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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
SECURITIES EXCHANGE ACT OF 1934
For the transition period ended
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Commission File Number 0-28090
DECISIONONE HOLDINGS CORP.
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(Exact name of registrant as specified in its charter)
Delaware 13-3435409
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(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
50 East Swedesford Road, Frazer, Pennsylvania 19355
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 296-6000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject of such
filing requirements for the past 90 days. Yes [X] No [ ]
As of September 30, 1996 registrant had 27,467,788 shares of its Common Stock
outstanding.
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DECISIONONE HOLDINGS CORP. AND SUBSIDIARIES
FORM 10-Q NOVEMBER 14, 1996
CONTENTS
<TABLE>
<CAPTION>
Page No.
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Balance Sheets - 2
September 30, 1996 and June 30, 1996
(unaudited)
Condensed Consolidated Statements of 3
Operations - Three Months Ended
September 30, 1996 and 1995 (unaudited)
Condensed Consolidated Statements of 4
Cash Flows - Three Months Ended
September 30, 1996 and 1995 (unaudited)
Notes to Condensed Consolidated 5-6
Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis 7-10
of Financial Condition and Results of
Operations
PART II. OTHER INFORMATION 11
</TABLE>
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DECISIONONE HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
September 30, June 30,
ASSETS 1996 1996
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<S> <C> <C>
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,028 $ 8,221
Accounts receivable, net of allowances of $9,008 and $9,580 . . . . . . . . . . . 106,357 92,650
Inventories, net of allowances of $11,667 and $10,794 . . . . . . . . . . . . . . 31,015 30,130
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,665 12,770
-------- --------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158,065 143,771
Repairable Parts, Net of Accumulated Amortization of $66,011 and $45,064 . . . . . 159,017 154,970
Intangibles, Net of Accumulated Amortization of $24,678 and $19,625 . . . . . . . . 162,732 164,659
Property, Plant and Equipment, Net of Accumulated Depreciation
of $29,751 and $22,936 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,563 32,430
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,239 18,680
-------- --------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $530,616 $514,510
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . $ 3,057 $ 2,321
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . 81,192 89,564
Deferred revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,143 38,485
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,898 479
-------- --------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 127,290 130,849
Revolving Credit Loan and Long-term Debt . . . . . . . . . . . . . . . . . . . . . 202,951 188,582
Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,029 14,286
Shareholders' Equity:
Preferred stock, no par value; authorized 5,000,000 shares, none outstanding
Common stock, $.01 par value, authorized 100,000,000 shares;
issued and outstanding 27,467,788 and 27,340,288 shares . . . . . . . . . . . . 275 273
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . 255,357 255,262
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (68,061) (73,516)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,225) (1,226)
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Total Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . 186,346 180,793
-------- --------
Total Liabilities and Shareholders' Equity . . . . . . . . . . . . . . . . . . . . $530,616 $514,510
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
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DECISIONONE HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
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1996 1995
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<S> <C> <C>
Revenues $176,426 $46,791
Cost of Revenues 134,565 31,267
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Gross Profit 41,861 15,524
Operating Expenses:
Selling, general and administrative expenses 24,269 5,683
Amortization of intangibles 4,919 1,946
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Total Operating Expenses 29,188 7,629
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Operating Income 12,673 7,895
Interest Expense, Net of Interest Income 3,268 579
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Income Before Income Taxes 9,405 7,316
Provision for Income Taxes 3,950 2,930
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Net Income $ 5,455 $ 4,386
======== =======
Per Common Share:
Net Income $0.18 $0.19
Weighted Average Number of Common Shares
and Equivalent Shares Outstanding 30,083 23,149
</TABLE>
See notes to condensed consolidated financial statements.
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DECISIONONE HOLDINGS CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
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1996 1995
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<S> <C> <C>
Operating Activities:
Net income $ 5,455 $ 4,386
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 22,111 4,836
Changes in assets and liabilities, net of effects
of business acquisitions (20,843) (2,518)
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Net cash provided by operating activities 6,723 6,704
Investing Activities:
Business acquisitions (1,566) (13,522)
Capital expenditures, net of retirements (2,055) (488)
Repairable spare parts purchases (17,035) (4,693)
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Net cash used in investing activities (20,656) (18,703)
Financing Activities:
Proceeds from issuance of common stock 97 -
Proceeds from borrowings 15,035 15,000
Payments on borrowings - (5,366)
Principal payments under capital leases (394) (139)
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Net cash provided by financing activities 14,738 9,495
Effect of exchange rates on cash 2 (5)
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Net change in cash and cash equivalents 807 (2,509)
Cash and cash equivalents beginning of period 8,221 2,659
-------- --------
Cash and cash equivalents end of period $ 9,028 $ 150
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
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DECISIONONE HOLDINGS CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
QUARTER ENDED SEPTEMBER 30, 1996
(UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of
DecisionOne Holdings Corp. and Subsidiaries (the "Company") have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
and, therefore, do not include all information and footnotes necessary for
presentation of financial position, results of operations and cash flows
required by generally accepted accounting principles. The June 30, 1996
balance sheet was derived from the Company's audited consolidated financial
statements. The information furnished reflects all adjustments (consisting of
normal recurring adjustments) which are, in the opinion of management,
necessary for a fair summary of the financial position, results of operations
and cash flows. The financial statements should be read in conjunction with
the audited historical consolidated financial statements of the Company and
notes thereto filed with the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1996, as amended.
NOTE 2: INCOME PER COMMON SHARE
Pursuant to Securities and Exchange Commission Staff Accounting Bulletins,
primary income per share for the three months ended September 30, 1995,
presented in connection with the Company's initial public offering of common
stock via its Registration Statement on Form S-1, as amended, dated April 3,
1996 (the "Offering"), also includes amounts computed on options and warrants
issued within twelve months of the filing date as if they were outstanding for
all periods presented, even when the result is anti-dilutive, using the
treasury stock method and the Offering price. Additionally, the computation of
primary income per common share for the three months ended September 30, 1995
includes the conversion of all shares of preferred stock, which automatically
converted to shares of common stock as of the closing of the Offering, as if
they were outstanding for all periods presented, even when the result is
anti-dilutive.
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NOTE 3: SUBSEQUENT EVENTS
On November 1, 1996, the Company entered into a definitive Asset
Purchase Agreement (the "Agreement") to acquire substantially all of the
operating assets and assume certain liabilities of the U.S. computer service
business (the "Business") of Memorex Telex Corporation and certain of its
affiliates (collectively, "MTC"). The Agreement provides for a total purchase
price, subject to adjustment, of $52,500,000, of which approximately
$30,000,000 is to be paid in cash. Closing is to occur prior to November 30,
1996.
In connection with this anticipated acquisition, the Company's lender has
approved a $75,000,000 increase to its existing Revolving Credit Facility (the
"Facility"), raising the total loan commitment under the Facility to
$300,000,000. The Company intends to utilize a significant portion of this
increase to finance the acquisition of the Business.
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ITEM 2.
DECISIONONE HOLDINGS CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996
This report contains, in addition to historical information, statements by the
Company with regard to its expectations as to financial results and other
aspects of its business that involve risks and uncertainties and may constitute
forward looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements include statements regarding
certain risks associated with the Company's practice of entering into interest
rate swap agreements in an effort to minimize interest exposure, estimated
clean-up costs relating to certain waste disposal sites, and the sufficiency of
the Company's liquidity and capital resources. Although the Company makes such
statements based on assumptions which it believes to be reasonable and
management's current expectations, such statements are subject to a number of
risks and uncertainties and there can be no assurance that actual results will
not differ materially from those described in such statements. Factors that may
cause such a difference include, but are not limited to, those identified under
"Risk Factors" in the Company's Annual Report on Form 10-K for the year ended
June 30, 1996, as amended.
OVERVIEW:
Since the beginning of fiscal 1993, when the Company decided to focus
principally on its current core business of providing computer maintenance and
technology support services, DecisionOne has experienced significant growth,
primarily through acquisition of complementary businesses as well as through
growth in its existing business. The most significant of these business
acquisitions was that of Bell Atlantic Business Systems Services ("BABSS"),
which was acquired in October, 1995. The Company has historically met its
cash needs for operations through its cash flows from operating activities,
while cash requirements for business acquisitions and capital expenditures have
been met through the Company's financing activities in addition to existing
cash and cash equivalents.
The following discussion of results of operations is presented for the Company
for the fiscal quarters ended September 30, 1996 and 1995.
RESULTS OF OPERATIONS:
Revenues: Revenues for the three months ended September 30, 1996 increased by
$129.6 million, or 276.9%, to $176.4 million as compared to revenues for the
same period a year earlier of $46.8 million. This increase is attributable
primarily to the acquisition of BABSS, which occurred in October, 1995. Growth
in the Company's monthly maintenance contract customer base also contributed to
the increase in revenues, as evidenced by an increase of 3.2% versus the prior
quarter.
Gross Profit: Gross profit increased to $41.9 million from $15.5 million for
the first quarter of the prior fiscal year, an increase of 170.3%, or $26.4
million. This increase is also largely due to the BABSS acquisition. As a
percentage of revenues, however, gross profit for the quarters ended September
30, 1996 and September 30, 1995 equaled 23.7% and 33.2%, respectively. This
decrease reflects the change in mix of the Company's services resulting from
the BABSS acquisition, as higher-margin revenue contracts for servicing
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proprietary systems (i.e. systems that can only be serviced by a
limited number of service providers), which represented approximately 30% of
total revenues prior to the BABSS acquisition, currently account for a
significantly smaller portion of total revenues.
Selling, General and Administrative Expenses: Selling, general and
administrative expenses increased by $18.6 million, or 326.3%, to $24.3 million
for the three months ended September 30, 1996 from $5.7 million for the three
months ended September 30, 1995, reflecting growth attributable primarily to
the BABSS acquisition. As a percentage of revenues, selling, general and
administrative expenses increased to 13.8% for the quarter ended September 30,
1996 as compared to 12.2% for the quarter ended September 30, 1995.
Amortization and Write-off of Intangibles: Amortization of intangible assets
increased by $3.0 million, or 157.8%, from $1.9 million for the three months
ended September 30, 1995 to $4.9 million for the three months ended September
30, 1996. This increase is attributable principally to the amortization of
intangibles, primarily goodwill, arising from the acquisition of BABSS.
Interest Expense: Interest expense, net of interest income, for the three
months ended September 30, 1996 increased by $2.7 million, or 450.0%, to $3.3
million as compared to $0.6 million for the three months ended September 30,
1995. Additional indebtedness required to fund the acquisition of BABSS,
resulting in significantly higher average outstanding borrowings than in
periods prior to this acquisition, represents the primary cause for this
increase.
Provision for Income Taxes: The Company's income tax provision for the quarter
ended September 30, 1996 reflects an estimated effective income tax rate of
approximately 42%, while the effective income tax rate for the quarter ended
September 30, 1995 equaled approximately 40%. This slight increase in the
Company's anticipated effective income tax rate is due primarily to the
prior-year impact of certain non-recurring foreign income tax benefits relating
to net operating loss carryforwards.
As of June 30, 1996, the Company had tax net operating loss (NOL) carryforwards
of approximately $38.1 million and $15.2 million, for Federal and state income
tax purposes, respectively, which are scheduled to expire between 1997 and 2009.
The Company also had minimum tax credits of approximately $1.2 million as of
June 30, 1996, with no applicable expiration period. These carryforwards and
credits may be utilized, as applicable, to reduce future taxable income. The
Company's initial public offering in April, 1996 via its Registration
Statement on Form S-1, as amended, (the "Offering") resulted in an "ownership
change" pursuant to Section 382 of the Internal Revenue Code, which in turn
results in the limitation on the usage of these carryforwards and credits during
any future period to approximately $20 million per annum. See Note 11 to the
Company's Consolidated Financial Statements for the year ended June 30, 1996,
included in its Annual Report on Form 10-K, as amended, dated September 30,
1996.
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LIQUIDITY AND CAPITAL RESOURCES:
Financing: Historically, the Company's principal sources of capital have been
borrowings from banks (primarily to finance acquisitions), financing from
principal stockholders through debt and equity securities, and cash flow from
operations. In April, 1996, the Company significantly improved its liquidity
and capital structure through i.) the Offering, which raised approximately $106
million via the issuance of 6.3 million shares of common stock, and ii.) the
restructuring of the Company's Revolving Credit Facility, each of which is more
fully discussed below.
The Company used the proceeds of the Offering to repay approximately $70 million
of its existing 1995 Term Loan as well as to repay the then-existing balance of
its subordinated notes of approximately $30 million. Further, in connection
with the Offering, the Company's mandatorily-redeemable Series A, B and C
Preferred Stock of approximately $37.6 million was automatically converted to
common stock.
Subsequent to the Offering, the Company converted the remaining balance of its
1995 Term Loan and its existing $30 million Revolving Credit Facility into a new
$225 million, unsecured variable rate revolving credit facility (the "1996
Revolving Credit Facility"). The 1996 Revolving Credit Facility enables the
Company to borrow up to $225 million in the form of revolving credit loans with
a maturity date of April 26, 2001 for all principal borrowed. The interest rate
applicable to the 1996 Revolving Credit Facility varies, at the Company's
option, based upon LIBOR (plus an applicable margin not to exceed 1%) or the
prime rate. As of September 30, 1996, the applicable interest rate was LIBOR
plus .75%, for an effective rate of approximately 6.4%, and available borrowings
under the Facility were $18.4 million. Subsequent to September 30, 1996, the
Company's lender approved a $75,000,000 increase to the Facility, raising the
total loan commitment to $300,000,000. See Note 3 to the unaudited Condensed
Consolidated Financial Statements for the Three Months Ended September 30, 1996.
The Company has attempted to minimize its interest exposure by entering into two
interest rate swap agreements with major financial institutions. Although it
may be exposed to losses in the event of nonperformance by counterparties, the
Company does not expect such losses, if any, to be significant.
Cash Flow and Leverage: The Company's cash flow from operating activities for
the three months ended September 30, 1996 equaled $6.7 million. These operating
funds, together with borrowings under the Facility, provided the required
capital to fund the Company's capital expenditures, totaling approximately $19.1
million, as well as the acquisition of a complementary business for
approximately $1.6 million. As of September 30, 1996, the Company had no
material commitments for purchases of spare parts or for capital expenditures
other than those in the ordinary course of business. Subsequent to September
30, 1996, the Company entered into an asset purchase agreement to acquire
another complementary business - see Note 3 to the unaudited Condensed
Consolidated Financial Statements for the Three Months Ended September 30, 1996.
As of September 30, 1996, the Company maintained working capital of
approximately $30.8 million and a current ratio (current assets to current
liabilities) of approximately 1.25 to 1. These calculations exclude the
Company's investment in repairable spare part inventories, which are classified
as non-current assets in the accompanying Condensed Consolidated
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Balance Sheet as of September 30, 1996. As of September 30, 1996, the Company's
debt-to-equity ratio was approximately 1 to 1.
The Company believes that its operations will generate cash which, together
with cash availability under its Revolving Credit Facility, will be sufficient
to meet its working capital requirements, requirements for the purchase of
repairable spare parts and other capital expenditures, and debt service
requirements for the foreseeable future. Expansion of the Company's business
through acquisitions, however, may require additional funds. While the Company
will seek such financing as may be required to fund any future acquisitions,
there can be no assurance that such financing will be available on reasonable
terms.
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DECISIONONE HOLDINGS CORP. AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Number Description of Documents
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10.1 Asset Purchase Agreement, dated as of
October 31, 1996, among Decision One
Corporation, Memorex Telex Corporation,
Tulsa Computer Products, Inc., Memorex
Telex Services, Inc. and Memorex Telex
Puerto Rico, Inc.
10.2 Revolving Credit Agreement, dated as of
November 13, 1996, between DecisionOne
Holdings Corp., Decision One Corporation
and The First National Bank of Boston
et al.
11 Computation of net income per share
27 Financial data schedule
(b) Reports on Form 8-K
Not applicable
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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 thereunto duly authorized.
DecisionOne Holdings Corp.
/s/ Thomas J. Fitzpatrick
---------------------------------------------
Thomas J. Fitzpatrick
Duly Authorized and Chief Financial Officer
DATE: November 14, 1996
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ASSET PURCHASE
DATED AS OF OCTOBER 31, 1996
AMONG
MEMOREX TELEX CORPORATION
TULSA COMPUTER PRODUCTS, INC.,
MEMOREX TELEX SERVICES, INC.,
MEMOREX TELEX PUERTO RICO, INC.,
AND
DECISIONONE CORPORATION
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Exhibits
Exhibit A - Service Business
Schedules
Schedule 1 - July 1996 Statement of Operating Results
Schedule 1.1(a) - Inventory
Schedule 1.1(b) - Fixed Assets
Schedule 3.2(d) - Commitment Letter
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ASSET PURCHASE AGREEMENT
dated as of October 31, 1996,
among DecisionOne Corporation, a
Delaware corporation (the
"Buyer"), TULSA COMPUTER PRODUCTS,
INC., an Oklahoma corporation
("Tulsa"), MEMOREX TELEX SERVICES,
INC., a Delaware corporation ("MT
Services"), MEMOREX TELEX PUERTO
RICO, INC., a Delaware corporation
("MT Puerto Rico"), and MEMOREX
TELEX CORPORATION, a Delaware
corporation ("MTC", and together
with Tulsa, MT Services and MT
Puerto Rico, collectively, the
"Sellers", and each individually,
a "Seller"). The Buyer and the
Sellers are sometimes referred to
collectively as the "Parties" and
individually as a "Party".
The Sellers are engaged in the Service Business in North American
continent (as defined and described in Exhibit A hereto) (the "Service
Business" or the "Business"). The Buyer desires to purchase from the Sellers
substantially all of the assets of the Business and the Sellers desire to sell
such assets to the Buyer upon the terms and subject to the conditions
hereinafter set forth.
Provided that the closing occurs hereunder, certain aspects of the
transactions contemplated hereby are to be effective as of November 1, 1996
(the "Effective Date").
Subject to Bankruptcy Court approval, Buyer has agreed to provide up
to $6,000,000 in post petition financing to Sellers pursuant to an Interim
Order Authorizing Debtors-In-Possession Financing (the "Buyer DIP Financing")
in form and substance reasonably satisfactory to Buyer and Seller.
NOW, THEREFORE, in consideration of the mutual promises herein made,
and in consideration of the representations, warranties, and covenants herein
contained, the Parties agree as follows:
1
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ARTICLE I
PURCHASE AND SALE OF ASSETS, ASSUMPTION OF LIABILITIES
1.1. ACQUIRED ASSETS.
On and subject to the terms and conditions of this Agreement, at the
Closing (as defined in Section 2.2), the Buyer shall purchase from the Sellers,
and each of the Sellers shall sell, transfer, assign, convey and deliver to the
Buyer, all right, title and interest in and to all of the assets, business,
goodwill and rights of the Business held by such Seller (collectively the
"Acquired Assets"), as the same shall exist immediately prior to the Closing
(the Effective Date as specified in clause (m), (n) and (o) below), free and
clear of all liens, claims and encumbrances, including, without limitation, all
right, tittle and interest of each of the Sellers, if any, in, to and under the
following assets:
(a) all inventories of spare parts, work-in-process, raw
materials, finished products, supplies, shipping containers and other materials
used in the Business, including, without limitation, inventory located at
Sellers' warehouse, field locations, customer sites and consigned to vendors as
well as the items of inventory listed on Schedule 1.1(a) hereto (the
"Inventory");
(b) all machinery, equipment, vehicles, furniture, fixtures,
office equipment, test equipment, tools and other items of tangible personal
property used in the Business, including, without limitation, the items
comprising the $1,937,000 net book value as of July 31, 1996 on the statement
of fixed assets of the Business attached hereto as Schedule 1.1(b) (the "Fixed
Assets");
(c) all written and oral (i) service contracts, maintenance
contracts and other contracts and agreements with customers of the Business,
(ii) purchase orders, sales orders and other orders and commitments issued by
customers of the Business, and (iii) the entire monthly maintenance revenue
stream of the Business (collectively, the "Customer Contracts");
(d) subject to Section 6.9, all land, buildings, improvements and
fixtures located at 6422 East 41st Street, Tulsa, Tulsa County, Oklahoma (the
"Tulsa Facility");
(e) subject to Section 6.10, the November Billings (as herein
defined);
(f) all software, operating systems, dispatch systems and
accounting systems developed or transferable by the Sellers and used in the
Business;
(g) all rights under any liability insurance policies with respect
to claims made against the Buyer with respect to events occurring prior to the
Closing and all rights under any casualty insurance policies with respect to
the Acquired Assets or any assets that, but for a casualty loss, would be
Acquired Assets;
2
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(h) to the extent transferable, all United States, state and local
governmental licenses, permits, authorizations and approvals relating to the
Business;
(i) all technical information and know-how, plans, designs,
manufacturing processes, operating manuals, technology, computer programs,
source codes, binary files and related assets used in the Business, including,
without limitation, that required to repair and refurbish spare parts used in
the Business.
(j) all customer and supplier lists, records and files, and all
advertising and promotional materials related to the Business;
(k) all documentation, manuals, diagnostics, microcode and other
service support items used by Sellers in the Business;
(l) all other Intellectual Property used in the Business other
than the "Memorex", "Telex" and "Memorex Telex" trademarks and tradenames;
(m) all accounts receivable (other than the Retained Accounts
Receivable (as herein defined), including, subject to Section 6.10, the
November Billings;
(n) all cash received by Sellers or any agent of Sellers after the
Effective Date from customers of the Business for services provided by the
Business other than amounts received on account of the Retained Accounts
Receivable;
(o) all cash received by Sellers or any agent of Sellers after the
Effective Date for the sale or other transfer of any asset that, but for such
sale or transfer, would be an Acquired Asset; and
(p) all warranties, guarantees and letters of credit received from
vendors, suppliers or subcontractors; all records, notes or other documents of
each Seller pertaining in any respect to any and all employees of such Seller
to whom the Buyer makes an offer of employment and who accepts such offer; and
all bills of lading, trust receipts, warehouse receipts and other documents of
title to whatever kind and description of the Business.
1.2. EXCLUDED ASSETS.
Anything contained in Section 1.1 or elsewhere herein to the contrary
notwithstanding, the Acquired Assets shall not include the following assets and
rights of the Sellers (collectively, the "Excluded Assets"):
(a) all rights to receive mail and other communications addressed
to each of the Sellers relating to any of the Excluded Assets or the excluded
Liabilities;
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(b) the corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates and other documents relating to
the organization, maintenance and existence of each of the Sellers as a
corporation and any documents or other material (other than documents and
materials relating to Intellectual Property and products of each of the
Sellers) relating to each of the Sellers which are subject to the
attorney-client privilege; notwithstanding the foregoing, each of the Buyer and
Sellers agree and acknowledge that the transfer of information and/or
documentation from each of the Sellers to the Buyer as required herein is
intended to preserve, and does not waive, any applicable privileges, including,
but not limited to, the attorney-client privilege and the work product
privilege;
(c) any Intellectual Property not identified in Section 1.1 hereof
and any Bankruptcy Recoveries;
(d) any contracts, agreements, leases, or commitments of each of
the Sellers which are not a party of the Customer Contracts;
(e) any net operating loss, or tax attribute or benefit generated
by each of the Sellers for any period prior to the Closing Date; any of the
rights of each of the Sellers under this Agreement;
(f) cash on hand immediately prior to the Effective Date;
(g) accounts receivable as of immediately prior to the Effective
Date (including, without limitation, any intercompany receivables from
affiliates of the Sellers as of immediately prior to the Effective Date) other
than, subject to Section 6.10, the November Billings (the "Retained Accounts
Receivable"); and
(h) all real estate owned or leased by Sellers other than, subject
to Section 6.9, the Tulsa Facility.
1.3. ASSUMED LIABILITIES.
On and subject to the terms and conditions of this Agreement, the
Buyer shall assume and discharge or perform when due the obligations of any of
the Sellers under the Customer Contracts to the extent that such obligations
relate to the period from and after the Closing Date, including all obligations
of any of the Sellers under the Customer Contracts to provide services to
Sellers' customers after the Closing Date for which any Seller has billed such
customers prior to the Closing Date (collectively, the "Assumed Liabilities").
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1.4. EXCLUDED LIABILITIES.
Notwithstanding anything to the contrary contained in this Agreement,
except for the Assumed Liabilities, the Buyer shall not assume or be liable for
any of the Liabilities of the Sellers including, without limitation, trade
payables, obligations or liabilities under real or personal property leases,
any claim or loss relating to injury to persons or property, employees
(including all accrued vacation time and other employee benefits), taxes or
warranty obligations, or any claim or loss relating to or arising out of the
protection of the environment or human health or safety, all of which are
retained by the Sellers (the "Excluded Liabilities). Notwithstanding anything
to the contrary in this Agreement, Buyer acknowledges and agrees that the
Sellers have no obligation to Buyer to pay, satisfy, perform or discharge any
of the Excluded Liabilities.
1.5. EXECUTORY CONTRACTS.
As soon as practicable after the date hereof, the Sellers shall (upon
request by Buyer), pursuant to a motion in form and substance reasonably
acceptable to the Buyer (the "Assumption and Assignment Order"), move to assume
and assign to the Buyer the executory contracts included in the Acquired Assets
and shall provide notice thereof in accordance with all applicable bankruptcy
rules. The Buyer may at any time prior to the entry of the Assumption and
Assignment Order delete therefrom any of the executory contracts included in
the Acquired Assets. If, immediately prior to the entry of the Assumption and
Assignment Order, the Buyer requests that any executory contracts included in
the Acquired Assets not be rejected (any such executory contract being
hereinafter referred to as an "Extended Executory Contract"), then the Sellers
shall not reject such Extended Executory Contract until the earlier of (a) the
date the Buyer notifies the Sellers that they are free to reject such Extended
Executory Contract or (b) the one hundred twenty-first day after the Closing
Date. The Buyer shall reimburse the Sellers for the costs under such Extended
Executory Contract during the period from the Closing Date until the earlier of
(a) the date an order of the Bankruptcy Court is entered rejecting such
Extended Executory Contract after the Buyer notifies the Sellers that they are
free to reject such Extended Executory Contract; provided that the Sellers
shall have filed a motion to reject such Extended Executory Contract within
three (3) business days after receipt from the Buyer of such notification, or
such later date as shall be agreed by the Sellers and the Buyer or (b) the date
such Extended Executory Contract is assumed by the Sellers and assigned to the
Buyer pursuant to the next sentence of this Section 1.5. If the Buyer notifies
the Sellers that they are free to reject such Extended Executory Contract and
the Sellers fail to file a motion to reject such Extended Executory Contract
within three (3) business days of receipt of such notification, or such later
date as shall be agreed by the Sellers and the Buyer, the Buyer shall reimburse
the Sellers for the costs under such Extended Executory Contract during the
period from the Closing Date until the date of receipt by the Sellers of such
notification. If the Buyer requests that any Extended Executory Contract be
assumed and assigned to the Buyer within one hundred twenty days after the
Closing Date, then, as soon as practicable after such request, the Sellers
shall move to assume and assign to the Buyer such executory contract by motion
in form
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and substance reasonably satisfactory to the Buyer. None of the Sellers shall
reject any executory contract included in the Acquired Assets prior to the
entry of the Assumption and Assignment Order without the consent of the Buyer.
In connection with any such assumption and assignment, Buyer shall be
responsible for any cure payments and, to provide adequate assurance of future
performance. Notwithstanding anything in this Agreement to the contrary,
Sellers' compliance or noncompliance with this Section 1.5 shall not give rise
to any right of setoff, deduction or claim for damages by Buyer.
1.6. BUYER DIP FINANCING.
Subject to Bankruptcy Court approval, Buyer will provide the Buyer DIP
Financing in form and substance reasonably satisfactory to Buyer and Sellers.
ARTICLE II
CONSIDERATION; CLOSING
2.1. CONSIDERATION.
(a) CONSIDERATION. Subject to Sections 6.9 and 6.10, the
consideration to be paid by the Buyer at Closing for the Acquired Assets shall
equal (x) $52.5 million ($52,500,000) minus the Estimated Deferred Revenue (as
herein defined) (the "Base Cash Consideration") plus (y) the assumption of the
Assumed Liabilities. The Base Cash Consideration shall be payable as follows:
(i) Ninety percent (90%) of the Base Cash Consideration,
subject to set-off as provided in Section 2.3(b)(iii), in immediately available
funds payable to the Sellers (the "Sellers Cash Consideration"); and
(ii) Ten percent (10%) of the Base Cash Consideration in
immediately available funds payable to an escrow agent mutually acceptable to
the Parties (the "Escrow Agent") pursuant to an escrow agreement (the "Escrow
Agreement") in form and substance mutually acceptable to the Parties (the
"Escrowed Cash Consideration").
(b) ESTIMATED DEFERRED REVENUE. Prior to the Closing, the Parties
shall estimate the amount billed to customers of the Business as of the
Effective Date for services to be rendered after the Effective Date (whether or
not any such amounts have been collected), but excluding amounts billed in
October 1996 or thereafter for services to be rendered on or after November 1,
1996 (the "November Billings") (such amount, less the November Billings, is
hereinafter referred to as the "Deferred Revenue" or, as estimated, the
"Estimated Deferred Revenue") calculated in accordance with past practice,
which, by way of example, would result in Estimated Deferred Revenue as of the
date hereof of approximately $22.5 million ($22,500,000).
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(c) BASE CASH CONSIDERATION ADJUSTMENTS. The Base Cash
Consideration shall be subject to adjustment following the Closing as follows
(as adjusted, the "Final Cash Consideration"):
(i) if the actual Deferred Revenue assumed by the Buyer
from the Sellers as of the Effective Date (the "Actual Deferred Revenue") is
greater than the Estimated Deferred Revenue then the Base Cash Consideration
shall be decreased by the amount by which the Actual Deferred Revenue exceeds
the Estimated Deferred Revenue;
(ii) if the Actual Deferred Revenue is less than the
Estimated Deferred Revenue then the Base Cash Consideration shall be increased
by the amount by which the Estimated Deferred Revenue exceeds the Actual
Deferred Revenue;
(iii) if the revenue (calculated in accordance with past
practice) from Customer Contracts for the period beginning September 1, 1996
and ending October 31, 1996 (the "Two Month Revenue") is less than $24 million
(such difference is hereinafter referred to as the "Shortfall") then the Base
Cash Consideration shall be decreased by an amount equal to the sum of (x) 1.0
times the first $500,000 of the Shortfall plus (y) 2.2 times the amount, if
any, of the Shortfall in excess of $500,000.
(iv) if the Inventory (at the Sellers' standard cost)
(calculated in accordance with past practice) as of the Effective Date (the
"Actual Inventory") is less than $67,000,000 then the Base Cash Consideration
shall be decreased by an amount equal to (x) 0.5 times (y) the amount by which
$67,000,000 exceeds the Actual Inventory; and
(v) if the Buyer has at Seller's request made any
disbursements to or on behalf of the Sellers pursuant to the Buyer DIP
Financing other than Authorized Expenditures (as such term is defined in the
Buyer DIP Financing) (the "Non-Authorized Expenditures") then the Base Cash
Consideration shall be decreased by the dollar amount of such Non-Authorized
Expenditures.
The adjustments provided in (i) through (v) above are cumulative.
(d) CLOSING STATEMENT. As soon as practicable following the
Closing, but in no event later than 45 days thereafter, the Buyer shall prepare
and deliver to the Sellers calculations of (i) the Actual Deferred Revenue,
(ii) the Two Month Revenue, (iii) the Actual Inventory and (iv) the
Non-Authorized Expenditures (collectively, the "Closing Statement") and, based
upon the Closing Statement, a calculation of the Final Cash Consideration. The
Closing Statement and the amount of the Final Cash Consideration as calculated
by the Buyer, when delivered by the Buyer to the Sellers, shall be deemed
conclusive and binding upon the Parties, unless the Sellers notify the Buyer in
writing within 10 days after receipt of the Closing Statement of their
disagreement therewith, which notice shall state with reasonable specificity
the reasons for any disagreement and the amounts in dispute (a "Disagreement
Notice"). If there is a disagreement, and such
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disagreement cannot be resolved by the Buyer and the Sellers within 14 days
following the date of the Disagreement Notice, the items in dispute shall be
submitted immediately to the auditing firm of Coopers & Lybrand LLP (the
"Account Firm"). the Accounting Firm shall be required to render a
determination of the Parties' dispute within 45 days after referral of the
matter to the Accounting Firm, which determination must be in writing and must
set forth, in reasonable detail, the bases therefor. The determination of the
Accounting Firm shall be binding and conclusive upon the Parties. the fees and
disbursements of the Accounting Firm shall be allocated between Buyer and
Sellers so that Sellers' share of such fees and disbursements shall be in the
same proportion that the aggregate amount of such remaining disputed amounts so
submitted by Sellers to the Accounting Firm that is unsuccessfully disputed by
Sellers (as finally determined by the Accounting Firm) bears to the total
amount of such remaining disputed amounts so submitted by Sellers.
(e) FINAL PAYMENT. The Final Cash Consideration shall be deemed
to have been finally determined on the first to occur of (i) the 11th day after
the Buyer's delivery of the Closing Statement and the Buyer's calculation of
the Final Cash Consideration to the Sellers, unless the Sellers shall have,
prior to such date, given a Disagreement Notice, (ii) the date upon which the
Parties agree in writing on the amount of the Final Cash Consideration, or
(iii) the date upon which the Accounting Firm renders its determination in
accordance with Section 2.1(d). Within three (3) business days after such
final determination (the "Final Payment Date"), any difference between the
Final Cash Consideration and the Base Cash Consideration shall be paid by the
Buyer to the Sellers or by the Escrow Agent and/or the Sellers to the Buyer, as
the case may be, together with interest on such amount from the Closing Date
until paid at a rate per annum equal to the prime rate announced from time to
time by The First National Bank of Boston, or any successor thereto, by wire
transfer of immediately available funds to an account designated by the Party
being paid.
(f) TAX ALLOCATION. All amounts, if any, outstanding as of the
Closing Date under the Buyer DIP Financing shall be deemed an increase in the
purchase price of the Acquired Assets for tax purposes.
2.2. THE CLOSING.
Subject to the terms and conditions of this Agreement, the closing of
the transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of O'Sullivan Graev & Karabell, LLP, 30 Rockefeller Plaza,
New York, New York 10112, or any such other place as agreed to by the Parties,
on the later to occur of, unless otherwise agreed to by the Parties: (i) the
date on which the conditions to closing set forth in Article V shall have been
satisfied or waived or (ii) the day after the Sale Order has been entered
provided that it has not been stayed (such date being the "Closing Date").
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2.3. DELIVERIES AT THE CLOSING.
(a) At the Closing, the Sellers shall deliver to the Buyer:
(i) the Acquired Assets in accordance with the terms of
Sections 1.1 and 6.6;
(ii) a counterpart to a bill of sale and assignment and
assumption agreement (the "Bill of Sale"), in form and substance mutually
acceptable to the Parties;
(iii) Intellectual Property transfer documents (the "IP
Assignments"), provided, that the Buyer shall be required to pay any filing
fees in connection with the filing of such IP Assignments to the extent
necessary;
(iv) such other instruments of sale, transfer, conveyance
and assignment as the Buyer reasonably may request to effectuate the transfer
of the Acquired Assets to the Buyer;
(v) a certified copy of the Sale Order and the court
Docket dated as of the Closing Date;
(vi) a counterpart to the Escrow Agreement; and
(vii) except as otherwise provided in Section 6.9, a deed
to the Tulsa Facility.
(b) At the Closing, the Buyer shall deliver to the Sellers:
(i) a counterpart to the Bill of Sale;
(ii) a counterpart to the IP Assignment;
(iii) Sellers Cash Consideration less any amounts
previously paid as a deposit by the Buyer on the Acquired Assets pursuant to
the escrow arrangements which have been established by Young, Conaway, Stargatt
and Taylor;
(iv) copies of the consent of the board of directors of
the Buyer authorizing this Agreement and the transactions contemplated thereby;
and
(v) a counterpart to the Escrow Agreement.
(c) At the Closing, the Buyer shall deliver to the Escrow Agent
the Escrowed Cash Consideration.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES OF EACH OF THE SELLERS.
Each of the Sellers hereby represents and warrants to the Buyer as
follows:
(a) ORGANIZATION, GOOD STANDING, QUALIFICATION AND POWER. Each of
the Sellers is a corporation duly organized and validly existing under the laws
of its jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as presently conducted. As used in this Agreement, (i) the term "Charter"
means the Certificate of Incorporation, Organization or Association or other
document which governs such entity's internal affairs, in each case as amended,
supplemented, or restated and (ii) the term "Governmental Authority" means any
federal, state, local or foreign government, authority, instrumentality,
department, commission, board, bureau, agency or court.
(b) AUTHORITY, ENFORCEABILITY, ETC. Subject to Bankruptcy Court
approval, each of the Sellers has the full and absolute power to enter into
this Agreement and the documents contemplated hereby, to perform its
obligations under this Agreement and each such document, and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance by each of the Sellers of this Agreement and all documents
contemplated hereby and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
action (corporate or otherwise), including shareholder approval, on the part of
each of the Sellers. Each of this Agreement and the documents contemplated
hereby has been, or upon its execution and delivery will be, duly and validly
executed and delivered by each of the Sellers and is, or upon its execution and
delivery will be (assuming approval of this Agreement by the Bankruptcy Court),
a legal, valid and binding obligation of each of the Sellers, enforceable
against such Seller in accordance with its terms.
(c) SCHEDULES. Each Schedule attached hereto is made a part of
this Agreement. Anything contained herein to the contrary notwithstanding, any
information disclosed on any Schedule attached hereto and made a part hereof
with respect to any particular section of this Agreement shall be deemed to be
disclosed on all Schedules with respect to all other sections of this Agreement
to which such information is considered responsive.
(d) AFFILIATES. No affiliate of any Seller (other than a Party
hereto) has any interest in any property used by any Seller in the Business.
(e) TITLE TO ACQUIRED ASSETS. Sellers will convey to Buyer at
Closing indefeasible, good, valid and marketable title to all of the Acquired
Assets free and clear of all liens, claims and encumbrances.
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(f) NO CHANGES. Since October 1, 1996, the Business has been
conducted in the ordinary course except as approved by the Bankruptcy Court,
the Buyer acknowledging that since October 15,1 996, the Sellers have been
debtors operating under Chapter 11 of the Bankruptcy Code.
(g) JULY 1996 STATEMENT OF OPERATING RESULTS. The July 1996
Statement of Operating Results: (i) are in accordance with the books and
records of each Seller in all material respects; and (ii) are true and correct
copies of the interim period statements of operating results which management
of the Business has regularly used to measure the financial performance of the
Business.
3.2. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
The Buyer hereby represents and warrants to each of the Sellers as
follows:
(a) AUTHORITY, ENFORCEABILITY, NO VIOLATION, ETC. The Buyer has
all requisite corporate power and authority to execute and deliver this
Agreement and the documents contemplated hereby to which it is a party, to
perform its obligations under this Agreement and each such document, and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by the Buyer of each document contemplated hereby, to
which it is a party and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of the Buyer. This Agreement and each document
contemplated hereby to which the Buyer is a party is, or upon its execution and
delivery will be, a valid and binding obligation of the Buyer, enforceable
against it in accordance with the terms thereof. Neither the execution,
delivery or performance by the Buyer of this Agreement or any document
contemplated hereby to which it is a party, nor the consummation by the Buyer
of the transactions contemplated hereby and thereby nor compliance by the Buyer
with any of the provisions hereof and thereof will (i) conflict with or result
in a breach of any provision of the Buyer's Charter or By-Laws, (ii) conflict
with any material law, statute, rule or regulation or judgment, order, writ,
injunction or decree of any governmental Authority, in each case applicable to
the Buyer or its assets, or (iii) conflict with or result in a default or
breach of any provision of any material contract or agreement to which the
Buyer is a party or by which its assets may be bound. Except for filings under
the HSR Act and filings related to taxes, no material filing with, and no
material permit, authorization, consent or approval of, any Governmental
Authority is necessary for the consummation by the Buyer of the transactions
contemplated by this Agreement and the documents contemplated hereby.
(b) BROKERS AND FINDERS. The Buyer has not employed any broker or
finder in connection with the transactions contemplated by this Agreement.
(c) ABSENCE OF LITIGATION. No claim, action, suit, arbitration,
inquiry, proceeding or investigation by or before any governmental Authority is
pending against
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the Buyer which seeks to delay or prevent the consummation of the transactions
contemplated hereby or which may adversely affect or restrict the Buyer's
ability to consummate the transactions contemplated hereby.
(d) FINANCING. Attached hereto as Schedule 3.2(d) is a copy of
the commitment letter for the bank debt contemplated by the Buyer to finance
the purchase of the Acquired Assets as contemplated hereby.
ARTICLE IV
CONDITIONS OF CLOSING
4.1. CONDITIONS TO OBLIGATIONS OF THE BUYER AND THE SELLERS.
The obligations of the Buyer and each of the Sellers to perform this
Agreement is subject to the satisfactions of the following conditions:
(a) LEGAL ACTION. No temporary restraining order, preliminary
injunction or permanent injunction or other order preventing the consummation
of the transactions contemplated hereby shall have been issued by any court of
law or administrative agency and remain in effect. Each party agrees to use
its reasonable best efforts to have any such injunction lifted.
(b) LEGISLATION. No statute, rule or regulation shall have been
enacted which prohibits, restricts or delays the consummation of the
transactions contemplated hereby or any of the conditions to the consummation
of such transactions.
(c) HSR ACT. Any waiting period (and any extension thereof) under
this HSR Act applicable to the purchase of the Acquired Assets contemplated
hereby shall have expired or shall have been terminated.
(d) SALE ORDER. The Bankruptcy Court shall have issued the Sale
Order, and the Sale Order shall not be stayed.
4.2. CONDITIONS TO OBLIGATION OF THE BUYER.
The obligation of the Buyer to perform this Agreement is subject to
the satisfaction of the following conditions, unless waived by the Buyer:
(a) OFFICER CERTIFICATES. The Buyer shall have received (i) a
certificate, dated as of the Closing Date, signed by the Secretary of each of
the Sellers and certifying as to the Charter, By-laws, incumbency of officers
executing this Agreement and the other documents contemplated hereby to which
each of the Sellers is a party and resolutions of the Board of Directors of the
Sellers authorizing this Agreement and the other documents contemplated hereby
to which each of the Sellers is a party and (ii) a certificate of an
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officer of each of the Sellers certifying as to the fulfillment of the
conditions set forth in this Section 4.2.
(b) PERFORMANCE OF OBLIGATIONS OF THE SELLERS. Prior to or at
Closing, each Seller shall have performed and complied in all material respects
with all agreements and obligations and satisfied all conditions to be
performed, complied with and satisfied by such Seller under this Agreement and
the other documents contemplated hereby prior to or at Closing.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Sellers set forth herein and in any other document
contemplated hereby shall be correct in all material respects as of the Closing
Date as though made on and as of the Closing Date.
4.3. CONDITIONS TO OBLIGATION OF EACH OF THE SELLERS.
The obligation of each of the Sellers to perform this Agreement is
subject to the satisfaction of the following conditions, unless waived by such
Seller:
(a) AUTHORIZATION. All corporate or other action necessary to
authorize the execution, delivery and performance of this Agreement and the
other documents contemplated hereby by the Buyer and the consummation of the
transactions contemplated hereby and thereby shall have been duly and validly
taken by the Buyer and the Buyer shall have full power and authority to enter
into and consummate the transactions contemplated by this Agreement and the
other documents contemplated hereby.
(b) PERFORMANCE OF OBLIGATIONS OF THE BUYER. The Buyer shall have
performed and complied in all material respects with all agreements and
obligations and satisfied all conditions to be performed, complied with and
satisfied by it under this Agreement and the other documents contemplated
hereby prior to or at the Closing.
(c) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Buyer set forth herein and in any other document contemplated
hereby shall be correct in all material respects as of the Closing Date as
though made on and as of the Closing Date.
(d) OFFICER CERTIFICATES. The Sellers shall have received (i) a
certificate dated as of the Closing Date, signed by the Secretary of the Buyer
and certifying as to the Charter, By-laws, incumbency of officers executing
this Agreement and the other documents contemplated hereby to which the Buyer
is a party and the resolutions of the Board of Directors of the Buyer
authorizing this Agreement and the other documents contemplated hereby to which
the Buyer is a party and (ii) a certificate of an officer of the Buyer
certifying as to the fulfillment of the conditions set forth in this Section
4.3.
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ARTICLE V
TERMINATION
5.1 RIGHT OF TERMINATION.
This Agreement may be terminated at any time prior to the Closing by:
(a) the mutual written consent of the Buyer and each of the
Sellers;
(b) either the Buyer or the Sellers if the Bankruptcy Court shall
have determined not to enter the Sale Order;
(c) either the Buyer or the Sellers in writing, without liability
to the terminating party on account of such termination (except as provided in
Section 5.2) if the Closing shall have not occurred on or before November 30,
1996 unless extended by agreement of the parties; or
(d) the Buyer, without liability to the Sellers on account of such
termination (except as provided in Section 5.2), if at the close of business on
November 1, 1996, neither (i) the Buyer DIP Financing has been approved by the
Bankruptcy Court nor (ii) the Buyer is reasonably satisfied that the Sellers
have obtained an alternate facility for additional debtor-in-possession
financing for at least $6,000,000 to fund the Business during the period
beginning on the Effective Date and ending on either the Closing Date or the
date of the termination of this Agreement and that such financing facility has
been approved by the Bankruptcy Court.
5.2 EFFECT OF TERMINATION.
Termination of this Agreement pursuant to this Article V shall
terminate all obligations of the parties hereunder, except for the obligations
under this Section 5.2 and Article VIII, provided, however, that nothing in
this Section 5.2 shall relieve or limit the liability or obligations hereunder
of any party (the "Defaulting Party") to the other party or parties on account
of a willful and intentional breach of a covenant or agreement contained
herein, or any fraudulent representation or warranty contained herein by the
Defaulting Party. In the case of such a willful and intentional breach or
fraud, in addition to any damages for which the Defaulting Party may be liable,
the Defaulting Party shall reimburse the other party or parties for any
expenses incurred by such party or parties in order to enforce its or their
rights under this Agreement (including reasonable attorney's fees and
expenses).
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ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 SURVIVAL.
The representations and warranties of the Sellers set forth in this
Agreement or in any certificate or other writing delivered in connection with
this Agreement shall terminate at the Closing. The covenants of the Buyer and
the Sellers in this Agreement or in any certificate or other writing delivered
in connection with this Agreement shall survive the Closing and shall be fully
effective and enforceable for the periods therein indicated or, where not
indicated, without limitation as to time.
6.2 TRANSACTION EXPENSES; RISK OF LOSS.
Except as otherwise provided herein, each party hereto shall pay all
of its own expenses incurred in connection with the transactions contemplated
hereby (whether consummated or not). Sellers shall retain the risk of loss
with respect to the Acquired Assets prior to the Closing Date.
6.3 EMPLOYEES.
The Buyer shall be entitled to offer regular or temporary employment
to the employees of each the Sellers actively employed on the Closing Date by
the Sellers in connection with the Business. Each of the Sellers shall do or
cause to be done all such acts and things as may be necessary, proper or
advisable to assist the Buyer in employing any of the Sellers' employees, at
Buyer's expense. The Buyer and the Sellers agree to follow the Standard
Procedure specified in Rev. Proc. 84-77, 1984-2 C.B. 753, whereby, among other
things, each Party will be responsible for the reporting duties with respect to
its own payments of wages and compensation to employees in connection with the
operation of the Business.
6.4 FURTHER ASSURANCES.
After the Closing Date, the Buyer shall provide each of the Sellers
with access (within 5 business days) during normal business hours to any
documents or records reasonably requested by the Sellers which relate to any
claims asserted in the Bankruptcy Case. If the books or records relating to
any claims are moved from a Seller's corporate headquarters, the Buyer shall
provide such Seller with copies of any documents or records reasonably
requested by the Sellers which relate to any claims, within 5 business days of
the written request therefor at Seller's expense. Following the Closing Date,
the Buyer shall provide each of the Sellers with reasonable access to all
former employees of the Sellers necessary for the Sellers to prepare claims
objections and prosecute adversary proceedings in the Bankruptcy Case.
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After the date hereof, the Sellers shall give to the Buyer and to the
Buyer's counsel, accountants, lenders and other representatives (with Sellers'
assistance) full access during normal business hours to all the properties,
books, financial records, tax returns, contracts, commitments, records,
officers, personnel, employees, vendors, customers and accountants of each
Seller and will furnish to Buyer all such documents and copies of documents and
all information with respect to the affairs of each of the Sellers as the Buyer
may reasonably request, including, without limitation, all information
necessary for the Buyer to prepare audited financial statements in accordance
with Buyer's reporting requirements under the Securities Exchange Act of 1934.
After the date hereof, the Sellers will grant access to the properties of each
of the Sellers to the Buyer and its representatives, including the Buyer's
environmental consultants, for the purpose of conducting any environmental
investigation of the properties which may include air, soil and surface and/or
groundwater tests or such other tests as may appear advisable to the Buyer.
After the date hereof, the Sellers agree to facilitate the Buyer's discussions
with Sellers' employees, customers and vendors which discussions are necessary
in order for the Buyer to integrate the Business into the Buyer's business at
and after the Closing. Between the date hereof and the Closing Date, the
Sellers will consult with the Buyer before making any management decisions
which will affect the Business in a material way and will consider (but will
not be bound by) the Buyer's advice.
6.5 EFFORTS TO CONSUMMATE.
Subject to the terms and conditions herein provided, the parties shall
use their reasonable best effort to take or cause to be taken all action and do
or cause to be done all things reasonable necessary, proper or advisable to
consummate and make effective, as soon as reasonably practicable, the
transactions contemplated hereby, including, but not limited to, (i) the
compliance with all requirements under the HSR Act applicable to the
transactions contemplated hereby, including but not limited to a request for
the early termination of the waiting period under the HSR Act, (ii) taking the
measures reasonably necessary to achieve such an early termination and (iii)
the obtaining of all other authorizations, orders and approvals of any third
party, whether private or governmental, required in connection with the
consummation of the transactions contemplated hereby. Sellers and Buyer shall
use reasonable best effort to commence the waiting period under the HSR Act
upon Sellers' selection of Buyer as the most likely purchaser of the assets
Buyer bid on, even if the Sale Order has not yet been entered. Notwithstanding
the foregoing or any other provisions contained in this Agreement to the
contrary, neither the Buyer nor any of its affiliates shall be under any
obligation to (a) sell or otherwise dispose of, or hold separate (through the
establishment of a trust or otherwise) particular assets or categories of
assets or businesses of any of the Sellers, the Buyer or any of the Buyer's
affiliates or (b) take any other action which would have an adverse effect on
the value to the Buyer of the transactions contemplated hereby.
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6.6 BROKER'S FEES.
Each of the Parties shall be responsible for, and shall indemnify and
hold each of the other Parties harmless against, any fees or commissions for
which such Party is liable to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
6.7 AS IS.
Buyer hereby acknowledges and agrees that except as provided herein or
in certificates delivered or to be delivered at the Closing pursuant hereto,
the Sellers make no representations or warranties, express or implied,
regarding the Acquired Assets, including, without limitation, any
representations or warranties relating to the condition or sufficiency of the
Acquired Assets or concerning the merchantability or fitness for a particular
purpose of the Acquired Assets or any portion thereof; income to be derived
from or expenses to be incurred in connection with the Acquired Assets; the
physical condition of any tangible property comprising any portion of the
Acquired Assets; the value of the Acquired Assets, the accuracy, completeness,
transferability or assignability of any documents or other materials relating
to the Acquired Assets (or any portion thereof), the existence of or rights
with respect to any copyrights, trademarks, tradenames or other Intellectual
Property or intangible property rights relating to or comprising any portion of
the Acquired Assets (or any portion thereof), or the transferability of any
such rights; the transferability of any letter of credit or instrument
comprising a portion of the Acquired Assets; the collectibility or
enforceability of any accounts receivable comprising any portion of the
Acquired Assets. Accordingly, without limiting the foregoing, except as
provided herein or in certificates delivered or to be delivered at the Closing
pursuant hereto, the Buyer accepts the Acquired Assets from the Sellers at the
Closing "As Is," "Where Is" and "With All Faults." The Buyer further
acknowledges and agrees that notwithstanding anything to the contrary in this
Agreement or in any agreement, document or instrument executed pursuant to or
in connection with this Agreement, the Sellers may fully satisfy any obligation
under this Agreement or under any such instrument, document or agreement, to
deliver the Acquired Assets (or any portion thereof) to Buyer by making such
Acquired Assets available to Buyer at their location(s) as of the Closing.
6.8 CONDUCT OF THE BUSINESS PENDING CLOSING.
From and after the date hereof and pending Closing, each Seller
covenants and agrees that (a) the Business shall be conducted only in the
ordinary course and consistent with past practice, including the providing of
all required services to the customers of the Business and the purchase and
repair of spare parts used in the Business, and (b) it shall not sell,
transfer, lease or otherwise dispose of any of the Acquired Assets other than
in the ordinary course of business and consistent with past practice.
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6.9 TULSA FACILITY.
(a) Prior to the Closing, Buyer shall have its environmental
consultants conduct a Phase I environmental assessment with respect to the
Tulsa Facility (the "Tulsa Environmental Assessment").
(b) If the Remediation Cost (as herein defined) is greater than or
equal to $500,000 but less than $3,300,000, then the Base Cash Consideration
will be reduced by the amount by which the Remediation Cost exceeds $500,000.
(c) If the Remediation Cost exceeds $3,300,000, then the Buyer
shall have the option to not purchase the Tulsa Facility. If the Buyer
exercises such option, (i) the Base Cash Consideration will be reduced by
$2,800,000 and (ii) at Closing, in lieu of a deed to the Tulsa Facility, the
Sellers shall deliver to the Buyer an executed lease agreement in form and
substance mutually acceptable to the Parties for the lease by the Buyer of the
Tulsa Facility for a period of six (6) months after the Closing Date at a
monthly rate equal to then fair market value for such six (6) month lease.
(d) For purposes of this Agreement, the "Remediation Cost" shall
be the reasonably expected cost of any environmental remediation needed on the
Tulsa Facility as determined by the Tulsa Environmental Assessment.
(e) Prior to Closing, Seller shall either complete, at its cost,
asbestos remediation at the Tulsa Facility or place $200,000 into an escrow
account with the Escrow Agent pursuant to the Escrow Agreement to be used to
pay for such remediation.
6.10 NOVEMBER BILLINGS.
If at Closing, the Sellers have not delivered to the Buyer all
consents necessary to permit assignment of the November Billings from Sellers
to Buyer free and clear of all liens, claims and encumbrances then the Base
Cash Consideration will be reduced by the dollar amount of the November
Billings and the Sellers shall be entitled to retain the collections thereof.
If the Buyer purchases the November Billings at the Closing, (i) the Base Cash
Consideration shall be reduced dollar for dollar for any amounts received on
account of the November Billings by the Sellers or their agents prior to
Closing and (ii) the Sellers and their agents shall immediately turn over to
Buyer any amounts received on account of the November Billings after Closing.
ARTICLE VII
DEFINITIONS
"Affiliate" means, with respect to any Person, any of (a) a director,
executive officer or stockholder of such Person, (b) a spouse, parent, sibling
or descendant of such
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Person (or a spouse, parent, sibling or descendant of any director or executive
officer of such Person) and (c) any other Person that, directly or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, another Person. The term "control" includes, without
limitation, the possession, directly or indirectly, of the power to direct the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
"Bankruptcy Case" means the cases filed under Chapter 11 of the
Bankruptcy Code by the Sellers, currently jointly administered and styled In re
Memorex Telex Corporation, Case Nos. 96-1615 through 96-1618(PJW), currently
pending in the United States Bankruptcy Court for the District of Delaware.
"Bankruptcy Code" means Title 11 of the United States Code, as now in
effect or hereafter amended or modified.
"Bankruptcy Court" means the United States Bankruptcy Court for the
District of Delaware.
"Bankruptcy Recoveries" means property or interests in property
recovered or recoverable by the bankruptcy estates of the Sellers, as the case
may be, pursuant to Bankruptcy Code sections 542, 543, 544, 545, 547, 548, 549,
550, 551 or 553.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time and the regulations promulgated thereunder.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvement Act of
1976, as amended, and the rules promulgated thereunder.
"Intellectual Property" means (a) inventions, all improvements thereto
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) registered and unregistered trademarks, service
marks, trade dress, logos, trade names, and corporate names, including all
goodwill associated therewith, and applications, registrations, and renewals in
connection therewith, (c) copyrightable works, copyrights and applications,
registrations and renewals in connection therewith, (d) trade secrets,
formulae, customer lists, supplier lists, pricing and cost information,
business and marketing plans and other confidential business information, (e)
computer programs and related software, (f) other proprietary rights and (g)
copies and tangible embodiments thereof.
"Liability" means any liability or obligation, whether known or
unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued,
liquidated or unliquidated, and whether due or to become due, regardless of
when asserted.
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"Person" shall be construed broadly and shall include an individual, a
partnership, a corporation, a limited liability company, an association, a
joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Purchase Price" has the meaning set forth in Section 2.1 hereof.
"Sale Order" shall mean an order issued by the Bankruptcy Court (i)
approving this Agreement, including the sale of the Acquired Assets free and
clear of liens, claims (including successor liability claims) and encumbrances,
(ii) finding that adequate notice of the Bidding Procedures and the Motion
seeking approval of this Agreement has been given to all parties in interest,
(iii) finding that the Buyer is a good faith purchaser entitled to the
protections of Section 363(m) of the Bankruptcy Code, (iv) authorizing the
Sellers to consummate all of the transactions contemplated hereby, and (v)
otherwise in forma and substance reasonably satisfactory to the Buyer.
ARTICLE VIII
MISCELLANEOUS
8.1 NO THIRD PARTY BENEFICIARIES.
This Agreement shall not confer any rights or remedies upon any Person
other than the Parties and their respective successors and permitted assigns,
personal representatives, heirs or estate, as the case may be.
8.2 ENTIRE AGREEMENT.
This Agreement (including the documents referred to herein)
constitutes the entire agreement between the Parties with respect to the
subject matter hereof and supersedes any prior understandings, agreements or
representations by or between the Parties, written or oral, that may have
related in any way to the subject matter hereof.
8.3 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and permitted assigns, including, but
not limited to, any trustee, receiver or other agent or representative
appointed for any of the Sellers or one or more of their creditors, whether
under Chapter 11 or Chapter 7 of the Bankruptcy Code, applicable state law or
otherwise. Prior to the Closing, no Party may assign either this Agreement or
any of its rights hereunder without the prior written approval of the other
Parties except that the Buyer may assign its rights to acquire any or all of
the Acquired Assets to one or more, direct or indirect, wholly owned
subsidiaries of Buyer. No Party may delegate any of its obligations hereunder
at any time.
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8.4 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute
one and the same instrument.
8.5 HEADINGS.
The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.
8.6 NOTICES.
All notices, requests, demands, claims, and other communications
hereunder shall be in writing. Any notice, request, demand, claim or other
communication hereunder shall be deemed duly given when delivered personally to
the recipient, telecopied to the intended recipient at the telecopy number set
forth therefor below (with hard copy to follow), or sent to the recipient by
reputable express courier service (charges prepaid) and addressed to the
intended recipient as set forth below:
If to the Sellers:
Memorex Telex Corporation
545 E. John Carpenter Freeway, LB6
Irving, Texas 75062
Attention: Legal Department
Telephone: (214) 444-3600
Telecopier: (214) 444-3633
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza - 41st Floor
New York, New York 10112
Attention: George P. O'Sullivan, Esq. And
Stewart A. Kagan, Esq.
Telephone: (212) 408-2400
Telecopier: (212) 408-2420
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If to the Buyer:
DecisionOne Corporation
50 East Swedesford Road
Frazer, PA 19355
Attention: General Counsel
Telephone: (610) 296-6000
Telecopier: (610) 408-3820
with a copy to:
Dechert Price & Rhoads
4000 Bell Atlantic Tower
1717 Arch Street
Philadelphia, PA 19103
Attention: Carmen J. Romano, Esq.
Telephone: (215) 994-4000
Telecopier: (215) 994-2222
Any Party may send any notice, request, demand, claim or other communication
hereunder to the intended recipient at the address set forth above using any
other means, but no such notice, request, demand, claim or other communication
shall be deemed to have been duly given unless and until it actually is
received by the intended recipient. Any Party may change the address to which
notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other Party notice in the manner herein set forth.
8.7 GOVERNING LAW.
THIS AGREEMENT WILL BE GOVERNED IN ACCORDANCE WITH THE FEDERAL LAW OF
THE UNITED STATES OF AMERICA AND THE DOMESTIC LAWS OF THE STATE OF NEW YORK,
WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING PROVISION OR RULE
(WHETHER OF THE STATE OF NEW YORK, OR ANY OTHER JURISDICTION) THAT WOULD CAUSE
THE LAWS OF ANY JURISDICTION OTHER THAN THE UNITED STATES OF AMERICA AND THE
STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL
LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND CONSTRUCTION
OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW OR CONFLICT
OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD
ORDINARILY APPLY.
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8.8 JURISDICTION AND VENUE.
SUBJECT TO THE TERMS OF THIS AGREEMENT, THE SELLERS AND THE BUYER
HEREBY AGREE THAT ALL ACTIONS ARISING UNDER OR IN RESPECT OF THIS AGREEMENT OR
ANY OTHER DOCUMENT EXECUTED CONCURRENTLY HEREWITH INVOLVING THE SELLERS AND THE
BUYER PRIOR TO THE ENTRY OF A FINAL DECREE OF THE BANKRUPTCY COURT CLOSING THE
BANKRUPTCY CASE SHALL BE LITIGATED IN THE UNTIED STATES BANKRUPTCY COURT FOR
THE DISTRICT OF DELAWARE. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH OF
THE SELLERS AND THE BUYER IRREVOCABLY SUBMITS TO THE PERSONAL JURISDICTION OF
SUCH COURTS FOR ITSELF, HIMSELF, OR HERSELF AND IN RESPECT OF ITS, HIS OR HER
PROPERTY WITH RESPECT TO SUCH ACTION. EACH OF THE SELLERS AND THE BUYER AGREES
THAT VENUE WOULD BE PROPER IN ANY OF SUCH COURTS, AND HEREBY WAIVES ANY
OBJECTION THAT ANY SUCH COURT IS AN IMPROPER OR INCONVENIENT FORUM FOR THE
RESOLUTION OF ANY SUCH ACTION. THE PARTIES FURTHER AGREE THAT THE MAILING BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, OF ANY PROCESS REQUIRED
BY ANY SUCH COURT SHALL CONSTITUTE VALID AND LAWFUL SERVICE OF PROCESS AGAINST
THEM, WITHOUT THE NECESSITY FOR SERVICE BY ANY OTHER MEANS PROVIDED BY STATUTE
OR RULE OF COURT. NOTHING CONTAINED HEREIN SHALL APPLY TO ACTIONS ARISING
UNDER OR IN RESPECT OF THIS AGREEMENT INVOLVING OR RELATING TO THE BUYER.
8.9 AMENDMENT AND WAIVERS.
No amendment or waiver of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by all of the Parties. No
waiver by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
8.10 INCORPORATION OF EXHIBITS AND SCHEDULES.
The Exhibits and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
8.11 CONSTRUCTION.
Where specific language is used to clarify by example a general
statement contained herein, such specific language shall not be deemed to
modify, limit or restrict in any manner the construction of the general
statement to which it relates. The language used in this Agreement shall be
deemed to be the language chosen by the Parties to
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express their mutual intent, and no rule of strict construction shall be
applied against any Party.
8.12 REMEDIES.
The Parties shall each have and retain all other rights and remedies
existing in their favor at law or equity, including, without limitation, any
actions for specific performance and/or injunctive or other equitable relief
(including, without limitation, the remedy of rescission) to enforce or prevent
any violations of the provisions of this Agreement.
8.13 SEVERABILITY.
It is the desire and intent of the Parties hereto that the provisions
of this Agreement be enforced to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any particular provision of this Agreement shall be
adjudicated by a court of competent jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction. Notwithstanding the foregoing, if such provision could be more
narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
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IN WITNESS WHEREOF, the Parties have executed this Asset Purchase
Agreement as of the date first above written.
MEMOREX TELEX CORPORATION
By:__________________________________
Name:
Title:
MEMOREX TELEX SERVICES, INC.
By:__________________________________
Name:
Title:
TULSA COMPUTER PRODUCTS, INC.
By:___________________________________
Name:
Title:
MEMOREX TELEX PUERTO RICO, INC.
By:____________________________________
Name:
Title:
DECISIONONE CORPORATION
By:_____________________________________
Name:
Title:
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EXHIBIT A
SERVICE BUSINESS
The Service Business consists of all of Sellers' computer maintenance
and repair business referred to by Sellers as their "Keyser Operation" other
than the network installation, cabling, network support and network consulting
lines of business, all as shown on Sellers statement of operating results for
the year, quarter and month ended July 31, 1996 attached hereto as Schedule a
(the "July 1996 Statement of Operating Results").
26
<PAGE> 1
REVOLVING CREDIT AGREEMENT
Dated as of November 13, 1996
among
DECISIONONE HOLDINGS CORP.,
DECISIONONE CORPORATION
THE FIRST NATIONAL BANK OF BOSTON
and the other lending institutions listed on Schedule 1 hereto
and
THE FIRST NATIONAL BANK OF BOSTON
as Agent
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
1. DEFINITIONS AND RULES OF INTERPRETATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Rules of Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2. THE REVOLVING CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.1. Commitment to Lend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2. Commitment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.3. Reduction of Total Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.4. The Revolving Credit Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.5. Interest on Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.6. Requests for Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.7. Conversion Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.7.1. Conversion to Different Type of Revolving Credit Loan . . . . . . . . . . . . . . 16
2.7.2. Continuation of Type of Revolving Credit Loan . . . . . . . . . . . . . . . . . . 16
2.7.3. Eurodollar Rate Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.8. Funds for Revolving Credit Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.8.1. Funding Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.8.2. Advances by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3. REPAYMENT OF THE REVOLVING CREDIT LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1. Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.2. Mandatory Repayments of Revolving Credit Loans. . . . . . . . . . . . . . . . . . . . . . . 18
3.3. Optional Repayments of Revolving Credit Loans . . . . . . . . . . . . . . . . . . . . . . . 18
4. CERTAIN GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1. Closing Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2. Funds for Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2.1. Payments to Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2.2. Net Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.3. Computations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.4. Inability to Determine Eurodollar Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.5. Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.6. Additional Costs, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.7. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.8. Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.9. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.10. Interest After Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.10.1. Overdue Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.10.2. Amounts Not Overdue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.11. Replacement Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5. GUARANTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.1. Guaranties of Holdings Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.2. New Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1. Corporate Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1.1. Incorporation; Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1.2. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.1.3. Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
<PAGE> 3
-ii-
<TABLE>
<S> <C> <C>
6.2. Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3. Title to Properties; Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4. Financial Statements and Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4.1. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.4.2. Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.5. No Material Changes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.6. Franchises, Patents, Copyrights, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7. Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.8. No Materially Adverse Contracts, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.9. Compliance with Other Instruments, Laws, etc. . . . . . . . . . . . . . . . . . . . . . . . 27
6.10. Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.11. No Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.12. Holding Company and Investment Company Acts . . . . . . . . . . . . . . . . . . . . . . . . 27
6.13. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.13.1. Absence of Financing Statements . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.13.2. No Mortgages; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.14. Other Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.15. Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.16. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.16.1. In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.16.2. Terminability of Welfare Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.16.3. Guaranteed Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.16.4. Multiemployer Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.17. Regulations U and X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.18. Environmental Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.19. Subsidiaries, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.20. Chief Executive Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.21. Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.22. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.23. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7. AFFIRMATIVE COVENANTS OF THE BORROWER AND Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1. Compliance with Original Agreement Affirmative Covenants . . . . . . . . . . . . . . . . . 31
7.2. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND Holdings . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.1. Restrictions on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.2. Compliance with Original Agreement Negative Covenants . . . . . . . . . . . . . . . . . . . 34
9. FINANCIAL COVENANTS OF THE BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10. CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.1. Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.2. Certified Copies of Charter Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.3. Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.4. Incumbency Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.5. UCC Search Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.6. Solvency Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.7. Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.8. Payment of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.9. Disbursement Instructions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.10. Evidence of Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
</TABLE>
<PAGE> 4
-iii-
<TABLE>
<S> <C> <C>
11. CONDITIONS TO ALL BORROWINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.1. Representations True; No Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.2. No Legal Impediment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.3. Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.4. Proceedings and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12. EVENTS OF DEFAULT; ACCELERATION; ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.1. Events of Default and Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
12.2. Termination of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.3. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
12.4. Distribution of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
13. SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.1. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
14.2. Employees and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.3. No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.4. No Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
14.5. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.5.1. Payments to Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.5.2. Distribution by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.5.3. Delinquent Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
14.6. Holders of Revolving Credit Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.7. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.8. Agent as Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.9. Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
14.10. Notification of Defaults and Events of Default . . . . . . . . . . . . . . . . . . . . . . 44
14.11. Duties in the Case of Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
15. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
16. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
17. SURVIVAL OF COVENANTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
18. ASSIGNMENT AND PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
18.1. Conditions to Assignment by Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
18.2. Certain Representations and Warranties; Limitations; Covenants . . . . . . . . . . . . . . 47
18.3. Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
18.4. New Revolving Credit Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
18.5. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
18.6. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
18.7. Assignee or Participant Affiliated with the Borrower . . . . . . . . . . . . . . . . . . . 49
18.8. Miscellaneous Assignment Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
18.9. Assignment by Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
19. NOTICES, ETC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
20. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
21. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
22. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
23. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
24. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
25. CONSENTS, AMENDMENTS, WAIVERS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
26. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
<PAGE> 5
EXHIBITS
Exhibit A Form of Revolving Credit Note
Exhibit B Form of Loan Request
Exhibit C Form of Compliance Certificate
Exhibit D Form of Assignment and Acceptance
SCHEDULES
Schedule 1 Banks; Commitments
Schedule 6.3 Title to Properties
Schedule 6.6 Intellectual Property
Schedule 6.7 Litigation
Schedule 6.10 Taxes
Schedule 6.18 Environmental Matters
Schedule 6.19 Subsidiaries
Schedule 6.23 Insurance
Schedule 8.1 Existing Indebtedness
Schedule 8.2 Existing Liens
Schedule 8.3 Existing Investments
<PAGE> 6
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT is made as of November 13, 1996, by
and among (a) DECISIONONE HOLDINGS CORP., a Delaware corporation ("Holdings"),
(b) DECISIONONE CORPORATION, (the "Borrower") a Delaware corporation having its
principal place of business at 50 East Swedesford Road, Frazer, Pennsylvania
19355, (c) THE FIRST NATIONAL BANK OF BOSTON and the other lending institutions
listed on Schedule 1 hereto (collectively and with any other Person who becomes
an assignee of any rights and obligations of any such lending institution
pursuant to Section 18 hereof, the "Banks") and (d) THE FIRST NATIONAL BANK OF
BOSTON, as agent for the Banks (the "Agent").
DEFINITIONS AND RULES OF INTERPRETATION.
1.1. DEFINITIONS. The following terms shall have the meanings
set forth in this Section 1 or elsewhere in the provisions of this Credit
Agreement referred to below:
Acquisition. Any acquisition by any of the Holdings Companies which
is permitted by Section 9.5 of the Original Agreement.
Additional Guaranties. See Section 5.2 hereof.
Adjustment Date. The date which is one (1) Business Day following the
date in which a Compliance Certificate is delivered by the Borrower pursuant to
Section 8.4(d) of the Original Agreement.
Affected Bank. See Section 4.11 hereof.
Affiliate. Any Person that would be considered to be an affiliate of
the Borrower under Rule 144(a) of the Rules and Regulations of the Securities
and Exchange Commission, as in effect on the date hereof, if the Borrower was
issuing securities.
Agent. As defined in the preamble hereto.
Agent's Head Office. The Agent's head office located at the address
set forth on Schedule 1 attached hereto, or at such other location as the Agent
may designate from time to time.
Agent's Special Counsel. Bingham, Dana & Gould LLP or such other
counsel as may be approved by the Agent.
Applicable Margin. For each period commencing on an Adjustment Date
through the date immediately preceding the next Adjustment Date (each a "Rate
Adjustment Period"), the Applicable Margin shall be the applicable margin set
forth below with respect to the Borrower's Debt Ratio, as determined for the
fiscal quarter of the Borrower ending immediately prior to the applicable Rate
Adjustment Period.
<PAGE> 7
-2-
<TABLE>
<CAPTION>
BASE RATE EURODOLLAR
LOANS RATE LOANS
APPLICABLE APPLICABLE COMMITMENT
DEBT RATIO MARGIN MARGIN FEE RATE
---------- ------ ------ --------
<S> <C> <C> <C>
Greater than or equal to 0.55:1.00 0% 1.00% 0.250%
Less than 0.55:1.00 but greater than or equal to 0.50:1.00 0% 0.750% 0.225%
Less than 0.50:1.00 but greater than or equal to 0.45:1.00 0% 0.625% 0.200%
Less than 0.45:1.00 but greater than or equal to 0.35:1.00 0% 0.500% 0.175%
Less than 0.35:1.00 but greater than or equal to 0.25:1.00 0% 0.375% 0.125%
Less than 0.25:1.00 0% 0.250% 0.100%
</TABLE>
Notwithstanding the foregoing, in the event the Borrower obtains a
Senior Debt Rating from either Standard & Poor's or Moody's, the Applicable
Margin for each Rate Adjustment Period occurring after the Borrower obtains
such Senior Debt Rating and maintains a Senior Debt Rating shall be the
applicable margin set forth below with respect to the Borrower's Senior Debt
Rating, as determined for the fiscal quarter of the Borrower ending immediately
prior to the applicable Rate Adjustment Period, and, in the event the Borrower
obtains a Senior Debt Rating from both Standard & Poor's and Moody's, the
higher Applicable Margin applicable for either Standard & Poor's or Moody's
Senior Debt Rating shall be the Applicable Margin for such Rate Adjustment
Period:
<TABLE>
<CAPTION>
SENIOR DEBT RATING BASE RATE LOANS EURODOLLAR RATE
(STANDARD & POOR'S APPLICABLE LOANS APPLICABLE COMMITMENT FEE
AND/OR MOODY'S MARGIN MARGIN RATE
------------------- --------------- ---------------- --------------
<S> <C> <C> <C>
BB- and/or Ba3 or less 0% 0.875% 0.225%
BB/BB+ and/or Ba2/Ba1 0% 0.700% 0.225%
BBB- and/or Baa3 0% 0.500% 0.175%
BBB/BBB+ and/or Baa2/Baa1 0% 0.375% 0.125%
A- and/or A3 or better 0% 0.250% 0.100%
</TABLE>
Notwithstanding the foregoing, if the Borrower fails to deliver any
Compliance Certificate when required by Section 7 hereof, then, for the period
commencing on the date when such Compliance Certificate should have been
delivered pursuant to Section 7 through the date immediately following the date
on which such Compliance Certificate is delivered, the Applicable Margin shall
be the highest Applicable Margin set forth above.
Assignment and Acceptance. See Section 18.1.
Balance Sheet Date. June 30, 1996.
Banks. As defined in the preamble hereto.
<PAGE> 8
-3-
Base Rate. The higher of (a) the annual rate of interest announced
from time to time by the Agent at its head office in Boston, Massachusetts, as
its "base rate" and (b) one-half of one percent (1/2%) above the Federal Funds
Effective Rate. For the purposes of this definition, "Federal Funds Effective
Rate" shall mean for any day, the rate per annum equal to the weighted average
of the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published for such
day (or, if such day is not a Business Day, for the next preceding Business
Day) by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average of the quotations for
such day on such transactions received by the Agent from three funds brokers of
recognized standing selected by the Agent.
Base Rate Loans. Revolving Credit Loans bearing interest calculated
by reference to the Base Rate.
Borrower. As defined in the preamble hereto.
Business Day. Any day on which banking institutions in Boston,
Massachusetts, are open for the transaction of corporate lending business and,
in the case of Eurodollar Rate Loans, also a day which is a Eurodollar Business
Day.
Capital Assets. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery and equipment) and intangible (such as patents, copyrights,
trademarks, franchises and goodwill); provided that Capital Assets shall not
include any item customarily charged directly to expense or depreciated over a
useful life of twelve (12) months or less in accordance with generally accepted
accounting principles.
Capital Expenditures. Amounts paid or indebtedness incurred by any of
the Holdings Companies in connection with the purchase or lease by any of the
Holdings Companies of Capital Assets that would be required to be capitalized
and shown on the balance sheet of such Person in accordance with generally
accepted accounting principles; provided, however, for purposes of compliance
with the covenant regarding limitations on Capital Expenditures set forth in
Section 10.1 of the Original Agreement and incorporated by reference from the
Original Agreement pursuant to Section 9 hereof, Capital Expenditures shall not
include amounts paid or indebtedness incurred in connection with the purchase
of spare parts inventory in the ordinary course of business consistent with
past practices.
Capitalization Documents. The certificates of incorporation and
by-laws of the Holdings Companies.
Capitalized Leases. Leases under which any of the Holdings Companies
is the lessee or obligor, the discounted future rental payment obligations of
the Holdings Companies which are required to be capitalized on the balance
sheet of the lessee or obligor in accordance with generally accepted accounting
principles.
CERCLA. See Section 6.18 hereof.
Closing Date. The first date on which the conditions set forth in
Section 10 have been satisfied and any Revolving Credit Loans are to be made
hereunder.
<PAGE> 9
-4-
Code. The Internal Revenue Code of 1986, as amended, and all
regulations which are promulgated thereunder.
Commitment. With respect to each Bank, the amount set forth on
Schedule 1 hereto as the amount of such Bank's commitment to make Revolving
Credit Loans to the Borrower, as the same may be reduced from time to time; or
if such commitment is terminated pursuant to the provisions hereof, zero.
Commitment Fee. See Section 2.2 hereof.
Commitment Fee Rate. See the definition of Applicable Margin.
Commitment Percentage. With respect to each Bank, the percentage set
forth on Schedule 1 hereto as such Bank's percentage of the aggregate
Commitments of all of the Banks.
Compliance Certificate. The "Compliance Certificate" as defined in
Section 8.4(d) of the Original Agreement.
Consolidated or consolidated. With reference to any term defined
herein, shall mean that term as applied to the accounts of Holdings and its
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
Consolidated Net Income (or Loss). The consolidated net income (or
loss) of the Holdings Companies, after deduction of all expenses, taxes, and
other proper charges, determined in accordance with generally accepted
accounting principles, but excluding any non-cash expenses recognized by any of
the Holdings Companies as a result of the issuance by such Holdings Company of
stock options to employees at less than fair market value.
Consolidated Net Worth. The excess of Consolidated Total Assets
(which shall include any Preferred Stock) over Consolidated Total Liabilities,
less, to the extent otherwise includable in the computations of Consolidated
Net Worth, any subscriptions receivable.
Consolidated Total Assets. All assets of Holdings and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting principles.
Consolidated Total Interest Expense. For any period, the aggregate
amount of interest required to be paid or accrued by Holdings and its
Subsidiaries during such period on all Indebtedness of Holdings and its
Subsidiaries outstanding during all or any part of such period, whether such
interest was or is required to be reflected as an item of expense or
capitalized, including payments consisting of interest in respect of
Capitalized Leases and including commitment fees, agency fees, facility fees,
balance deficiency fees and similar fees or expenses in connection with the
borrowing of money.
Consolidated Total Liabilities. All liabilities of Holdings and its
Subsidiaries determined on a consolidated basis in accordance with generally
accepted accounting
<PAGE> 10
-5-
principles and all Indebtedness of Holdings and its Subsidiaries, whether or
not so classified.
Conversion Request. A notice given by the Borrower to the Agent of
the Borrower's election to convert or continue a Revolving Credit Loan in
accordance with Section 2.7.
Credit Agreement. This Revolving Credit Agreement, including the
Schedules and Exhibits hereto.
Debt Ratio. As of any date of determination, the ratio of (a) Total
Funded Indebtedness of the Holdings Companies outstanding on such date to (b)
Total Capital of the Holding Companies on such date.
Decision Companies. Collectively, the Borrower and the Decision
Subsidiaries.
DecisionOne Canada. DecisionOne Corporation, a corporation organized
under the laws of Ontario, Canada and a wholly-owned Subsidiary of the
Borrower.
DecisionOne Supplies. DecisionOne Supplies, Inc., a Delaware
corporation.
Decision Subsidiaries. Collectively, Decision Switzerland;
DecisionOne Supplies; Decision Data Investment Corporation, a Delaware
corporation; Holding Corp.; DecisionOne Canada; IC Properties; and any other
Subsidiary of the Borrower or Holdings that is acquired or created subsequent
to the date hereof.
Decision Switzerland. Decision Data Computer International, S.A., a
societe anonyme organized under the laws of Switzerland.
Default. See Section 12.1 hereof.
Distribution. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of any Person, other than
dividends payable solely in shares of common stock of such Person; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of any Person, directly or indirectly through a Subsidiary of such Person
or otherwise; the return of capital by any Person to its shareholders as such;
or any other distribution on or in respect of any shares of any class of
capital stock of any Person.
Dollars or $. Dollars in lawful currency of the United States of
America.
Domestic Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other office of such
Bank, if any, located within the United States that will be making or
maintaining Base Rate Loans.
Drawdown Date. The date on which any Revolving Credit Loan is made or
is to be made, and the date on which any Revolving Credit Loan is converted or
continued in accordance with Section 2.7.
<PAGE> 11
-6-
EBITDA. With respect to any Person and its Subsidiaries for any
fiscal period, an amount equal to Consolidated Net Income for such period,
plus, to the extent deducted in the calculation of Consolidated Net Income and
without duplication, (a) depreciation and amortization (including the
amortization of spare parts) for such period, (b) other noncash charges for
such period, including, without duplication, charges or credits for unutilized
leases (c) income tax expense for such period and (d) Consolidated Total
Interest Expense paid or accrued during such period and minus purchases of any
repairable spare parts in such period.
Eligible Assignee. Any of (a) a commercial bank or finance company
organized under the laws of the United States, or any State thereof or the
District of Columbia, and having total assets in excess of $1,000,000,000; (b)
a savings and loan association or savings bank organized under the laws of the
United States, or any State thereof or the District of Columbia, and having a
net worth of at least $100,000,000, calculated in accordance with generally
accepted accounting principles; (c) a commercial bank organized under the laws
of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any
such country, and having total assets in excess of $1,000,000,000, provided
that such bank is acting through a branch or agency located in the country in
which it is organized or another country which is also a member of the OECD;
(d) the central bank of any country which is a member of the OECD; (e) any
investment fund, financial institution or other institutional lender (other
than any financial institution which but for the amount of its total assets or
net worth would have been an Eligible Assignee under clauses (a)-(d) above)
having total assets in excess of $100,000,000; and (f) if, but only if, any
Event of Default has occurred and is continuing, any other bank, insurance
company, commercial finance company or other financial institution or other
Person approved by the Agent, such approval not to be unreasonably withheld.
Employee Benefit Plan. Any employee benefit plan within the meaning
of Section 3(3) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate, other than a Multiemployer Plan.
Environmental Laws. See Section 6.18(a) hereof.
ERISA. The Employee Retirement Income Security Act of 1974.
ERISA Affiliate. Any Person which is treated as a single employer
with the Borrower under Section 414 of the Code.
ERISA Reportable Event. A reportable event with respect to a
Guaranteed Pension Plan within the meaning of Section 4043 of ERISA and the
regulations promulgated thereunder as to which the requirement of notice has
not been waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar
Rate Loan, the maximum rate (expressed as a decimal) at which any lender
subject thereto would be required to maintain reserves under Regulation D of
the Board of Governors of the Federal Reserve System (or any successor or
similar regulations relating to such reserve requirements) against
"Eurocurrency Liabilities" (as that term is used in Regulation D), if
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such liabilities were outstanding. The Eurocurrency Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in the
Eurocurrency Reserve Rate.
Eurodollar Business Day. Any day on which commercial banks are open
for international business (including dealings in Dollar deposits) in London or
such other eurodollar interbank market as may be selected by the Agent in its
sole discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Bank
designated as such in Schedule 1 hereto; thereafter, such other office of such
Bank, if any, that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar
Rate Loan, the rate per annum appearing on Telerate Page 3750 (or any successor
page) as the London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of such Interest Period for a term comparable to such Interest Period. If
for any reason such rate is not available, the term "Eurodollar Rate" shall
mean, for any Eurodollar Rate Loan for any Interest Period therefor, the rate
per annum appearing on Reuters Screen LIBO Page as the London interbank offered
rate for deposits in Dollars at approximately 11:00 a.m. (London time) two (2)
Business Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more than one rate is
specified on Reuters Screen LIBO Page, the applicable rate shall be the
arithmetic mean of all such rates.
Eurodollar Rate Loans. Revolving Credit Loans bearing interest
calculated by reference to the Eurodollar Rate.
Event of Default. See Section 12.1 hereof.
Fee Letter. See Section 4.1 hereof.
FNBB. The First National Bank of Boston, a national banking
association, in its individual capacity.
generally accepted accounting principles. (a) When used in the
financial covenants set forth in Section 10 of the Original Agreement and
incorporated by reference pursuant to Section 9 hereof, whether directly or
indirectly through reference to a capitalized term used therein, means (i)
principles that are consistent with the principles promulgated or adopted by
the Financial Accounting Standards Board and its predecessors, in effect for
the fiscal year ended on the Balance Sheet Date, and (ii) to the extent
consistent with such principles, the accounting practice of the Borrower
reflected in its financial statements for the year ended on the Balance Sheet
Date, and (b) when used in general, other than as provided above, means
principles that are (i) consistent with the principles promulgated or adopted
by the Financial Accounting Standards Board and its predecessors, as in effect
from time to time, and (ii) consistently applied with past financial statements
of the Borrower adopting the same principles, provided that in each case
referred to in this definition of "generally accepted accounting principles" a
certified public accountant would, insofar as the use of
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such accounting principles is pertinent, be in a position to deliver an
unqualified opinion (other than a qualification regarding changes in generally
accepted accounting principles) as to financial statements in which such
principles have been properly applied.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrower
or any ERISA Affiliate the benefits of which are guaranteed on termination in
full or in part by the PBGC pursuant to Title IV of ERISA, other than a
Multiemployer Plan.
Guaranty. The Guaranty, dated or to be dated on or prior to the
Closing Date, made by the Holdings Companies (other than the Borrower and
DecisionOne Canada) in favor of the Banks and the Agent pursuant to which each
of the Holdings Companies (other than the Borrower and DecisionOne Canada)
guaranty to the Banks and the Agent the payment and performance of the
Obligations and in form and substance satisfactory to the Banks and the Agent.
Hazardous Substances. See Section 6.18(b) hereof.
Holding Corp. Properties Holding Corporation, a Delaware corporation.
Holdings. As defined in the preamble hereto.
Holdings Companies. Collectively, Holdings and the Decision
Companies.
IC Properties. IC Properties Corporation, a Delaware corporation.
Indebtedness. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should
be made by footnotes thereto, including in any event and whether or not so
classified: (a) all debt and similar monetary obligations, whether direct or
indirect; (b) all liabilities secured by any mortgage, pledge, security
interest, lien, charge or other encumbrance existing on property owned or
acquired subject thereto, whether or not the liability secured thereby shall
have been assumed; and (c) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness of others,
including any obligation to supply funds to or in any manner to invest in,
directly or indirectly, the debtor, to purchase indebtedness, or to assure the
owner of indebtedness against loss, through an agreement to purchase goods,
supplies, or services for the purpose of enabling the debtor to make payment of
the indebtedness held by such owner or otherwise, and the obligations to
reimburse the issuer in respect of any letters of credit.
Intercompany Indebtedness. The aggregate amount of all Indebtedness of
(a) the Borrower to Holdings, (b) any of the Decision Subsidiaries to the
Borrower or other Decision Subsidiaries, and (c) the Borrower to the Decision
Subsidiaries, in each case incurred in the ordinary course of business and, in
the case of clauses (b) and (c) hereof, incurred in connection with (i) the
collection by the Borrower of accounts receivable owing to the Decision
Subsidiaries, (ii) the payment by the Borrower of accounts payable, payroll and
accrued expenses owing by the Decision Subsidiaries, (iii) other cash
management functions customarily performed by the Borrower or any Decision
Subsidiary on behalf of
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the other Decision Subsidiaries and service, supply, leasing, licensing or
other non-cash arrangements among the Decision Subsidiaries and (iv)
Acquisitions permitted by Section 9.5 of the Original Agreement and
incorporated by reference pursuant to Section 8 hereof.
Interest Payment Date. (a) As to any Base Rate Loan, the last day of
the calendar quarter; and (b) as to any Eurodollar Rate Loan in respect of
which the Interest Period is (i) three (3) months or less, the last day of such
Interest Period and (ii) more than three (3) months, the date that is three (3)
months from the first day of such Interest Period and, in addition, the last
day of such Interest Period.
Interest Period. With respect to each Revolving Credit Loan, (a)
initially, the period commencing on the Drawdown Date of such Revolving Credit
Loan and ending on the last day of one of the periods set forth below, as
selected by the Borrower in a Loan Request (i) for any Base Rate Loan, the last
day of the calendar quarter; and (ii) for any Eurodollar Rate Loan, 1, 2, 3 or
6 months; and (b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Revolving Credit Loan and
ending on the last day of one of the periods set forth above, as selected by
the Borrower in a Conversion Request; provided that all of the foregoing
provisions relating to Interest Periods are subject to the following:
(a) if any Interest Period with respect to a Eurodollar Rate
Loan would otherwise end on a day that is not a Eurodollar Business
Day, that Interest Period shall be extended to the next succeeding
Eurodollar Business Day unless the result of such extension would be
to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the immediately preceding
Eurodollar Business Day;
(b) if any Interest Period with respect to a Base Rate Loan
would end on a day that is not a Business Day, that Interest Period
shall end on the next succeeding Business Day;
(c) if the Borrower shall fail to give notice as provided in
Section 2.7, the Borrower shall be deemed to have requested a
conversion of the affected Eurodollar Rate Loan to a Base Rate Loan
and the continuance of all Base Rate Loans as Base Rate Loans on the
last day of the then current Interest Period with respect thereto;
(d) any Interest Period relating to any Eurodollar Rate Loan
that begins on the last Eurodollar Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in
the calendar month at the end of such Interest Period) shall end on
the last Eurodollar Business Day of a calendar month; and
(e) any Interest Period relating to any Eurodollar Rate Loan
that would otherwise extend beyond the Revolving Credit Loan Maturity
Date shall end on the Revolving Credit Loan Maturity Date.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or in
respect of any guaranties (or other
<PAGE> 15
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commitments as described under Indebtedness), or obligations of, any Person.
In determining the aggregate amount of Investments outstanding at any
particular time: (a) the amount of any Investment represented by a guaranty
shall be taken at not less than the principal amount of the obligations
guaranteed and still outstanding; (b) there shall be included as an Investment
all interest accrued with respect to Indebtedness constituting an Investment
unless and until such interest is paid; (c) there shall be deducted in respect
of each such Investment any amount received as a return of capital (but only by
repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution); (d) there shall not be deducted in respect of any
Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (b) may be deducted when paid; and (e) there
shall not be deducted from the aggregate amount of Investments any decrease in
the value thereof.
Investors. J.H. Whitney & Co., a New York limited partnership, Welsh,
Carson, Anderson & Stowe IV, a New York limited partnership acting through its
general partner WCAS IV Partners and WCAS Venture Partners, a New York limited
partnership acting through its general partner WCAS Ventures.
Loan Documents. This Credit Agreement, the Notes, the Fee Letter and
the Guaranty.
Loan Request. See Section 2.6 hereof.
Majority Banks. As of any date, the Banks holding at least fifty-one
percent (51%) of the outstanding principal amount of the Revolving Credit Note,
plus the unused portion of the Commitments on such date; and if no such
principal is outstanding, the Banks whose aggregate Commitments constitutes at
least fifty-one percent (51%) of the Total Commitment.
Memorex. Memorex Telex Corporation, a Delaware corporation.
Memorex Acquisition. The Acquisition by the Borrower of certain of
the assets of Memorex and its Subsidiaries pursuant to an order of the United
States Bankruptcy Court for a purchase price (including related transaction
costs) of not more than $75,000,000.
Multiemployer Plan. Any multiemployer plan within the meaning of
Section 3(37) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate.
Non-Affected Bank. Any Bank which is not an Affected Bank.
Non-U.S. Lender. See Section 4.2.2(b) hereof.
Obligations. All indebtedness, obligations and liabilities of any of
the Holdings Companies to any of the Banks and the Agent, individually or
collectively, existing on the date of this Credit Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, arising or incurred under this
Credit Agreement or any of the other Loan Documents or in respect of any of the
Loans
<PAGE> 16
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made or any of the Notes or any documents, agreements or instruments executed
in connection therewith, or other instruments at any time evidencing any
thereof.
Original Agreement. The Revolving Credit Agreement dated as of April
26, 1996 by and among the Borrower, Holdings, the lending institutions listed
on Schedule 1 thereto and the agents named therein, as amended by the First
Amendment to Revolving Credit Agreement dated as of September 30, 1996 and as
the same may be further amended, restated, modified and supplemented from time
to time.
outstanding. With respect to the Revolving Credit Loans, the
aggregate unpaid principal thereof as of any date of determination.
PBGC. The Pension Benefit Guaranty Corporation created by Section
4002 of ERISA and any successor entity or entities having similar
responsibilities.
Permitted Liens. Liens, security interests and other encumbrances
permitted by Section 9.2 of the Original Agreement.
Person. Any individual, corporation, partnership, trust,
unincorporated association, business, or other legal entity, and any government
or any governmental agency or political subdivision thereof.
Preferred Stock. As applied to the capital stock of any Person, means
the capital stock of any class or classes (however designated) that is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of capital stock of any other class of such Person.
Rate Adjustment Period. As defined in the definition of Applicable
Margin.
Real Estate. All real property at any time owned or leased (as lessee
or sublessee) by any of the Holdings Companies.
Record. The grid attached to a Revolving Credit Note, or the
continuation of such grid, or any other similar record, including computer
records, maintained by any Bank with respect to any Revolving Credit Loan
referred to in such Revolving Credit Note.
Reference Period. A period of four consecutive fiscal quarters (or
such shorter period of one, two or three full consecutive fiscal quarters as
has elapsed since the Closing Date).
Revolving Credit Loan Maturity Date. April 26, 2001.
Revolving Credit Loans. Revolving credit loans made or to be made by
the Banks to the Borrower pursuant to Section 2.
Revolving Credit Note. See Section 2.4 hereof.
<PAGE> 17
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Senior Debt Rating. The rating issued from time to time (whether on a
preliminary basis or otherwise) by Standard & Poor's or Moody's with respect to
unsecured debt of the Borrower not maturing within twelve (12) months and not
subordinated by its terms in right of payment to other unsecured debt of the
Borrower (such debt, "Long Term Senior Debt"). If (but only if) no such direct
rating by the particular applicable rating agency exists with respect to Long
Term Senior Debt, such rating shall be implied from the rating issued from time
to time (whether on a preliminary basis or otherwise) by, as applicable,
Standard & Poor's or Moody's with respect to unsecured debt of the Borrower not
maturing within twelve (12) months that is subordinated by its terms in right
of payment to other unsecured senior debt of the borrower (such debt, "Long
Term Subordinated Debt") on the following basis: the Senior Debt Rating of
Long Term Senior Debt shall be the next higher subgrade designation to the debt
rating of Long Term Subordinated Debt by Standard & Poor's or Moody's, as the
case may be. In the event Standard & Poor's or Moody's changes its debt rating
designations, definitions of symbols, the Borrower and the Majority Banks shall
agree as to the exact application of such new debt rating terminology to the
application of the Applicable Margin, taking into account the explanation of
such new rating terminology by Standard & Poor's or Moody's, as the case may
be, and its comparability to the Senior Debt Ratings referred to in the
definition of Applicable Margin.
Subsidiary. Any corporation, association, trust, or other business
entity of which the designated parent shall at any time own directly or
indirectly through a Subsidiary or Subsidiaries at least a majority (by number
of votes) of the outstanding Voting Stock.
Swiss Account Amount. The amount, not in excess of 250,000 Swiss
francs plus interest earned thereon, held by Decision Switzerland in Union des
Banques Suisses Account No. 392.429.80J, as such amount is reduced from to time
to time pursuant to the agreement of the signatories of such account for the
purpose of paying such tax obligations of Decision Switzerland to the various
taxing authorities in Switzerland as have accrued, may be accruing, or may
accrue in the future, including, without limitation, Federal direct taxes
expected to be due for the biennial taxable period ended November 30, 1988, and
such dividend withholding taxes as may become due on the earnings and legal
reserve of Decision Switzerland as of November 30, 1988.
Total Capital. As of any date of determination, the sum of (a) the
Total Funded Indebtedness of the Holdings Companies outstanding at such time,
plus (b) all shareholder equity of the Holdings Companies, as determined in
accordance with generally accepted accounting principles, plus, without
duplication, (c) the amount of any Preferred Stock issued after the Closing
Date which is not classified as shareholder equity in accordance with generally
accepted accounting principles.
Total Commitment. The sum of the Commitments of the Banks, as in
effect from time to time.
Total Funded Indebtedness. All Indebtedness of Holdings and its
Subsidiaries for borrowed money, purchase money Indebtedness and with respect
to Capitalized Leases, determined on a consolidated basis in accordance with
generally accepted accounting principles.
<PAGE> 18
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Type. As to any Revolving Credit Loan, its nature as a Base Rate Loan
or a Eurodollar Rate Loan.
Voting Stock. Stock or similar interests, of any class or classes
(however designated), the holders of which are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the corporation, association, trust or other
business entity involved, whether or not the right so to vote exists by reason
of the happening of a contingency.
1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include
such document or agreement as amended, modified or supplemented from
time to time in accordance with its terms and the terms of this Credit
Agreement.
(b) The singular includes the plural and the plural includes
the singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted
successors and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by generally accepted accounting principles
applied on a consistent basis by the accounting entity to which they
refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts,
have the meanings assigned to them therein, with the term "instrument"
being that defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "Section " refers to that
section of this Credit Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of
like import shall refer to this Credit Agreement as a whole and not to
any particular section or subdivision of this Credit Agreement.
2. THE REVOLVING CREDIT FACILITY.
2.1. Commitment to Lend. Subject to the terms and conditions set
forth in this Credit Agreement, each of the Banks severally agrees to lend to
the Borrower and the Borrower may borrow, repay, and reborrow from time to time
between the Closing Date and the Revolving Credit Loan Maturity Date upon
notice by the Borrower to the Agent given in accordance with Section 2.6, such
sums as are requested by the Borrower up to a maximum
<PAGE> 19
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aggregate amount outstanding (after giving effect to all amounts requested) at
any one time equal to such Bank's Commitment, provided that the sum of the
outstanding amount of the Revolving Credit Loans (after giving effect to all
amounts requested) shall not at any time exceed the Total Commitment and
provided, further, that until such time as the Agent receives evidence that the
Memorex Acquisition has been consummated on terms and conditions satisfactory
to the Banks and the Agent, the sum of the outstanding amount of all Revolving
Credit Loans (after giving effect to all amounts requested) shall not at any
time exceed $5,000,000. The Revolving Credit Loans shall be made pro rata in
accordance with each Bank's Commitment Percentage. Each request for a
Revolving Credit Loan hereunder shall constitute a representation and warranty
by the Borrower that the conditions set forth in Section 10 and Section 11, in
the case of the initial Revolving Credit Loans to be made on the Closing Date,
and Section 11, in the case of all other Revolving Credit Loans, have been
satisfied on the date of such request.
2.2. Commitment Fee. The Borrower agrees to pay to the Agent for
the accounts of the Banks in accordance with their respective Commitment
Percentages a commitment fee (the "Commitment Fee") calculated at the
applicable Commitment Fee Rate on the average daily amount during each calendar
quarter or portion thereof from the date hereof to the Revolving Credit Loan
Maturity Date by which the Total Commitment exceeds the outstanding amount of
Revolving Credit Loans during such calendar quarter. The commitment fee shall
be payable quarterly in arrears on the first day of each calendar quarter for
the immediately preceding calendar quarter commencing on the first such date
following the date hereof, with a final payment on the Revolving Credit
Maturity Date or any earlier date on which the Commitments shall terminate.
2.3. Reduction of Total Commitment. The Borrower shall have the
right at any time and from time to time upon one (1) Business Days prior
written notice to the Agent to reduce by $5,000,000 or a whole multiple of
$100,000 in excess thereof or terminate entirely the Total Commitment,
whereupon the Commitments of the Banks shall be reduced pro rata in accordance
with their respective Commitment Percentages of the amount specified in such
notice or, as the case may be, terminated. Promptly after receiving any notice
of the Borrower delivered pursuant to this Section 2.3, the Agent will notify
the Banks of the substance thereof. Upon the effective date of any such
reduction or termination, the Borrower shall pay to the Agent for the
respective accounts of the Banks the full amount of any commitment fee then
accrued on the amount of the reduction. No reduction or termination of the
Commitments may be reinstated.
2.4. The Revolving Credit Notes. The Revolving Credit Loans shall
be evidenced by a promissory note of the Borrower in substantially the form of
Exhibit A hereto (the "Revolving Credit Note"), dated as of the Closing Date
and completed with appropriate insertions. The Revolving Credit Note shall be
payable to the order of the Agent for the respective accounts of the Banks in a
principal amount equal to the Total Commitment or, if less, the outstanding
amount of all Revolving Credit Loans made by all the Banks, plus interest
accrued thereon, as set forth below. The Borrower irrevocably authorizes the
Agent to make or cause to be made, at or about the time of the Drawdown Date of
any Revolving Credit Loan or at the time of receipt of any payment of principal
on the Revolving Credit Note, an appropriate notation on the Record reflecting
the making of such Revolving Credit Loan or (as the case may be) the receipt of
such payment. The outstanding amount of the
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Revolving Credit Loans set forth on the Record shall be prima facie evidence of
the principal amount thereof owing and unpaid to the Agent for the accounts of
the Banks, but the failure to record, or any error in so recording, any such
amount on the Record shall not limit or otherwise affect the obligations of the
Borrower hereunder or under the Revolving Credit Note to make payments of
principal of or interest on the Revolving Credit Note when due. At the request
of any Bank, the Borrower shall execute and deliver to such requesting Bank a
Revolving Credit Note made payable to such Bank in a principal amount equal to
such Bank's Commitment Percentage of the Revolving Credit Loans, or, if less,
the outstanding amount of all Revolving Credit Loans made by such Bank, plus
interest accrued thereon, as set forth below, and the Borrower shall execute
and deliver to the Agent for the respective accounts of the Banks which do not
hold their own Revolving Credit Note, an amended and restated Revolving Credit
Note in a principal amount equal to the Total Commitment less the Commitment
amount of any Banks which hold their own Revolving Credit Notes, or, if less,
the outstanding amount of all Revolving Credit Loans made by all such Banks
plus interest accrued thereon, as set forth below.
2.5. Interest on Revolving Credit Loans. Except as otherwise
provided in Section 5.10,
(a) Each Base Rate Loan shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day
of the Interest Period with respect thereto at the rate per annum
equal to the Base Rate plus the Applicable Margin.
(b) Each Eurodollar Rate Loan shall bear interest for the
period commencing with the Drawdown Date thereof and ending on the
last day of the Interest Period with respect thereto at the rate per
annum equal to the Eurodollar Rate for such Interest Period, plus the
Applicable Margin.
(c) The Borrower promises to pay interest on each Revolving
Credit Loan in arrears on each Interest Payment Date with respect
thereto.
(d) The Agent agrees to notify the Borrower of any change in
the Base Rate.
2.6. Requests for Revolving Credit Loans. The Borrower shall give
to the Agent written or telegraphic notice in the form of Exhibit B hereto (or
telephonic notice confirmed in a writing in the form of Exhibit B hereto) of
each Revolving Credit Loan requested hereunder (a "Loan Request") no later than
(a) 10:00 a.m. (Boston time) on the day of the proposed Drawdown Date of any
Base Rate Loan and (b) three (3) Eurodollar Business Days prior to the proposed
Drawdown Date of any Eurodollar Rate Loan. Each such notice shall specify (a)
the principal amount of the Revolving Credit Loan requested, (b) the proposed
Drawdown Date of such Revolving Credit Loan, (c) the Interest Period for such
Revolving Credit Loan and (d) the Type of such Revolving Credit Loan. Promptly
upon receipt of any such notice, the Agent shall notify each of the Banks
thereof. Each Loan Request shall be irrevocable and binding on the Borrower and
shall obligate the Borrower to accept the Revolving Credit Loan requested from
the Banks on the proposed Drawdown Date. Each Loan Request for a Eurodollar
Rate Loan shall be in a minimum aggregate amount of $5,000,000 or a whole
multiple of $100,000 in excess thereof, and each Loan
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Request for a Base Rate Loan shall be in a minimum aggregate amount of $500,000
or a whole multiple of $100,000 in excess thereof.
2.7. Conversion Options.
2.7.1. Conversion to Different Type of Revolving Credit
Loan. The Borrower may elect from time to time to convert any
outstanding Revolving Credit Loan to a Revolving Credit Loan of
another Type, provided that (a) with respect to any such conversion of
a Revolving Credit Loan to a Base Rate Loan, the Borrower shall give
the Agent at least two (2) Business Days prior written notice of such
election; (b) with respect to any such conversion of a Base Rate Loan
to a Eurodollar Rate Loan, the Borrower shall give the Agent at least
three (3) Eurodollar Business Days prior written notice of such
election; (c) with respect to any such conversion of a Eurodollar Rate
Loan into a Revolving Credit Loan of another Type, such conversion
shall only be made on the last day of the Interest Period with respect
thereto, or, if such conversion is made on a day which is not the last
day of the Interest Period with respect thereto, shall pay the
applicable costs set forth in Section 4.9; and (d) no Revolving Credit
Loan may be converted into a Eurodollar Rate Loan when any Default or
Event of Default has occurred and is continuing. On the date on which
such conversion is being made each Bank shall take such action as is
necessary to transfer its Commitment Percentage of such Revolving
Credit Loans to its Domestic Lending Office or its Eurodollar Lending
Office, as the case may be. All or any part of outstanding Revolving
Credit Loans of any Type may be converted into a Revolving Credit Loan
of another Type as provided herein, provided that any partial
conversion shall be in an aggregate principal amount of $5,000,000 or
a whole multiple of $100,000 in excess thereof, unless such conversion
is into a Base Rate Loan, which shall be in an aggregate principal
amount of $100,000 or a whole multiple thereof. Each Conversion
Request relating to the conversion of a Revolving Credit Loan to a
Eurodollar Rate Loan shall be irrevocable by the Borrower.
2.7.2. Continuation of Type of Revolving Credit Loan. Any
Revolving Credit Loan of any Type may be continued as a Revolving
Credit Loan of the same Type upon the expiration of an Interest Period
with respect thereto by compliance by the Borrower with the notice
provisions contained in Section 2.7.1; provided that no Eurodollar
Rate Loan may be continued as such when any Default or Event of
Default has occurred and is continuing, but shall be automatically
converted to a Base Rate Loan on the last day of the first Interest
Period relating thereto ending during the continuance of any Default
or Event of Default of which officers of the Agent active upon the
Borrower's account have actual knowledge. In the event that the
Borrower fails to provide any such notice with respect to the
continuation of any Eurodollar Rate Loan as such, then such Eurodollar
Rate Loan shall be automatically converted to a Base Rate Loan on the
last day of the first Interest Period relating thereto. The Agent
shall notify the Banks promptly when any such automatic conversion
contemplated by this Section 2.7 is scheduled to occur.
2.7.3. Eurodollar Rate Loans. Any conversion to or from
Eurodollar Rate Loans shall be in such amounts and be made pursuant to
such elections so that, after
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giving effect thereto, the aggregate principal amount of all
Eurodollar Rate Loans having the same Interest Period shall not be
less than $5,000,000 or a whole multiple of $100,000 in excess
thereof. In addition, the Borrower hereby agrees that there shall not
be more than ten (10) Eurodollar Rate Loans outstanding at any one
time.
2.8. Funds for Revolving Credit Loan.
2.8.1. Funding Procedures. Not later than 1:00 p.m. (Boston
time) on the proposed Drawdown Date of any Revolving Credit Loans,
each of the Banks will make available to the Agent, at the Agent's
Head Office, in immediately available funds, the amount of such Bank's
Commitment Percentage of the amount of the requested Revolving Credit
Loans. Upon receipt from each Bank of such amount, and upon receipt
of the documents required by Section Section 10 and 11 and the
satisfaction of the other conditions set forth therein, to the extent
applicable, the Agent will make available to the Borrower the
aggregate amount of such Revolving Credit Loans made available to the
Agent by the Banks. The failure or refusal of any Bank to make
available to the Agent at the aforesaid time and place on any Drawdown
Date the amount of its Commitment Percentage of the requested
Revolving Credit Loans shall not relieve any other Bank from its
several obligation hereunder to make available to the Agent the amount
of such other Bank's Commitment Percentage of any requested Revolving
Credit Loans.
2.8.2. Advances by Agent. The Agent may, unless notified to
the contrary by any Bank prior to a Drawdown Date, assume that such
Bank has made available to the Agent on such Drawdown Date the amount
of such Bank's Commitment Percentage of the Revolving Credit Loans to
be made on such Drawdown Date, and the Agent may (but it shall not be
required to), in reliance upon such assumption, make available to the
Borrower a corresponding amount. If any Bank makes available to the
Agent such amount on a date after such Drawdown Date, such Bank shall
pay to the Agent on demand an amount equal to the product of (a) the
average computed for the period referred to in clause (c) below, of
the weighted average interest rate paid by the Agent for federal funds
acquired by the Agent during each day included in such period, times
(b) the amount of such Bank's Commitment Percentage of such Revolving
Credit Loans, times (c) a fraction, the numerator of which is the
number of days that elapse from and including such Drawdown Date to
the date on which the amount of such Bank's Commitment Percentage of
such Revolving Credit Loans shall become immediately available to the
Agent, and the denominator of which is 365. A statement of the Agent
submitted to such Bank with respect to any amounts owing under this
paragraph shall be prima facie evidence of the amount due and owing to
the Agent by such Bank. If the amount of such Bank's Commitment
Percentage of such Revolving Credit Loans is not made available to the
Agent by such Bank within three (3) Business Days following such
Drawdown Date, the Agent shall be entitled to recover such amount from
the Borrower on demand, with interest thereon at the rate per annum
applicable to the Revolving Credit Loans made on such Drawdown Date.
<PAGE> 23
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3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
3.1. Maturity. The Borrower promises to pay on the Revolving
Credit Loan Maturity Date, and there shall become absolutely due and payable on
the Revolving Credit Loan Maturity Date, all of the Revolving Credit Loans
outstanding on such date, together with any and all accrued and unpaid interest
thereon.
3.2. Mandatory Repayments of Revolving Credit Loans. If at any
time the sum of the outstanding amount of the Revolving Credit Loans exceeds
the Total Commitment, then the Borrower shall immediately pay the amount of
such excess to the Agent for the respective accounts of the Banks for
application to the Revolving Credit Loans. Each prepayment of Revolving Credit
Loans shall be allocated among the Banks, in proportion, as nearly as
practicable, to the respective unpaid principal amount of each Bank's Revolving
Credit Loan, with adjustments to the extent practicable to equalize any prior
payments or repayments not exactly in proportion.
3.3. Optional Repayments of Revolving Credit Loans. The Borrower
shall have the right, at its election, to repay the outstanding amount of the
Revolving Credit Loans, as a whole or in part, at any time without penalty or
premium, provided that any full or partial prepayment of the outstanding amount
of any Eurodollar Rate Loans pursuant to this Section 3.3 may be made only on
the last day of the Interest Period relating thereto, or, if not made on the
last day of the such Interest Period, the Borrower shall pay any applicable
costs associated with such repayment as set forth in Section 4.9 hereof. The
Borrower shall give the Agent, no later than 10:00 a.m., (Boston time), at
least one (1) Business Days prior written notice of any proposed prepayment
pursuant to this Section 3.3 of Base Rate Loans, and three (3) Eurodollar
Business Days notice of any proposed prepayment pursuant to this Section 3.3 of
Eurodollar Rate Loans, in each case specifying the proposed date of prepayment
of Revolving Credit Loans and the principal amount to be prepaid. Each such
partial prepayment of the Eurodollar Rate Loans shall be in an integral
multiple of $2,000,000, and each partial prepayment of a Base Rate Loan shall
be in an integral multiple of $500,000, and each shall be accompanied by the
payment of accrued interest on the principal prepaid to the date of prepayment
and shall be applied, in the absence of instruction by the Borrower, first to
the principal of Base Rate Loans and then to the principal of Eurodollar Rate
Loans. Each partial prepayment shall be allocated among the Banks, in
proportion, as nearly as practicable, to the respective unpaid principal amount
of each Bank's Revolving Credit Note, with adjustments to the extent
practicable to equalize any prior repayments not exactly in proportion.
4. CERTAIN GENERAL PROVISIONS.
4.1. Closing Fee. The Borrower agrees to pay to the Agent a
closing fee in the amount and at the times agreed to by the Borrower and the
Agent pursuant to the terms of the fee letter dated as of October __, 1996 (the
"Fee Letter").
4.2. Funds for Payments.
4.2.1. Payments to Agent. All payments of principal,
interest, Commitment Fees and any other amounts due hereunder or under
any of the other
<PAGE> 24
-19-
Loan Documents shall be made to the Agent, for the respective accounts
of the Banks and the Agent, at the Agent's Head Office or at such
other location in the Boston, Massachusetts area that the Agent may
from time to time designate, in each case in immediately available
funds.
4.2.2. Net Payments (a) All payments made to the Banks and
the Agent by the Borrower hereunder, under any Revolving Credit Note
or under any other Loan Document will be made without setoff,
counterclaim or other defense. All such payments will be made free
and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other
charges of whatever nature now or hereafter imposed by any
jurisdiction or any political subdivision or taxing authority thereof
or therein (but excluding, any tax imposed on or measured by net
income of a Bank (including all interest, penalties or similar
liabilities related thereto) pursuant to the laws of the United States
of America or any foreign country or any political subdivision
thereof, or taxing authority of the United States of America or any
foreign country or any political subdivision thereof, all such non-
excluded taxes, collectively, "Taxes"). If any Taxes are so levied or
imposed, the Borrower agrees to pay the full amount of such Taxes, and
such additional amounts as may be necessary so that the amount of
every payment of all amounts due hereunder received by the recipient
thereof, under any Revolving Credit Note or under any other Loan
Document, after withholding or deduction for or on account of any
Taxes, will not be less than the amount provided for herein or in such
Revolving Credit Note. The Borrower will furnish to the Agent upon
request certified copies of tax receipts evidencing such payment by
the Borrower. The Borrower will indemnify and hold harmless the Agent
and each Bank, and reimburse the Agent or such Bank upon its written
request, for the amount of any Taxes so levied or imposed and paid or
withheld by such Bank. Each Bank shall use reasonable efforts to
designate a different principal office or applicable lending office to
avoid the need for the payment of any Taxes by such Bank pursuant to
this paragraph to the extent that such a designation would not, in the
reasonable opinion of such Bank, be disadvantageous to such Bank.
(b) Each Bank that is not a citizen or resident of the United
States of America, a corporation, partnership or other entity created
or organized in or under any laws of the United States of America, or
an estate or trust that is subject to United States Federal income
taxation regardless of the source of its income (a "Non-U.S. Lender")
shall, on or prior to the date hereof (in the case of each Non-U.S.
Lender that is a party hereto on the date hereof) or on or prior to
the date of any assignment or participation hereunder and thereafter
as reasonably requested from time to time by the Borrower or the
Agent, execute and deliver, if legally able to do so, to the Borrower
and the Agent one or more (as the Borrower or the Agent may reasonably
request) United States Internal Revenue Service Forms 4224 or Forms
1001 (as appropriate for such Bank) and Form W-8 or Form W-9 or such
other forms or documents (or successor forms or documents) (as
appropriate for such Bank), appropriately completed, as may be
applicable to establish the extent, if any, to which a payment to such
Non-U.S. Lender is exempt from or entitled to a reduced rate of
withholding or deduction of Taxes. As an alternative to delivering
Internal Revenue Service Form 1001 or Form 4224, a Non-U.S. Lender
<PAGE> 25
-20-
that is not a "bank" under section 881(c)(3)(A) of the Code may, on or
prior to the date it becomes a party to this Credit Agreement and
thereafter as reasonably requested from time to time by the Borrower
or the Agent, execute and deliver, if legally able to do so, to the
Borrower and the Agent an Internal Revenue Service Form W-8, together
with a statement under penalties of perjury that such Non- U.S.
Lender, or beneficial owner, as the case may be, is not a "bank" under
section 881(c)(3)(A) of the Code.
(c) The Borrower shall not be required to indemnify or pay any
additional amounts to any Bank with respect to any Taxes pursuant to
this Section 4.2.2. to the extent that any obligation to withhold,
deduct or pay amounts with respect to such tax existed on the date
such Bank became a party to this Credit Agreement (and, in such case,
the Borrower may deduct and withhold such tax from payments to such
Bank). In addition, the Borrower shall not be required to indemnify
or to pay any additional amounts to any Non-U.S. Lender with respect
to any Taxes pursuant to this Section 4.2.2. to the extent that such
Taxes are payable as a result of such Non-U.S. Lender's failure to
comply in full with the provisions of paragraph (b) above resulting in
the claimed Taxes and in such case, the Borrower may deduct and
withhold all Taxes required by law as a result of such noncompliance
from payments to such Non-U.S. Lender).
4.3. Computations. All computations of interest on the Base Rate
Loans shall be based on a 365-day year and paid for the actual number of days
elapsed. All computations of interest on the Eurodollar Rate Loans and of
Commitment Fees or other fees shall, unless otherwise expressly provided
herein, be based on a 360-day year and paid for the actual number of days
elapsed. Except as otherwise provided in the definition of the term "Interest
Period" with respect to Eurodollar Rate Loans, whenever a payment hereunder or
under any of the other Loan Documents becomes due on a day that is not a
Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension.
4.4. Inability to Determine Eurodollar Rate. In the event, prior
to the commencement of any Interest Period relating to any Eurodollar Rate
Loan, the Agent shall determine or be notified by the Majority Banks that
adequate and reasonable methods do not exist for ascertaining the Eurodollar
Rate that would otherwise determine the rate of interest to be applicable to
any Eurodollar Rate Loan during any Interest Period, the Agent shall forthwith
give notice of such determination (which shall be conclusive and binding on the
Borrower and the Banks provided that the Agent shall have made the same
determination with respect to loan facilities similar to those provided in this
Credit Agreement) to the Borrower and the Banks. In such event (a) any Loan
Request or Conversion Request with respect to Eurodollar Rate Loans shall be
automatically withdrawn and shall be deemed a request for Base Rate Loans, (b)
each Eurodollar Rate Loan will automatically, on the last day of the then
current Interest Period relating thereto, become a Base Rate Loan, and (c) the
obligations of the Banks to make Eurodollar Rate Loans shall be suspended until
the Agent or the Majority Banks determines that the circumstances giving rise
to such suspension no longer exist, whereupon the Agent or, as the case may be,
the Agent upon the instruction of the Majority Banks, shall so notify the
Borrower and the Banks.
<PAGE> 26
-21-
4.5. Illegality. Notwithstanding any other provisions herein, if
any change in any present or enactment of any future law, regulation, treaty or
directive or in the interpretation or application thereof shall make it
unlawful for any Bank to make or maintain Eurodollar Rate Loans, such Bank
shall forthwith give notice of such circumstances to the Borrower and the other
Banks and thereupon (a) the commitment of such Bank to make Eurodollar Rate
Loans or convert Base Rate Loans to Eurodollar Rate Loans shall forthwith be
suspended and (b) such Bank's Revolving Credit Loans then outstanding as
Eurodollar Rate Loans, if any, shall be converted automatically to Base Rate
Loans on the last day of each Interest Period applicable to such Eurodollar
Rate Loans or within such earlier period as may be required by law provided,
that such Bank shall have made the same determination with respect to other
loan facilities similar to those provided in this Credit Agreement. The
Borrower hereby agrees promptly to pay the Agent for the account of such Bank,
upon demand by such Bank, any additional amounts necessary to compensate such
Bank for any costs incurred by such Bank in making any conversion in accordance
with this Section 4.5, including any interest or fees payable by such Bank to
lenders of funds obtained by it in order to make or maintain its Eurodollar
Rate Loans hereunder.
4.6. Additional Costs, etc. If any change in any present or the
enactment of any future applicable law, which expression, as used herein,
includes statutes, rules and regulations thereunder and interpretations thereof
by any competent court or by any governmental or other regulatory body or
official charged with the administration or the interpretation thereof and
requests, directives, instructions and notices at any time or from time to time
hereafter made upon or otherwise issued to any Bank or the Agent by any central
bank or other fiscal, monetary or other authority (whether or not having the
force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature with respect
to this Credit Agreement, the other Loan Documents, such Bank's
Commitment or the Revolving Credit Loans (other than taxes based upon
or measured by the income or profits of such Bank or the Agent), or
(b) materially change the basis of taxation (except for
changes in taxes on income or profits) of payments to any Bank of the
principal of or the interest on any Revolving Credit Loans or any
other amounts payable to any Bank or the Agent under this Credit
Agreement or any of the other Loan Documents, or
(c) impose or increase or render applicable (other than to
the extent specifically provided for elsewhere in this Credit
Agreement) any special deposit, reserve, assessment, liquidity,
capital adequacy or other similar requirements (whether or not having
the force of law) against assets held by, or deposits in or for the
account of, or loans by, or letters of credit issued by, or
commitments of an office of any Bank, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan
Documents, the Revolving Credit Loans, such Bank's Commitment, or any
class of loans, letters of credit or
<PAGE> 27
-22-
commitments of which any of the Revolving Credit Loans or such Bank's
Commitment forms a part, and the result of any of the foregoing is
(i) to increase the cost to any Bank of making,
funding, issuing, renewing, extending or maintaining any of
the Revolving Credit Loans or such Bank's Commitment, or
(ii) to reduce the amount of principal, interest or
other amount payable to such Bank or the Agent hereunder on
account of such Bank's Commitment or any of the Revolving
Credit Loans, or
(iii) to require such Bank or the Agent to make any
payment or to forego any interest or other sum payable
hereunder, the amount of which payment or foregone interest or
other sum is calculated by reference to the gross amount of
any sum receivable or deemed received by such Bank or the
Agent from the Borrower hereunder,
then, and in each such case, the Borrower will, upon demand made by such Bank
or (as the case may be) the Agent at any time and from time to time and as
often as the occasion therefor may arise, pay to such Bank or the Agent such
additional amounts as will be sufficient to compensate such Bank or the Agent
for such additional cost, reduction, payment or foregone interest or other sum
provided, that such Bank shall have made demand on other customers to which
such additional costs are applicable with respect to other loan facilities
similar to those provided in this Credit Agreement.
4.7. Capital Adequacy. If after the date hereof any Bank or the
Agent determines that (a) the adoption of or change in any law, governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law) regarding capital requirements for banks or bank holding
companies or any change in the interpretation or application thereof by a court
or governmental authority with appropriate jurisdiction, or (b) compliance by
such Bank or the Agent or any corporation controlling such Bank or the Agent
with any law, governmental rule, regulation, policy, guideline or directive
(whether or not having the force of law) of any such entity regarding capital
adequacy, has the effect of reducing the return on such Bank's or the Agent's
commitment with respect to any Loans or Letters of Credit to a level below that
which such Bank or the Agent could have achieved but for such adoption, change
or compliance (taking into consideration such Bank's or the Agent's then
existing policies with respect to capital adequacy and assuming full
utilization of such entity's capital) by any amount deemed by such Bank or (as
the case may be) the Agent to be material, then such Bank or the Agent may
notify the Borrower of such fact. To the extent that the amount of such
reduction in the return on capital is not reflected in the Base Rate, the
Borrower and such Bank shall thereafter attempt to negotiate in good faith,
within thirty (30) days of the day on which the Borrower receives such notice,
an adjustment payable hereunder that will adequately compensate such Bank in
light of these circumstance, provided, that such Bank shall have made the same
determination and taken similar action with respect to other loan facilities
similar to those provided in this Credit Agreement. If the Borrower and such
Bank are unable to agree to such adjustment within thirty (30) days of the date
on which the Borrower receives such notice, then commencing on the date of such
notice (but not earlier than the effective date of any such increased
<PAGE> 28
-23-
capital requirement), the fees payable hereunder shall increase by an amount
that will, in such Bank's reasonable determination, provide adequate
compensation. Each Bank shall allocate such cost increases among its customers
in good faith and on an equitable basis.
4.8. Certificate. A certificate setting forth any additional
amounts payable pursuant to Section Section 4.6 or 4.7 and a brief explanation
of such amounts which are due, submitted by any Bank or the Agent to the
Borrower, shall be conclusive, absent manifest error, that such amounts are due
and owing.
4.9. Indemnity. The Borrower agrees to indemnify each Bank and to
hold each Bank harmless from and against any loss, cost or expense (including
loss of anticipated profits) that such Bank may sustain or incur as a
consequence of (a) default by the Borrower in payment of the principal amount
of or any interest on any Eurodollar Rate Loans as and when due and payable,
including any such loss or expense arising from interest or fees payable by
such Bank to lenders of funds obtained by it in order to maintain its
Eurodollar Rate Loans, (b) default by the Borrower in making a borrowing or
conversion after the Borrower has given (or is deemed to have given) a Loan
Request, or a Conversion Request relating thereto in accordance with Section
2.6 or Section 2.7 or (c) the making of any payment of a Eurodollar Rate Loan
or the making of any conversion of any such Eurodollar Rate Loan to a Base Rate
Loan on a day that is not the last day of the applicable Interest Period with
respect thereto, including interest or fees payable by such Bank to lenders of
funds obtained by it in order to maintain any such Loans.
4.10. Interest After Default.
4.10.1. Overdue Amounts. Overdue principal and (to the
extent permitted by applicable law) interest on the Revolving Credit
Loans and all other overdue amounts payable hereunder or under any of
the other Loan Documents shall bear interest compounded monthly and
payable on demand at a rate per annum equal to four percent (4%) above
the Base Rate until such amount shall be paid in full (after as well
as before judgment).
4.10.2. Amounts Not Overdue. During the continuance of an
Event of Default the principal of the Revolving Credit Loans not
overdue shall, until such Event of Default has been cured or remedied
or such Event of Default has been waived by the Majority Banks
pursuant to Section 25, bear interest at a rate per annum equal to the
greater of (a) two percent (2%) above the rate of interest otherwise
applicable to such Revolving Credit Loans pursuant to Section 2.5 and
(b) the rate of interest applicable to overdue principal pursuant to
Section 4.10.1.
4.11. Replacement Banks. Within thirty (30) days after (a) any Bank
has demanded compensation from the Borrower pursuant to Section Section 4.6 or
4.7 hereof, or (b) there shall have occurred a change in law with respect to
any Bank as a consequence of which it shall have become unlawful for such Bank
to make a Eurodollar Rate Loan on any Drawdown Date, as described in Section
4.5 hereof (any such Bank described in the foregoing clauses (a) or (b) is
hereinafter referred to as an "Affected Bank"), the Borrower may request that
the Non-Affected Banks acquire all, but not less than all, of the Affected
Bank's outstanding Revolving Credit Loans and assume all, but not less than
all, of the Affected
<PAGE> 29
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Bank's Commitment. If the Borrower so requests, one or more of the Non-Affected
Banks may, in their sole and absolute discretion, elect to acquire all or any
portion of the Affected Bank's outstanding Revolving Credit Loans and to assume
all or any portion of the Affected Bank's Commitment. If the Non-Affected Banks
do not elect to acquire and assume all of the Affected Bank's outstanding
Revolving Credit Loans and Commitment, the Borrower may designate a replacement
bank or banks, which must be an Eligible Assignee and satisfactory to the Agent,
to acquire and assume that portion of the outstanding Revolving Credit Loans and
Commitment of the Affected Bank not being acquired and assumed by the
Non-Affected Banks. The provisions of Section 18 hereof shall apply to all
reallocations pursuant to this Section 4.11, and the Affected Bank and any
Non-Affected Banks and/or replacement banks which are to acquire the Revolving
Credit Loans and Commitment of the Affected Bank shall execute and deliver to
the Agent, in accordance with the provisions of Section 18 hereof, such
Assignments and Acceptances and other instruments as are required pursuant to
Section 18 hereof to give effect to such reallocations. On the effective date
of the applicable Assignments and Acceptances, the Borrower shall pay to the
Affected Bank all interest accrued on its Revolving Credit Loans up to but
excluding such date, along with any fees and any other amounts payable to such
Affected Bank hereunder up to but excluding such date. In addition, the
Borrower agrees to indemnify each Bank and to hold each Bank harmless from and
against any loss, cost or expense (including loss of anticipated profits) that
such Bank may sustain or incur as a result of any assignment contemplated by
this Section 4.11.
5. GUARANTY.
5.1. Guaranties of Holdings Companies. The Obligations shall be
guaranteed by each of the Holdings Companies (other than the Borrower and
DecisionOne Canada) pursuant to the terms of the Guaranty.
5.2. New Subsidiaries. In the event that any new Subsidiary of any
of the Holdings Companies is formed or acquired after the Closing Date, such
new Subsidiary shall, immediately upon becoming a Subsidiary, become a party to
the Guaranty, pursuant to which such Subsidiary guarantees all of the
Obligations to the Agent and the Banks; provided, however, the provisions of
this Section 5.2 shall not apply to any Subsidiary incorporated and doing
substantially all of its business in any jurisdiction outside of the United
States of America.
6. REPRESENTATIONS AND WARRANTIES.
The Borrower and Holdings hereby represent and warrant to the Banks
and the Agent as follows:
6.1. Corporate Authority.
6.1.1. Incorporation; Good Standing. Each of the Holdings
Companies (a) is a corporation duly organized, validly existing and in
good standing under the laws of its state of incorporation, (b) has
all requisite corporate power to own its property and conduct its
business as now conducted and as presently contemplated, and (c) is in
good standing as a foreign corporation and is duly authorized to do
<PAGE> 30
-25-
business in each jurisdiction where such qualification is necessary
except where a failure to be so qualified would not have a materially
adverse effect on the business, assets or financial condition of the
Holdings Companies.
6.1.2. Authorization. The execution, delivery and
performance of this Credit Agreement and the other Loan Documents to
which any of the Holdings Companies is or is to become a party and the
transactions contemplated hereby and thereby (a) are within the
corporate authority of such Person, (b) have been duly authorized by
all necessary corporate proceedings, (c) do not conflict with or
result in any breach or contravention of any provision of law,
statute, rule or regulation to which any of the Holdings Companies is
subject or any judgment, order, writ, injunction, license or permit
applicable to any of the Holdings Companies or any manner which would
have a materially adverse effect on the business, assets or financial
condition of the Holdings Companies and (d) do not conflict with any
provision of the corporate charter or bylaws of, or any agreement or
other material instrument binding upon, any of the Holdings Companies.
6.1.3. Enforceability. The execution and delivery of this
Credit Agreement and the other Loan Documents to which any of the
Holdings Companies is or is to become a party will result in valid and
legally binding obligations of such Person enforceable against it in
accordance with the respective terms and provisions hereof and
thereof, except as enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or
affecting generally the enforcement of creditors' rights and except to
the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before
which any proceeding therefor may be brought.
6.2. Governmental Approvals. The execution, delivery and
performance by the Holdings Companies of this Credit Agreement and the other
Loan Documents to which such Holdings Company is or is to become a party and
the transactions contemplated hereby and thereby do not require the approval or
consent of, or filing with, any governmental agency or authority other than
those already obtained, unless the failure to obtain such approval or consent
or to complete such filing would not have a material adverse effect on the
business, financial condition or assets of the Holdings Companies.
6.3. Title to Properties; Leases. Except as indicated on Schedule
6.3 hereto, the Holdings Companies own all of the assets reflected in the
consolidated balance sheet of the Holdings Companies as at the Balance Sheet
Date or acquired since that date (except property and assets sold or otherwise
disposed of in the ordinary course of business since that date), subject to no
rights of others, including any mortgages, leases, conditional sales
agreements, title retention agreements, liens or other encumbrances except
Permitted Liens.
6.4. Financial Statements and Projections
6.4.1. Financial Statements. There has been furnished to
each of the Banks an audited consolidated balance sheet of the
Holdings Companies as at the Balance Sheet Date, and an audited
consolidated statement of income of the Holdings Companies for the
fiscal year then ended. Such balance sheet and
<PAGE> 31
-26-
statement of income have been prepared in accordance with generally
accepted accounting principles and fairly present the financial
condition of the Borrower as at the close of business on the date
thereof and the results of operations for the fiscal year then ended.
There are no contingent liabilities of Holdings or any of its
Subsidiaries as of such date involving material amounts, known to the
officers of the Borrower, which were not disclosed in such balance
sheet and the notes related thereto.
6.4.2. Projections. The Borrower have furnished to each of
the Banks financial projections, including cash flow projections, for
the period commencing on June 30, 1996 and ending on June 30, 2001.
Such projections reflect the Borrower's good faith estimates of the
expected financial performance of the Holdings Companies during such
period.
6.5. No Material Changes, etc. Since the Balance Sheet Date there
has occurred no materially adverse change in the financial condition or
business of the Holdings Companies as shown on or reflected in the consolidated
balance sheet of the Holdings Companies as at the Balance Sheet Date, or the
consolidated statement of income for the fiscal year then ended, other than
changes in the ordinary course of business that have not had any materially
adverse effect either individually or in the aggregate on the business or
financial condition of the Holdings Companies. Since the Balance Sheet Date,
none of the Holdings Companies other than Holdings has made any Distributions,
and Holdings has only made those Distributions described on Schedule 7.5
hereto, and since the Closing Date, none of the Holdings Companies has made any
Distributions except as permitted by Section 9.4 of the Original Agreement and
incorporated by reference pursuant to Section 8 hereof.
6.6. Franchises, Patents, Copyrights, etc. Except as set forth on
Schedule 6.6 hereto, each of the Holdings Companies possesses all franchises,
patents, copyrights, trademarks, trade names, licenses and permits, and rights
in respect of the foregoing, adequate for the conduct of its business
substantially as now conducted without known conflict with any rights of
others.
6.7. Litigation. Except as set forth in Schedule 6.7 hereto, there
are no actions, suits, proceedings or investigations of any kind pending or, to
the best of Holdings' or the Borrower's knowledge, threatened against any of
the Holdings Companies before any court, tribunal or administrative agency or
board that, if adversely determined, might, either in any case or in the
aggregate, materially adversely affect the properties, assets, financial
condition, prospects or business of the Holdings Companies or materially impair
the right of the Holdings Companies, considered as a whole, to carry on
business substantially as now conducted by them, or result in any substantial
liability not adequately covered by insurance, or for which adequate reserves
are not maintained on the consolidated balance sheet of the Holdings Companies,
or which question the validity of this Credit Agreement or any of the other
Loan Documents, or any action taken or to be taken pursuant hereto or thereto.
6.8. No Materially Adverse Contracts, etc. Neither the Borrower
nor Holdings, nor any of their Subsidiaries is subject to any charter,
corporate or other legal restriction, or any judgment, decree, order, rule or
regulation that has or is expected in the future to have a
<PAGE> 32
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materially adverse effect on the business, assets or financial condition of the
Holdings Companies. Neither the Borrower, Holdings nor any of their
Subsidiaries is a party to any contract or agreement that has or is expected,
in the judgment of the Borrower's officers, to have any materially adverse
effect on the business of the Holdings Companies.
6.9. Compliance with Other Instruments, Laws, etc. Neither the
Borrower nor Holdings, nor any of their Subsidiaries is in violation of any
provision of its charter documents, bylaws, or any agreement or instrument to
which it may be subject or by which it or any of its properties may be bound or
any decree, order, judgment, statute, license, rule or regulation, in any of
the foregoing cases in a manner that could result in the imposition of
substantial penalties or materially and adversely affect the financial
condition, properties or business of the Holdings Companies.
6.10. Tax Status. The Holdings Companies (a) have made or filed all
federal and state income and all other tax returns, reports and declarations
required by any jurisdiction to which any of them is subject, unless the
failure to so file would not have a materially adverse effect on the business,
assets or financial condition of the Holdings Companies, (b) have paid all
taxes and other governmental assessments and charges shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and by appropriate proceedings and (c) have set aside on their books
provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
Except as set forth on Schedule 6.10 hereto, there are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction,
and the officers of the Borrower know of no basis for any such claim.
6.11. No Event of Default. No Default or Event of Default has
occurred and is continuing.
6.12. Holding Company and Investment Company Acts. None of the
Holdings Companies is a "holding company", or a "subsidiary company" of a
"holding company", or an affiliate" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal underwriter"
of an "investment company", as such terms are defined in the Investment Company
Act of 1940.
6.13 Liens.
6.13.1. Absence of Financing Statements. No financing
statement which names any of the Holdings Companies as a debtor has
been filed in any jurisdiction in the United States or any State
thereof pursuant to Article 9 of the Uniform Commercial Code of any
State, and none of the Holdings Companies has signed any financing
statement or any security agreement authorizing any secured party
thereunder to file any such financing statement in any such
jurisdiction, except for notice filings by lessors of personal
property or equipment under operating leases, and otherwise as
permitted by Section 9.2 of the Original Agreement and incorporated by
reference pursuant to Section 8 hereof.
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6.13.2. No Mortgages; Etc. No mortgages, chattel mortgages,
assignments, statements of assignment, security agreements or deeds of
trust have been filed by any person or persons with respect to any
part of the property or assets of any of the Holdings Companies,
except for mortgages and security agreements permitted by the
provisions of Section 9.2 of the Original Agreement and incorporated
by reference pursuant to Section 8 hereof.
6.14. Other Representations. Each of the representations and
warranties made by each of the Holdings Companies in any of the Loan Documents
was true and correct in all material respects when made and continues to be
true and correct in all material respects on the Closing Date, except to the
extent that any of such representations and warranties relate, by the express
terms thereof, solely to a date falling prior to the Closing Date, and except
to the extent that any of such representations and warranties may have been
affected by the consummation of the transactions contemplated and permitted or
required by the Loan Documents.
6.15. Certain Transactions. Except for arm's length transactions
pursuant to which any of the Holdings Companies makes payments in the ordinary
course of business upon terms no less favorable than such Holdings Company
could obtain from third parties, none of the officers, directors, or employees
of any of the Holdings Companies is presently a party to any transaction with
the Borrower or any of its Subsidiaries (other than for services as employees,
officers and directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any
officer, director or such employee or, to the knowledge of the Borrower, any
corporation, partnership, trust or other entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director,
trustee or partner.
6.16. Employee Benefit Plans.
6.16.1. In General. Each Employee Benefit Plan has been
maintained and operated in compliance in all material respects with
the provisions of ERISA and, to the extent applicable, the Code,
including but not limited to the provisions thereunder respecting
prohibited transactions. The Borrower has heretofore delivered to the
Agent the most recently completed annual report, Form 5500, with all
required attachments, and actuarial statement required to be submitted
under Section 103(d) of ERISA, with respect to each Guaranteed Pension
Plan.
6.16.2. Terminability of Welfare Plans. The Borrower may
terminate each Employee Benefit Plan at any time (or at any time
subsequent to the expiration of any applicable bargaining agreement)
in the discretion of the Borrower without liability to any of the
Holdings Companies, except such Employee Benefit Plans the termination
of which would not cause a materially adverse effect on the business,
assets or financial condition of the Holdings Companies.
6.16.3. Guaranteed Pension Plans. Each contribution required
to be made to a Guaranteed Pension Plan, whether required to be made
to avoid the incurrence of an accumulated funding deficiency, the
notice or lien provisions of Section 302(f)
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of ERISA, or otherwise, has been timely made. No waiver of an
accumulated funding deficiency or extension of amortization periods
has been received with respect to any Guaranteed Pension Plan. No
liability to the PBGC (other than required insurance premiums, all of
which have been paid) has been incurred by the Borrower or any ERISA
Affiliate with respect to any Guaranteed Pension Plan and there has
not been any ERISA Reportable Event, or any other event or condition
which presents a material risk of termination of any Guaranteed
Pension Plan by the PBGC. Based on the latest valuation of each
Guaranteed Pension Plan (which in each case occurred within twelve
months of the date of this representation), and on the actuarial
methods and assumptions employed for that valuation, the aggregate
benefit liabilities of all such Guaranteed Pension Plans within the
meaning of Section 4001 of ERISA did not exceed the aggregate value of
the assets of all such Guaranteed Pension Plans, disregarding for this
purpose the benefit liabilities and assets of any Guaranteed Pension
Plan with assets in excess of benefit liabilities, by more than
$3,000,000.
6.14.4. Multiemployer Plans. Neither the Borrower nor any
ERISA Affiliate has incurred any material liability (including
secondary liability) to any Multiemployer Plan as a result of a
complete or partial withdrawal from such Multiemployer Plan under
Section 4201 of ERISA or as a result of a sale of assets described in
Section 4204 of ERISA. Neither the Borrower nor any ERISA Affiliate
has been notified that any Multiemployer Plan is in reorganization or
insolvent under and within the meaning of Section 4241 or Section 4245
of ERISA or that any Multiemployer Plan intends to terminate or has
been terminated under Section 4041A of ERISA.
6.17. Regulations U and X. The proceeds of the Revolving Credit
Loans shall be used to finance the Memorex Acquisition, for working capital and
general corporate purposes, which may include Acquisitions permitted by Section
9.5 of the Original Agreement. No portion of any Revolving Credit Loan is to
be used for the purpose of purchasing or carrying any "margin security" or
"margin stock" as such terms are used in Regulations U and X of the Board of
Governors of the Federal Reserve System, 12 C.F.R. Parts 221 and 224.
6.18. Environmental Compliance. The Borrower has taken all
necessary steps to investigate the condition and past and present usage of the
Real Estate and the operations conducted thereon and, based upon such diligent
investigation, has determined that:
(a) except as set forth on Schedule 6.18 hereto, none of the
Holdings Companies or any operator of the Real Estate or any
operations thereon is in violation, or alleged violation, of any
judgment, decree, order, law, license, rule or regulation pertaining
to environmental matters, including without limitation, those arising
under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980 as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Federal Clean Water Act, the
Federal Clean Air Act, the Toxic Substances Control Act, or any state
or local statute, regulation, ordinance, order or decree relating to
health, safety or the environment (hereinafter "Environmental
<PAGE> 35
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Laws"), which violation would have a material adverse effect on the
business, assets or financial condition of the Holdings Companies;
(b) except as set forth on Schedule 6.18 hereto, neither the
Borrower nor any of the other Holdings Companies has received notice
from any third party including, without limitation, any federal, state
or local governmental authority, (a) that any one of them has been
identified by the United States Environmental Protection Agency
("EPA") as a potentially responsible party under CERCLA with respect
to a site listed on the National Priorities List, 40 C.F.R. Part 300
Appendix B; (b) that any hazardous waste, as defined by 42 U.S.C.
Section 6903(5), any hazardous substances as defined by 42 U.S.C.
Section 9601(14), any pollutant or contaminant as defined by 42 U.S.C.
Section 9601(33) and any toxic substances, oil or hazardous materials
or other chemicals or substances regulated by any Environmental Laws
("Hazardous Substances") which any one of them has generated,
transported or disposed of has been found at any site at which a
federal, state or local agency or other third party has conducted or
has ordered that the Borrower or any of its Subsidiaries conduct a
remedial investigation, removal or other response action pursuant to
any Environmental Law; or (c) that it is or shall be a named party to
any claim, action, cause of action, complaint, or legal or
administrative proceeding (in each case, contingent or otherwise)
arising out of any third party's incurrence of costs, expenses, losses
or damages of any kind whatsoever in connection with the release of
Hazardous Substances;
(c) except as set forth on Schedule 6.18 attached hereto: (a)
no portion of the Real Estate has been used for the handling,
processing, storage or disposal of Hazardous Substances and no
underground tank or other underground storage receptacle for Hazardous
Substances is located on any protion of the Real Estate except in
accordance with applicable Environmental Laws except where any such
noncompliance with applicable Environmental Laws would not have a
material adverse effect on the business, assets or financial condition
of the Holdings Companies; (b) in the course of any activities
conducted by the Holdings Companies or operators of its properties, no
Hazardous Substances have been generated or are being used on the Real
Estate except in accordance with applicable Environmental Laws, except
where any such noncompliance with applicable Environmental Laws would
not have a material adverse effect on the business, assets or financial
condition of the Holdings Companies, (c) there have been no releases
(i.e. any past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
disposing or dumping) or threatened releases of Hazardous Substances
on, upon, into or from the properties of the Holdings Companies, which
releases would have a material adverse effect on the business, assets
or financial condition of the Holdings Companies; (d) to the best of
the Borrower's knowledge, there have been no releases on, upon, from or
into any real property in the vicinity of any of the Real Estate which,
through soil or groundwater contamination, may have come to be located
on, and which would have a material adverse effect on business, assets
or financial condition of the Holdings Companies; and (e) in addition,
any Hazardous Substances that have been generated on any of the Real
Estate have been transported, treated or disposed of as required under
applicable Environmental Laws, except where any such noncompliance with
<PAGE> 36
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applicable Environmental Laws would not have a material adverse effect
on the business, assets or financial condition of the Holdings
Companies; and
(d) None of the Holdings Companies or any of the Real Estate
is subject to any applicable environmental law requiring the
performance of Hazardous Substances site assessments, or the removal
or remediation of Hazardous Substances, or the giving of notice to any
governmental agency or the recording or delivery to other Persons of
an environmental disclosure document or statement by virtue of the
transactions set forth herein and contemplated hereby.
6.19. Subsidiaries, etc. As of the Closing Date, except for those
Subsidiaries listed on Schedule 6.19 attached hereto, the Borrower and Holdings
own or hold of record and/or beneficially (whether directly or indirectly) no
shares of any class in the capital of any other corporations and no legal
and/or beneficial interests in any partnership, business trust or joint
venture or in any other unincorporated trade or business enterprise. Schedule
6.19 contains a complete list of all such Subsidiaries and sets forth the
authorized capital of all classes of the capital stock of each such Subsidiary
on the date hereof, together with the ownership of all of the issued and
outstanding shares of each such class.
6.20. Chief Executive Offices. As of the Closing Date, the
Borrower's chief executive office is at 50 East Swedesford Road, Frazer,
Pennsylvania 19355, at which location its books and records are kept.
6.21. Fiscal Year. Each of the Holdings Companies has a fiscal year
which is the twelve (12) months ending on June 30 of each year.
6.22. Disclosure No representation or warranty made by any of the
Holdings Companies in this Credit Agreement or in any agreement, instrument,
document, certificate, statement or letter furnished to the Agent or any Bank
by or on behalf of in connection with any of the transactions contemplated by
any of the Loan Documents contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances in which they
are made.
6.23. Insurance. Each of the Holdings Companies maintains with
financially sound and reputable insurers insurance with respect to its
properties and businesses against such casualties and contingencies as are in
accordance with sound business practices, with the details of such coverage
being more fully described on Schedule 6.23 hereto.
7. AFFIRMATIVE COVENANTS OF THE BORROWER AND HOLDINGS.
Each of the Borrower and Holdings covenants and agrees that, so long
as any Revolving Credit Loan or Revolving Credit Note is outstanding or any
Bank has any obligation to make any Revolving Credit Loans:
7.1. Compliance with Original Agreement Affirmative Covenants. The
Borrower and Holdings will, and where applicable cause each of their
Subsidiaries to, perform, comply with and observe each and every affirmative
covenant contained in Section Section 8.1-8.11 and Section Section 8.13-8.14 of
the Original Agreement. The foregoing covenant in this Section 7.1 is
<PAGE> 37
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made in this Credit Agreement by the Borrower and Holdings to the Banks and the
Agent with the intention that each covenant contained in Section Section
8.1-8.11 and Section Section 8.13-8.14 of the Original Agreement shall have the
same effect in this Credit Agreement as if each such covenant was set forth
verbatim herein. The foregoing covenant is this Section 7 shall survive
termination, cancellation or recission of the Original Agreement and shall not
be affected by the termination, cancellation or recession of the Original
Agreement.
7.2. Use of Proceeds. The Borrower will use the proceeds of the
Revolving Credit Loans solely to finance the Memorex Acquisition and for
working capital and general corporate purposes, which may include Acquisitions
permitted by Section 9.5 of the Original Agreement.
8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER AND HOLDINGS.
Each of the Borrower and Holdings covenants and agrees that, so long
as any Revolving Credit Loan or Revolving Credit Note is outstanding or any
Bank has any obligation to make any Revolving Credit Loans:
8.1. Restrictions on Indebtedness. Neither the Borrower nor
Holdings will nor will any of them permit any of their Subsidiaries to, create,
incur, assume, guarantee or be or remain liable, contingently or otherwise,
with respect to any Indebtedness other than:
(a) Indebtedness to the Banks and the Agent arising under
this Credit Agreement or any of the other Loan Documents;
(b) current liabilities of the Holdings Companies incurred in
the ordinary course of business not incurred through (i) the borrowing
of money, or (ii) the obtaining of credit except for credit on an open
account basis customarily extended and in fact extended in connection
with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials and
supplies and liabilities under employee benefit plans, including
pension plans, to the extent that payment therefor shall not at the
time be required to be made in accordance with the provisions of
Section 8.8 of the Original Agreement, or to the extent that the
amount, applicability, or validity thereof is actively contested by
any Holdings Company or any of their respective Subsidiaries in good
faith by appropriate proceedings and with respect to which reserves
have been set aside on the books of such Decision Company or its
Subsidiaries (segregated to the extent required by generally accepted
accounting principles and practices) reasonably deemed by Holdings,
the Borrower or such Subsidiary and the Agent to be adequate with
respect thereto;
(d) Indebtedness in respect of judgments or awards that have
been in force for less than the applicable period for taking an appeal
so long as execution is not levied thereunder or in respect of which
the Holdings Companies shall at the time in good faith be prosecuting
an appeal or proceedings for review and in respect of which a stay of
execution shall have been obtained pending such appeal or review;
<PAGE> 38
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(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the
ordinary course of business;
(f) obligations under Capitalized Leases not exceeding
$10,000,000 in aggregate amount at any time outstanding provided that
the aggregate amount of all payments due and payable in any fiscal
year by the Decision Companies pursuant to non-cancellable operating
leases, rental agreements or other similar contracts shall not exceed
$40,000,000 and provided, further, that the aggregate amount of all
payments due and payable in any Indebtedness Reference Period (as
hereinafter defined) by the Decision Companies pursuant to non-
cancellable operating leases, rental agreements or other similar
contracts shall not exceed $80,000,000 (exclusive of payments due and
payable in an amount not to exceed $40,000,000 pertaining to
non-cancellable operating leases of the Borrower). For the purposes
of this Section 8.1(f), the term "Indebtedness Reference Period" shall
mean, for any fiscal year of the Borrower ending on or after the
Closing Date, the period of four fiscal years of the Borrower
beginning on the first day of such fiscal year;
(g) Indebtedness incurred in connection with the acquisition
after the date hereof of any real or personal property by the Borrower
or such Subsidiary, provided that the aggregate principal amount of
such Indebtedness of the Borrower and its Subsidiaries shall not
exceed the aggregate amount of $10,000,000 in any fiscal year;
(h) Indebtedness existing on the date hereof and listed and
described on Schedule 8.1 hereto;
(i) Intercompany Indebtedness (i) to any of the Holdings
Companies so long as such Holdings Company has guaranteed the
Obligations; and (ii) Indebtedness of DecisionOne Canada to any of the
other Holdings Companies, provided the amount of such Indebtedness of
DecisionOne Canada does not exceed $10,000,000 in the aggregate.
(j) Indebtedness incurred in connection with performance
bonds obtained by any of the Holdings Companies in the ordinary course
of business, if so required to be obtained by any customer;
(k) unsecured public Indebtedness of the Borrower not
otherwise permitted hereunder provided that (i) the aggregate amount
of all such Indebtedness does not exceed, in the aggregate,
$150,000,000 at any time; (ii) no Default or Event of Default has
occurred and is continuing or would exist as a result of the Borrower
incurring such Indebtedness; (iii) the Borrower has demonstrated to
the satisfaction of the Agent, based on a pro forma Compliance
Certificate, compliance with Section 9 hereof on a pro forma basis
immediately prior to and for the subsequent period of twelve (12)
months after giving effect to such incurrence of Indebtedness; (iv) at
the date of the incurrence of such Indebtedness the weighted average
life and final maturity of such Indebtedness must be greater than six
months after the Revolving Credit Loan Maturity Date; provided,
however in no event shall more than forty percent (40%) of the
principal amount of such Indebtedness become due and
<PAGE> 39
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payable to the holder of such Indebtedness prior to six (6) months
after the Revolving Credit Loan Maturity Date; (v) such Indebtedness
does not contain terms and conditions which are more onerous to the
Borrower than the terms and conditions contained herein and does not
contain affirmative or negative covenants more restrictive to the
Borrower than contained herein; and (vi) such Indebtedness is a single
draw term loan and not a revolving credit loan;
(l) unsecured Indebtedness incurred in connection with any
Acquisition permitted by Section 9.5.1 of the Original Agreement to
the seller of the assets being acquired, provided, that (i) the
aggregate amount of all such Indebtedness permitted by this Section
8.1(l) does not exceed, in the aggregate, $50,000,000 at any time;
(ii) no Default or Event of Default has occurred and is continuing or
would exist as a result of the incurrence of such Indebtedness; (iii)
such Indebtedness does not contain terms and conditions which are more
onerous to the Borrower than the terms and conditions contained herein
and does not contain affirmative or negative covenants more
restrictive to the Borrower than contained herein; and (iv) such
Indebtedness is comprised of term loans and not revolving credit
loans; and
(m) Indebtedness arising under the Original Agreement, the
guaranty issued in connection therewith and any of the other documents
executed in connection therewith;
provided, however, notwithstanding the foregoing provisions of this Section
8.1, the total principal amount of all Indebtedness outstanding under clauses
(a), (k) and (l) of this Section 8.1 shall not at any time exceed $150,000,000
in the aggregate at any one time outstanding.
8.2. Compliance with Original Agreement Negative Covenants. The
Borrower and Holdings will, and where applicable cause each of their
Subsidiaries to, perform, comply with and observe and and every negative
covenant contained in Section Section 9.2-9.16 of the Original Agreement. The
foregoing covenant in this Section 8.2 is made in this Credit Agreement by the
Borrower and Holdings to the Banks and the Agent with the intention that each
covenant contained in Section Section 9.2-9.16 of the Original Agreement shall
have the same effect in this Credit Agreement as if each such covenant was set
forth verbatim herein. The foregoing covenant in this Section 8.2 shall
survive termination, cancellation or recission of the Original Agreement and
shall not be affected by the termination, cancellation or recession of the
Original Agreement.
9. FINANCIAL COVENANTS OF THE BORROWER.
Each of Holdings and the Borrower covenants and agrees that, so long
as any Loan or Revolving Credit Note is outstanding or any Bank has any
obligation to make any Revolving Credit Loans, the Borrower and Holdings will,
and where applicable cause each of their Subsidiaries to, perform, comply with
and observe each and every financial covenant contained in Section 10 of the
Original Agreement. The foregoing covenant in this Section 9 is made in this
Credit Agreement by the Borrower and Holdings to the Banks and the Agent with
the intention that each covenant contained in Section 10 of the Original
Agreement shall have the same effect in this Credit Agreement as if each such
covenant was set forth verbatim herein. The foregoing covenant in this Section
9 shall survive termination, cancellation or
<PAGE> 40
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recission of the Original Agreement and shall not be affected by the
termination, cancellation or recession of the Original Agreement:
10. CLOSING CONDITIONS.
The obligations of the Banks to make the initial Revolving Credit
Loans shall be subject to the satisfaction of the following conditions
precedent.
10.1. Loan Documents. Each of the Loan Documents shall have been
duly executed and delivered by the respective parties thereto, shall be in full
force and effect and shall be in form and substance satisfactory to each of the
Banks. Each Bank shall have received a fully executed copy of each such
document.
10.2. Certified Copies of Charter Documents. Each of the Banks
shall have received from each of the Holdings Companies a copy, certified by a
duly authorized officer of such Person to be true and complete on the Closing
Date, of each of (a) its charter or other incorporation documents as in effect
on such date of certification, and (b) its by-laws as in effect on such date.
10.3. Corporate Action. All corporate action necessary for the
valid execution, delivery and performance each of the Holdings Companies of
this Credit Agreement and the other Loan Documents to which it is or is to
become a party shall have been duly and effectively taken, and evidence thereof
satisfactory to the Banks shall have been provided to each of the Banks.
10.4. Incumbency Certificate. Each of the Banks shall have received
an incumbency certificate, dated as of the Closing Date, signed by a duly
authorized officer of each of the Holdings Companies and giving the name and
bearing a specimen signature of each individual who shall be authorized: (a) to
sign, in the name and on behalf of each such Holdings Companies, each of the
Loan Documents to which such Holdings Company is or is to become a party; (b)
in the case of the Borrower, to make Loan Requests and Conversion Requests; and
(c) to give notices and to take other action on its behalf under the Loan
Documents.
10.5. UCC Search Results. The Agent shall have received the results
of UCC searches indicating no liens other than Permitted Liens and otherwise in
form and substance satisfactory to the Agent.
10.6. Solvency Certificate. Each of the Banks shall have received
an officer's certificate of the Borrower dated as of the Closing Date as to the
solvency of the Holdings Companies following the consummation of the
transactions contemplated herein and in form and substance satisfactory to the
Banks.
10.7. Opinion of Counsel. Each of the Banks and the Agent shall
have received a favorable legal opinion addressed to the Banks and the Agent,
dated as of the Closing Date, in form and substance satisfactory to the Banks
and the Agent, from Vincent M. Dadamo, Esq., counsel to the Holdings Companies.
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10.8. Payment of Fees. The Borrower shall have paid to the Banks or
the Agent, as appropriate, the fees pursuant to Section 4.1.
10.9. Disbursement Instructions. The Agent shall have received
disbursement instructions from the Borrower, with respect to proceeds of the
initial Revolving Credit Loan.
10.10. Evidence of Acquisition. The Agent shall have received
evidence that the Memorex Acquisition has been approved by the United States
Bankruptcy Court (the "Order") and is on terms and conditions satisfactory to
the Agent, and, prior to the Banks advancing any Revolving Credit Loans which,
when taken together with all Revolving Credit Loans outstanding, exceeds
$5,000,000, the Agent shall have received evidence that the Memorex Acquisition
has been consummated on the terms set forth in the Order and on terms and
conditions otherwise satisfactory to the Agent.
11. CONDITIONS TO ALL BORROWINGS.
The obligations of the Banks to make any Revolving Credit Loan whether
on or after the Closing Date, shall also be subject to the satisfaction of the
following conditions precedent:
11.1. Representations True; No Event of Default. Each of the
representations and warranties of each of the Holdings Companies contained in
this Credit Agreement, the other Loan Documents or in any document or
instrument delivered pursuant to or in connection with this Credit Agreement
shall be true as of the date as of which they were made and shall also be true
at and as of the time of the making of such Revolving Credit Loan, with the
same effect as if made at and as of that time (except to the extent of changes
resulting from transactions contemplated or permitted by this Credit Agreement
and the other Loan Documents and changes occurring in the ordinary course of
business that singly or in the aggregate are not materially adverse, and to the
extent that such representations and warranties relate expressly to an earlier
date) and no Default or Event of Default shall have occurred and be continuing.
11.2. No Legal Impediment. No change shall have occurred in any law
or regulations thereunder or interpretations thereof that in the reasonable
opinion of any Bank would make it illegal for such Bank to make such Revolving
Credit Loan.
11.3. Governmental Regulation. Each Bank shall have received such
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System.
11.4. Proceedings and Documents. All proceedings in connection with
the transactions contemplated by this Credit Agreement, the other Loan
Documents and all other documents incident thereto shall be satisfactory in
substance and in form to the Banks and to the Agent and the Agent's Special
Counsel, and the Banks, the Agent and such counsel shall have received all
information and such counterpart originals or certified or other copies of such
documents as the Agent may reasonably request.
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12. EVENTS OF DEFAULT; ACCELERATION; ETC.
12.1. Events of Default and Acceleration. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults")
shall occur:
(a) the Borrower shall fail to pay any principal of the
Revolving Credit Loans when the same shall become due and payable,
whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment;
(b) the Borrower shall fail to pay any interest on the
Revolving Credit Loans, the Commitment Fee, the Agent's fee, or other
sums due hereunder or under any of the other Loan Documents, within
three (3) days after the same shall become due and payable, whether at
the stated date of maturity or any accelerated date of maturity or at
any other date fixed for payment;
(c) either of the Borrower or Holdings shall fail to comply
with any of its covenants contained in Section Section 7 (except for
Section Section 8.3, 8.7 and 8.8 of the Original Agreement which are
incorporated by reference in Section 7 hereof), 8 or 9;
(d) the Borrower or any of its Subsidiaries shall fail to
perform any term, covenant or agreement contained herein or in any of
the other Loan Documents (other than those specified elsewhere in this
Section 12.1) for fifteen (15) days after written notice of such
failure has been given to the Borrower by the Agent;
(e) any representation or warranty of any of the Holdings
Companies in this Credit Agreement or any of the other Loan Documents
or in any other document or instrument delivered pursuant to or in
connection with this Credit Agreement shall prove to have been false
in any material respect upon the date when made or deemed to have been
made or repeated;
(f) an Event of Default shall have occurred and be continuing
under the Original Agreement or any of the Holdings Companies shall
fail to pay at maturity, or within any applicable period of grace, any
obligation for borrowed money or credit received or in respect of any
Capitalized Leases, or fail to observe or perform any material term,
covenant or agreement contained in any agreement by which it is bound,
evidencing or securing borrowed money or credit received or in respect
of any Capitalized Leases individually or in the aggregate in excess
of $5,000,000 for such period of time as would permit (assuming the
giving of appropriate notice if required) the holder or holders
thereof or of any obligations issued thereunder to accelerate the
maturity thereof;
(g) any of the Holdings Companies shall make an assignment
for the benefit of creditors, or admit in writing its inability to pay
or generally fail to pay its debts as they mature or become due, or
shall petition or apply for the appointment of a trustee or other
custodian, liquidator or receiver of it or of any substantial part of
the assets of any of the Holdings Companies or shall commence any case
or other proceeding relating to under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or
liquidation or similar law of any
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jurisdiction, now or hereafter in effect, or shall take any action to
authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or other
proceeding shall be commenced against and shall indicate its approval
thereof, consent thereto or acquiescence therein or such petition or
application shall not have been dismissed within forty- five (45) days
following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating bankrupt or
insolvent, or approving a petition in any such case or other
proceeding, or a decree or order for relief is entered in respect of
any of the Holdings Companies in an involuntary case under federal
bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied
and unstayed, for more than thirty days, whether or not consecutive,
any final judgment against any of the Holdings Companies that, with
other outstanding final judgments, undischarged, against any of the
Holdings Companies exceeds in the aggregate $1,000,000;
(j) if any of the Loan Documents shall be cancelled,
terminated, revoked or rescinded otherwise than in accordance with the
terms thereof or with the express prior written agreement, consent or
approval of the Banks, or any action at law, suit or in equity or
other legal proceeding to cancel, revoke or rescind any of the Loan
Documents shall be commenced by or on behalf of any of the Holdings
Companies party thereto or any of their respective stockholders, or
any court or any other governmental or regulatory authority or agency
of competent jurisdiction shall make a determination that, or issue a
judgment, order, decree or ruling to the effect that, any one or more
of the Loan Documents is illegal, invalid or unenforceable in
accordance with the terms thereof;
(k) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Banks shall have
determined in their reasonable discretion that such event reasonably
could be expected to result in liability of the Borrower or any of its
Subsidiaries to the PBGC or such Guaranteed Pension Plan in an
aggregate amount exceeding $1,000,000 and such event in the
circumstances occurring reasonably could constitute grounds for the
termination of such Guaranteed Pension Plan by the PBGC or for the
appointment by the appropriate United States District Court of a
trustee to administer such Guaranteed Pension Plan; or a trustee shall
have been appointed by the United States District Court to administer
such Plan; or the PBGC shall have instituted proceedings to terminate
such Guaranteed Pension Plan;
(l) any of the Holdings Companies shall be enjoined,
restrained or in any way prevented by the order of any court or any
administrative or regulatory agency from conducting any material part
of its business and such order shall continue in effect for more than
thirty (30) days;
(m) there shall occur any material damage to, or loss, theft
or destruction of, any assets of any of the Holdings Companies,
whether or not insured, or any
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strike, lockout, labor dispute, embargo, condemnation, act of God or
public enemy, or other casualty, which in any such case causes, for
more than fifteen (15) consecutive days, the cessation or substantial
curtailment of revenue producing activities at any facility of any of
the Holdings Companies if such event or circumstance is not covered by
business interruption insurance and would have a material adverse
effect on the business or financial condition of the Holdings
Companies;
(n) there shall occur the loss, suspension or revocation of,
or failure to renew, any license or permit now held or hereafter
acquired by any of the Holdings Companies if such loss, suspension,
revocation or failure to renew would have a material adverse effect on
the business or financial condition of the Holdings Companies;
(o) any of the Holdings Companies shall be indicted for a
state or federal crime, or any civil or criminal action shall
otherwise have been brought against any of the Holdings Companies, the
punishment for which in any such case could include the forfeiture of
any assets but having a fair market value in excess of $100,000;
(p) Holdings shall at any time, legally or beneficially own
less than 100% of the capital stock of the Borrower;
(q) any Person other than an Investor shall at any time, be a
legal or beneficial owner (within the meaning used in Rule 13d- 3 of
the Securities and Exchange Commission promulgated under the
Securities Exchange Act of 1934, as amended) of more than 25% of the
outstanding shares of the common stock of Holdings;
(r) at any time individuals who were directors of Holdings on
the Closing Date shall cease, for any reason, to constitute a majority
of the board of directors of Holdings (except to the extent that
individuals who were directors on the Closing Date were replaced by
individuals (i) elected by a majority of the remaining members of the
board of directors of Holdings or (ii) nominated for election by a
majority of the remaining members of the board of directors of
Holdings); or
(s) Holdings or any other guarantor thereunder shall purport
to revoke the Guaranty or assert that it has no obligations
thereunder.
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrower declare all amounts owing with respect to this Credit Agreement,
the Revolving Credit Notes and the other Loan Documents to be, and they shall
thereupon forthwith become, immediately due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived by the Borrower; provided that in the event of any Event of Default
specified in Section Section 12.1(g) or 12.1(h), all such amounts shall become
immediately due and payable automatically and without any requirement of notice
from the Agent or any Bank.
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12.2. Termination of Commitments. If any one or more of the Events
of Default specified in Section 12.1(g) or Section 12.1(h) shall occur, any
unused portion of the credit hereunder shall forthwith terminate and each of
the Banks shall be relieved of all further obligations to make Revolving Credit
Loans to the Borrower. If any other Event of Default shall have occurred and
be continuing, or if on any Drawdown Date the conditions precedent to the
making of the Revolving Credit Loans to be made on such Drawdown Date on such
other date are not satisfied, the Agent may and, upon the request of the
Majority Banks, shall, by notice to the Borrower, terminate the unused portion
of the credit hereunder, and upon such notice being given such unused portion
of the credit hereunder shall terminate immediately and each of the Banks shall
be relieved of all further obligations to make Revolving Credit Loans. No
termination of the credit hereunder shall relieve any of the Holdings Companies
of any of the Obligations.
12.3. Remedies. In case any one or more of the Events of Default
shall have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Revolving Credit Loans pursuant to Section
12.1, each Bank, if owed any amount with respect to the Revolving Credit Loans,
may, with the consent of the Majority Banks but not otherwise, proceed to
protect and enforce its rights by suit in equity, action at law or other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Credit Agreement and the other Loan Documents or
any instrument pursuant to which the Obligations to such Bank are evidenced,
including as permitted by applicable law the obtaining of the ex parte
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any
Bank or the Agent or the holder of any Revolving Credit Note is intended to be
exclusive of any other remedy and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or any other provision of law.
12.4. Distribution of Proceeds. In the event that, following the
occurrence or during the continuance of any Default or Event of Default, the
Agent or any Bank, as the case may be, receives any monies with respect to the
enforcement of any of their remedies under any of the Loan Documents, such
monies shall be distributed for application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such
monies by the Agent, for the exercise, protection or enforcement by
the Agent of all or any of the rights, remedies, powers and privileges
of the Agent under this Credit Agreement or any of the other Loan
Documents or in support of any provision of adequate indemnity to the
Agent against any taxes or liens which by law shall have, or may have,
priority over the rights of the Agent to such monies;
(b) Second, to all other Obligations in such order or
preference as the Majority Banks may determine; provided, however,
that distributions in respect of Obligations owing to the Banks with
respect to each type of Obligation such as
<PAGE> 46
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interest, principal, fees and expenses, shall be made among the Banks
pro rata; and provided, further, that the Agent may in its discretion
make proper allowance to take into account any Obligations not then
due and payable; and
(c) Third, the excess, if any, shall be returned to the
Borrower or to such other Persons as are entitled thereto.
13. SETOFF.
Regardless of the adequacy of any collateral, during the continuance
of any Event of Default, any deposits or other sums credited by or due from any
of the Banks to Holdings or the Borrower and any securities or other property
of Holdings or the Borrower in the possession of such Bank may be applied to or
set off by such Bank against the payment of Obligations and any and all other
liabilities, direct, or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, of Holdings or the Borrower to such Bank.
Each of the Banks agrees with each other Bank that (a) if an amount to be set
off is to be applied to Indebtedness of Holdings or the Borrower to such Bank,
other than Indebtedness evidenced by the Revolving Credit Notes held by such
Bank, such amount shall be applied ratably to such other Indebtedness and to
the Indebtedness evidenced by all such Revolving Credit Notes held by such
Bank, and (b) if such Bank shall receive from the Borrower or Holdings or
otherwise in respect of the Revolving Credit Loans, whether by voluntary
payment, exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Revolving Credit Notes held by such
Banks by proceedings against the Borrower or Holdings at law or in equity or by
proof thereof in bankruptcy, reorganization, liquidation, receivership or
similar proceedings, or otherwise, and shall retain and apply to the payment of
the Revolving Credit Note or Revolving Credit Notes held by such Bank any
amount in excess of its ratable portion of the payments received by all of the
Banks with respect to the Revolving Credit Notes held by all of the Banks, such
Bank will make such disposition and arrangements with the other Banks with
respect to such excess, either by way of distribution, pro tanto assignment of
claims, subrogation or otherwise as shall result in each Bank receiving in
respect of the Revolving Credit Notes held by it, its proportionate payment as
contemplated by this Credit Agreement; provided that if all or any part of such
excess payment is thereafter recovered from such Bank, such disposition and
arrangements shall be rescinded and the amount restored to the extent of such
recovery, but without interest.
14. THE AGENT.
14.1. Authorization.
(a) The Agent is authorized to take such action on behalf of
each of the Banks and to exercise all such powers as are hereunder and
under any of the other Loan Documents and any related documents
delegated to the Agent, together with such powers as are reasonably
incident thereto, provided that no duties or responsibilities not
expressly assumed herein or therein shall be implied to have been
assumed by the Agent.
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(b) The relationship between the Agent and each of the Banks
is that of an independent contractor. The use of the term "Agent" is
for convenience only and is used to describe, as a form of convention,
the independent contractual relationship between the Agent and each of
the Banks. Nothing contained in this Credit Agreement nor the other
Loan Documents shall be construed to create an agency, trust or other
fiduciary relationship between the Agent and any of the Banks.
(c) As an independent contractor empowered by the Banks to
exercise certain rights nd perform certain duties and responsibilities
hereunder and under the other Loan Documents, the Agent is
nevertheless a "representative" of the Banks, as that term is defined
in Article 1 of the Uniform Commercial Code, for purposes of actions
for the benefit of the Banks and the Agent with respect to all
collateral security and guaranties contemplated by the Loan Documents.
Such actions include the designation of the Agent as "secured party",
"mortgagee" or the like on all financing statements and other
documents and instruments, whether recorded or otherwise, relating to
the attachment, perfection, priority or enforcement of any security
interests, mortgages or deeds of trust in collateral security intended
to secure the payment or performance of any of the Obligations, all
for the benefit of the Banks and the Agent.
14.2. Employees and Agents. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to
its rights and duties under this Credit Agreement and the other Loan Documents.
14.3. No Liability. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
14.4. No Representations. The Agent shall not be responsible for
the execution or validity or enforceability of this Credit Agreement, the
Revolving Credit Notes, any of the other Loan Documents or for the validity,
enforceability or collectability of any such amounts owing with respect to the
Revolving Credit Notes, or for any recitals or statements, warranties or
representations made herein or in any of the other Loan Documents or in any
certificate or instrument hereafter furnished to it by or on behalf of any of
the Holdings Companies, or be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants or
agreements herein or to inspect any of the properties, books or records of any
of the Holdings Companies. The Agent shall not be bound to ascertain whether
any notice, consent, waiver or request delivered to it by the Borrower or any
holder of any of the Revolving Credit Notes shall have been duly authorized or
is true, accurate and complete. The Agent has not made nor does it now make
any representations or warranties, express or implied, nor does it assume any
liability to the Banks, with respect to the credit worthiness or financial
conditions of any of the Holdings Companies. Each
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Bank acknowledges that it has, independently and without reliance upon the
Agent or any other Bank, and based upon such information and documents as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Credit Agreement.
14.5. Payments.
14.5.1. Payments to Agent. A payment by the Borrower to the
Agent hereunder or any of the other Loan Documents for the account of
any Bank shall constitute a payment to such Bank. The Agent agrees
promptly to distribute to each Bank such Bank's pro rata share of
payments received by the Agent for the account of the Banks except as
otherwise expressly provided herein or in any of the other Loan
Documents.
14.5.2. Distribution by Agent. If in the opinion of the
Agent the distribution of any amount received by it in such capacity
hereunder, under the Revolving Credit Notes or under any of the other
Loan Documents might involve it in liability, it may refrain from
making distribution until its right to make distribution shall have
been adjudicated by a court of competent jurisdiction. If a court of
competent jurisdiction shall adjudge that any amount received and
distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall
pay over the same in such manner and to such Persons as shall be
determined by such court.
14.5.3. Delinquent Banks. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan
Documents, any Bank that fails (a) to make available to the Agent its
pro rata share of any Revolving Credit Loan or (b) to comply with the
provisions of Section 13 with respect to making dispositions and
arrangements with the other Banks, where such Bank's share of any
payment received, whether by setoff or otherwise, is in excess of its
pro rata share of such payments due and payable to all of the Banks,
in each case as, when and to the full extent required by the
provisions of this Credit Agreement, shall be deemed delinquent (a
"Delinquent Bank") and shall be deemed a Delinquent Bank until such
time as such delinquency is satisfied. A Delinquent Bank shall be
deemed to have assigned any and all payments due to it from the
Borrower, whether on account of outstanding Revolving Credit Loans,
interest, fees or otherwise, to the remaining nondelinquent Banks for
application to, and reduction of, their respective pro rata shares of
all outstanding Revolving Credit Loans. The Delinquent Bank hereby
authorizes the Agent to distribute such payments to the nondelinquent
Banks in proportion to their respective pro rata shares of all
outstanding Revolving Credit Loans. A Delinquent Bank shall be deemed
to have satisfied in full a delinquency when and if, as a result of
application of the assigned payments to all outstanding Revolving
Credit Loans of the nondelinquent Banks, the Banks' respective pro
rata shares of all outstanding Revolving Credit Loans have returned to
those in effect immediately prior to such delinquency and without
giving effect to the nonpayment causing such delinquency.
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14.6. Holders of Revolving Credit Notes. The Agent may deem and
treat the payee of any Revolving Credit Note as the absolute owner or purchaser
thereof for all purposes hereof until it shall have been furnished in writing
with a different name by such payee or by a subsequent holder, assignee or
transferee.
14.7. Indemnity. The Banks ratably agree hereby to indemnify and
hold harmless the Agent from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Agent has not been reimbursed by the Borrower as
required by Section 15), and liabilities of every nature and character arising
out of or related to this Credit Agreement, the Revolving Credit Notes, or any
of the other Loan Documents or the transactions contemplated or evidenced
hereby or thereby, or the Agent's actions taken hereunder or thereunder, except
to the extent that any of the same shall be directly caused by the Agent's
willful misconduct or gross negligence.
14.8. Agent as Bank. In its individual capacity, FNBB shall have
the same obligations and the same rights, powers and privileges in respect to
its Commitment and the Revolving Credit Loans made by it, and as the holder of
any of the Revolving Credit Notes, as it would have were it not also the Agent.
14.9. Resignation. The Agent may resign at any time by giving sixty
(60) days prior written notice thereof to the Banks and the Borrower. Upon any
such resignation, the Majority Banks shall have the right to appoint a
successor Agent. Unless a Default or Event of Default shall have occurred and
be continuing, such successor Agent shall be reasonably acceptable to the
Borrower. If no successor Agent shall have been so appointed by the Majority
Banks and shall have accepted such appointment within thirty (30) days after
the retiring Agent's giving of notice of resignation, then the retiring Agent
may, on behalf of the Banks, appoint a successor Agent, which shall be a
financial institution having a rating of not less than A or its equivalent by
Standard & Poor's Corporation. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. After any retiring Agent's resignation, the provisions
of this Credit Agreement and the other Loan Documents shall continue in effect
for its benefit in respect of any actions taken or omitted to be taken by it
while it was acting as Agent.
14.10. Notification of Defaults and Events of Default. Each Bank
hereby agrees that, upon learning of the existence of a Default or an Event of
Default, it shall promptly notify the Agent thereof. The Agent hereby agrees
that upon receipt of any notice under this Section 14.10 it shall promptly
notify the other Banks of the existence of such Default or Event of Default.
14.11. Duties in the Case of Enforcement. In case one or more Events
of Default have occurred and shall be continuing, and whether or not
acceleration of the Obligations shall have occurred, the Agent shall, if (a) so
requested by the Majority Banks and (b) the Banks have provided to the Agent
such additional indemnities and assurances against expenses and liabilities as
the Agent may reasonably request, proceed to exercise all or any such other
legal and equitable and other rights or remedies as it may have under the Loan
<PAGE> 50
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Documents. The Majority Banks may direct the Agent in writing as to the method
and the extent of any enforcement, the Banks hereby agreeing to indemnify and
hold the Agent, harmless from all liabilities incurred in respect of all
actions taken or omitted in accordance with such directions, provided that the
Agent need not comply with any such direction to the extent that the Agent
reasonably believes the Agent's compliance with such direction to be unlawful
or commercially unreasonable in any applicable jurisdiction.
15. EXPENSES.
The Borrower and Holdings jointly and severally agree to pay (a) the
reasonable costs of producing and reproducing this Credit Agreement, the other
Loan Documents and the other agreements and instruments mentioned herein, (b)
except to the extent provided in Section 4.2.2, any taxes (including any
interest and penalties in respect thereto) payable by the Agent or any of the
Banks (other than taxes based upon the Agent's or any Bank's net income) on or
with respect to the transactions contemplated by this Credit Agreement (the
Borrower hereby agreeing to indemnify the Agent and each Bank with respect
thereto), (c) the reasonable fees, expenses and disbursements of the Agent's
Special Counsel or any local counsel to the Agent incurred in connection with
the preparation, administration or interpretation of the Loan Documents and
other instruments mentioned herein, each closing hereunder, and amendments,
modifications, approvals, consents or waivers hereto or hereunder, (d) the
fees, expenses and disbursements of the Agent incurred by the Agent in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, including all title insurance
premiums and surveyor, engineering and appraisal charges, (e) all reasonable
out-of-pocket expenses (including without limitation reasonable attorneys' fees
and costs, which attorneys may be employees of any Bank or the Agent, and
reasonable consulting, accounting, appraisal, investment banking and similar
professional fees and charges) incurred by any Bank the Agent in connection
with (i) the enforcement of or preservation of rights under any of the Loan
Documents against or the administration thereof after the occurrence of a
Default or Event of Default and (ii) any litigation, proceeding or dispute
whether arising hereunder or otherwise, in any way related to any Bank's or the
Agent's relationship with any of the Holdings Companies; (f) all reasonable
fees, expenses and disbursements of any Bank or the Agent incurred in
connection with UCC searches; and (g) all reasonable fees, expenses and
disbursements of the Agent in connection with the syndication of this Credit
Agreement. The covenants of this Section 15 shall survive payment or
satisfaction of all other Obligations.
16. INDEMNIFICATION.
The Borrower and Holdings jointly and severally agree to indemnify and
hold harmless the Agent and the Banks from and against any and all claims,
actions and suits whether groundless or otherwise, and from and against any and
all liabilities, losses, damages and expenses of every nature and character
arising out of this Credit Agreement or any of the other Loan Documents or the
transactions contemplated hereby including, without limitation, (a) any actual
or proposed use by of the proceeds of any of the Revolving Credit Loans, (b)
entering into or performing this Credit Agreement or any of the other Loan
Documents or (c) with respect to any of the Holdings Companies and their
respective properties and assets, the violation of any Environmental Law, the
presence, disposal, escape, seepage, leakage, spillage, discharge, emission,
release or threatened
<PAGE> 51
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release of any Hazardous Substances or any action, suit, proceeding or
investigation brought or threatened with respect to any Hazardous Substances
(including, but not limited to, claims with respect to wrongful death, personal
injury or damage to property), in each case including, without limitation, the
reasonable fees and disbursements of counsel and allocated costs of internal
counsel incurred in connection with any such investigation, litigation or other
proceeding; provided, however, the Holdings Companies shall not be required to
indemnify any Person for any claims, actions, suits, liabilities, losses,
damages or expenses arising solely out of the gross negligence or willful
misconduct of the Person seeking to be indemnified, nor shall they be required
to indemnify any Bank for any claims, actions, suits, liabilities, losses,
damages or expenses arising solely out of disputes between the Banks which do
not in any manner involve the Borrower. In litigation, or the preparation
therefor, the Banks and the Agent shall be entitled to select their own counsel
and, in addition to the foregoing indemnity, the Borrower agrees to pay
promptly the reasonable fees and expenses of such counsel. If, and to the
extent that the obligations of the Borrower and Holdings jointly and severally
under this Section 16 are unenforceable for any reason, the Borrower hereby
agrees to make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law. The covenants contained
in this Section 16 shall survive payment or satisfaction in full of all other
Obligations.
17. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein,
in the Revolving Credit Notes, in any of the other Loan Documents or in any
documents or other papers delivered by or on behalf of any of the Holdings
Companies pursuant hereto shall be deemed to have been relied upon by the Banks
and the Agent, notwithstanding any investigation heretofore or hereafter made
by any of them, and shall survive the making by the Banks of any of the
Revolving Credit Loans as herein contemplated, and shall continue in full force
and effect so long as any amount due under this Credit Agreement or the
Revolving Credit Notes or any of the other Loan Documents remains outstanding
or any Bank has any obligation to make any Revolving Credit Loans, and for such
further time as may be otherwise expressly specified in this Credit Agreement.
All statements contained in any certificate or other paper delivered to any
Bank or the Agent at any time by or on behalf of any of the Holdings Companies
pursuant hereto or in connection with the transactions contemplated hereby
shall constitute representations and warranties by any of the Holdings
Companies.
18. ASSIGNMENT AND PARTICIPATION.
18.1. Conditions to Assignment by Banks. Except as provided herein,
each Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentage and Commitment and the same portion of
the Revolving Credit Loans at the time owing to it, the Revolving Credit Notes
held by it); provided that (a) each of the Agent and, unless a Default or Event
of Default shall have occurred and be continuing, the Borrower shall have given
its prior written consent to such assignment, which consent will not be
unreasonably withheld, (b) each such assignment shall be of a constant, and not
a varying, percentage of all the assigning Bank's rights and obligations under
this Credit Agreement, (c) each assignment shall be in an amount that is a
minimum of $5,000,000, or,
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if such Bank's Commitment is less than $5,000,000, the amount of such Bank's
Commitment and (d) the parties to such assignment shall execute and deliver to
the Agent, for recording in the Register (as hereinafter defined), an
Assignment and Acceptance, substantially in the form of Exhibit D hereto (an
"Assignment and Acceptance"), together with any Revolving Credit Notes subject
to such assignment. Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in each Assignment and Acceptance,
which effective date shall be at least five (5) Business Days after the
execution thereof, (a) the assignee thereunder shall be a party hereto and, to
the extent provided in such Assignment and Acceptance, have the rights and
obligations of a Bank hereunder, and (b) the assigning Bank shall, to the
extent provided in such assignment and upon payment to the Agent of the
registration fee referred to in Section 18.3, be released from its obligations
under this Credit Agreement.
18.2. Certain Representations and Warranties; Limitations;
Covenants. By executing and delivering an Assignment and Acceptance, the
parties to the assignment thereunder confirm to and agree with each other and
the other parties hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Bank makes no
representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement or the other Loan
Documents,
(b) the assigning Bank makes no representation or warranty
and assumes no responsibility with respect to the financial condition
of any of the Holdings Companies or any other Person primarily or
secondarily liable in respect of any of the Obligations, or the
performance or observance by any of the Holdings Companies or any
other Person primarily or secondarily liable in respect of any of the
Obligations of any of their obligations under this Credit Agreement or
any of the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto;
(c) such assignee confirms that it has received a copy of
this Credit Agreement, together with copies of the most recent
financial statements referred to in Section 7.4 and Section 8.4 of the
Original Agreement and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance;
(d) such assignee will, independently and without reliance
upon the assigning Bank, the Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Credit Agreement;
(e) such assignee represents and warrants that it is an
Eligible Assignee;
<PAGE> 53
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(f) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers under
this Credit Agreement and the other Loan Documents as are delegated to
the Agent by the terms hereof or thereof, together with such powers as
are reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Credit Agreement are required to be performed by it as a Bank; and
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance.
18.3. Register. The Agent, acting for this purpose solely as agent
of the Borrower, shall maintain at the Agent's Head Office a copy of each
Assignment and Acceptance delivered to it and a register (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment
Percentage of, and principal amount of the Revolving Credit Loans owing to the
Banks from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrower, the Agent and the Banks shall
treat each Person whose name is recorded in the Register as the owner of a Loan
or other obligation hereunder as the owner thereof for all purposes of this
Credit Agreement. Notwithstanding anything to the contrary contained herein,
no assignment shall be effective unless and until the Agent has recorded the
appropriate Assignment and Acceptance in the Register and such assignment
otherwise complies with this Section 18. The Register shall be available for
inspection by the Borrower and the Banks at any reasonable time and from time
to time upon reasonable prior notice. Upon each such recordation, the assigning
Bank agrees to pay to the Agent a registration fee in the sum of $3,000,
provided, however, in the case of an assignment to another Bank or to an
affiliate of the transferor Bank, no such registration fee shall be due and
payable.
18.4. New Revolving Credit Notes. Upon its receipt of an Assignment
and Acceptance executed by the parties to such assignment, the Agent shall (a)
record the information contained therein in the Register, and (b) give prompt
notice thereof to the Borrower and the Banks (other than the assigning Bank).
Within five (5) Business Days after receipt of such notice, the Borrower, at
its own expense, shall execute and deliver to the Agent, an amendment to the
Revolving Credit Note affected by such assignment indicating the Assignment and
Acceptance. Within five (5) days of issuance of any amendment to the Revolving
Credit Notes pursuant to this Section 18.4, the Borrower shall deliver an
opinion of counsel, addressed to the Banks and the Agent, relating to the due
authorization, execution and delivery of such amendment and the legality,
validity and binding effect thereof, in form and substance satisfactory to the
Banks.
18.5. Participations. Each Bank may sell participations to one or
more banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; provided
that (a) any such sale or participation shall not affect the rights and duties
of the selling Bank hereunder to the Borrower and (b) the only rights granted
to the participant pursuant to such participation arrangements with respect to
waivers, amendments or modifications of the Loan Documents shall be the rights
to approve waivers, amendments or modifications that would reduce the principal
of or the
<PAGE> 54
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interest rate on any Revolving Credit Loans, extend the term or increase the
amount of the Commitment of such Bank as it relates to such participant, reduce
the amount of any commitment fees to which such participant is entitled or
extend any regularly scheduled payment date for principal or interest.
18.6. Disclosure. The Borrower agree that in addition to
disclosures made in accordance with standard and customary banking practices
any Bank may disclose information obtained by such Bank pursuant to this Credit
Agreement to assignees or participants and potential assignees or participants
hereunder; provided that such assignees or participants or potential assignees
or participants shall agree (a) to treat in confidence such information unless
such information otherwise becomes public knowledge, (b) not to disclose such
information to a third party, except as required by law or legal process and
(c) not to make use of such information for purposes of transactions unrelated
to such contemplated assignment or participation.
18.7. Assignee or Participant Affiliated with the Borrower. If any
assignee Bank is an Affiliate of the Borrower or Holdings, then any such
assignee Bank shall have no right to vote as a Bank hereunder or under any of
the other Loan Documents for purposes of granting consents or waivers or for
purposes of agreeing to amendments or other modifications to any of the Loan
Documents or for purposes of making requests to the Agent pursuant to Section
12.1 or Section 12.2, and the determination of the Majority Banks shall for all
purposes of this Agreement and the other Loan Documents be made without regard
to such assignee Bank's interest in any of the Revolving Credit Loans. If any
Bank sells a participating interest in any of the Revolving Credit Loans to a
participant, and such participant is either of the Borrower or Holdings or an
Affiliate of the Borrower or Holdings, then such transferor Bank shall promptly
notify the Agent of the sale of such participation. A transferor Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or modifications to any of the Loan Documents or for
purposes of making requests to the Agent pursuant to Section 12.1 or Section
12.2 to the extent that such participation is beneficially owned by the
Borrower, Holdings or any Affiliate of the Borrower or Holdings, and the
determination of the Majority Banks shall for all purposes of this Credit
Agreement and the other Loan Documents be made without regard to the interest
of such transferor Bank in the Revolving Credit Loans to the extent of such
participation.
18.8. Miscellaneous Assignment Provisions. Any assigning Bank shall
retain its rights to be indemnified pursuant to Section 16 with respect to any
claims or actions arising prior to the date of such assignment. If any
assignee Bank is not incorporated under the laws of the United States of
America or any state thereof, it shall, prior to the date on which any interest
or fees are payable hereunder or under any of the other Loan Documents for its
account, deliver to the Borrower and the Agent certification as to its
exemption from deduction or withholding of any United States federal income
taxes. If any Reference Bank transfers all of its interest, rights and
obligations under this Credit Agreement, the Agent shall, in consultation with
the Borrower and with the consent of the Borrower and the Majority Banks,
appoint another Bank to act as a Reference Bank hereunder. Anything contained
in this Section 18 to the contrary notwithstanding, any Bank may at any time
pledge all or any portion of its interest and rights under this Credit
Agreement (including all or any portion of its Revolving Credit Notes) to any
of the twelve Federal Reserve Banks
<PAGE> 55
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organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341.
No such pledge or the enforcement thereof shall release the pledgor Bank from
its obligations hereunder or under any of the other Loan Documents.
18.9. Assignment by Borrower. The Borrower shall not assign or
transfer any of its rights or obligations under any of the Loan Documents
without the prior written consent of each of the Banks.
19. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Revolving Credit Notes shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first class
mail, postage prepaid, sent by overnight courier, or sent by telegraph,
telecopy, facsimile or telex and confirmed by delivery via courier or postal
service, addressed as follows:
(a) if to any of the Holdings Companies, at 50 E. Swedesford
Road, Frazer, Pennsylvania, Attention: Mr. Thomas Fogarty, or at such
other address for notice as the Borrower shall last have furnished in
writing to the Person giving the notice;
(b) if to the Agent, at 100 Federal Street, Boston,
Massachusetts 02110, Attention: Jay L. Massimo, Vice President, or
such other address for notice as the Agent shall last have furnished
in writing to the Person giving the notice; and
(c) if to any Bank, at such Bank's address set forth on
Schedule 1 hereto, or such other address for notice as such Bank shall
have last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or
made and to have become effective (a) if delivered by hand, overnight courier
or facsimile to a responsible officer of the party to which it is directed, at
the time of the receipt thereof by such officer or the sending of such
facsimile and (b) if sent by registered or certified first-class mail, postage
prepaid, on the third Business Day following the mailing thereof.
20. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). EACH OF THE
BORROWER AND HOLDINGS AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF
THE COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND
CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH
<PAGE> 56
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COURT AND SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON EACH OF THE
BORROWER AND HOLDINGS BY MAIL AT THE ADDRESS SPECIFIED IN Section 19. EACH OF
THE BORROWER AND HOLDINGS HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH
SUIT IS BROUGHT IN AN INCONVENIENT COURT.
21. HEADINGS.
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
22. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in
several counterparts and by each party on a separate counterpart, each of which
when executed and delivered shall be an original, and all of which together
shall constitute one instrument. In proving this Credit Agreement it shall not
be necessary to produce or account for more than one such counterpart signed by
the party against whom enforcement is sought.
23. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in Section 25.
24. WAIVER OF JURY TRIAL.
Each of Holdings and the Borrower hereby waives its right to a jury
trial with respect to any action or claim arising out of any dispute in
connection with this Credit Agreement, the Revolving Credit Notes or any of the
other Loan Documents, any rights or obligations hereunder or thereunder or the
performance of which rights and obligations. Except as prohibited by law, each
of Holdings and the Borrower hereby waives any right it may have to claim or
recover in any litigation referred to in the preceding sentence any special,
exemplary, punitive or consequential damages or any damages other than, or in
addition to, actual damages. Each of Holdings and the Borrower (a) certifies
that no representative, agent or attorney of any Bank or the Agent has
represented, expressly or otherwise, that such Bank or the Agent would not, in
the event of litigation, seek to enforce the foregoing waivers and (b)
acknowledges that the Agent and the Banks have been induced to enter into this
Credit Agreement, the other Loan Documents to which it is a party by, among
other things, the waivers and certifications contained herein.
25. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Credit Agreement
to be given by all of the Banks may be given, and any term of this Credit
Agreement, the other Loan Documents or any other instrument related hereto or
mentioned herein may be amended, and the performance or observance by any of
the Holdings Companies of any
<PAGE> 57
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terms of this Credit Agreement, the other Loan Documents or such other
instrument or the continuance of any Default or Event of Default may be waived
(either generally or in a particular instance and either retroactively or
prospectively) with, but only with, the written consent of the Borrower and the
written consent of the Majority Banks. Notwithstanding the foregoing, any
amendment to this Section 25, the rate of interest on the Revolving Credit
Notes (other than interest accruing pursuant to Section 4.10.2 following the
effective date of any waiver by the Majority Banks of the Default or Event of
Default relating thereto), the term or the principal amount of the Revolving
Credit Notes, the amount of the Commitments of the Banks, the date for payment
of principal, interest or fees, the release of any of the Guarantors (except
for the release of any Guarantor due to an action which is expressly permitted
by Section Section 8.6 and 9.5.2 of the Original Agreement) and the amount of
commitment fees hereunder may not be changed without the written consent of the
Borrower and the written consent of each Bank; the definition of Majority Banks
may not be amended without the written consent of all of the Banks; and the
amount of the Agent's Fee and Section 14 may not be amended without the written
consent of the Agent. No waiver shall extend to or affect any obligation not
expressly waived or impair any right consequent thereon. No course of dealing
or delay or omission on the part of the Agent or any Bank in exercising any
right shall operate as a waiver thereof or otherwise be prejudicial thereto.
No notice to or demand upon the Borrower shall entitle the Borrower to other or
further notice or demand in similar or other circumstances.
26. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or
in part in any jurisdiction, then such invalidity or unenforceability shall
affect only such clause or provision, or part thereof, in such jurisdiction,
and shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Credit Agreement in any
jurisdiction.
<PAGE> 58
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IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
DECISIONONE HOLDINGS CORP.
By:
-----------------------------------
Name:
Title:
DECISIONONE CORPORATION
By:
-----------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF BOSTON,
individually and as Agent
By:
-----------------------------------
Jay L. Massimo, Vice President
<PAGE> 59
GUARANTY
GUARANTY, dated as of November 13, 1996, by DECISIONONE HOLDINGS
CORP., a Delaware corporation ("Holdings"), DECISIONONE SUPPLIES, INC., a
Delaware corporation, IC PROPERTIES CORPORATION, a Delaware corporation,
DECISION DATA COMPUTER INTERNATIONAL, S.A., a Switzerland corporation, DECISION
DATA INVESTMENT CORPORATION, a Delaware corporation, and PROPERTIES HOLDING
CORPORATION, a Delaware corporation (collectively, the "Guarantors", and each,
individually, a "Guarantor") in favor of (a) THE FIRST NATIONAL BANK OF BOSTON,
as agent (hereinafter, in such capacity, the Agent") for itself and the other
lending institutions (hereinafter, collectively the "Banks") which are or may
become parties to a Revolving Credit Agreement dated as of November 13, 1996
(as amended and in effect from time to time, the "Credit Agreement"), by and
among Holdings, DecisionOne Corporation, a Delaware corporation (the
"Company"), the Banks, and the Agent and (b) each of the Banks.
WHEREAS, the Company and the Guarantors are members of a group of
related corporations, the success of any one of which is dependent in part on
the success of the other members of such group;
WHEREAS, the Guarantors expect to receive substantial direct and
indirect benefits from the extensions of credit to the Company by the Banks
pursuant to the Credit Agreement (which benefits are hereby acknowledged);
WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Company under the Credit Agreement that each
of the Guarantors execute and deliver to the Agent for the benefit of the Banks
and the Agent an unlimited guaranty substantially in the form hereof; and
WHEREAS, each of the Guarantors wishes to guaranty the Company's
obligations to the Banks and the Agent under or in respect of the Credit
Agreement as provided herein;
NOW, THEREFORE, the each of the Guarantors hereby agrees with the
Banks and the Agent as follows:
1. Definitions. The term "Obligations" and all other capitalized
terms used herein without definition shall have the respective meanings
provided therefor in the Credit Agreement.
2. Guaranty of Payment and Performance. The Guarantors hereby
jointly and severally guarantee to the Banks and the Agent the full and
punctual payment when due (whether at stated maturity, by required pre-payment,
by acceleration or otherwise), as well as the performance, of all of the
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Obligations including all such which would become due but for the operation of
the automatic stay pursuant to Section 362(a) of the Federal Bankruptcy Code
and the operation of Section Section 502(b) and 506(b) of the Federal
Bankruptcy Code. This Guaranty is an absolute, unconditional and continuing
guaranty of the full and punctual payment and performance of all of the
Obligations and not of their collectibility only and is in no way conditioned
upon any requirement that the Agent or any Bank first attempt to collect any of
the Obligations from the Company or resort to any collateral security or other
means of obtaining payment. Should the Company default in the payment or
performance of any of the Obligations, the obligations of the Guarantors
hereunder with respect to such Obligations in default shall, upon demand by the
Agent, become immediately due and payable to the Agent, for the benefit of the
Banks and the Agent, without demand or notice of any nature, all of which are
expressly waived by the Guarantors. Payments by the Guarantors hereunder may
be required by the Agent on any number of occasions. All payments by the
Guarantors hereunder shall be made to the Agent, in the manner and at the place
of payment specified therefor in the Credit Agreement, for the account of the
Banks and the Agent. To the extent that any Guarantor makes a payment
hereunder in excess of the aggregate amount of the benefit received by such
Guarantor in respect of the extensions of credit under the Credit Agreement
(the "Benefit Amount"), then such Guarantor, after the payment in full in cash
of all of the Obligations, shall be entitled to recover from each other
Guarantor such excess payment, pro rata in accordance with the ratio of the
Benefit Amount received by each such other Guarantor to the total Benefit
Amounts received by all Guarantors, and the right to such recovery shall be
deemed to be in asset and property of such Guarantor so funding; provided that
all such rights to recovery shall be subordinate and junior in right of payment
to the final and indefeasible repayment in full in cash of all of the
Obligations.
3. Guarantors' Agreement to Pay Enforcement Costs, etc. Each of
the Guarantors further agrees, as the principal obligors and not as guarantors
only, to pay to the Agent, on demand, all costs and expenses (including court
costs and legal expenses) incurred or expended by the Agent or any Bank in
connection with the Obligations, this Guaranty and the enforcement thereof,
together with interest on amounts recoverable under this Section 3 from the
time when such amounts become due until payment, whether before or after
judgment, at the rate of interest for overdue principal set forth in the Credit
Agreement, provided that if such interest exceeds the maximum amount permitted
to be paid under applicable law, then such interest shall be reduced to such
maximum permitted amount.
4. Waivers by Guarantors; Bank's Freedom to Act. The Guarantors
agree that the Obligations will be paid and performed strictly in accordance
with their respective terms, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the Agent or any Bank with respect thereto. The Guarantors waive
promptness, diligences, presentment, demand, protest, notice of acceptance,
notice of any Obligations incurred and all other notices of any kind, all
defenses which may
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be available by virtue of any valuation, stay, moratorium law or other similar
law now or hereafter in effect, any right to require the marshalling of assets
of the Company or any other entity or other person primarily or secondarily
liable with respect to any of the Obligations, and all suretyship defenses
generally. Without limiting the generality of the foregoing, the Guarantors
agree to the provisions of any instrument evidencing, securing or otherwise
executed in connection with any Obligation and agree that the obligations of
the Guarantors hereunder shall not be released or discharged, in whole or in
part, or otherwise affected by (a) the failure of the Agent or any Bank to
assert any claim or demand or to enforce any right or remedy against the
Company or any other entity or other person primarily or secondarily liable
with respect to any of the Obligations; (b) any extensions, compromise,
refinancing, consolidation or renewals of any Obligation; (c) any change in the
time, place or manner of payment of any of the Obligations or any rescissions,
waivers, compromise, refinancing, consolidation or other amendments or
modifications of any of the terms or provisions of the Credit Agreement, the
Revolving Credit Note, the other Loan Documents or any other agreement
evidencing, securing or otherwise executed in connection with any of the
Obligations, (d) the addition, substitution or release of any entity or other
person primarily or secondarily liable for any Obligation; (e) the adequacy of
any rights which the Agent or any Bank may have against any collateral security
or other means of obtaining repayment of any of the Obligations; (f) the
impairment of any collateral securing any of the Obligations, including without
limitation the failure to perfect or preserve any rights which the Agent or any
Bank might have in such collateral security or the substitution, exchange,
surrender, release, loss or destruction of any such collateral security; or (g)
any other act or omission which might in any manner or to any extent vary the
risk of the Guarantors or otherwise operate as a release or discharge of the
Guarantors, all of which may be done without notice to the Guarantors. To the
fullest extent permitted by law, the Guarantors hereby expressly waive any and
all rights or defenses arising by reason of (i) any "one action" or "anti-
deficiency" law which would otherwise prevent the Agent or any Bank from
bringing any action, including any claim for a deficiency, or exercising any
other right or remedy (including any right of set-off), against the Guarantors
before or after the Agent or such Bank's commencement or completion of any
foreclosure action, whether judicially, by exercise of power of sale or
otherwise, or (ii) any other law which in any other way would otherwise require
any election of remedies by the Agent or any Bank.
5. Unenforceability of Obligations Against Company. If for any
reason the Company has no legal existence or is under no legal obligation to
discharge any of the Obligations, or if any of the Obligations have become
irrecoverable from the Company by reason of the Company's insolvency,
bankruptcy or reorganization or by other operation of law or for any other
reason, this Guaranty shall nevertheless be binding on the Guarantors to the
same extent as if the Guarantors at all times had been the principal obligors
on all such Obligations. In the event that acceleration of the time for
payment of any of the Obligations is stayed upon the insolvency, bankruptcy or
<PAGE> 62
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reorganization of the Company, or for any other reason, all such amounts
otherwise subject to acceleration under the terms of the Credit Agreement, the
Revolving Credit Note, the other Loan Documents or any other agreement
evidencing, securing or otherwise executed in connection with any Obligation
shall be immediately due and payable by the Guarantors.
6. Subrogation; Subordination.
6.1. Waiver of Rights Against Company. Until the final
payment and performance in full of all of the Obligations, the
Guarantors shall not exercise and hereby waive any rights against the
Company arising as a result of payment by the Guarantors hereunder, by
way of subrogation, reimbursement, restitution, contribution or
otherwise, and will not prove any claim in competition with the Agent
or any Bank in respect of any payment hereunder in any bankruptcy,
insolvency or reorganization case or proceedings of any nature; the
Guarantors will not claim any setoff, recoupment or counterclaim
against the Company in respect of any liability of the Guarantors to
the Company; and the Guarantors waive any benefit of and any right to
participate in any collateral security which may be held by the Agent
or any Bank.
6.2. Subordination. The payment of any amounts due with
respect to any indebtedness of the Company for money borrowed or
credit received now or hereafter owed to the Guarantors is hereby
subordinated to the prior payment in full of all of the Obligations.
The Guarantors agree that, after the occurrence of any default in the
payment or performance of any of the Obligations, the Guarantors will
not demand, sue for or otherwise attempt to collect any such
indebtedness of the Company to the Guarantors until all of the
Obligations shall have been paid in full. If, notwithstanding the
foregoing sentence, the Guarantors shall collect, enforce or receive
any amounts in respect of such indebtedness while any Obligations are
still outstanding, such amounts shall be collected, enforced and
received by the Guarantors as trustees for the Banks and the Agent and
be paid over to the Agent, for the benefit of the Banks and the Agent,
on account of the Obligations without affecting in any manner the
liability of the Guarantors under the other provisions of this
Guaranty.
6.3. Provisions Supplemental. The provisions of this
Section 6 shall be supplemental to and not in derogation of any rights
and remedies of the Banks and the Agent under any separate
subordination agreement which the Agent may at any time and from time
to time enter into with the Guarantors for the benefit of the Banks
and the Agent.
7. Security; Setoff. The Guarantors grant to each of the Agent
and the Banks, as security for the full and punctual payment and performance of
all of the Guarantors' obligations hereunder, a continuing lien on and security
interest in all securities or other property belonging to the Guarantors now or
<PAGE> 63
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hereafter held by the Agent or such Bank and in all deposits (general or
special, time or demand, provisional or final) and other sums credited by or
due from the Agent or such Bank to the Guarantors or subject to withdrawal by
the Guarantors. Regardless of the adequacy of any collateral security or other
means of obtaining payment of any of the Obligations, each of the Agent and the
Banks is hereby authorized at any time and from time to time, without notice to
the Guarantors (any such notice being expressly waived by the Guarantors) and
to the fullest extent permitted by law, to set off and apply such deposits and
other sums against the obligations of the Guarantors under this Guaranty,
whether or not the Agent or such Bank shall have made any demand under this
Guaranty and although such obligations may be contingent or unmatured.
8. Further Assurances. The Guarantors agree that they will from
time to time, at the request of the Agent, do all such things and execute all
such documents as the Agent may consider necessary or desirable to give full
effect to this Guaranty and to perfect and preserve the rights and powers of
the Banks and the Agent hereunder. The Guarantors acknowledge and confirm that
the Guarantors themselves have established their own adequate means of
obtaining from the Company on a continuing basis all information desired by the
Guarantors concerning the financial condition of the Company and that the
Guarantors will look to the Company and not to the Agent or any Bank in order
for the Guarantors to keep adequately informed of changes in the Company's
financial condition.
9. Termination; Reinstatement. This Guaranty shall remain in
full force and effect until the Agent is given written notice of the
Guarantors' intention to discontinue this Guaranty, notwithstanding any
intermediate or temporary payment or settlement of the whole or any part of the
Obligations. No such notice shall be effective unless received and
acknowledged by an officer of the Agent at the address of the Agent for notices
set forth in Section 19 of the Credit Agreement. No such notice shall affect
any rights of the Agent or any Bank hereunder, including without limitation the
rights set forth in Section Section 4 and 6, with respect to any Obligations
incurred or accrued prior to the receipt of such notice or any Obligations
incurred or accrued pursuant to any contract or commitment in existence prior
to such receipt. This Guaranty shall continue to be effective or be
reinstated, notwithstanding any such notice, if at any time any payment made or
value received with respect to any Obligation is rescinded or must otherwise be
returned by the Agent or any Bank upon the insolvency, bankruptcy or
reorganization of the Company, or otherwise, all as though such payment had not
been made or value received.
10. Successors and Assigns. This Guaranty shall be binding upon
the Guarantors, their successors and assigns, and shall inure to the benefit of
the Agent and the Banks and their respective successors, transferees and
assigns. Without limiting the generality of the foregoing sentence, each Bank
may assign or otherwise transfer the Credit Agreement, the other Loan
Documents, or any other agreement or note held by it evidencing, securing or
otherwise executed in connection with the Obligations, or sell participations
in any interest therein, to
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any other entity or other person, and such other entity or other person shall
thereupon become vested, to the extent set forth in the agreement evidencing
such assignment, transfer or participation, with all the rights in respect
thereof granted to such Bank herein, all in accordance with Section 18 of the
Credit Agreement. The Guarantors may not assign any of their obligations
hereunder.
11. Amendments and Waivers. No amendment or waiver of any
provision of this Guaranty nor consent to any departure by the Guarantors
therefrom shall be effective unless the same shall be in writing and signed by
the Agent with the consent of the Majority Banks. No failure on the part of
the Agent or any Bank to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right.
12. Notices. All notices and other communications called for
hereunder shall be made in writing and, unless otherwise specifically provided
herein, shall be deemed to have been duly made or given when delivered by hand
or mailed first class, postage prepaid, or, in the case of telegraphic or
telexed notice, when transmitted, answer back received, addressed as follows:
if to the Guarantors, at the addresses set forth beneath their signatures
hereto, and if to the Agent, at the address for notices to the Agent set forth
in Section 19 of the Credit Agreement, or at such address as either party may
designate in writing to the other.
13. Governing Law; Consent to Jurisdiction. THIS GUARANTY IS
INTENDED TO TAKE EFFECT AS A SEALED INSTRUMENT AND SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS.
The Guarantors agree that any suit for the enforcement of this Guaranty may be
brought in the courts of the Commonwealth of Massachusetts or any federal court
sitting therein and consents to the nonexclusive jurisdiction of such court and
to service of process in any such suit being made upon the Guarantors by mail
at the address specified by reference in Section 12. The Guarantors hereby
waive any objection that they may now or hereafter have to the venue of any
such suit or any such court or that such suit was brought in an inconvenient
court.
14. Waiver of Jury Trial. EACH OF THE GUARANTORS HEREBY WAIVES
ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS GUARANTY, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THE PERFORMANCE OF ANY OF SUCH RIGHTS OR OBLIGATIONS. Except as
prohibited by law, each of the Guarantors hereby waives any rights which it may
have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. Each of the Guarantors
(a) certifies that neither the Agent nor any Bank nor any representative of the
Agent or the Banks or attorney of the Agent
<PAGE> 65
- 7 -
or any Bank has represented, expressly or otherwise, that the Agent or any Bank
would not, in the event of litigation, seek to enforce the foregoing waivers
and (b) acknowledges that, in entering into the Credit Agreement and the other
Loan Documents to which the Agent or any Bank is a party, the Agent and the
Banks are relying upon, among other things, the waivers and certifications
contained in this Section 14.
15. Miscellaneous. This Guaranty constitutes the entire agreement
of the Guarantors with respect to the matters set forth herein. The rights and
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or any other agreement, and this Guaranty shall be in addition
to any other guaranty of or collateral security for any of the Obligations.
The invalidity or unenforceability of any one or more sections of this Guaranty
shall not affect the validity or enforceability of its remaining provisions.
Captions are for the ease of reference only and shall not affect the meaning of
the relevant provisions. The meanings of all defined terms used in this
Guaranty shall be equally applicable to the singular and plural forms of the
terms defined.
<PAGE> 66
- 8 -
IN WITNESS WHEREOF, the Guarantors have caused this Guaranty to be
executed and delivered as of the date first above written.
DECISIONONE HOLDINGS CORP.
DECISIONONE SUPPLIES, INC.
IC PROPERTIES CORPORATION
DECISION DATA COMPUTER INTERNATIONAL, S.A.
DECISION DATA INVESTMENT CORPORATION
PROPERTIES HOLDING CORPORATION
By:
--------------------------------------
Title:
<PAGE> 67
REVOLVING CREDIT NOTE
$75,000,000 as of November 13, 1996
FOR VALUE RECEIVED, the undersigned DECISIONONE CORPORATION, a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of
THE FIRST NATIONAL BANK OF BOSTON, a national banking association (the "Bank")
at the Agent's Head Office (as defined in the Credit Agreement referred to
below):
(a) prior to or on the Revolving Credit Loan Maturity Date
the principal amount of SEVENTY FIVE MILLION DOLLARS ($75,000,000) or,
if less, the aggregate unpaid principal amount of Revolving Credit
Loans advanced by the Bank to the Borrower pursuant to the Revolving
Credit Agreement dated as of November 13, 1996 (as amended and in
effect from time to time, the "Credit Agreement"), among the Borrower,
the Banks and other parties thereto;
(b) the principal outstanding hereunder from time to time at
the times provided in the Credit Agreement; and
(c) interest on the principal balance hereof from time to
time outstanding from the Closing Date under the Credit Agreement
through and including the final payment in full hereof at the times
and at the rate provided in the Credit Agreement.
This Note evidences borrowings under and has been issued by the
Borrower in accordance with the terms of the Credit Agreement. The Bank and
any holder hereof is entitled to the benefits of the Credit Agreement and the
other Loan Documents, and may enforce the agreements of the Borrower contained
therein, and any holder hereof may exercise the respective remedies provided
for thereby or otherwise available in respect thereof, all in accordance with
the respective terms thereof. All capitalized terms used in this Note and not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.
The Borrower irrevocably authorizes the Bank to make or cause to be
made, at or about the time of the Drawdown Date of any Revolving Credit Loan or
at the time of receipt of any payment of principal of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid, or
any other similar record, including computer records, reflecting the making of
such Revolving Credit Loan or (as the case may be) the receipt of such payment.
The outstanding amount of the Revolving Credit Loans set forth on the grid
attached to this Note, or the continuation of such grid, or any other similar
<PAGE> 68
- 2 -
record, including computer records, maintained by the Bank with respect to any
Revolving Credit Loans shall be prima facie evidence of the principal amount
thereof owing and unpaid to the Bank, but the failure to record, or any error in
so recording, any such amount on any such grid, continuation or other record
shall not limit or otherwise affect the obligations of the Borrower hereunder or
under the Credit Agreement to make payments of principal of and interest on this
Note when due.
The Borrower has the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the principal
of this Note on the terms and conditions specified in the Credit Agreement.
If any one or more of the Events of Default shall occur, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of
any other rights of the Bank or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.
The Borrower and every endorser and guarantor of this Note or the
obligation represented hereby waive presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assent to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or release
of any other party or person primarily or secondarily liable.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL FOR ALL
PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE
COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR
CHOICE OF LAW). THE BORROWER AGREES THAT ANY SUIT FOR THE ENFORCEMENT OF THIS
NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS OR ANY
FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE JURISDICTION
OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE
BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN Section 18 OF THE CREDIT
AGREEMENT. THE BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH
SUIT IS BROUGHT IN AN INCONVENIENT COURT.
<PAGE> 69
- 3 -
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
<PAGE> 70
- 4 -
IN WITNESS WHEREOF, each of the undersigned has caused this Revolving
Credit Note to be signed in its corporate names and its corporate seal to be
impressed thereon by their duly authorized officers as of the day and year
first above written.
DECISIONONE CORPORATION
By:
-----------------------
Title:
<PAGE> 71
Amount of Balance of
Amount Principal Paid Principal Notation
Date of Loan or Prepaid Unpaid Made By:
<PAGE> 1
EXHIBIT 11
DECISIONONE HOLDINGS CORP. AND SUBSIDIARIES
(UNAUDITED) COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------------- ----------------------------
1996 1995 1996 1995
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net Income $ 5,455 $ 4,386 $ 5,455 $ 4,386
======= ======= ======= =======
Primary Income Per Share:
Weighted average number of common shares:
Shares outstanding, beginning of period 27,340 8,936 27,340 8,936
Average number of shares related to common
stock equivalents 2,719 1,895 2,719 1,895
Average number of shares issued for
employee stock options exercised 24 24
Shares related to SAB 83 1,046 1,046
Shares from automatic conversion of redeemable
preferred stock related to SAB 64 11,272 11,272
------- ------- ------- -------
Total weighted average common
and common equivalent shares outstanding 30,083 23,149 30,083 23,149
======= ======= ======= =======
Net income per common share $ 0.18 $ 0.19 $ 0.18 $ 0.19
======= ======= ======= =======
Fully Diluted Income Per Share:
Weighted average number of common shares:
Shares outstanding, beginning of period 27,340 8,936 27,340 8,936
Average number of shares related to common
stock equivalents 2,557 1,895 2,557 1,895
Average number of shares issued for
employee stock options exercised 24 24
Shares related to SAB 83 1,046 1,046
Shares from automatic conversion of redeemable
preferred stock related to SAB 64 11,272 11,272
------- ------- ------- -------
Total weighted average common
and common equivalent shares outstanding 29,921 23,149 29,921 23,149
======= ======= ======= =======
Net income per common share $0.18 $0.19 $0.18 $0.19
===== ===== ===== =======
</TABLE>
Note to Exhibit:
Fully diluted earnings per share calculation is presented in accordance with
Regulation S-K item 601 (b)(11), although not required by Paragraph 40 of
Accounting Principles Board Opinion No. 15 because it is anti-dilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF DECISION ONE CORP. AND
SUBSIDIARIES AT AND FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 9,028
<SECURITIES> 0
<RECEIVABLES> 115,365
<ALLOWANCES> 9,008
<INVENTORY> 31,015
<CURRENT-ASSETS> 158,065
<PP&E> 61,314
<DEPRECIATION> 29,751
<TOTAL-ASSETS> 530,616
<CURRENT-LIABILITIES> 127,290
<BONDS> 0
0
0
<COMMON> 275
<OTHER-SE> 186,071
<TOTAL-LIABILITY-AND-EQUITY> 530,616
<SALES> 176,426
<TOTAL-REVENUES> 176,426
<CGS> 134,565
<TOTAL-COSTS> 134,565
<OTHER-EXPENSES> 28,839
<LOSS-PROVISION> 349
<INTEREST-EXPENSE> 3,268
<INCOME-PRETAX> 9,405
<INCOME-TAX> 3,950
<INCOME-CONTINUING> 5,455
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,455
<EPS-PRIMARY> 0.18
<EPS-DILUTED> 0.18
</TABLE>
