The original complaint alleges that defendants, Safeguard and its former Chairman, violated the federal securities laws during the class period. Specifically, the complaint alleges that defendants failed to disclose the fact that defendant, its former Chairman, had pledged substantially all of his Safeguard shares as collateral to secure margin trading in his personal brokerage accounts. When defendant's investments declined in value, he received margin calls from his brokers and was forced to liquidate his Safeguard stock, causing the price of Safeguard's shares to decline significantly. Plaintiff alleges that defendants' failure to disclose the pledge, coupled with their subsequent efforts to conceal the consequences of several margin calls, violated the federal securities laws.

According to a press release dated April 12, 2006, Safeguard Scientifics, Inc. ("Safeguard"), Warren V. "Pete" Musser ("Musser") and 12 individuals who sued Safeguard and Musser or sought to intervene in the actions described below ("Plaintiffs") hereby announce a final settlement (the "Settlement") of all claims asserted, or which could have been asserted, by: (1) the named plaintiffs in In re Safeguard Scientifics Securities Litigation, Civil Action No. 01-3208 (E.D.Pa.); (2) the named plaintiffs in Mandell et al. v. Safeguard Scientifics, Inc. et al., Civil Action No. 04-3286 (E.D. Pa.); and (3) the individuals who unsuccessfully moved to intervene in the In re Safeguard Scientifics Securities Litigation case (collectively, the "Plaintiffs"). Among other things, the Plaintiffs had alleged that, during the period of December 1, 1999 through December 5, 2000, Safeguard failed to timely disclose certain information regarding allegedly manipulative margin trading by Safeguard's former chief executive officer, Musser, and a loan and guarantee extended by Safeguard to Musser. On August 23, 2003, the United States District Court for the Eastern District of Pennsylvania (the "Court") denied the Plaintiffs' motion for class certification in the In re Safeguard Scientifics Securities Litigation case. On November 23, 2004, the Court granted summary judgment in favor of Safeguard and Musser with respect to all claims asserted in that case and dismissed that action in its entirety. An appeal from the Court's rulings in that action has been stayed pending the completion of mediation proceedings under the auspices of the Mediation Program of the United States Court of Appeals for the Third Circuit which led to this Settlement. As a result of the Settlement, Plaintiffs, on their own personal behalf, will release and dismiss with prejudice claims and actions they may have against Safeguard and Musser, including the appeal. This is not a class action settlement. Therefore, the only Safeguard stock purchasers who are bound by it and will participate in the Settlement are the Plaintiffs. No other Safeguard stock purchaser will receive any payment as part of the Settlement. The Settlement does not bar any claim by any other shareholder. The terms of the Settlement have been approved by the Court. Once the In re Safeguard Scientifics Securities Litigation and Mandell cases are dismissed pursuant to the Settlement, there will be no case pending to prevent the running and expiration of the statute of limitations with respect to the claims in the actions being dismissed in the Settlement. These actions will be dismissed as of June 27, 2006.