEGUARD SCIENTIFICS (DELAWARE), INC. ("Safeguard Scientifics";
Safeguard Scientifics and Safeguard Delaware are sometimes referred to,
individually, as a "Borrower" and collectively, the "Borrowers").

                                    RECITALS

         Borrowers wish to obtain credit from time to time from Bank, and Bank
desires to extend credit to Borrowers. This Agreement sets forth the terms on
which Bank will advance credit to Borrowers, and Borrowers will repay the
amounts owing to Bank.

                                    AGREEMENT

         The parties agree as follows:

         1. DEFINITIONS AND CONSTRUCTION.

                  1.1 Definitions. As used in this Agreement, the following
terms shall have the following definitions:

                           "Advance" or "Advances" means a cash advance or cash
advances under the Revolving Facility.

                           "Affiliate" means, with respect to any Person, any
Person that owns or controls directly or indirectly such Person, any Person that
controls or is controlled by or is under common control with such Person, and
each of such Person's senior executive officers, directors, and partners.

                           "Bank Expenses" means all: reasonable costs or
expenses (including reasonable attorneys' fees and expenses) incurred in
connection with the preparation, negotiation, administration, and enforcement of
the Loan Documents; reasonable Collateral audit fees; and Bank's reasonable
attorneys' fees and expenses incurred in amending, enforcing or defending the
Loan Documents (including fees and expenses of appeal), incurred before, during
and after an Insolvency Proceeding, whether or not suit is brought.

                           "Borrower's Books" means all of a Borrower's books
and records including: ledgers; records concerning Borrower's assets or
liabilities, the Collateral, business operations or financial condition; and all
computer programs, or tape files, and the equipment, containing such
information.

                           "Business Day" means any day that is not a Saturday,
Sunday, or other day on which banks in the State of California or the
Commonwealth of Pennsylvania are authorized or required to close.

                           "Cash Equivalents" means (i) marketable direct
obligations issued or unconditionally guaranteed by the United States of America
or any agency or any State thereof maturing within one (1) year from the date of
acquisition thereof, (ii) commercial paper maturing no more than one (1) year
from the date of creation thereof and currently having a rating of at least A-2
or P-2 from either Standard & Poor's Corporation or Moody's Investors Service,
(iii) certificates of deposit, time deposits or Euro time deposits maturing no
more than one (1) year from the date of investment therein, and (iv) money
market accounts.

                           "Change in Control" means a transaction in which any
"person" or "group" (within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended) becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended),
directly or indirectly, of a sufficient number of shares of all classes of stock
then outstanding of Borrower ordinarily entitled to vote in the election of
directors, empowering such "person" or "group" to elect a majority of the Board
of Directors of Borrower, who did not have such power before such transaction.


                                       1
<PAGE>
                           "Charter Documents" means, as to each Borrower, its
certificate of incorporation and bylaws.

                           "Closing Date" means the date of this Agreement.

                           "Code" means the California Uniform Commercial Code
in effect from time to time.

                           "Contingent Obligation" means, as applied to any
Person, any direct or indirect liability, contingent or otherwise, of that
Person with respect to (i) any indebtedness, lease, dividend, letter of credit
or other obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed, co-made or discounted or
sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable; (ii) any obligations with respect to
undrawn letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; provided, however,
that the term "Contingent Obligation" shall not include endorsements for
collection or deposit in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determined amount of the primary obligation in respect of which such Contingent
Obligation is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith; provided, however, that such amount shall not in any event exceed the
maximum amount of the obligations under the guarantee or other support
arrangement.

                           "Credit Extension" means each Advance, Letter of
Credit, Private Partner Guaranty or any other extension of credit by Bank for
the benefit of Borrowers hereunder.

                           "Daily Balance" means the amount of the Obligations
owed at the end of a given day.

                           "Event of Default" has the meaning assigned in
Article 7.

                           "GAAP" means generally accepted accounting principles
as in effect from time to time.

                           "Guarantor" means Safeguard Scientifics, Inc.

                           "Indebtedness" means (a) all indebtedness for
borrowed money or the deferred purchase price of property or services, including
without limitation reimbursement and other obligations with respect to surety
bonds and letters of credit, (b) all obligations evidenced by notes, bonds,
debentures or similar instruments, (c) all capital lease obligations and (d) all
Contingent Obligations.

                           "Insolvency Proceeding" means any proceeding
commenced by or against any person or entity under any provision of the United
States Bankruptcy Code, as amended, or under any other bankruptcy or insolvency
law, including assignments for the benefit of creditors, formal or informal
moratoria, compositions, extension generally with its creditors, or proceedings
seeking reorganization, arrangement, or other relief.

                           "Investment" means any beneficial ownership of
(including stock, partnership interest or other securities) any Person, or any
loan, advance or capital contribution to any Person.

                           "IRC" means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.

                           "Lien" means any mortgage, lien, deed of trust,
charge, pledge, security interest or other encumbrance.

                           "Loan Documents" means, collectively, this Agreement,
any note or notes executed by a Borrower, and any other agreement entered into
between a Borrower and Bank in connection with this Agreement, all as amended or
extended from time to time.


                                       2
<PAGE>
                           "Material Adverse Effect" means a material adverse
effect on (i) the business operations or condition (financial or otherwise) of
the Borrowers, taken as a whole or (ii) the ability of a Borrower to repay the
Obligations or otherwise perform its obligations under the Loan Documents.

                           "Obligations" means all debt, principal, interest,
Bank Expenses and other amounts owed to Bank by a Borrower pursuant to this
Agreement or any other agreement, whether absolute or contingent, due or to
become due, now existing or hereafter arising, including any interest that
accrues after the commencement of an Insolvency Proceeding and including any
debt, liability, or obligation owing from a Borrower to others that Bank may
have obtained by assignment or otherwise.

                           "Payment Advance Form" means the form attached hereto
in substantially the form of Exhibit B.

                           "Periodic Payments" means all installments or similar
recurring payments that a Borrower may now or hereafter become obligated to pay
to Bank pursuant to the terms and provisions of any instrument, or agreement now
or hereafter in existence between Borrower and Bank.

                           "Permitted Indebtedness" means:

                           (a) Indebtedness of a Borrower in favor of Bank
arising under this Agreement or any other Loan Document;

                           (b) Indebtedness existing on the Closing Date and
disclosed in the Schedule;

                           (c) Guaranties in support of Private Partner
Companies;

                           (d) Indebtedness in the form of equipment leases or
purchase money financing for equipment, provided the aggregate outstanding
amount of such Indebtedness does not exceed $5,000,000;

                           (e) Contingent Obligations in the form of hedging
agreements entered into in the ordinary course of a Borrower's business on terms
reasonably acceptable to Bank; and

                           (f) Subordinated Debt

                           (g) Extensions, refinancings, modifications,
amendment and restatement of any item of Permitted Indebtedness described in
clauses (a) through (f) above; provided that the principal amount thereof is not
increased or the terms thereof are not modified to impose more burdensome terms
upon Borrower.

                           "Permitted Liens" means the following:

                           (a) Any Liens existing on the Closing Date and
disclosed in the Schedule or arising under this Agreement or the other Loan
Documents;

                           (b) Liens for taxes, fees, assessments or other
governmental charges or levies, either not delinquent or being contested in good
faith by appropriate proceedings;

                           (c) Liens (i) upon or in any equipment acquired or
held by a Borrower to secure the purchase price of such equipment or
indebtedness incurred solely for the purpose of financing the acquisition of
such equipment, or (ii) existing on such equipment at the time of its
acquisition, provided that the Lien is confined solely to the property so
acquired and improvements thereon, and the proceeds of such equipment;

                           (d) Liens incurred in connection with the extension,
renewal or refinancing of the indebtedness secured by Liens of the type
described in clauses (a) through (c) above, provided that any extension, renewal
or replacement Lien shall be limited to the property encumbered by the existing
Lien and the principal amount of the indebtedness being extended, renewed or
refinanced does not increase; and


                                       3
<PAGE>
                           (e) Carrier's, warehousemen's, mechanic's,
materialmen's, repairmen's or other like Liens imposed by law;

                           "Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or governmental agency.

                           "Portfolio Company" or "Portfolio Companies" means
Persons in which a Borrower or Fund has made and retains Investments in
accordance with the Charter Documents.

                           "Prime Rate" means the variable rate of interest, per
annum, most recently announced by Bank, as its "prime rate," whether or not such
announced rate is the lowest rate available from Bank.

                           "Private Partner Company" or "Private Partner
Companies" means Persons in which a Borrower or Guarantor has an equity
investment, as reported or as will be reported in Guarantor's consolidated
financial statements from time to time.

                           "Private Partner Guaranty" or "Private Partner
Guaranties" means one or more guaranties by Borrower for the benefit of Bank.

                           "Responsible Officer" means each of the individuals
or officers of each of the Borrowers listed on Schedule 1 attached hereto (as
the same may be modified from time to time).

                           "Revolving Facility" means the facility under which a
Borrower may request Bank to make Advances, as specified in Section 2.1 hereof.

                           "Revolving Line" means aggregate Credit Extensions of
up to Twenty Five Million Dollars ($25,000,000).

                           "Revolving Maturity Date" means the day before the
first anniversary of the Closing Date.

                           "Schedule" means the schedule of exceptions attached
hereto.

                           "Shares" means shares of stock of the Private Partner
Companies.

                           "Subordinated Debt" means any debt incurred by a
Borrower that is subordinated to the debt owing by a Borrower to Bank on terms
reasonably acceptable to Bank (and identified as being such by a Borrower and
Bank).

                           "Subsidiary" means any corporation or partnership in
which (i) any general partnership interest or (ii) more than 50% of the stock of
which by the terms thereof ordinary voting power to elect the Board of
Directors, managers or trustees of the entity, at the time as of which any
determination is being made, is owned by a Borrower, either directly or through
an Affiliate.

                   1.2 Accounting Terms. All accounting terms not specifically
 defined herein shall be construed in accordance with GAAP and all calculations
 made hereunder shall be made in accordance with GAAP. When used herein, the
 terms "financial statements" shall include the notes and schedules thereto.

         2. LOAN AND TERMS OF PAYMENT.

                  2.1 Credit Extensions,

                           Borrowers promise to pay to the order of Bank, in
lawful money of the United States of America, the aggregate unpaid principal
amount of all Credit Extensions made by Bank to each Borrower and/or


                                       4
<PAGE>
Borrowers hereunder. Borrowers shall also pay interest on the unpaid principal
amount of such Credit Extensions at rates in accordance with the terms hereof.

                  (a) Revolving Advances.

                           (i) Subject to and upon the terms and conditions of
this Agreement, Borrowers may request Advances at any time before the Revolving
Maturity Date in an aggregate outstanding amount not to exceed the Revolving
Line minus the face amount of outstanding Letters of Credit and minus the face
amount of outstanding Private Partner Guaranties. Subject to the terms and
conditions of this Agreement, amounts borrowed pursuant to this Section may be
repaid and reborrowed at any time prior to the Revolving Maturity Date, at which
time all Advances under this Section shall be immediately due and payable.
Borrowers may prepay any Advances without penalty or premium. If at any time the
aggregate outstanding Advances made under this Section exceed the Revolving Line
minus the face amount of outstanding Letters of Credit and minus the face amount
of outstanding Private Partner Guaranties, Borrowers shall immediately pay Bank
the excess in cash.

                           (ii) Whenever Borrowers desire an Advance, Borrowers
will notify Bank by facsimile transmission or telephone no later than 1:00 p.m.
Pacific time, on the Business Day that the Advance is to be made. Each such
notification shall be promptly confirmed by a Payment/Advance Form in
substantially the form of Exhibit B hereto, together with a statement in form
and substance acceptable to Bank setting forth each Borrower's Investments. Bank
is authorized to make Advances under this Agreement, based upon instructions
received from a Responsible Officer or a designee of a Responsible Officer, or
without instructions if in Bank's discretion such Advances are necessary to meet
Obligations which have become due and remain unpaid. Bank shall be entitled to
rely on any telephonic notice given by a person who Bank reasonably believes to
be a Responsible Officer or a designee thereof, and Borrowers shall indemnify
and hold Bank harmless for any damages or loss suffered by Bank as a result of
such reliance. Bank will credit the amount of Advances made under this Section
to a Borrower's deposit account, as directed by the Borrower requesting the
Advance.

                  (b) Letters of Credit.

                           (i) Subject to the terms and conditions of this
Agreement, Bank agrees to issue or cause to be issued letters of credit for the
account of Borrower (each, a "Letter of Credit" and collectively, the "Letters
of Credit") in an aggregate outstanding face amount not to exceed the Revolving
Line. All Letters of Credit shall be, in form and substance, acceptable to Bank
in its sole discretion and shall be subject to the terms and conditions of
Bank's form of standard application and letter of credit agreement (the
"Application"), which Borrower hereby agrees to execute, including Bank's
standard fee equal to 0.5% per annum of the face amount of each Letter of
Credit. Prior to the Revolving Maturity Date, Borrower shall secure in cash all
obligations under any outstanding Letters of Credit on terms acceptable to Bank.

                           (ii) The obligation of Borrower to reimburse Bank for
drawings made under Letters of Credit shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement, the Application, and such Letters of Credit, under all
circumstances whatsoever. Borrower shall indemnify, defend, protect, and hold
Bank harmless from any loss, cost, expense or liability, including, without
limitation, reasonable attorneys' fees, arising out of or in connection with any
Letters of Credit, except for expenses caused by Bank's gross negligence or
willful misconduct.

                           (iii) Borrower shall use the Letters of Credit to
support the business operations of Borrower and its Affiliates and obligations
of the Private Partner Companies.

                  2.2 Interest Rates, Payments. and Calculations.

                           (a) Interest Rates. Except as set forth in Section
2.2(b), the Advances shall bear interest on the outstanding daily balance
thereof, at a rate equal to the Prime Rate.

                           (b) Late Fee; Default Rate. If any payment is not
made within ten (10) calendar days after the date such payment is due, Borrowers
shall pay Bank a late fee equal to the lesser of (i) five percent


                                       5
<PAGE>
(5%) of the amount of such unpaid amount or (ii) the maximum amount permitted to
be charged under applicable law. All Obligations shall bear interest, from and
after the occurrence and during the continuance of an Event of Default, at a
rate equal to five (5) percentage points above the interest rate applicable
immediately prior to the occurrence of the Event of Default.

                           (c) Payments. Interest hereunder shall be due and
payable on the first calendar day of each month during the term hereof. Bank
shall, at its option, charge such interest, all Bank Expenses, and all Periodic
Payments against any of a Borrower's deposit accounts or against the Revolving
Line, in which case those amounts shall thereafter accrue interest at the rate
then applicable hereunder. Any interest not paid when due shall be compounded by
becoming a part of the Obligations, and such interest shall thereafter accrue
interest at the rate then applicable hereunder.

                           (d) Computation. In the event the Prime Rate is
changed from time to time hereafter, the applicable rate of interest hereunder
shall be increased or decreased, effective as of the day the Prime Rate is
changed, by an amount equal to such change in the Prime Rate. All interest
chargeable under the Loan Documents shall be computed on the basis of a three
hundred sixty (360) day year for the actual number of days elapsed. All payments
shall be free and clear of any taxes, withholdings, duties, impositions or other
charges, to the end that Bank will receive the entire amount of any Obligations
payable hereunder, regardless of source of payment.

                  2.3 Crediting Payments. Bank shall credit a wire transfer of
funds, check or other item of payment to such deposit account or Obligation as
Borrowers specify. After the occurrence and during the continuance of an Event
of Default, the receipt by Bank of any wire transfer of funds, check, or other
item of payment shall be immediately applied to conditionally reduce
Obligations, but shall not be considered a payment on account unless such
payment is of immediately available federal funds or unless and until such check
or other item of payment is honored when presented for payment. Notwithstanding
anything to the contrary contained herein, any wire transfer or payment received
by Bank after 12:00 noon Pacific time shall be deemed to have been received by
Bank as of the opening of business on the immediately following Business Day.
Whenever any payment to Bank under the Loan Documents would otherwise be due
(except by reason of acceleration) on a date that is not a Business Day, such
payment shall instead be due on the next Business Day, and additional fees or
interest, as the case may be, shall accrue and be payable for the period of such
extension.

                  2.4 Fees. Borrowers shall pay to Bank the following:

                           (a) Facility Fee. A facility fee equal to 0.125% of
the difference between the Revolving Line and the average Daily Balance for each
quarter, which fee shall be due and payable within ten days of the last day of
each such quarter, provided Bank waives such fee for each quarter in which
Borrowers, collectively, maintain an average daily balance of at least
$5,000,000 in deposit accounts with Bank; and

                           (b) Bank Expenses. On the Closing Date, all Bank
Expenses incurred through the Closing Date, including reasonable attorneys' fees
and expenses and, after the Closing Date, all Bank Expenses, including
reasonable attorneys' fees and expenses, as and when they become due.

                  2.5 Additional Costs. In case any law, regulation, treaty or
official directive or the interpretation or application thereof by any court or
any governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central bank or other
governmental authority (whether or not having the force of law):

                           (a) subjects Bank to any tax with respect to payments
of principal or interest or any other amounts payable hereunder by a Borrower or
otherwise with respect to the transactions contemplated hereby (except for taxes
on the overall net income of Bank imposed by the United States of America or any
political subdivision thereof);

                           (b) imposes, modifies or deems applicable any deposit
insurance, reserve, special deposit or similar requirement against assets held
by, or deposits in or for the account of, or loans by, Bank; or


                                       6
<PAGE>
                           (c) imposes upon Bank any other condition with
respect to its performance under this Agreement,

and the result of any of the foregoing is to increase the cost to Bank, reduce
the income receivable by Bank or impose any expense upon Bank with respect to
the Obligations, Bank shall notify Borrowers thereof. Borrowers agrees to pay to
Bank the amount of such increase in cost, reduction in income or additional
expense as and when such cost, reduction or expense is incurred or determined,
upon presentation by Bank of a statement of the amount and setting forth Bank's
calculation thereof, all in reasonable detail, which statement shall be deemed
true and correct absent manifest error.

                  2.6 Term. This Agreement shall become effective on the Closing
Date and, subject to Section 12.7, shall continue in full force and effect for
so long as any Obligations are outstanding. Borrowers may terminate this
Agreement at any time upon written notice to Bank and satisfaction of all
outstanding obligations. Notwithstanding the foregoing, Bank shall have the
right to terminate its obligation to make Credit Extensions under this Agreement
immediately and without notice upon the occurrence and during the continuance of
an Event of Default.

         3. CONDITIONS OF CREDIT EXTENSIONS.

                  3.1 Conditions Precedent to Initial Credit Extension. The
obligation of Bank to make the initial Credit Extension is subject to the
condition precedent that Bank shall have received, in form and substance
satisfactory to Bank, the following:

                           (a) this Agreement executed by Borrowers;

                           (b) a certificate of a Responsible Officer of each
Borrower with respect to incumbency and resolutions authorizing the execution
and delivery of this Agreement;

                           (c) a guaranty of the Guarantor;

                           (d) a copy of the Certificate of Incorporation of
each Borrower and Guarantor, certified by the Secretary of State of Delaware;

                           (e) a good standing certificate for each Borrower and
Guarantor, issued by the Secretary of State of Delaware;

                           (f) an opinion of counsel to Borrowers and Guarantor;

                           (g) payment of the fees and Bank Expenses then due
specified in Section 2.4 hereof; and

                           (h) such other documents, and completion of such
other matters, as Bank may reasonably deem necessary or appropriate.

                  3.2 Conditions Precedent to all Credit Extensions. The
obligation of Bank to make each Credit Extension, including the initial Credit
Extension, is further subject to the following conditions:

                           (a) timely receipt by Bank of the Payment/Advance
Form as provided in Section 2.1: and

                           (b) the representations and warranties contained in
Section 4 shall be true and correct in all material respects on and as of the
date of such Payment/Advance Form and on the effective date of each Credit
Extension as though made at and as of each such date, and no Event of Default
shall have occurred and be continuing, or would exist after giving effect to
such Credit Extension. The making of each Credit Extension


                                       7
<PAGE>
shall be deemed to be a representation and warranty by Borrower on the date of
such Credit Extension that the facts referred to in this Section 3.2 are
accurate.

         4. REPRESENTATIONS AND WARRANTIES.

                  Each Borrower represents and warrants as follows:

                  4.1 Due Organization and Qualification. Borrower is a
corporation duly existing under the laws of Delaware and qualified and licensed
to do business in any state in which the conduct of its business or its
ownership of property requires that it be so qualified except where the failure
to be so qualified or licensed could not reasonably be expected to have a
Material Adverse Effect.

                  4.2 Due Authorization; No Conflict. The execution, delivery,
and performance of the Loan Documents are within Borrower's powers, have been
duly authorized, and are not in conflict with nor constitute a breach of any
provision contained in any Charter Document, nor will they constitute an event
of default under any material agreement to which Borrower is a party or by which
Borrower is bound. Borrower is not in default under any agreement to which it is
a party or by which it is bound, which default could have a Material Adverse
Effect.

                  4.3 No Prior Encumbrances. Borrower has good and marketable
title to its property, free and clear of Liens, except for Permitted Liens.

                  4.4 Charter Documents. Except for amendments permitted hereby,
each Charter Document is in full force and effect in the form presented to Bank
as of the Closing Date.

                  4.5 Name; Location of Chief Executive Office. Except as
disclosed in the Schedule, Borrower has not done business under any name other
than that specified on the signature page hereof. The chief executive office of
Borrower is located at the address indicated in Section 9 hereof.

                  4.6 Litigation. Except as set forth in the Schedule, there are
no actions or proceedings pending by or against Borrower before any court or
administrative agency in which an adverse decision could have a Material Adverse
Effect.

                  4.7 No Material Adverse Change in Financial Statements. All
consolidated financial statements related to Borrower that Bank has received
fairly present in all material respects Borrower's consolidated financial
condition as of the date thereof and Borrower's consolidated results of
operations for the period then ended. There has not been a material adverse
change in the consolidated financial condition of Borrower since the date of the
most recent of such financial statements submitted to Bank.

                  4.8 Solvency, Payment of Debts. Borrower is solvent and able
to pay its debts (including trade debts) as they mature.

                  4.9 Regulatory Compliance. Borrower is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended. Borrower is not engaged
principally, or as one of the important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations T and U of the Board of Governors of the Federal Reserve
System). Borrower has not violated any statutes, laws, ordinances or rules
applicable to it, violation of which could have a Material Adverse Effect.

                  4.10 Environmental Condition. Except as disclosed in the
Schedule, none of Borrower's properties or assets has ever been used by Borrower
or, to the best of Borrower's knowledge, by previous owners or operators, in the
disposal of, or to produce, store, handle, treat, release, or transport, any
hazardous waste or hazardous substance other than in accordance with applicable
law; to the best of Borrower's knowledge, none of Borrower's properties or
assets has ever been designated or identified in any manner pursuant to any
environmental protection statute as a hazardous waste or hazardous substance
disposal site, or a candidate for closure pursuant to any environmental
protection statute; no lien arising under any environmental protection statute
has attached to any


                                       8
<PAGE>
revenues or to any real or personal property owned by Borrower; and Borrower has
not received a summons, citation, notice, or directive from the Environmental
Protection Agency or any other federal, state or other governmental agency
concerning any action or omission by Borrower resulting in the releasing, or
otherwise disposing of hazardous waste or hazardous substances into the
environment.

                  4.11 Taxes. Borrower has filed or caused to be filed all tax
returns required to be tiled, and has paid, or has made adequate provision for
the payment of, all taxes reflected therein.

                  4.12 Government Consents. Borrower has obtained all consents,
approvals and authorizations of, made all declarations or filings with, and
given all notices to, all governmental authorities that are necessary for the
continued operation of Borrower's business as currently conducted, the failure
to obtain which could have a Material Adverse Effect.

                  4.13 Full Disclosure. No representation, warranty or other
statement made by Borrower in any certificate or written statement furnished to
Bank contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained in such
certificates or statements not misleading in light of the circumstances in which
they were made.

         5. AFFIRMATIVE COVENANTS.

                  Each Borrower covenants and agrees that, until payment in full
of all outstanding Obligations, and for so long as Bank may have any commitment
to make a Credit Extension hereunder, Borrower shall do all of the following:

                  5.1 Good Standing. Borrower shall maintain its corporate
existence in its jurisdiction of incorporation and maintain qualification in
each jurisdiction in which the failure to so qualify could have a Material
Adverse Effect. Borrower shall maintain in force all licenses, approvals and
agreements, the loss of which could have a Material Adverse Effect.

                  5.2 Government Compliance. Borrower shall comply with all
statutes, laws, ordinances and government rules and regulations to which it is
subject, noncompliance with which could have a Material Adverse Effect.

                  5.3 Financial Statements, Reports, Certificates. Borrower
shall deliver to Bank:

                           (a) as soon as available, but in any event within
forty five (45) days after the last day of each fiscal quarter ending March 31,
June 30 and September 30, (i) Guarantor's report on Form 10-Q filed or required
to be filed with the Securities and Exchange Commission, (ii) Guarantor-prepared
consolidating financial statements of Guarantor and its Subsidiaries prepared in
accordance with GAAP, consistently applied, and (iii) a Compliance Certificate
in substantially the form of Exhibit B attached hereto;

                           (b) as soon as available, but in any event by March
31 after the end of each Borrower's fiscal year, (i) Guarantor's report on Form
10-K filed or required to be filed with the Securities and Exchange Commission,
(ii) Guarantor-prepared consolidating financial statements of Guarantor and
Borrowers prepared in accordance with GAAP, consistently applied, and (iii) a
Compliance Certificate in substantially the form of Exhibit B attached hereto;

                           (c) promptly upon receipt of notice thereof, a report
of any legal actions pending or threatened against Borrower that is reasonably
likely to result in damages or costs to Borrower of One Million Dollars
($1,000,000) or more; and

                           (d) such other financial information as Bank may
reasonably request from time to time, including financial information on Private
Partner Companies.


                                       9
<PAGE>
                  5.4 Charter Documents. Borrower shall cause the Charter
Documents to remain in full force and effect in the form presented to Bank on
the Closing Date.

                  5.5 Taxes. Borrower shall make, due and timely payment or
deposit of all material federal, state, and local taxes, assessments, or
contributions required of it by law, and will execute and deliver to Bank, on
demand, appropriate certificates attesting to the payment or deposit thereof;
and Borrower will make, timely payment or deposit of all material tax payments
and withholding taxes required of it by applicable laws, and will, upon request,
furnish Bank with proof satisfactory to Bank indicating that Borrower has made
such payments or deposits; provided that Borrower need not make any payment if
the amount or validity of such payment is contested in good faith by appropriate
proceedings and is reserved against (to the extent required by GAAP) by
Borrower.

                  5.6 Insurance. Borrower shall maintain insurance relating to
Borrower's business in amounts and of a type that are customary to businesses
similar to Borrower's All such policies of insurance shall be in such form, with
such companies and in such amounts as may be reasonably satisfactory to Bank.

                  5.7 Unrestricted Cash. The sum of (i) the amount that
Borrowers maintain in unrestricted deposit accounts maintained by Bank or in
certificates of deposit issued by Bank, plus (ii) unrestricted cash and Cash
Equivalents on their balance sheets (exclusive of amounts counted in (i)) shall
at all times during the term of this Agreement be at least Fifty Million Dollars
($50,000,000).

                  5.8 Depository Balances. At all times during the term of this
Agreement, Borrowers, collectively, shall maintain in unrestricted deposit
accounts maintained by Bank, or in certificates of deposit issued by Bank, a
balance of cash and Cash Equivalents that is at least two (2.0) times the
outstanding balance of the Credit Extensions. Borrowers shall maintain their
principal depository accounts with Bank.

         6. NEGATIVE COVENANTS.

                  Each Borrower covenants and agrees that, until payment in full
of the outstanding Obligations or for so long as Bank may have any commitment to
make any Credit Extensions, such Borrower will not do any of the following
without the prior consent of Bank:

                  6.1 Dispositions. Convey, sell, lease, transfer or otherwise
dispose of (collectively, a "Transfer") all or any part of its business or
property, other than Transfers of securities, including debt and equity
securities and partnership interests, in the ordinary course of Borrowers'
businesses.

                  6.2 Change in Business; Change in Control or Executive Office.
Engage in any business other than the businesses currently engaged in by
Borrowers and any business substantially similar or related thereto (or
incidental thereto); suffer a Change in Control; or change its state of
incorporation; or, except upon thirty (30) days prior written notification to
Bank, relocate its chief executive office.

                  6.3 Mergers or Acquisitions. Merge or consolidate with or into
any other business organization, or acquire all or substantially all of the
capital stock or property of another Person other than Private Partner
Companies. Notwithstanding the foregoing, this Section 6.3 shall not apply to
(i) transactions in which all outstanding Obligations are satisfied in full
concurrent with the closing of that transaction, and any commitment by Bank to
make any additional Credit Extensions is terminated, and (ii) cash investment
into and acquisition of Private Partner Companies made in the ordinary course of
Borrowers' businesses. Notwithstanding the foregoing, no Borrower's interests in
any Private Partner Company shall not be deemed in violation of this Section
6.3.

                  6.4 Impairment Charges. Impairment charges relating to Private
Partner Companies on a cumulative basis during the term of this Agreement,
excluding mandatory FASB 142 charges, shall not exceed $50,000,000.

                  6.5 Indebtedness. Create, incur, assume or be or remain liable
with respect to any Indebtedness other than Permitted Indebtedness.


                                       10
<PAGE>
                  6.6 Encumbrances. Create, incur, assume or suffer to exist any
Lien with respect to any of its property, or assign or otherwise convey any
right to receive income other than Permitted Liens.

                  6.7 Distributions. Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock, membership unit or partnership interests, except that
Borrower may make distributions in accordance with its Charter Documents in the
ordinary course of Borrower's business as long as an Event of Default does not
exist prior to such distributions or would not exist after giving effect to such
distributions.

                  6.8 Transactions with Affiliates. Directly or indirectly enter
into or permit to exist any material transaction with any Affiliate of Borrower
except for transactions that are in the ordinary course of Borrower's business
or as disclosed in Guarantor's Annual Report on Form 10k and related proxy
statement, upon fair and reasonable terms that are no less favorable to Borrower
than would be obtained in an arm's length transaction with a non-affiliated
Person.

                  6.9 Subordinated Debt. Make any payment in respect of any
Subordinated Debt if an Event of Default exists at the time of such proposed
payment or would exist after giving effect thereto.

                  6.10 Compliance. Become an "investment company" or be
controlled by an "investment company," within the meaning of the Investment
Company Act of 1940, or become principally engaged in, or undertake as one of
its important activities, the business of extending credit for the purpose of
purchasing or carrying margin stock, or use the proceeds of any Credit Extension
for such purpose; or fail to comply with, or violate any, law or regulation,
which failure or violation could have a Material Adverse Effect.

         7. EVENTS OF DEFAULT.

                  Any one or more of the following events shall constitute an
Event of Default under this Agreement:

                  7.1 Payment Default. If a Borrower fails to pay, within five
(5) Business Days of the date due, any of the non-principal or non-interest
Obligations hereunder, or fails to pay, when due, any of the principal or
interest Obligations hereunder;

                  7.2 Covenant Default. If a Borrower fails to perform any
obligation under Article 5 or violates any of the covenants contained in Article
6 of this Agreement, or fails or neglects to perform, keep, or observe any other
term, provision, condition, covenant, or agreement contained in this Agreement,
in any of the Loan Documents, or in any other present or future agreement
between a Borrower and Bank and as to any default under such other term
provision, condition, covenant or agreement that can be cured, has failed to
cure such default within twenty (20) days after Borrower receives notice thereof
or any officer of Borrower becomes aware thereof;

                  7.3 Borrower Composition. If a Borrower is dissolved or any
action is taken to effect such dissolution, or if a Change in Control occurs, or
if a Borrower's or Guarantor's existence is otherwise terminated or any action
is taken to effect such termination;

                  7.4 Material Adverse Effect. If any circumstance occurs that
could reasonably be expected to have a Material Adverse Effect;

                  7.5 Attachment. If any portion of a Borrower's assets is
attached, seized, subjected to a writ or distress warrant, or is levied upon, or
comes into the possession of any trustee, receiver or person acting in a similar
capacity and such attachment, seizure, writ or distress warrant or levy has not
been removed, discharged or rescinded within ten (10) days, or if a Borrower is
enjoined, restrained, or in any way prevented by court order from continuing to
conduct all or any material part of its business affairs, or if a judgment or
other claim becomes a lien or encumbrance upon any material portion of a
Borrower's assets, or if a notice of lien, levy, or assessment is filed of
record with respect to any of a Borrower's assets by the United States
Government, or any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, and the same is not paid
within


                                       11
<PAGE>
ten (10) days after a Borrower receives notice thereof, provided that none of
the foregoing shall constitute an Event of Default where such action or event is
stayed or an adequate bond has been posted pending a good faith contest by a
Borrower (provided that no Credit Extensions will be required to be made during
such cure period);

                  7.6 Insolvency or Bankruptcy. If a Borrower becomes insolvent,
or if an Insolvency Proceeding is commenced by a Borrower, or if an Insolvency
Proceeding is commenced against a Borrower and is not dismissed or stayed within
thirty (30) days (provided that no Credit Extensions will be made prior to the
dismissal of such Insolvency Proceeding);

                  7.7 Other Agreements. If there is a default in any agreement
to which a Borrower is a party with a third party or parties resulting in a
right by such third party or parties, whether or not exercised, to accelerate
the maturity of any Indebtedness in an amount in excess of Two Million Dollars
($2,000,000) or that could have a Material Adverse Effect;

                  7.8 Subordinated Debt. If a Borrower makes any payment on
account of Subordinated Debt, except to the extent such payment is allowed under
any subordination agreement entered into with Bank;

                  7.9 Judgments. If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least Two Million
Dollars ($2,000,000) shall be rendered against a Borrower and shall remain
unsatisfied and unstayed for a period of ten (10) days (provided that no Credit
Extensions will be made prior to the satisfaction or stay of such judgment);

                  7.10 Misrepresentations. If any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth herein or in any certificate delivered to Bank by any Responsible
Officer pursuant to this Agreement or to induce Bank to enter into this
Agreement or any other Loan Document; or

                  7.11 Guaranty. If the Guaranty ceases for any reason to be in
full force and effect, or the Guarantor fails to perform any obligation under
the Guaranty, or any misrepresentation or material misstatement exists now or
hereafter in any warranty or representation set forth in the Guaranty or in any
certificate delivered to Bank in connection with the Guaranty, or the Guarantor
revokes or purports to revoke its obligations under the Guaranty, or if any of
the circumstances or events described in any of Sections 7.3 through 7.10 occurs
with respect to the Guarantor or its property.

         8. BANK'S RIGHTS AND REMEDIES.

                  8.1 Rights and Remedies. Upon the occurrence and during the
continuance of an Event of Default, Bank may, at its election, without notice of
its election and without demand, do any one or more of the following, all of
which are authorized by Borrowers:

                           (a) Declare all Obligations, whether evidenced by
this Agreement, by any of the other Loan Documents, or otherwise, immediately
due and payable (provided that upon the occurrence of an Event of Default
described in Section 7.6, all Obligations shall become immediately due and
payable without any action by Bank); and

                           (b) Cease advancing money or extending credit to or
for the benefit of a Borrower under this Agreement or under any other agreement
between a Borrower and Bank.

                  8.2 Right of Setoff; Deposit Accounts. Upon and after the
occurrence of any Event of Default, Bank is hereby authorized by each Borrower,
at any time and from time to time, (a) to set off against, and to appropriate
and apply to the payment of, the obligations and liabilities of a Borrower under
the Loan Documents (whether matured or unmatured, fixed or contingent or
liquidated or unliquidated) any and all amounts owing by Bank to a Borrower
(whether payable in U.S. Dollars or any other currency, whether matured or
unmatured, and, in the case of deposits, whether general or special, time or
demand and however evidenced) and (b) pending any such action, to the extent
necessary, to hold such amounts as collateral to secure such obligations and
liabilities and to


                                       12
<PAGE>
return as unpaid for insufficient funds any and all checks and other items drawn
against any deposits so held as Bank in its sole discretion may elect.

                  8.3 Power of Attorney. Effective only upon the occurrence and
during the continuance of an Event of Default, each Borrower hereby irrevocably
appoints Bank (and any of Bank's designated officers, or employees) as
Borrower's true and lawful attorney to: (a) endorse Borrower's name on any
checks or other forms of payment or security that may come into Bank's. The
appointment of Bank as each Borrower's attorney in fact, and each and every one
of Bank's rights and powers, being coupled with an interest, is irrevocable
until all of the Obligations have been fully repaid and performed and Bank's
obligation to provide advances hereunder is terminated.

                  8.4 Remedies Cumulative. Bank's rights and remedies under this
Agreement, the Loan Documents, and all other agreements shall be cumulative.
Bank shall have all other rights and remedies not inconsistent herewith as
provided under the Code, by law, or in equity. No exercise by Bank of one right
or remedy shall be deemed an election, and no waiver by Bank of any Event of
Default on a Borrower's part shall be deemed a continuing waiver. No delay by
Bank shall constitute a waiver, election, or acquiescence by it. No waiver by
Bank shall be effective unless made in a written document signed on behalf of
Bank and then shall be effective only in the specific instance and for the
specific purpose for which it was given.

                  8.5 Demand; Protest. Each Borrower waives demand, protest,
notice of protest, dishonor, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees at any time held by Bank on which a
Borrower may in any way be liable.

         9. NOTICES.

                  Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other agreement entered
into in connection herewith shall be in writing and (except for financial
statements and other informational documents which may be sent by first-class
mail, postage prepaid) shall be personally delivered or sent by a recognized
overnight delivery service, certified mail, postage prepaid, return receipt
requested, or by telefacsimile to Borrowers or to Bank, as the case may be, at
its addresses set forth below:

<TABLE>
<S>                        <C>
If to any Borrower:        c/o  Safeguard Delaware, Inc.
                           435 Devon Park Drive
                           800 The Safeguard Building
                           Wayne, PA 19087
                           Attn: Christopher J. Davis
                           FAX: (610) 293-0601

                           with a copy to:

                           Safeguard Scientifics, Inc.
                           435 Devon Park Drive
                           800 The Safeguard Building
                           Wayne, PA    19087
                           Attn: N. Jeffrey Klauder,
                           Managing Director and General Counsel
                           FAX: (610) 293-0601

If to Bank:                Comerica Bank-California
                           226 Airport Parkway
                           San Jose, CA 95110-1024
                           Attn: Corporate Banking Center
                           FAX: (408) 451-8586
</TABLE>


                                       13
<PAGE>
<TABLE>
<S>                        <C>
with a copy to:            Comerica Bank-California
                           2420 Sand Hill Road, Suite 102
                           Menlo Park, CA 94025
                           Attn: Judith Erwin
                           FAX: (650) 233-3075
</TABLE>

         The parties hereto may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other. A notice given to a party hereunder shall be effective regardless of
whether a copy of such notice is given to any other Person.

         10. CO-BORROWERS

                  10.1 Primary Obligation. This Agreement is a primary and
original obligation of each Borrower and shall remain in effect notwithstanding
future changes in conditions, including any change of law or any invalidity or
irregularity in the creation or acquisition of any Obligations or in the
execution or delivery of any agreement between Bank and any Borrower. Each
Borrower shall be liable for existing and future Obligations as fully as if all
of the Advances were advanced to such Borrower. Bank may rely on any certificate
or representation made by any Borrower as made on behalf of, and binding on, all
Borrowers, including without limitation Advance Request Forms and Compliance
Certificates.

                  10.2 Enforcement of Rights. Borrowers are jointly and
severally liable for the Obligations and Bank may proceed against one or more of
the Borrowers to enforce the Obligations without waiving its right to proceed
against any of the other Borrowers.

                  10.3 Borrowers as Agents. Each Borrower appoints the other
Borrower as its agent with all necessary power and authority to give and receive
notices, certificates or demands for and on behalf of both Borrowers, to act as
disbursing agent for receipt of any Advances on behalf of each Borrower and to
apply to Bank on behalf of each Borrower for Advances, any waivers and any
consents. This authorization cannot be revoked, and Bank need not inquire as to
each Borrower's authority to act for or on behalf of Borrower.

                  10.4 Subrogation and Similar Rights. Notwithstanding any other
provision of this Agreement or any other Loan Document, each Borrower
irrevocably waives all rights that it may have at law or in equity (including,
without limitation, any law subrogating the Borrower to the rights of Bank under
the Loan Documents) to seek contribution, indemnification, or any other form of
reimbursement from any other Borrower, or any other Person now or hereafter
primarily or secondarily liable for any of the Obligations, for any payment made
by the Borrower with respect to the Obligations in connection with the Loan
Documents or otherwise and all rights that it might have to benefit from, or to
participate in, any security for the Obligations as a result of any payment made
by the Borrower with respect to the Obligations in connection with the Loan
Documents or otherwise. Any agreement providing for indemnification,
reimbursement or any other arrangement prohibited under this Section 10.4 shall
be null and void. If any payment is made to a Borrower in contravention of this
Section 10.4, such Borrower shall hold such payment in trust for Bank and such
payment shall be promptly delivered to Bank for application to the Obligations,
whether matured or unmatured.

                  10.5 Waivers of Notice. Each Borrower waives notice of
acceptance hereof; notice of the existence, creation or acquisition of any of
the Obligations; notice of an Event of Default; notice of the amount of the
Obligations outstanding at any time; notice of intent to accelerate; notice of
acceleration; notice of any adverse change in the financial condition of any
other Borrower or of any other fact that might increase the Borrower's risk;
presentment for payment; demand; protest and notice thereof as to any
instrument; default; and all other notices and demands to which the Borrower
would otherwise be entitled. Each Borrower waives any defense arising from any
defense of any other Borrower, or by reason of the cessation from any cause
whatsoever of the liability of any other Borrower. Bank's failure at any time to
require strict performance by any Borrower of any provision of the Loan
Documents shall not waive, alter or diminish any right of Bank thereafter to
demand strict compliance and performance therewith. Nothing contained herein
shall prevent Bank from foreclosing on the Lien of any deed of trust, mortgage
or other security instrument, or exercising any rights available thereunder, and
the exercise of any such rights shall not constitute a legal or equitable
discharge of any Borrower. Each Borrower also waives any defense arising from
any act or omission of Bank that changes the scope of the Borrower's risks
hereunder. Each


                                       14
<PAGE>
Borrower hereby waives any right to assert against Bank any defense (legal or
equitable), setoff, counterclaim, or claims that such Borrower individually may
now or hereafter have against another Borrower or any other Person liable to
Bank with respect to the Obligations in any manner or whatsoever.

                  10.6 Subrogation Defenses. Each Borrower hereby waives any
defense based on impairment or destruction of its subrogation or other rights
against any other Borrower and waives all benefits which might otherwise be
available to it under California Civil Code Sections 2809, 2810, 2819, 2839,
2845, 2848, 2849, 2850, 2899, and 3433 and California Code of Civil Procedure
Sections 580a, 580b, 580d and 726, as those statutory provisions are now in
effect and hereafter amended, and under any other similar statutes now and
hereafter in effect.

                  10.7 Right to Settle, Release.

                           (a) The liability of Borrowers hereunder shall not be
diminished by (i) any agreement, understanding or representation that any of the
Obligations is or was to be guaranteed by another Person or secured by other
property, or (ii) any release or unenforceability, whether partial or total, of
rights, if any, which Bank may now or hereafter have against any other Person,
including another Borrower, or property with respect to any of the Obligations.

                           (b) Without notice to any Borrower and without
affecting the liability of any Borrower hereunder, Bank may (i) compromise,
settle, renew, extend the time for payment, change the manner or terms of
payment, discharge the performance of, decline to enforce, or release all or any
of the Obligations with respect to a Borrower, (ii) grant other indulgences to a
Borrower in respect of the Obligations, (iii) modify in any manner any documents
relating to the Obligations with respect to a Borrower, (iv) release, surrender
or exchange any deposits or other property securing the Obligations, whether
pledged by a Borrower or any other Person, or (v) compromise, settle, renew, or
extend the time for payment, discharge the performance of, decline to enforce,
or release all or any obligations of any guarantor, endorser or other Person who
is now or may hereafter be liable with respect to any of the Obligations.

         11. CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

                  This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of California, without regard to
principles of conflicts of law. Each Borrower and Bank hereby submit to the
jurisdiction of the state and Federal courts located in the County of Santa
Clara, State of California for purposes of this Agreement. BORROWERS AND BANK
EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. EACH PARTY
RECOGNIZES AND AGREES THAT THE FOREGOING WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR IT TO ENTER INTO THIS AGREEMENT. EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.

         12. GENERAL PROVISIONS.

                  12.1 Successors and Assigns. This Agreement shall bind and
inure to the benefit of the respective successors and permitted assigns of each
of the parties; provided, however, that neither this Agreement nor any rights
hereunder may be assigned by a Borrower without Bank's prior written consent,
which consent may be granted or withheld in Bank's sole discretion. Bank shall
have the right without the consent of or notice to a Borrower to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Bank's obligations, rights and benefits hereunder.

                  12.2 Indemnification. Borrowers shall defend, indemnify and
hold harmless Bank and its officers, employees, and agents against: (a) all
obligations, demands, claims, and liabilities claimed or asserted by any other
party in connection with the transactions contemplated by this Agreement; and
(b) all losses or Bank


                                       15
<PAGE>
Expenses in any way suffered, incurred, or paid by Bank as a result of or in any
way arising out of, following, or consequential to transactions between Bank and
a Borrower whether under this Agreement, or otherwise (including without
limitation reasonable attorneys fees and expenses), except for losses caused by
Bank's gross negligence or willful misconduct.

                  12.3 Time of Essence. Time is of the essence for the
performance of all obligations set forth in this Agreement.

                  12.4 Severability of Provisions. Each provision of this
Agreement shall be severable from every other provision of this Agreement for
the purpose of determining the legal enforceability of any specific provision.

                  12.5 Amendments in Writing, Integration. This Agreement cannot
be amended or terminated orally. All prior agreements, understandings,
representations, warranties, and negotiations between the parties hereto with
respect to the subject matter of this Agreement, if any, are merged into this
Agreement and the Loan Documents.

                  12.6 Counterparts. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement.

                  12.7 Survival. All covenants, representations and warranties
made in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding. The obligations of Borrowers to indemnify Bank
with respect to the expenses, damages, losses, costs and liabilities described
in Section 12.2 shall survive until all applicable statute of limitations
periods with respect to actions that may be brought against Bank have run.

              [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]


                                       16
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.

                                              SAFEGUARD DELAWARE, INC.


                                              By: /s/ Christopher J. Davis
                                                 ------------------------------

                                              Title: Managing Director and CFO
                                                    ---------------------------


                                              SAFEGUARD SCIENTIFICS
                                              (DELAWARE), INC.


                                              By: /s/ Christopher J. Davis
                                                 ------------------------------

                                              Title: Managing Director and CFO
                                                    ---------------------------


                                              COMERICA BANK-CALIFORNIA


                                              By: /s/ Stacy Arrigo
                                                 ------------------------------

                                              Title: Vice President
                                                    ---------------------------


                                       17

</TEXT>
</DOCUMENT>
