8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 25, 2009

Safeguard Scientifics, Inc.
(Exact name of registrant as specified in its charter)

Pennsylvania	1-5620	23-1609753
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

435 Devon Park Drive, Building 800, Wayne, PA	19087
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: 610-293-0600

Not applicable

(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 1.01.     Entry into a Material Definitive Agreement.

On March 25, 2009, Clarient, Inc. (“Clarient”), a majority-owned subsidiary of the Company, entered into a Stock Purchase Agreement (the “Purchase Agreement”), with Oak Investment Partners XII, Limited Partnership, a Delaware limited partnership (“Oak”), pursuant to which Clarient agreed to sell and issue to Oak up to an aggregate of 6,578,948 shares of the Company’s Series A Convertible Preferred Stock, $0.01 par value (the “Preferred Shares”) in two or more tranches (the “Private Placement”) for aggregate consideration of up to $50.0 million. The initial closing of the Private Placement occurred on March 26, 2009, at which time Clarient issued and sold an aggregate of 3,833,201 Preferred Shares for aggregate consideration of approximately $29.1 million (“Initial Closing”). The second closing under the Purchase Agreement for an additional 1,429,957 Preferred Shares for consideration of approximately $10.9 million will occur no later than the second business day following the satisfaction or waiver of the conditions precedent to the second closing set forth in the Purchase Agreement, including the filing of an Information Statement with the Securities and Exchange Commission describing the stockholder action being taken to approve the Private Placement and the distribution of such Information Statement to all Clarient stockholders in accordance with Delaware law and the rules of the Securities and Exchange Commission and the Nasdaq Marketplace. Pursuant to the Stockholders Agreement (as defined below), Safeguard Delaware, Inc. (“SDI”) and Safeguard Scientifics (Delaware), Inc. (“SSDI”), wholly owned subsidiaries of Safeguard Scientifics, Inc. (“Safeguard”), have approved the issuance of the Preferred Shares via written consent. The remaining Preferred Shares will be issued and sold pursuant to the Purchase Agreement only upon the further mutual agreement of Clarient and Oak and the satisfaction of all conditions precedent to such closings contained in the Purchase Agreement. Neither party is obligated to consummate the sale and purchase of such remaining Preferred Shares. A portion of the net proceeds of the Initial Closing were used to repay $14 million of amounts outstanding under the Safeguard Loan Agreement (as defined below) and to pay off all amounts outstanding under the Comerica Loan Agreement (as defined below).

In connection with the Private Placement:

• SDI, SSDI and Safeguard entered into a Stockholders Agreement with Oak (“Stockholders Agreement”) pursuant to which they agreed, among other matters, to vote the securities they own in favor of the Private Placement.

• Clarient and SDI amended certain provisions of the Securities Purchase Agreement dated as of June 13, 2002, between Clarient and SDI. The amendment provides that Safeguard is entitled to nominate up to three directors to the Clarient Board of Directors for so long as Safeguard and/or its transferee(s) hold at least 25% of the voting power of all outstanding securities of Clarient.

• Clarient and SDI amended certain provisions of the Second Amended and Restated Senior Subordinated Revolving Credit Agreement, dated February 27, 2009, by and between Clarient and SDI (the “Safeguard Loan Agreement”). The material amendments to the Safeguard Loan Agreement are as follows: (i) the maximum aggregate principal amount which may be borrowed under the terms of the Safeguard Loan Agreement, inclusive of those amounts currently outstanding, is reduced from $30.0 million to $10.0 million; and (ii) the repayment in full of Clarient’s debt under, and the termination of, the Amended and Restated Loan Agreement, dated as of February 28, 2008 (as modified and amended from time to time), by and between Comerica Bank and Clarient (the “Comerica Loan Agreement”) at the Initial Closing is permitted.

• The Safeguard Guaranty (as defined below) and the Reimbursement and Indemnity Agreement (as defined below) were terminated, and the Safeguard cash collateral securing such guaranty was released.

The information set forth above is qualified in its entirety by reference to the Amendment to the Securities Purchase Agreement dated March 26, 2009, by and between Clarient and SDI and its affiliates (Exhibit 10.1), the First Amendment and Consent to the Second Amended and Restated Senior Subordinated Revolving Credit Agreement dated March 26, 2009, by and between Clarient and SDI (Exhibit 10.2), and the Stockholders Agreement dated March 26, 2009, among SDI, SSDI, Safeguard and Oak (Exhibit 10.3), which documents are incorporated herein by reference. A copy of Safeguard’s press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

ITEM 1.02. Termination of a Material Definitive Agreement

The disclosure set forth above under Item 1.01 is hereby incorporated by reference into this Item 1.02.

In connection with the termination of the Comerica Loan Agreement, that certain Third Amended and Restated Unconditional Guaranty dated January 17, 2007, by Safeguard in favor of Comerica Bank (as amended, the “Safeguard Guaranty”) was terminated. As a result of the termination of the Safeguard Guaranty, that certain Amended and Restated Reimbursement and Indemnity Agreement dated January 17, 2007, as amended, between Clarient and Safeguard (“Reimbursement and Indemnity Agreement”) automatically terminated.

ITEM 9.01. Financial Statements and Exhibits

(d) Exhibits

10.1 Amendment to Securities Purchase Agreement dated March 26, 2009, by and between Clarient, Inc. and Safeguard Delaware, Inc. and its affiliates (incorporated by reference to Exhibit 10.4 of the Current Report on Form 8-K filed on March 27, 2009 by Clarient, Inc. (SEC File No. 000-22677))

10.2 First Amendment and Consent to Second Amended and Restated Senior Subordinated Revolving Credit Agreement dated March 26, 2009 by and between Safeguard Delaware, Inc. and Clarient, Inc. (incorporated by reference to Exhibit 10.5 of the Current Report on Form 8-K filed on March 27, 2009 by Clarient, Inc. (SEC File No. 000-22677))

10.3 Stockholders Agreement dated March 26, 2009 by and among Safeguard Delaware, Inc., Safeguard Scientifics, Inc., Safeguard Scientifics (Delaware), Inc. and Oak Investment Partners XII, Limited Partnership (incorporated by reference to Exhibit 10.6 of the Current Report on Form 8-K filed on March 27, 2009 by Clarient, Inc. (SEC File No. 000-22677))

99.1 Press release dated March 26, 2009

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Safeguard Scientifics, Inc.
Dated: March 27, 2009	By:	BRIAN J. SISKO
		Brian J. Sisko Senior Vice President and General Counsel

EX-99.1

EXHIBIT 99.1

CONTACT:
John E. Shave
Vice President, Business Development and Corporate Communications
T:  610.293.0600
F:  610.672-9521

SAFEGUARD SCIENTIFICS STRENGTHENS ITS BALANCE SHEET THROUGH CLARIENT PRIVATE PLACEMENT

Transaction to Return $19.5 Million in Cash, Eliminate Debt Guaranty

Wayne, PA, March 26, 2009 – Safeguard Scientifics, Inc. (NYSE: SFE), a holding company that builds value in growth-stage life sciences and technology companies, announced today that the Company improved its balance sheet, financial strength and flexibility as a result of Clarient, Inc. (Nasdaq: CLRT) entering into a transaction to issue an aggregate of up to $50 million in convertible preferred stock in a private placement to Oak Investment Partners, a multi-stage venture capital firm based in Westport, CT.

$40 million of the transaction will be completed in two tranches. The first tranche, which closed today, was for approximately $29.1 million and allowed Safeguard to reduce its current $30 million mezzanine debt facility with Clarient to $10 million. Additionally, the first tranche enabled Safeguard to recapture approximately $14 million of $19.5 million outstanding under this facility; made available $12.3 million in cash collateral which previously supported Safeguard’s guaranty of Clarient third party debt; and reduced the need for Safeguard to commit additional capital to support Clarient’s growth in the future. Pending formal compliance with SEC and other rules relating to the shareholder action being taken to approve the private placement, the second tranche is anticipated to close before the end of May 2009 for an additional $10.9 million. Upon closing of the second tranche, the remaining outstanding balance under this mezzanine facility will be repaid and the facility will be extinguished.

“The Clarient/Oak transaction provides multiple benefits for all parties at a time of great uncertainty in the economy and specifically in the capital markets,” said Peter J. Boni, President and Chief Executive Officer of Safeguard Scientifics. “Moreover, Safeguard and Clarient gain a well-funded strategic partner in Oak, which has $8.4 billion in committed capital and has funded more than 480 companies.”

“Our investment strategy targets healthcare companies that deliver solutions designed to enhance the quality of care in the healthcare delivery system,” explained Ann Lamont, Managing Partner at Oak Investment Partners. “We view Clarient as a leader in cancer diagnostics and believe that its deep expertise and strong relationship with its pathologist, oncologist and pharmaceutical partners, enables it to provide superior, personalized care to the patients it serves. We are excited to have a quality partner like Safeguard Scientifics, which has supported and guided Clarient to achieve significant strategic, financial, and operational accomplishments over the past four years. As a result, we believe that Clarient is well-positioned to continue executing upon its growth strategy.”

The purchase price of the Clarient convertible preferred stock was $7.60 per share which equates to an effective purchase price of $1.90 per share of underlying common stock. Under terms of the transaction, Oak may convert at any time one convertible preferred share into four shares of Clarient common stock. Clarient shares closed at $1.70 on March 26, 2009.

Upon mutual agreement, Oak may purchase up to an additional $10 million of preferred shares on terms to be agreed upon at the time.

When both tranches are completed, the private placement will reduce Safeguard’s ownership position in Clarient to approximately 47%, on a primary basis. At March 26, 2009, the value of Safeguard’s ownership interest in Clarient was $79.0 million.

“This transaction continues to directly strengthen Safeguard’s balance sheet with respect to cash on hand as well as eliminating our commitments for future funding. We are also no longer required to provide Clarient’s lenders with cash collateral for other external borrowings,” said Stephen T. Zarrilli, Senior Vice President and Chief Financial Officer at Safeguard. “Although Safeguard is poised to seize opportunities at a time when lingering uncertainty and volatility are creating compelling values, our financial priorities remain unchanged. We will continue to pursue cost efficiencies where possible with respect to operating expenses, opportunistically retire our convertible debt at a discount, and conservatively deploy cash in existing and potential future partner companies with an emphasis to support existing partner companies.”

About Clarient
Clarient combines innovative diagnostic technologies with world class pathology expertise to assess and characterize cancer. Clarient’s mission is to become the leader in cancer diagnostics by dedicating itself to collaborative relationships with the healthcare community to translate cancer discovery and research into better patient care. The Company’s principal customers include pathologists, oncologists, hospitals and biopharmaceutical companies. The rise of individualized medicine as the new direction in oncology has created the need for a centralized resource providing leading diagnostic technologies, such as flow cytometry and molecular testing. Clarient is that resource, having created a state-of-the-art commercial cancer laboratory providing the most advanced oncology testing and diagnostic services available both onsite and over the web. The Company is also developing new, proprietary “companion” diagnostic markers for therapeutics in breast, prostate, lung and colon cancers, and leukemia/lymphoma. Clarient is a Safeguard Scientifics, Inc. partner company. www.clarientinc.com

About Oak Investment Partners
Oak Investment Partners is a multi-stage venture capital firm with a total of $8.4 billion in committed capital.  The primary investment focus is on high growth opportunities in Broadband Internet and Wireless Communications, Information Technology and Software Outsourced Services, Consumer Internet/New Media, Financial Services Technology, Healthcare Information and Services, Clean Energy, and Retail. Over a 30-year history, Oak has achieved a strong track record as a stage-independent investor funding more than 481 companies at key points in their lifecycles. Oak has been involved in the formation of companies, funded spinouts of operating divisions and technology assets, and provided growth equity to mid- and late-stage private businesses and to public companies through PIPE investments. Representative Oak healthcare investments include Genzyme Corporation, Cephalon, ViroPharma, American Esoteric Laboratories, athenahealth, Psychiatric Solutions, and United BioSource Corporation. www.oakinv.com

About Safeguard Scientifics
Founded in 1953 and based in Wayne, PA, Safeguard Scientifics, Inc. (NYSE: SFE) provides growth capital for entrepreneurial and innovative technology and life sciences companies. Safeguard targets technology companies in Software as a Service (SaaS) / Internet-based Businesses, Technology-Enabled Services and Vertical Software Solutions, and life sciences companies in Molecular and Point-of-Care Diagnostics, Medical Devices, Regenerative Medicine and Specialty Pharmaceuticals with capital requirements between $5 million and $50 million. Safeguard participates in expansion financings, corporate spin-outs, management buyouts, recapitalizations, industry consolidations and early-stage financings. www.safeguard.com

Forward-Looking Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties. Risks and uncertainties that could cause actual results to differ materially, include, among others, managing rapidly changing technologies, limited access to capital, competition, the ability to attract and retain qualified employees, the ability to execute our strategy, the uncertainty of the future performance of our companies, acquisitions and dispositions of companies, the inability to manage growth, compliance with government regulations and legal liabilities, additional financing requirements, the effect of economic conditions in the business sectors in which our companies operate, and other uncertainties described in the Company’s filings with the Securities and Exchange Commission. Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The Company does not assume any obligation to update any forward-looking statements or other information contained in this press release.

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