SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
DECISIONONE HOLDINGS CORP.
_______________________________________________________________
(Name of Issuer)
COMMON STOCK, $.01 PAR VALUE
______________________________________________________________
(Title of Class of Securities)
2434560100
______________________________________________________________
(CUSIP Number)
DAVID A. KATZ
WACHTELL, LIPTON, ROSEN & KATZ
51 WEST 52ND STREET
NEW YORK, N.Y. 10019
(212) 403-1302
______________________________________________________________
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
AUGUST 7, 1997
______________________________________________________________
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement
on Schedule 13G to report the acquisition which is the subject
of this Schedule 13D, and is filing this schedule because of
Rule 13d-1(b)(3) or (4), check the following box / /.
Note: Six copies of this statement, including all
exhibits, should be filed with the Commission. See Rule
13d-1(a) for other parties to whom copies are to be sent.
The information required on the remainder of this
cover page shall not be deemed to be "filed" for the purpose of
Section 18 of the Securities Exchange Act of 1934 or otherwise
subject to the liabilities of that section of the Act but shall
be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following pages)
Page 1 of 16 Pages<PAGE>
CUSIP No. 2434560100 13D Page 2 of 16 Pages
1 NAME OF PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
APOLLO INVESTMENT FUND III, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /x/
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY -810,117-
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH
10 SHARED DISPOSITIVE POWER
-810,117-
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
810,117
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.5%
14 TYPE OF PERSON REPORTING*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT<PAGE>
CUSIP No. 2434560100 13D Page 3 of 16 Pages
1 NAME OF PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
APOLLO OVERSEAS PARTNERS III, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /x/
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 810,117
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH
10 SHARED DISPOSITIVE POWER
810,117
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
810,117
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.5%
14 TYPE OF PERSON REPORTING*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT<PAGE>
CUSIP No. 2434560100 13D Page 4 of 16 Pages
1 NAME OF PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
APOLLO (U.K.) PARTNERS III, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /x/
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED KINGDOM
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 810,117
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH
10 SHARED DISPOSITIVE POWER
810,117
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
810,117
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.5%
14 TYPE OF PERSON REPORTING*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT<PAGE>
CUSIP No. 2434560100 13D Page 5 of 16 Pages
1 NAME OF PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
APOLLO ADVISORS II, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) /x/
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 810,117
EACH
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH
10 SHARED DISPOSITIVE POWER
810,117
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
810,117
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.5%
14 TYPE OF PERSON REPORTING*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT<PAGE>
ITEM 1. SECURITY AND ISSUER.
The class of equity securities to which this statement
relates is the common stock, $0.01 par value per share (the
"Shares"), of DecisionOne Holdings Corp., a Delaware corpora-
tion ("DecisionOne"). The principal executive offices of Deci-
sionOne are located at 50 East Swedesford Road, Frazer, Penn-
sylvania, 19355.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(c) and (f)
This Schedule 13D is being filed jointly on behalf of
the following persons (collectively, the "Reporting Persons"):
(1) Apollo Investment Fund III, L.P., a Delaware limited part-
nership ("Fund III"), (2) Apollo Overseas Partners III, L.P., a
Delaware limited partnership ("Overseas Partners"), (3) Apollo
(U.K.) Partners III, L.P., a limited partnership organized un-
der the laws of the United Kingdom ("UK Partners" and, together
with Fund III and Overseas Partners, the "Apollo Purchasers")
and (4) Advisors (as defined below). The Reporting Persons are
making this joint filing because they may be deemed to consti-
tute a "group" within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange
Act").
Each of the Apollo Purchasers is principally engaged
in the business of investment in securities. The principal
office of each of the Apollo Purchasers is c/o Apollo Advisors
II, L.P., Two Manhattanville Road, Purchase, New York 10577.
Apollo Advisors II, L.P., a Delaware limited partner-
ship ("Advisors"), is the managing general partner of each of
the Apollo Purchasers. Advisors is principally engaged in the
business of serving as managing general partner of the Apollo
Purchasers.
Apollo Capital Management II, Inc., a Delaware corpo-
ration ("Apollo Capital"), is the general partner of Apollo
Advisors. Apollo Capital is principally engaged in the busi-
ness of serving as general partner to Advisors.
Apollo Management, L.P., a Delaware limited partner-
ship ("Apollo Management"), serves as manager of the Apollo
Purchasers and manages their day-to-day operations.
AIF III Management, Inc., a Delaware corporation
("AIM"), is the general partner of Apollo Management. AIM is
-6-<PAGE>
principally engaged in the business of serving as general part-
ner to Apollo Management.
The respective addresses of the principal office of
Advisors, Apollo Capital, Apollo Management and AIM are c/o
Apollo Advisors II, L.P., Two Manhatanville Road, Purchase, New
York 10577.
Apollo Fund Administration II LDC, a Cayman Islands
LDC ("Administration"), is the administrative general partner
of each of Overseas Partners and UK Partners. Administration
is principally engaged in the business of serving as adminis-
trative general partner of Overseas Partners and UK Partners.
The principal place of business of Administration is Apollo
Fund Administration II LDC, c/o CIBC Bank and Trust Company
(Cayman) Limited, Edward Street, Georgetown, Grand Cayman, Cay-
man Islands, British West Indies.
Apollo Management (UK) Ltd., an English corporation
("Management UK"), is the resident general partner of UK Part-
ners. Management UK is principally engaged in the business of
serving as resident general partner of UK Partners. The ad-
dress of the principal business of Management UK is Hill House,
1 Little New Street, London EC4A 3TR, England.
Attached as Schedule I to this Schedule 13D is infor-
mation concerning the Reporting Persons and other persons and
entities as to which such information is required to be dis-
closed in response to Item 2 and General Instruction C to
Schedule 13D.
(d) and (e)
None of the Reporting Persons, Apollo Capital, Apollo
Management, AIM, Administration, Management UK nor any of the
persons or entities referred to in Schedule I has, during the
last five years, been convicted in a criminal proceeding (ex-
cluding traffic violations and similar misdemeanors) or been a
party to a civil proceeding of a judicial or administrative
body of competent jurisdiction and as a result of such proceed-
ing was or is subject to a judgment, decree, or final order
enjoining future violations of, or prohibiting or mandating
activities subject to, Federal or state securities laws or
finding any violation with respect to such laws.
-7-<PAGE>
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to the Subscription Agreement and the Merger
Agreement (both as defined below in Item 4), the total consid-
eration paid by the Apollo Purchasers in connection with their
purchase of the Shares was $16,694,380.72. The acquisition of
the Shares is described below in Item 4.
The Apollo Purchasers obtained funds to make the pur-
chase described herein through capital contributions from their
investors.
ITEM 4. PURPOSE OF TRANSACTION.
The Apollo Purchasers entered into the Agreements (as
defined below) to purchase of the Shares for general invest-
ment purposes. The Apollo Purchasers retain the right to
change their investment intent. In the event of a material
change in the present plans of the Apollo Purchasers, the Re-
porting Persons will amend this Schedule 13D to reflect such
change.
Except as set forth herein, the Reporting Persons do
not have any plans or proposals which would relate to or result
in any of the transactions described in subparagraphs (a)
through (j) of Item 4 of Schedule 13D.
On May 4, 1997, DecisionOne and Quaker Holding Co., a
Delaware corporation ("Quaker"), entered into the Agreement and
Plan of Merger (the "Merger Agreement," attached hereto as Ex-
hibit 1) pursuant to which Quaker agreed to merge with and into
DecisionOne (the "Merger"). The Merger became effective on
August 7, 1997 (the "Closing Date"). In connection with the
Merger and the transactions contemplated thereby, effective
August 7, 1997, Quaker entered into a Subscription Agreement
(the "Subscription Agreement") with the Apollo Purchasers,
DLJ Merchant Banking Partners II, L.P., DLJ Merchant Banking
Partners II-A.L.P., DLJ Offshore Partners, L.P., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A, L.P.,
DLJ Millennium Partners, L.P., DLJ Millennium Partners-A, L.P.,
DLJMB Funding II, Inc., DLJ First ESC, L.L.C., DLJ EAB Part-
ners, L.P., UK Investment Plan 1997 Partners (the "DLJ Enti-
ties"), Bain Capital Fund V, L.P., Bain Capital Fund V-B, L.P.,
BCIP Associates and BCIP Trust Associates (collectively,
"Bain"), Thomas H. Lee Equity Fund III, L.P., Thomas H. Lee
Foreign Fund III, L.P., THL Co. - Investors III - A LLC, THL
Co. - Investors III - B LLC (collectively, "THL"), DLJ Capital
Corp., Sprout Growth II, L.P., The Sprout CEO Fund, L.P.
("Sprout") and Ontario Teachers' Pension Plan Fund ("Teachers",
and collectively with the Apollo Purchasers, Bain, THL and
Sprout, the "Institutional Investors"), pursuant to which the
-8-<PAGE>
DLJ Entities and the Institutional Investors purchased shares
of Common Stock of Quaker on the terms set forth in the
Subscription Agreement. Upon consummation of the Merger and
the purchase of the Shares, the percentage ownership of the
outstanding Shares is as follows: (1) DLJ Entities, 60.6%;
(2) Apollo Purchasers, 6.5%; (3) Bain, 6.5%; (4) THL, 6.5%;
(5) Sprout, 3.8%; and (6) Teachers, 3.9%.
In connection with the Subscription Agreement,
DecisionOne, the DLJ Entities, the Apollo Purchasers, the other
Institutional Investors and certain members of DecisionOne
management (the "Management Shareholders"), entered into an
Investors' Agreement dated as of August 7, 1997 (the "Investors'
Agreement"). The Investors' Agreement together with the Merger
Agreement and the Subscription Agreement are sometimes referred
to herein as the "Agreements."
The Investors' Agreement provides that subject to cer-
tain ownership levels, the Institutional Investors will have
certain corporate governance rights and that (i) the Board of
Directors of DecisionOne will consist of 7 members, 4 of which
will be nominated by the DLJ Entities, 2 of which will be inde-
pendent directors satisfactory to the DLJ Entities and 1 of
which will be nominated by the Management Shareholders; and
(ii) the Institutional Investors will have certain Tag-along
Rights, Drag-along Rights and registration rights with respect
to the Shares (each as defined in the Investors' Agreement).
The Investors' Agreement also provides certain restrictions
regarding the investment made by the Management Shareholders
as more fully described therein. Further, the Investors'
Agreement provides for certain subscription rights in the event
DecisionOne proposes to issue equity securities.
Each of the Agreements is filed as an exhibit to this
Schedule 13D and is incorporated herein by reference. The
foregoing descriptions of the Agreements are qualified in their
entirety by reference to such exhibits.
-9-<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) and (b)
Fund III has acquired 738,693 Shares pursuant to the
Subscription Agreement and the Merger Agreement, representing
approximately 5.9% of the outstanding Shares as of August 8,
1997 (the "Outstanding Shares"). Fund III has, subject to the
Agreements, sole voting and sole dispositive power with respect
to such Shares.
Overseas Partners has acquired 44,117 Shares pursuant
to the Subscription Agreement and the Merger Agreement, repre-
senting approximately 0.3% of the Outstanding Shares. Overseas
Partners has, subject to the Agreements, sole voting and sole
dispositive power with respect to such Shares.
UK Partners has acquired 27,307 Shares pursuant to the
Subscription Agreement and the Merger Agreement, representing
approximately 0.2% of the Outstanding Shares. UK Partners has,
subject to the Agreements, sole voting and sole dispositive
power with respect to such Shares.
Each of Advisors and Apollo Capital may be deemed,
pursuant to the attribution rules of Rule 13d-3 of the Exchange
Act, to be the beneficial owner of 810,117 Shares, representing
approximately 6.5% of the Outstanding Shares. Each of Advisors
and Apollo Capital disclaim beneficial ownership of such
Shares.
The statements in this Schedule 13D shall not be con-
strued as an admission that a Reporting Person is the benefi-
cial owner of any of the Shares other than those which such
Reporting Person has acquired pursuant to the Agreements.
In addition, by virtue of the Agreements, each of the
Reporting persons may be deemed to share voting and dispositive
power with respect to the Shares. The Reporting Persons dis-
claim the existence of such shared power.
(c) The responses to Items 3 and 4 of this Schedule 13D are
incorporated herein.
(d) Not applicable
(e) Not applicable
-10-<PAGE>
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDING OR RELATION-
SHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
The response to Items 3, 4 and 5 of this Schedule 13D
and the Exhibits to this Schedule 13D are incorporated herein
by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following Exhibits are filed as part of this Schedule
13D:
Exhibit 1 - Merger Agreement, dated as of May 4, 1997
Exhibit 2 - Subscription Agreement, dated as of August 7,
1997
Exhibit 3 - Investors' Agreement, dated as of August 7, 1997
-11-<PAGE>
SIGNATURE
After reasonable inquiry and to the best of his knowledge and
belief, the undersigned certifies that the information set
forth in this statement is true, complete and correct. In ad-
dition, by signing below, the undersigned agrees that this
Schedule 13D may be filed jointly on behalf of each of Apollo
Investment Fund III, L.P., Apollo Overseas Partners III, L.P.
and Apollo (U.K.) Partners III, L.P.
Dated as of the 18th day of August, 1997.
APOLLO INVESTMENT FUND III, L.P.
By: Apollo Advisors II, L.P.,
its General Partner
By: Apollo Capital Management II, Inc.,
its General Partner
By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Vice President
APOLLO OVERSEAS PARTNERS III, L.P.
By: Apollo Advisors II, L.P.,
its General Partner
By: Apollo Capital Management II, Inc.,
its General Partner
By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Vice President
APOLLO (U.K.) PARTNERS III, L.P.
By: Apollo Advisors II, L.P.,
its General Partner
By: Apollo Capital Management II, Inc.,
its General Partner
By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Vice President
-12-<PAGE>
APOLLO ADVISORS II, L.P.
By: Apollo Capital Management II, Inc.,
its General Partner
By: /s/ Michael D. Weiner
Name: Michael D. Weiner
Title: Vice President
-13-<PAGE>
SCHEDULE I
The following sets forth information with respect to
the general partners, executive officers, directors and princi-
pal shareholders of Advisors, Apollo Capital, Apollo Manage-
ment, AIM, Administration and Management UK. Capitalized terms
used herein without definition have the meanings assigned
thereto in the Schedule 13D to which this Schedule I relates.
Except as otherwise indicated in this Schedule I or in the
Schedule 13D to which this Schedule I relates, the principal
business address of each person or entity set forth below is
c/o Apollo Advisors II, L.P., Two Manhattanville Road, Pur-
chase, New York 10577, and each such person or entity is a
citizen of the United States of America.
The principal business of Advisors is to provide ad-
vice regarding investments by, and serving as general partner
to, the Apollo Purchasers, and the principal business of Apollo
Capital is that of serving as general partner of Advisors. The
principal business of Apollo Management is to serve as the man-
ager of the Apollo Purchasers. The principal business of AIM
is to serve as general partner to Apollo Management.
The principal occupation of each of Messrs. Leon D.
Black and John J. Hannan is to act as an executive officer and
director of Apollo Capital and AIM. Messrs. Black and Hannan
are also limited partners of Advisors and Apollo Management.
Messrs. Black and Hannan are also founding principals
of Apollo Advisors, L.P. ("Apollo Advisors"), Lion Advisors,
L.P. ("Lion") and Apollo Real Estate Advisors, L.P. ("AREA").
The principal business of Apollo Advisors and Lion is to pro-
vide advice regarding investments in securities and the princi-
pal business of AREA is to provide advice regarding investments
in real estate and real estate-related investments. The busi-
ness address of each of Messrs. Black and Hannan is c/o Apollo
Management, L.P., 1301 Avenue of the Americas, New York, New
York 10019.
Peter Henry Larder, Michael Francis Benedict Gillooly,
Ian Thomas Patrick and Martin William Laidlaw, each of whom is
a British citizen, serve as directors of Administration. Each
of the above four individuals is principally employed by CIBC
Bank and Trust Company (Cayman) Limited ("CIBC") in the follow-
ing positions: Mr. Larder, Managing Director; Mr. Gillooly,
Deputy Managing Director; Mr. Patrick, Manager-Accounting Ser-
vices; and Mr. Laidlaw, Senior Fund Accountant. CIBC is a Cay-
man Islands corporation which is principally engaged in the
-14-<PAGE>
provision of trust, banking and corporate administration ser-
vices, the principal address of which is Edward Street, Grand
Cayman, Cayman Islands, British West Indies. It provides ac-
counting, administrative and other services to Administration
pursuant to a contract. Mr. Leon D. Black is the beneficial
owner of the stock of Administration.
-15-<PAGE>
EXHIBIT INDEX
SEQUENTIAL
EXHIBIT DESCRIPTION PAGE NO.
1 Merger Agreement, dated as of May 4, 1997
2 Subscription Agreement, dated as of
August 7, 1997
3 Investors' Agreement, dated as of
August 7, 1997
-16-
Exhibit 1
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
dated as of
May 4, 1997
among
DECISIONONE HOLDINGS CORP.
and
QUAKER HOLDING CO.<PAGE>
TABLE OF CONTENTS1
_____________
Page
ARTICLE 1 THE MERGER
Section 1.01. The Merger................................ 1
Section 1.02. Conversion (or Retention) of Shares....... 2
Section 1.03. Elections................................. 3
Section 1.04. Proration of Election Price............... 5
Section 1.05. Surrender and Payment..................... 6
Section 1.06. Dissenting Shares......................... 8
Section 1.07. Stock Options............................. 9
Section 1.08. Warrants.................................. 9
Section 1.09. Fractional Shares......................... 10
ARTICLE 2 THE SURVIVING CORPORATION
Section 2.01. Certificate of Incorporation.............. 10
Section 2.02. Bylaws.................................... 10
Section 2.03. Directors and Officers.................... 10
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.01. Corporate Existence and Power............. 11
Section 3.02. Corporate Authorization................... 11
Section 3.03. Governmental Authorization................ 11
Section 3.04. Non-contravention......................... 12
Section 3.05. Capitalization............................ 12
Section 3.06. Subsidiaries.............................. 13
Section 3.07. SEC Filings............................... 14
Section 3.08. Financial Statements...................... 14
Section 3.09. Disclosure Documents...................... 15
Section 3.10. Absence of Certain Changes................ 16
Section 3.11. No Undisclosed Material Liabilities....... 17
_______________________
1 The Table of Contents is not a part of this Agreement.
i<PAGE>
Page
Section 3.12. Litigation................................ 17
Section 3.13. Taxes..................................... 18
Section 3.14. ERISA..................................... 19
Section 3.15. Employees................................. 21
Section 3.16. Labor Matters............................. 21
Section 3.17. Compliance with Laws and Court Orders..... 22
Section 3.18. Licenses and Permits...................... 22
Section 3.19. Repairable Parts.......................... 22
Section 3.20. Intellectual Property..................... 22
Section 3.21. Finders' Fees............................. 23
Section 3.22. Inapplicability of Certain Restrictions... 23
Section 3.23. Rights Plan............................... 23
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF MERGERSUB
Section 4.01. Corporate Existence and Power............. 24
Section 4.02. Corporate Authorization................... 24
Section 4.03. Governmental Authorization................ 24
Section 4.04. Non-contravention......................... 24
Section 4.05. Disclosure Documents...................... 25
Section 4.06. Finders' Fees............................. 25
Section 4.07. Financing................................. 25
Section 4.08. Capitalization............................ 26
ARTICLE 5 COVENANTS OF THE COMPANY
Section 5.01. Conduct of the Company.................... 27
Section 5.02. Stockholder Meeting; Proxy Material....... 29
Section 5.03. Access to Information..................... 29
Section 5.04. Other Offers.............................. 30
Section 5.05. Notices of Certain Events................. 33
Section 5.06. Resignation of Directors.................. 33
Section 5.07. Preferred Stock........................... 33
Section 5.08. Solvency Advice........................... 33
ARTICLE 6 COVENANTS OF MERGERSUB
Section 6.01. SEC Filings............................... 34
ii<PAGE>
Page
Section 6.02. Voting of Shares.......................... 34
Section 6.03. Director and Officer Liability............ 34
Section 6.04. Employee Plans and Benefit Arrangements... 35
Section 6.05. Financing................................. 36
Section 6.06. NASDAQ Listing............................ 36
Section 6.07. Access to Information..................... 36
ARTICLE 7 COVENANTS OF MERGERSUB AND THE COMPANY
Section 7.01. Best Efforts.............................. 36
Section 7.02. Certain Filings........................... 37
Section 7.03. Public Announcements...................... 38
Section 7.04. Further Assurances........................ 38
ARTICLE 8 CONDITIONS TO THE MERGER
Section 8.01. Conditions to the Obligations of Each Party 38
Section 8.02. Conditions to the Obligations of MergerSub 39
Section 8.03. Condition to the Obligation of the Company 41
ARTICLE 9 TERMINATION
Section 9.01. Termination............................... 42
Section 9.02. Effect of Termination..................... 43
ARTICLE 10 MISCELLANEOUS
Section 10.01. Notices................................... 43
Section 10.02. Survival of Representations and Warranties 44
Section 10.03. Amendments; No Waivers.................... 44
Section 10.04. Expenses.................................. 45
Section 10.05. Successors and Assigns; Benefit........... 45
Section 10.06. Governing Law............................. 45
Section 10.07. Counterparts; Effectiveness............... 45
Section 10.08. Knowledge Defined......................... 46
Exhibit A Amendments to the Company's Certificate of
Incorporation
iii<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of May 4, 1997 among
DecisionOne Holdings Corp., a Delaware corporation (the
"COMPANY") and Quaker Holding Co., a Delaware corporation
("MERGERSUB").
W I T N E S S E T H:
WHEREAS, as of the date of execution of this Agreement,
all of the outstanding capital stock of, or other ownership
interest in, MergerSub is owned, in the aggregate, by DLJ
Merchant Banking Partners II, L.P., DLJ Offshore Partners II,
C.V., DLJ Diversified Partners, L.P., DLJMB Funding II, Inc.,
UK Investment Plan 1997 Partners and DLJ First ESC LLC;
WHEREAS, MergerSub is unwilling to enter into this
Agreement unless, contemporaneously with the execution and
delivery of this Agreement, certain beneficial and record
stockholders of the Company enter into a Voting Agreement and
Irrevocable Proxy providing for certain actions relating to
certain of the shares of common stock, options and warrants of
the Company owned by them;
WHEREAS, MergerSub and the Company desire to make certain
representations, warranties, covenants and agreements in
connection with the Merger (as defined in Section 1.01) and
also to prescribe certain conditions to the Merger;
WHEREAS, it is intended that the Merger be recorded as a
recapitalization for financial reporting purposes and both
parties, after discussion with their auditors, believe that the
Merger is eligible for such accounting treatment;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein
contained, the parties hereto agree as follows:
ARTICLE 1
The Merger
Section 1.1. The Merger. (a) At the Effective Time,
MergerSub shall be merged (the "MERGER") with and into the
Company in accordance with the Delaware Law, and in accordance
with the terms and conditions hereof, whereupon the separate
existence of MergerSub shall cease, and the Company shall be
the surviving corporation (the "SURVIVING CORPORATION").<PAGE>
(b) As soon as practicable after satisfaction or, to the
extent permitted hereunder, waiver of all conditions to the
Merger, the Company and MergerSub will file a certificate of
merger with the Secretary of State of the State of Delaware and
make all other filings or recordings required by Delaware Law
in connection with the Merger. The Merger shall become
effective at such time as the certificate of merger is duly
filed with the Secretary of State of the State of Delaware or
at such later time as is specified in the certificate of merger
(the "EFFECTIVE TIME").
(c) From and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers
and franchises and be subject to all of the restrictions,
disabilities and duties of the Company and MergerSub, all as
provided under Delaware Law.
(d) The Company hereby represents that its Board of
Directors, at a meeting duly called and held and acting on the
unanimous recommendation of the Board of Directors of the
Company, other than any directors expected to become affiliated
with MergerSub, has (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger, are
fair to and in the best interest of the Company's stockholders,
(ii) approved this Agreement and the transactions contemplated
hereby, including the Merger, which approval satisfies in full
the requirements of the General Corporation Law of the State of
Delaware (the "DELAWARE LAW") including, without limitation,
Section 203 thereof with respect to the transactions
contemplated hereby, and (iii) resolved to recommend approval
and adoption of this Agreement and the Merger by its
stockholders. The Company further represents that Smith Barney
Inc. has delivered to the Company's Board of Directors its
opinion that the consideration to be paid in the Merger is fair
to the holders of shares of common stock of the Company, par
value $0.01 per share (each, a "SHARE"), from a financial point
of view.
Section 1.2. Conversion (or Retention) of Shares. At the
Effective Time:
(a) each Share held by the Company as treasury stock or
owned by MergerSub immediately prior to the Effective Time
shall be canceled, and no payment shall be made with respect
thereto;
(b) each share of common stock, par value $.01 per share,
of MergerSub ("MERGERSUB COMMON STOCK") outstanding immediately
prior to the Effective Time shall be converted into and become
1 share of common stock of the Surviving Corporation with the
same rights, powers and privileges as the shares
2<PAGE>
so converted;
(c) each share of preferred stock, par value $.01 per
share, of MergerSub ("MERGERSUB PREFERRED STOCK"), if any,
outstanding immediately prior to the Effective Time shall be
converted into and become 1 share of preferred stock of the
Surviving Corporation with the same rights, powers and
privileges as the shares of preferred stock so converted;
(d) each outstanding warrant to purchase shares of
MergerSub common stock (each, a "MERGERSUB WARRANT") shall be
automatically amended to constitute a warrant to acquire shares
of common stock of the Surviving Corporation on the same terms
and conditions as the MergerSub Warrant; and
(e) each Share outstanding immediately prior to the
Effective Time shall, except as otherwise provided in Section
1.02(a)-(d) or as provided in Section 1.06 with respect to
Shares as to which appraisal rights have been exercised, be
converted into the following (the "MERGER CONSIDERATION"):
(i) for each such Share with respect to which
an election to retain Company Stock (as defined
below) has been effectively made and not revoked or
lost pursuant to Sections 1.03(c), (d) and (e)
("STOCK ELECTING SHARES"), or is deemed made pursuant
to Section 1.04(d)(ii), as the case may be, the right
to retain one share of common stock (the "STOCK ELEC-
TION PRICE"), par value $.01 per share ("COMPANY
STOCK"); and
(ii) for each such Share (other than Stock
Electing Shares and Shares as to which an election to
retain Company Stock is deemed made pursuant to
Section 1.04(d)(ii)), the right to receive in cash
from MergerSub an amount equal to $23.00 (the "CASH
ELECTION PRICE").
Section 1.3. Elections. (a) Each person who, on or
prior to the Election Date referred to in (c) below, is a
record holder of Shares will be entitled, with respect to such
Shares, to make an unconditional election on or prior to such
Election Date to retain the Stock Election Price (a "STOCK
ELECTION"), on the basis hereinafter set forth. For purposes
of this Agreement, "ELECTION" means a Stock Election.
(b) Prior to the mailing of the Company Proxy Statement
(as defined in Section 3.09), MergerSub shall appoint an agent
reasonably acceptable to the Company (the "EXCHANGE AGENT") for
the purpose of exchanging certificates
3<PAGE>
representing Shares for the Merger Consideration.
(c) MergerSub shall prepare and mail a form of election,
which form shall be subject to the reasonable approval of the
Company (the "FORM OF ELECTION"), with the Company Proxy
Statement to the record holders of Shares as of the record date
for the Company Stockholder Meeting (as defined in Section
5.02), which Form of Election shall be used by each record
holder of Shares who makes an Election with respect to any or
all its Shares. The Company will use its reasonable best
efforts to make the Form of Election and the Company Proxy
Statement available to all persons who become holders of Shares
during the period between such record date and the Election
Date referred to below. Any such holder's Election shall have
been properly made only if the Exchange Agent shall have
received at its designated office, by 5:00 p.m., New York City
time on the business day (the "ELECTION DATE") next preceding
the date of the Company Stockholder Meeting, a Form of Election
properly completed and signed and accompanied by certificates
for the Shares to which such Form of Election relates, duly
endorsed in blank or otherwise in form acceptable for transfer
on the books of the Company (or by an appropriate guarantee of
delivery of such certificates as set forth in such Form of
Election from a firm which is a member of a registered national
securities exchange or of the National Association of
Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States,
provided such certificates are in fact delivered to the
Exchange Agent within five New York Stock Exchange trading days
after the date of execution of such guarantee of delivery).
(d) Any Form of Election may be revoked by the holder
submitting it to the Exchange Agent only by written notice re-
ceived by the Exchange Agent (i) prior to 5:00 p.m., New York
City time on the Election Date or (ii) after the date of the
Company Proxy Statement, if (and to the extent that) the
Exchange Agent is legally required to permit revocations, and
the Effective Time shall not have occurred prior to such date.
In addition, all Forms of Election shall automatically be
revoked if the Exchange Agent is notified in writing by
MergerSub or the Company that the Merger has been abandoned or
this Agreement has been terminated. If a Form of Election is
revoked, the certificate or certificates (or guarantees of
delivery, as appropriate) for the Shares to which such Form of
Election relates shall be promptly returned to the stockholder
submitting the same to the Exchange Agent.
(e) The determination of the Exchange Agent shall be
binding whether
4<PAGE>
or not Elections have been properly made or revoked pursuant to
this Section 1.03 with respect to Shares and when elections and
revocations were received by it. If the Exchange Agent
determines that any Election either (x) was not properly made
or (y) was not submitted to or received by the Exchange Agent
with respect to any Shares, such Shares shall be converted into
Merger Consideration in accordance with Section 1.04(b)(iii) or
Section 1.04(d)(ii), as the case may be. The Exchange Agent
shall also make all computations as to the allocation and the
proration contemplated by Section 1.04, and any such
computation shall be conclusive and binding on the holders of
Shares. The Exchange Agent may, with the mutual agreement of
MergerSub and the Company, make such rules as are consistent
with this Section 1.03 for the implementation of the elections
provided for herein as shall be necessary or desirable fully to
effect such elections.
Section 1.4. Proration of Election Price. (a)
Notwithstanding anything in this Agreement to the contrary but
subject to Sections 1.02(a) and 1.06, the number of Shares to
be converted into the right to retain Company Stock at the
Effective Time (the "STOCK ELECTION NUMBER") shall be the sum
of (A) 1,474,345 plus (B) 5.3% of the number of Shares, if any,
issued after April 21, 1997 but prior to the Effective Time in
respect of Options (as defined below) or Warrants (as defined
below) (excluding for this purpose any Shares to be canceled
pursuant to Section 1.02(a)).
(b) If the number of Stock Electing Shares exceeds in the
aggregate the Stock Election Number, then the Stock Electing
Shares for each Stock Election shall be converted into the
right to retain the Stock Election Price or the right to
receive the Cash Election Price in accordance with the terms of
Section 1.02(e) in the following manner:
(i) A stock proration factor (the "STOCK
PRORATION FACTOR") shall be determined by dividing
the Stock Election Number by the total number of
Stock Electing Shares.
(ii) The number of Stock Electing Shares covered
by each Stock Election to be converted into the right
to retain the Stock Election Price shall be
determined by multiplying the Stock Proration Factor
by the total number of Stock Electing Shares covered
by such Stock Election.
(iii) Each Stock Electing Share, other than any
Shares converted into the right to receive the Stock
Election Price in accordance with
5<PAGE>
Section 1.04(b)(ii), shall be converted into the
right to receive the Cash Election Price as if such
shares were not Stock Electing Shares in accordance
with the terms of Section 1.02(e)(ii).
(c) If the number of Stock Electing Shares is equal to
the Stock Election Number, then all Stock Electing Shares shall
be converted into the right to receive the Stock Election Price
in accordance with the terms of Section 1.02(e)(i), and all
Shares other than Stock Electing Shares shall be converted into
the right to receive the Cash Election Price.
(d) If the number of Stock Electing Shares is less in the
aggregate than the Stock Election Number, then:
(i) All Stock Electing Shares shall be
converted into the right to receive the Stock
Election Price in accordance with Section 1.02(e)(i).
(ii) Such number of Shares with respect to which
a Stock Election is not in effect ("NON-ELECTING
SHARES") shall be converted into the right to retain
the Stock Election Price (and a Stock Election shall
be deemed to have been made with respect to such
Shares) in accordance with Section 1.02(e) in the
following manner:
(A) a cash proration factor (the "CASH
PRORATION FACTOR") shall be determined by
dividing (x) the difference between the Stock
Election Number and the number of Stock Electing
Shares, by (y) the total number of Shares other
than Stock Electing Shares and Dissenting Shares
(as defined in Section 1.06); and
(B) the number of Shares in addition to
Stock Electing Shares to be converted into the
right to retain the Stock Election Price shall
be determined by multiplying the Cash Proration
Factor by the total number of Shares other than
Stock Electing Shares and Dissenting Shares so
that the aggregate number of Stock Electing
Shares and Non-Electing Shares converted into
such right equals the Stock Election Number.
Subject to the provisions of Section 1.04(d)(ii), the
Exchange Agent shall determine (on a consistent basis among
stockholders who held Shares as to which
6<PAGE>
they did not make the election referred to in Section
1.02(e)(i), pro rata to the number of shares as to which they
did not make such election) which Non-Electing Shares shall be
converted into the right to receive the Stock Election Price.
Section 1.5. Surrender and Payment. (a) As soon as
reasonably practicable as of or after the Effective Time,
MergerSub shall deposit with the Exchange Agent, for the
benefit of the holders of Shares, for exchange in accordance
with this Article 1, the Merger Consideration. For purposes of
determining the Merger Consideration to be made available,
MergerSub shall assume that no holder of Shares will perfect
his right to appraisal of his Shares. Promptly after the
Effective Time, MergerSub will send, or will cause the Exchange
Agent to send, to each holder of Shares at the Effective Time a
letter of transmittal for use in such exchange (which shall
specify that the delivery shall be effected, and risk of loss
and title shall pass, only upon proper delivery of the
certificates representing Shares to the Exchange Agent).
(b) Each holder of Shares that have been converted into a
right to receive the Merger Consideration, upon surrender to
the Exchange Agent of a certificate or certificates
representing such Shares, together with a properly completed
letter of transmittal covering such Shares, will be entitled to
receive the Merger Consideration payable in respect of such
Shares. Until so surrendered, each such certificate shall,
after the Effective Time, represent for all purposes, only the
right to receive such Merger Consideration. No interest will
be paid or will accrue on any cash payable as Merger
Consideration or in lieu of any fractional shares of Company
Stock.
(c) If any portion of the Merger Consideration is to be
paid to a Person other than the registered holder of the Shares
represented by the certificate or certificates surrendered in
exchange therefor, it shall be a condition to such payment that
the certificate or certificates so surrendered shall be
properly endorsed or otherwise be in proper form for transfer
and that the Person requesting such payment shall pay to the
Exchange Agent any transfer or other taxes required as a result
of such payment to a Person other than the registered holder of
such Shares or establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable. For
purposes of this Agreement, "PERSON" means an individual, a
corporation, a limited liability company, a partnership, an
association, a trust or any other entity or organization,
including a government or political subdivision or any agency
or instrumentality thereof.
7<PAGE>
(d) After the Effective Time, there shall be no further
registration of transfers of Shares. If, after the Effective
Time, certificates representing Shares are presented to the
Surviving Corporation, they shall be canceled and exchanged for
the Merger Consideration provided for, and in accordance with
the procedures set forth, in this Article 1.
(e) Any portion of the Merger Consideration made avail-
able to the Exchange Agent pursuant to Section 1.05 (a) that
remains unclaimed by the holders of Shares six months after the
Effective Time shall be returned to MergerSub, upon demand, and
any such holder who has not exchanged his Shares for the Merger
Consideration in accordance with this Section prior to that
time shall thereafter look only to MergerSub for payment of the
Merger Consideration in respect of his Shares. Notwithstanding
the foregoing, MergerSub shall not be liable to any holder of
Shares for any amount paid to a public official pursuant to
applicable abandoned property laws. Any amounts remaining
unclaimed by holders of Shares two years after the Effective
Time (or such earlier date immediately prior to such time as
such amounts would otherwise escheat to or become property of
any governmental entity) shall, to the extent permitted by
applicable law, become the property of MergerSub free and clear
of any claims or interest of any Person previously entitled
thereto.
(f) Any portion of the Merger Consideration made avail-
able to the Exchange Agent pursuant to Section 1.05(a) to pay for
Shares for which appraisal rights have been perfected shall be
returned to MergerSub, upon demand.
(g) No dividends or other distributions with respect to
Company Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered certificate for
Shares with respect to the shares of Company Stock represented
thereby and no cash payment in lieu of fractional shares shall
be paid to any such holder pursuant to Section 1.09 until the
surrender of such certificate in accordance with this Article
1. Subject to the effect of applicable laws, following
surrender of any such certificate, there shall be paid to the
holder of the certificate representing whole shares of Company
Stock issued in exchange therefor, without interest, (i) at the
time of such surrender or as promptly after the sale of the
Excess Shares (as defined in Section 1.09) as practicable, the
amount of any cash payable in lieu of a fractional share of
Company Stock to which such holder is entitled pursuant to
Section 1.09 and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid
with respect to such whole shares of Company Stock, and (ii) at
the appropriate
8<PAGE>
payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to such
surrender and a payment date subsequent to such surrender
payable with respect to such whole shares of Company Stock.
Section 1.6. Dissenting Shares. Notwithstanding Section
1.02, Shares which are issued and outstanding immediately prior
to the Effective Time and which are held by a holder who has
not voted such shares in favor of the Merger, who shall have
delivered a written demand for appraisal of such Shares in the
manner provided by the Delaware Law and who, as of the
Effective Time, shall not have effectively withdrawn or lost
such right to appraisal ("DISSENTING SHARES") shall not be
converted into a right to receive the Merger Consideration.
The holders thereof shall be entitled only to such rights as
are granted by Section 262 of the Delaware Law. Each holder of
Dissenting Shares who becomes entitled to payment for such
Shares pursuant to Section 262 of the Delaware Law shall
receive payment therefor from the Surviving Corporation in
accordance with the Delaware Law; provided, however, that (i)
if any such holder of Dissenting Shares shall have failed to
establish his entitlement to appraisal rights as provided in
Section 262 of the Delaware Law, (ii) if any such holder of
Dissenting Shares shall have effectively withdrawn his demand
for appraisal of such Shares or lost his right to appraisal and
payment for his Shares under Section 262 of the Delaware Law or
(iii) if neither any holder of Dissenting Shares nor the
Surviving Corporation shall have filed a petition demanding a
determination of the value of all Dissenting Shares within the
time provided in Section 262 of the Delaware Law, such holder
shall forfeit the right to appraisal of such Shares and each
such Share shall be treated as if it had been a Non-Electing
Share and had been converted, as of the Effective Time, into a
right to receive the Merger Consideration, without interest
thereon, from the Surviving Corporation as provided in Section
1.02 hereof. The Company shall give MergerSub prompt notice of
any demands received by the Company for appraisal of Shares,
and MergerSub shall have the right to participate in all
negotiations and proceedings with respect to such demands. The
Company shall not, except with the prior written consent of
MergerSub, make any payment with respect to, or settle or offer
to settle, any such demands.
Section 1.7. Stock Options. (a) Immediately prior to
the Effective Time, each outstanding option to acquire Shares
granted to employees and directors, whether vested or not (the
"OPTIONS") shall be canceled and, in lieu thereof, as soon as
reasonably practicable as of or after the Effective Time, the
holders of
9<PAGE>
such Options shall receive, with respect to each Option, a cash
payment in an amount equal to the product of (x) the excess, if
any, of $23.00 over the exercise price of such Option
multiplied by (y) the number of Shares subject to such Option.
(b) Prior to the Effective Time, the Company shall (i)
obtain any consents from holders of options to purchase Shares
granted under the Company's stock option or compensation plans
or arrangements and (ii) make any amendments to the terms of
such stock option or compensation plans or arrangements that
are necessary to give effect to the transactions contemplated
by Section 1.07(a). Notwithstanding any other provision of
this Section, payment may be withheld in respect of any Option
until necessary consents are obtained.
Section 1.8. Warrants. The Company shall use its
reasonable best efforts to cause holders of all outstanding
warrants ("WARRANTS") to surrender such Warrants to the Company
prior to the Effective Time in exchange for payment immediately
after the Effective Time of an amount equal to the difference
between the exercise price in respect of each Share for which
such Warrant is exercisable and $23.00, multiplied by the
number of Shares subject to such Warrant, and upon such other
terms and conditions satisfactory to MergerSub. With respect
to Warrants that are not surrendered prior to the Effective
Time, after the Effective Time, the Surviving Corporation shall
comply with all applicable terms of such unsurrendered
Warrants.
Section 1.9. Fractional Shares. (a) No certificates or
scrip representing fractional shares of Company Stock shall be
issued upon the surrender for exchange of certificates
representing Shares, and such fractional share interests will
not entitle the owner thereof to vote or to any rights of a
stockholder of the Surviving Corporation; and
(b) Notwithstanding any other provision of this
Agreement, each holder of Shares exchanged pursuant to the
Merger who would otherwise have been entitled to receive a
fraction of a share of Company Stock (after taking into account
all Shares delivered by such holder) shall receive, in lieu
thereof, a cash payment (without interest) representing such
holder's proportionate interest in the net proceeds from the
sale by the Exchange Agent (following the deduction of
applicable transaction costs), on behalf of all such holders,
of the shares (the "EXCESS SHARES") of Company Stock rep-
resenting such fractions. Such sale shall be made as soon as
practicable after the Effective Time.
10<PAGE>
ARTICLE 2
The Surviving Corporation
Section 2.1. Certificate of Incorporation. The
certificate of incorporation of the Company in effect
immediately prior to the Effective Time shall be amended as of
the Effective Time as set forth in Exhibit A, and as so
amended, shall be the certificate of incorporation of the
Surviving Corporation until thereafter amended in accordance
with applicable law.
Section 2.2. Bylaws. The bylaws of MergerSub in effect
at the Effective Time shall be the bylaws of the Surviving
Corporation until amended in accordance with applicable law.
Section 2.3. Directors and Officers. From and after the
Effective Time, until successors are duly elected or appointed
and qualified in accordance with applicable law, (a) the
directors of MergerSub at the Effective Time shall be the
directors of the Surviving Corporation, and (b) the officers of
the Company at the Effective Time shall be the officers of the
Surviving Corporation.
ARTICLE 3
Representations and Warranties of the Company
The Company represents and warrants to MergerSub that:
Section 3.1. Corporate Existence and Power. The Company
is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware, and has
all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to carry on its
business as now conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where
the failure to be so qualified would not, individually or in
the aggregate, have a Material Adverse Effect. The Company has
heretofore delivered to MergerSub true and complete copies of
the Company's certificate of incorporation and bylaws as
currently in effect. For purposes of this Agreement, "MATERIAL
ADVERSE EFFECT" means any
11<PAGE>
material adverse effect on the condition (financial or
otherwise), business, assets, or results of operations of the
Company and the Subsidiaries taken as a whole, but excluding
(i) any change resulting from general economic conditions and
(ii) with respect to Section 3.10(a) and Section 3.10(h) (in
the case of the latter, with respect to agreements only), any
change arising out of the transactions contemplated by this
Agreement and the public announcement thereof.
Section 3.2. Corporate Authorization. The execution,
delivery and performance by the Company of this Agreement and
the consummation by the Company of the transactions
contemplated hereby are within the Company's corporate powers
and, except for any required approval by the Company's
stockholders by majority vote in connection with the
consummation of the Merger, have been duly authorized by all
necessary corporate and stockholder action. This Agreement
constitutes a valid and binding agreement of the Company.
Section 3.3. Governmental Authorization. The execution,
delivery and performance by the Company of this Agreement and
the consummation of the Merger by the Company require no action
by or in respect of, or filing with, any governmental body,
agency, official or authority other than (a) the filing of a
certificate of merger in accordance with Delaware Law; (b)
compliance with any applicable requirements of the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"); (c) compliance with any applicable requirements of the
Securities Exchange Act of 1934, as amended and the rules and
regulations promulgated thereunder (the "EXCHANGE ACT"); (d)
compliance with the applicable requirements of the Securities
Act of 1933, as amended and the rules and regulations
promulgated thereunder (the "SECURITIES ACT"); (e) compliance
with any applicable foreign or state securities or Blue Sky
laws; and (f) where the failure to take such action would not,
individually or in the aggregate, have a Material Adverse
Effect.
Section 3.4. Non-contravention. Except as set forth on
Schedule 3.04, the execution, delivery and performance by the
Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby do not and will not (a)
contravene or conflict with the certificate of incorporation or
bylaws of the Company, (b) assuming compliance with the matters
referred to in Section 3.03, contravene or conflict with or
constitute a violation of any provision of any law, regulation,
judgment, writ, injunction, order or decree of any court or
governmental authority binding upon or applicable to the
Company or any Subsidiary or any of their properties or assets,
(c) except under the Revolving
12<PAGE>
Credit Agreement dated as of April 26, 1996 among the Company,
certain of its Subsidiaries and the banks named therein, as
amended (the "REVOLVING CREDIT AGREEMENT") constitute a default
under or give rise to a right of termination, cancellation or
acceleration of any right or obligation of the Company or any
Subsidiary or to a loss of any benefit to which the Company or
any Subsidiary is entitled under any provision of any
agreement, contract or other instrument binding upon the
Company or any Subsidiary or any license, franchise, permit or
other similar authorization held by the Company or any
Subsidiary, or (d) result in the creation or imposition of any
Lien on any asset of the Company or any Subsidiary, except, in
the case of clauses (b), (c) and (d), to the extent that any
such violation, failure to obtain any such consent or other
action, default, right, loss or Lien would not, individually or
in the aggregate, have a Material Adverse Effect. For purposes
of this Agreement, "LIEN" means, with respect to any asset, any
mortgage, lien, pledge, charge, security interest or encum-
brance of any kind in respect of such asset.
Section 3.5. Capitalization. The authorized capital
stock of the Company consists of (i) 100,000,000 shares of
common stock ("COMMON STOCK"), par value $.01 per share, of
which as of April 21, 1997, there were outstanding 27,817,830
shares of Common Stock and Options to purchase an aggregate of
not more than 2,932,014 shares of Common Stock (of which
options to purchase an aggregate of 1,364,014 shares of Common
Stock were exercisable) and (ii) 5,000,000 shares of preferred
stock ("PREFERRED STOCK"), par value $.01 per share, of which
as of April 21, 1997 none were issued and outstanding. As of
April 21, 1997 there were Warrants to purchase: (i) 134,478
shares of common stock of the Company at an exercise price of
$5.90 per share and (ii) 468,750 shares or common stock of the
Company at an exercise price of $0.10 per share. The aggregate
exercise price of the (i) Options outstanding as of April 21,
1997 is $22,064,966.50 and (ii) Warrants outstanding as of
April 21, 1997 is $840,295.20. All outstanding shares of capi-
tal stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. Except as set
forth in this Section and except for changes since April 21,
1997 resulting from the exercise of Options and Warrants, in
each case, outstanding on such date, there are outstanding (a)
no shares of capital stock or other voting securities of the
Company, (b) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities
of the Company, and (c) no options or other rights to acquire
from the Company, and no obligation of the Company to issue,
any capital stock, voting securities or securities convertible
into or exchangeable for capital stock or voting securities of
13<PAGE>
the Company (the items in clauses 3.05(a), 3.05(b) and 3.05(c)
being referred to collectively as the "COMPANY SECURITIES").
There are no outstanding obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any
Company Securities.
Section 3.6. Subsidiaries. (a) Each Subsidiary is a
corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation,
has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to
carry on its business as now conducted and is duly qualified to
do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such
qualification necessary, except where the failure to have such
licenses, authorizations, consents and approvals or for those
jurisdictions where failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse
Effect. For purposes of this Agreement, "SUBSIDIARY" means any
corporation or other entity of which securities or other own-
ership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing
similar functions are directly or indirectly owned by the
Company and/or one or more Subsidiary, except for Properties
Holding Corporation, Decision Data Computer Investment
Corporation, Decision Data Computer International S.A. and
Properties Development Corporation, none of which (i) is
performing any activity significant to the business of the
Company and its Subsidiaries or (ii) has any material assets or
liabilities (together, the "IMMATERIAL SUBSIDIARIES"),
provided, however that for the purposes of Articles 5, 6 and 7
hereof, the term "Subsidiaries" shall be deemed to include the
Immaterial Subsidiaries. All Subsidiaries and their respective
jurisdictions of incorporation are identified in the Company's
annual report on Form 10-K for the fiscal year ended June 30,
1996 (the "COMPANY 10-K").
(b) Except for the restrictions on disposition of capital
stock pursuant to the Revolving Credit Agreement, all of the
outstanding capital stock of, or other ownership interests in,
each Subsidiary, is owned by the Company, directly or
indirectly, free and clear of any Lien and free of any other
limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock
or other ownership interests). All such capital stock has been
duly authorized and validly issued and is fully paid and non-
assessable. There are no outstanding (i) securities of the
Company or any Subsidiary convertible into or exchangeable for
shares of capital stock or other voting securities or ownership
interests in any Subsidiary, and (ii) options or other rights
to acquire from the
14<PAGE>
Company or any Subsidiary, and no other obligation of the
Company or any Subsidiary to issue, any capital stock, voting
securities or other ownership interests in, or any securities
convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Subsidiary (the items
in clauses 3.06(b)(i) and 3.06(b)(ii) being referred to
collectively as the "SUBSIDIARY SECURITIES"). There are no
outstanding obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any outstanding
Subsidiary Securities.
Section 3.7. SEC Filings. (a) The Company has made
available to MergerSub (i) the Company 10-K, (ii) its quarterly
reports on Form 10-Q for its fiscal quarters ended September
30, 1996 and December 31, 1996 (collectively, the "FORMS
10-Q"), (iii) its proxy or information statements relating to
meetings of, or actions taken without a meeting by, the
stockholders of the Company held since January 1, 1996, and
(iv) all of its other reports, statements, schedules and
registration statements filed with the Securities and Exchange
Commission (the "SEC") since January 1, 1996 (the documents
referred to in clauses (i)-(iv), together with Schedule 3.08
collectively, the "SEC DOCUMENTS").
(b) As of its filing date, each such report or statement
filed pursuant to the Exchange Act did not contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not mis-
leading.
(c) Each such registration statement, as amended or
supplemented, if applicable, filed pursuant to the Securities
Act, as of the date such statement or amendment became
effective did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not
misleading.
Section 3.8. Financial Statements. The audited
consolidated financial statements and unaudited consolidated
interim financial statements of the Company included in its
annual reports on Form 10-K, in the Forms 10-Q and in Schedule
3.08 fairly present, in all material respects, in conformity
with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of the Company
and its consolidated subsidiaries as of the dates thereof and
their consolidated results of operations and changes in
financial position for the periods then ended (subject to
normal year-end adjustments in the case of any unaudited
interim financial statements). For purposes of this Agreement,
"BALANCE SHEET" means
15<PAGE>
the consolidated balance sheet of the Company and its
subsidiaries as of June 30, 1996 set forth in the Company 10-K
and "BALANCE SHEET DATE" means June 30, 1996.
Section 3.9. Disclosure Documents. (a) Each document
required to be filed by the Company with the SEC in connection
with the transactions contemplated by this Agreement (the
"COMPANY DISCLOSURE DOCUMENTS"), including, without limitation,
the proxy or information statement of the Company containing
information required by Regulation 14A under the Exchange Act,
and, if applicable, Rule 13e-3 and Schedule 13E-3 under the
Exchange Act (the "COMPANY PROXY STATEMENT"), to be filed with
the SEC in connection with the Merger, and any amendments or
supplements thereto will, when filed, comply as to form in all
material respects with the applicable requirements of the
Exchange Act. The representations and warranties contained in
this Section 3.09(a) will not apply to statements or omissions
included in the Company Disclosure Documents based upon
information furnished to the Company in writing by MergerSub
specifically for use therein.
(b) At the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to stockholders
of the Company and at the time such stockholders vote on
adoption of this Agreement, the Company Proxy Statement, as
supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they
were made, not misleading. At the time of the filing of any
Company Disclosure Document other than the Company Proxy
Statement and at the time of any distribution thereof, such
Company Disclosure Document will not contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading. The representations and warranties contained in
this Section will not apply to statements or omissions
included in the Company Disclosure Documents based upon
information furnished to the Company in writing by MergerSub
specifically for use therein.
(c) The information with respect to the Company or any
Subsidiary that the Company furnishes to MergerSub in writing
specifically for use in the MergerSub Disclosure Documents (as
defined in Section 6.01) will not, at the time of the filing
thereof, at the time of any distribution thereof and at the
time of the meeting of the Company's stockholders, contain any
untrue statement of a material fact or omit to state any
material fact required to be stated therein or
16<PAGE>
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading.
Section 3.10. Absence of Certain Changes. Since the
Balance Sheet Date, the Company and Subsidiaries have conducted
their business in the ordinary course consistent with past
practice and there has not been:
(a) except as disclosed in the Forms 10-Q and Schedule
3.08, any event, occurrence or development of a state of facts
which, individually or in the aggregate, has had, or would
reasonably be expected to have a Material Adverse Effect;
(b) any declaration, setting aside or payment of any
dividend or other distribution with respect to any shares of
capital stock of the Company, or (other than any retirement of
Options or Warrants contemplated pursuant to this Agreement)
any repurchase, redemption or other acquisition by the Company
or any Subsidiary of any outstanding shares of capital stock or
other securities of, or other ownership interests in, the
Company or any Subsidiary;
(c) except as disclosed in the SEC Documents, any
amendment of any material term of any outstanding security of
the Company or any Subsidiary;
(d) except as disclosed in the SEC Documents, any in-
currence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money, other than
in the ordinary course of business and in amounts and on terms
consistent with past practices;
(e) any damage, destruction or other casualty loss
(whether or not covered by insurance) affecting the business or
assets of the Company or any Subsidiary which, individually or
in the aggregate, has had, or would reasonably be expected to
have, a Material Adverse Effect;
(f) except as disclosed in Schedule 5.01, any material
change in any method of accounting or accounting practice by
the Company or any Subsidiary, except for any such change
required by reason of a concurrent change in generally accepted
accounting principles;
(g) except as disclosed in the SEC Documents or in
Schedule 3.10(g), any (i) grant of any severance or termination
pay to any director, officer or
17<PAGE>
employee of the Company or any Subsidiary, (ii) entering into
of any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement)
with any director, officer or employee of the Company or any
Subsidiary, (iii) increase in benefits payable under any
existing severance or termination pay policies or employment
agreements or (iv) increase in compensation, bonus or other
benefits payable to directors, officers or employees of the
Company or any Subsidiary, other than in the ordinary course of
business consistent with past practice; or
(h) any cancellation of any licenses, sublicenses,
franchises, permits or agreements to which the Company or any
Subsidiary is a party, or any notification to the Company or
any Subsidiary that any party to any such arrangements intends
to cancel or not renew such arrangements beyond its expiration
date as in effect on the date hereof, which cancellation or
notification, individually or in the aggregate, has had, or
would reasonably be expected to have, a Material Adverse
Effect.
Section 3.11. No Undisclosed Material Liabilities. There
are no liabilities of the Company or any Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, which, individually or in the
aggregate, would reasonably be expected to be material to the
business of the Company and its Subsidiaries taken as a whole,
other than:
(a) liabilities disclosed or provided for in the Balance
Sheet;
(b) liabilities disclosed in the SEC Documents filed
after the Balance Sheet Date but prior to the date of this
Agreement;
(c) liabilities incurred in the ordinary course of
business consistent with past practice since the Balance Sheet
Date, which in the aggregate would not have a Material Adverse
Effect;
(d) liabilities under this Agreement; and
(e) liabilities under contracts or agreements of the
Company or any Subsidiary entered into in the ordinary course
of business (as to which contracts or agreements there is no
breach or violation by the Company or any Subsidiary).
Section 3.12. Litigation. Except as disclosed in
Schedule 3.12, there is no action, suit, investigation or
proceeding (or any basis therefor) pending against,
18<PAGE>
or to the knowledge of the Company threatened against or
affecting, the Company or any Subsidiary or any of their
respective properties before any court or arbitrator or any
governmental body, agency or official which, if determined or
resolved adversely to the Company or any Subsidiary in
accordance with the plaintiff's demands, would reasonably be
expected to have a Material Adverse Effect or which in any
manner challenges or seeks to prevent, enjoin, alter or
materially delay the Merger or any of the other transactions
contemplated hereby.
Section 3.13. Taxes. (a) All material tax returns,
statements, reports and forms (including estimated tax returns
and reports and information returns and reports) required to be
filed with any taxing authority with respect to any tax period
(or portion thereof) ending on or before the Effective Time (a
"PRE-CLOSING TAX PERIOD") by or on behalf of the Company or any
Subsidiary of the Company (collectively, the "RETURNS"), were
filed when due (including any applicable extension periods) in
accordance with all applicable laws.
(b) The Company and its Subsidiaries have timely paid, or
withheld and remitted to the appropriate taxing authority, all
material taxes shown as due and payable on all Returns that
have been filed.
(c) The charges, accruals and reserves for taxes with
respect to the Company and any Subsidiary for any Pre-Closing
Tax Period (including any Pre-Closing Tax Period for which no
Return has yet been filed, with respect to which Periods the
Company has made estimates in accordance with past practice)
reflected on the books of the Company and its Subsidiaries
(excluding any provision for deferred income taxes) are
adequate to cover such taxes.
(d) There is no material claim (including under any
indemnification or tax-sharing agreement), audit, action, suit,
proceeding, or investigation now pending or threatened in
writing against or in respect of any tax or "tax asset" of the
Company or any Subsidiary, other than (i) periodic sales tax
audits occurring in the ordinary course of business, the
resolution of which, individually or in the aggregate, the
Company believes will not have a Material Adverse Effect, and
(ii) claims, audits, actions, suits, proceedings or
investigations with respect to which the Company is indemnified
in full pursuant to the Stock Purchase Agreement among Decision
Servcom, Inc., Bell Atlantic Business Systems Services, Inc.,
and Bell Atlantic Business Systems, Inc. dated September 19,
1995. For purposes of this Section 3.13, the term "TAX ASSET"
shall include any net operating loss, net capital loss,
investment tax credit, foreign tax credit, charitable deduction
or any other credit or tax attribute which could reduce taxes.
19<PAGE>
(e) There are no Liens for taxes upon the assets of the
Company or its Subsidiaries except for Liens for current taxes
not yet due.
(f) Neither the Company nor any of its Subsidiaries has
been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Internal Revenue Code
of 1986, as amended (the "CODE") during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
Section 3.14. ERISA. (a) Schedule 3.14(a) sets forth a
list identifying each "EMPLOYEE BENEFIT PLAN", as defined in
Section 3(3) of the Employee Retirement Income Security Act of
1974 ("ERISA"), which (i) is subject to any provision of ERISA
and (ii) is maintained, administered or contributed to by the
Company or any affiliate (as defined below) and covers any
employee or former employee of the Company or any affiliate or
under which the Company or any affiliate has any liability.
Copies of such plans (and, if applicable, related trust
agreements) and all amendments thereto and written
interpretations thereof have been furnished to MergerSub
together with (A) the three most recent annual reports (Form
5500 including, if applicable, Schedule B thereto) prepared in
connection with any such plan and (B) the most recent actuarial
valuation report prepared in connection with any such plan.
Such plans are referred to collectively herein as the "EMPLOYEE
PLANS". For purposes of this Section, "AFFILIATE" of any
Person means any other Person which, together with such Person,
would be treated as a single employer under Section 414 of the
Code. The only Employee Plans which individually or
collectively would constitute an "employee pension benefit
plan" as defined in Section 3(2) of ERISA (the "PENSION PLANS")
are identified as such in the list referred to above. The
Company will make available to MergerSub complete age, salary,
service and related data as of the most recently available date
for employees and former employees of the Company and any
affiliate covered under the Pension Plans.
(b) No Employee Plan constitutes a "MULTIEMPLOYER PLAN",
as defined in Section 3(37) of ERISA (a "MULTIEMPLOYER PLAN"),
and no Employee Plan is maintained in connection with any trust
described in Section 501(c)(9) of the Code. Except as other-
wise identified in Schedule 3.14(b), no Employee Plan is
subject to Title IV of ERISA and no "ACCUMULATED FUNDING
DEFICIENCY", as defined in Section 412 of the Code, has been
incurred with respect to any Pension Plan, whether or not
waived. The Company knows of no "REPORTABLE EVENT", within the
meaning of Section 4043 of ERISA, and no event described in
Section 4041, 4042, 4062 or 4063 of ERISA has occurred in
connection with any Employee Plan, other than a "REPORTABLE
EVENT" or other event that individually
20<PAGE>
or in the aggregate, has not had, and would not reasonably be
expected to have, a Material Adverse Effect. To the Company's
knowledge, no condition exists and no event has occurred that
could constitute grounds for termination of any Employee Plan
subject to Title IV of ERISA and neither the Company nor any of
its affiliates has incurred any liability under Title IV of
ERISA arising in connection with the termination of, or
complete or partial withdrawal from, any plan covered or
previously covered by Title IV of ERISA. Nothing done or
omitted to be done and no transaction or holding of any asset
under or in connection with any Employee Plan has or will make
the Company or any Subsidiary, any officer or director of the
Company or any Subsidiary subject to any liability under Title
I of ERISA or liable for any tax pursuant to Section 4975 of
the Code which liability, individually or in the aggregate, has
had, or would reasonably be expected to have, a Material
Adverse Effect.
(c) Each Employee Plan which is intended to be qualified
under Section 401(a) of the Code is either a standardized
prototype plan covered by an opinion letter issued by the IRS
or an individually designed plan covered by a determination
letter issued by the IRS and, to the knowledge of the Company,
nothing has occurred since the date of the opinion or
determination letter which resulted, or is likely to result, in
the Company's inability to rely on such letters. The Company
has furnished to MergerSub copies of the most recent Internal
Revenue Service opinion determination letters with respect to
each such Plan. Each Employee Plan has been maintained in
substantial compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code,
which are applicable to such Plan.
(d) Except as set forth in Schedule 3.14(d) there is no
contract, agreement, plan or arrangement covering any employee
or former employee of the Company or any affiliate that,
individually or collectively, could give rise to the payment of
any amount that would not be deductible pursuant to the terms
of Section 280G of the Code.
(e) Schedule 3.14(e) sets forth a list of each employ-
ment, severance or other similar contract, arrangement or
policy and each plan or arrangement (written or oral) providing
for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits,
retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation or
other
21<PAGE>
forms of incentive compensation or post-retirement insurance,
compensation or benefits which (i) is not an Employee Plan,
(ii) is entered into, maintained or contributed to, as the case
may be, by the Company or any of its Subsidiaries and (iii)
covers any employee or former employee of the Company or any of
its Subsidiaries. Such contracts, plans and arrangements as
are described above, copies or descriptions of all of which
have been furnished previously to MergerSub are referred to
collectively herein as the "BENEFIT ARRANGEMENTS". Each
Benefit Arrangement has been maintained in substantial
compliance with its terms and with the requirements prescribed
by any and all statutes, orders, rules and regulations that are
applicable to such Benefit Arrangement.
(f) To the knowledge of the Company, no condition exists
that would prevent the Company or any Subsidiary from amending
or terminating any Employee Plan or Benefit Arrangement pro-
viding health or medical benefits in respect of any active em-
ployee of the Company or any Subsidiary.
(g) Except as disclosed on Schedule 3.14(g), there has
been no amendment to, written interpretation or announcement
(whether or not written) by the Company or any of its
affiliates relating to, or change in employee participation or
coverage under, any Employee Plan or Benefit Arrangement which
would increase materially the expense of maintaining such
Employee Plan or Benefit Arrangement above the level of the
expense incurred in respect thereof for the fiscal year ended
on the Balance Sheet Date other than with regard to any changes
mandated by law.
(h) Except as disclosed in Section 3.15, neither the
Company nor any Subsidiary is a party to or subject to any
union contract or any employment contract or arrangement
providing for annual future compensation (excluding sales
commissions) of $150,000 or more with any officer, director or
employee.
Section 3.15. Employees. The Company has disclosed to
MergerSub in writing on the date of this Agreement the names,
titles, annual salaries and other compensation of all employees
of the Company (the "KEY EMPLOYEES") whose base compensation,
together with any other cash compensation (excluding sales
commissions), was in excess of $150,000 per annum for calendar
year 1996. Except as disclosed to MergerSub in writing on the
date of this Agreement, none of the Key Employees has indicated
to the Company in writing on or prior to the date hereof that
he or she intends to resign or retire as a result of the
transactions contemplated by this Agreement or otherwise within
three months after the Effective Time.
22<PAGE>
Section 3.16. Labor Matters. The Company is in
compliance with all currently applicable laws respecting
employment practices, terms and conditions of employment and
wages and hours, and is not engaged in any unfair labor
practice, the failure to comply with which or engagement in
which, as the case may be, individually or in the aggregate,
has not had, and would not reasonably be expected to have, a
Material Adverse Effect. There is no unfair labor practice
complaint pending or, to the knowledge of the Company,
threatened against the Company before the National Labor
Relations Board. Except as otherwise set forth on Schedule
3.16, there are no strikes, slowdowns, union organizational
campaigns or other protected concerted activity under the
National Labor Relations Act or, to the knowledge of Company,
threats thereof, by or with respect to any employees of the
Company.
Section 3.17. Compliance with Laws and Court Orders.
Neither the Company nor any Subsidiary is in violation of, or
has since January 1, 1996 violated, and to the knowledge of the
Company none is under investigation with respect to or has been
threatened to be charged with or given notice of any violation
of, in each case, by any governmental agency or authority, any
applicable law, rule, regulation, judgment, injunction, order
or decree, except for violations that have not had, and would
not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
Section 3.18. Licenses and Permits. Except as set forth
on Schedule 3.18 or except as has not had, and would not
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, (i) the Permits are valid
and in full force and effect, (ii) neither the Company nor any
Subsidiary is in default under, and no condition exists that
with notice or lapse of time or both would constitute a default
under, the Permits and (iii) none of the Permits will be
terminated or impaired or become terminable, in whole or in
part, as a result of the transactions contemplated hereby.
"PERMITS" means each material license, franchise, permit,
certificate, approval or other similar authorization affecting,
or relating in any way to, the assets or business of the
Company and its Subsidiaries.
Section 3.19. Repairable Parts. The repairable parts set
forth in the Balance Sheet were stated therein at cost less ac-
cumulated amortization. Since the Balance Sheet Date, the
repairable parts of the Company and its Subsidiaries have been
maintained in the ordinary course of business. All such
repairable parts are owned free and clear of all Liens, except
for a purchase money security interest in certain parts in
favor of Electronic Data Systems Corp. to secure the
23<PAGE>
issuance of approximately $2,000,000 of credits. The
repairable parts recorded on the Balance Sheet consist of, and
all repairable parts of the Company and its Subsidiaries as of
the Effective Time will consist of, items of a quality usable
in the normal course of business consistent with past practices
(it being understood that at any given time, a portion of
repairable parts are not in good repair) and are and will be in
quantities sufficient for the normal operation of the business
of the Company and its Subsidiaries in accordance with past
practice.
Section 3.20. Intellectual Property. Except for that
litigation involving certain independent service providers
referred to in "Item 3. Legal Proceedings" in the Company 10-K,
provided that the Company is not a party to litigation of such
nature which would be required to be disclosed in response to
this sentence, the Company and the Subsidiaries own or possess
adequate licenses or other rights to use all Intellectual
Property Rights necessary to conduct the business now operated
by them, except where the failure to own or possess such
licenses or rights, individually or in the aggregate, has not
had, and would not reasonably be expected to have, a Material
Adverse Effect. To the knowledge of the Company, the
Intellectual Property Rights of the Company and the
Subsidiaries do not conflict with or infringe upon any Intel-
lectual Property Rights of others to the extent that, if sus-
tained, such conflict or infringement, individually or in the
aggregate, would reasonably be expected to have a Material
Adverse Effect. For purposes of this Agreement, "INTELLECTUAL
PROPERTY RIGHT" means any trademark, service mark, trade name,
mask work, copyright, patent, software license, other data
base, invention, trade secret, know-how (including any
registrations or applications for registration of any of the
foregoing) or any other similar type of proprietary
intellectual property right.
Section 3.21. Finders' Fees. With the exception of fees
payable to Smith Barney Inc., a copy of whose engagement
agreement has been provided to MergerSub, there is no
investment banker, broker, finder or other intermediary which
has been retained by or is authorized to act on behalf of, the
Company or any Subsidiary who might be entitled to any fee or
commission from the Company or any Subsidiary or any of its
affiliates upon consummation of the transactions contemplated
by this Agreement.
Section 3.22. Inapplicability of Certain Restrictions.
Section 203 of the Delaware Law does not in any way restrict
the consummation of the Merger or the other transactions
contemplated by this Agreement. The adoption of this Agreement
by the affirmative vote of the holders of Shares entitling such
holders to exercise at least a majority of the voting power of
the Shares is the only vote of
24<PAGE>
holders of any class or series of the capital stock of the
Company required to adopt this Agreement or to approve the
Merger or any of the other transactions contemplated hereby,
and no higher or additional vote is required pursuant to of the
Company's certificate of incorporation or otherwise.
Section 3.23. Rights Plan. Neither the Company nor any
of its Subsidiaries has any rights plan or similar common stock
or preferred stock purchase plan or similar arrangement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MERGERSUB
MergerSub represents and warrants to the Company that:
Section 4.1. Corporate Existence and Power. MergerSub is
a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation
and has all corporate powers and all material governmental
licenses, authorizations, consents and approvals required to
carry on its business as now conducted. Since the date of its
incorporation, MergerSub has not engaged in any activities
other than in connection with or as contemplated by this
Agreement and the Merger or in connection with arranging any
financing required to consummate the transactions contemplated
hereby. MergerSub has furnished to the Company true and
correct copies of its certificate of incorporation and by-laws,
which shall not be amended or modified prior to the Effective
Time except to reflect the terms of the MergerSub Preferred
Stock.
Section 4.2. Corporate Authorization. The execution,
delivery and performance by MergerSub of this Agreement and the
consummation by MergerSub of the transactions contemplated
hereby are within the corporate powers of MergerSub and have
been duly authorized by all necessary corporate and stockholder
action. This Agreement constitutes a valid and binding
agreement of MergerSub.
Section 4.3. Governmental Authorization. The execution,
delivery and performance by MergerSub of this Agreement and the
consummation by MergerSub of the transactions contemplated by
this Agreement require no action by or in respect of, or filing
with, any governmental body, agency, official or authority
other than (a) the filing of a certificate of merger in
accordance with the Delaware Law, (b) compliance with any
applicable requirements of the HSR Act;
25<PAGE>
(c) compliance with any applicable requirements of the Exchange
Act; (d) compliance with the applicable requirements of the
Securities Act; and (e) compliance with any applicable foreign
or state securities or Blue Sky laws.
Section 4.4. Non-contravention. The execution, delivery
and performance by MergerSub of this Agreement and the
consummation by MergerSub of the transactions contemplated
hereby do not and will not (a) contravene or conflict with the
certificate of incorporation or bylaws of MergerSub, (b)
assuming compliance with the matters referred to in Section 4.03,
contravene or conflict with any provision of law, regulation,
judgment, order or decree binding upon MergerSub, or (c)
constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or
obligation of MergerSub or to a loss of any benefit to which
MergerSub is entitled under any agreement, contract or other
instrument binding upon MergerSub.
Section 4.5. Disclosure Documents. (a) The information
with respect to MergerSub that MergerSub furnishes to the
Company in writing specifically for use in any Company
Disclosure Document will not contain any untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading (i) in
the case of the Company Proxy Statement at the time the Company
Proxy Statement or any amendment or supplement thereto is first
mailed to stockholders of the Company, at the time the
stockholders vote on adoption of this Agreement and at the
Effective Time, and (ii) in the case of any Company Disclosure
Document other than the Company Proxy Statement, at the time of
the filing thereof and at the time of any distribution thereof.
(b) The MergerSub Disclosure Documents (as defined in
Section 6.01), when filed, will comply as to form in all
material respects with the applicable requirements of the
Securities Act and the Exchange Act and will not at the time of
the filing thereof, at the time of any distribution thereof or
at the time of the meeting of the Company's stockholders,
contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements made
therein, in the light of the circumstances under which they
were made, not misleading, provided, that this representation
and warranty will not apply to statements or omissions in the
MergerSub Disclosure Documents based upon information furnished
to MergerSub in writing by the Company specifically for use
therein.
Section 4.6. Finders' Fees. Except for Donaldson, Lufkin
& Jenrette
26<PAGE>
Securities Corporation ("DLJSC"), a copy of whose engagement
agreement has been provided to the Company and whose fees will
be paid by MergerSub, there is no investment banker, broker,
finder or other intermediary which has been retained by or is
authorized to act on behalf of MergerSub who might be entitled
to any fee or commission from MergerSub or any of its
affiliates upon consummation of the transactions contemplated
by this Agreement.
Section 4.7. Financing. The Company has received copies
of (a) a commitment letter dated May 4, 1997 from DLJ Merchant
Banking Partners II, L.P., DLJ Offshore Partners II, C.V., DLJ
Diversified Partners, C.V., DLJ Funding II, Inc., UK Investment
Plan 1997 Partners and DLJ First ESC LLC pursuant to which each
of the foregoing has committed, subject to the terms and
conditions set forth therein, to purchase securities of
MergerSub for an aggregate amount equal to $310,000,007, (b) a
letter dated May 4, 1997 from DLJSC pursuant to which DLJSC has
indicated that it is highly confident of its ability to place
privately, or underwrite in the public markets, Senior
Subordinated Notes of DecisionOne Corporation, a Delaware
corporation ("OPERATING CO.") in the amount of $150,000,000,
and (c) a commitment letter dated April 30, 1997 from DLJ
Capital Funding, Inc. ("DLJ SENIOR DEBT FUND") pursuant to
which DLJ Senior Debt Fund has committed, subject to the terms
and conditions set forth therein, to enter into one or more
credit agreements providing for loans to Operating Co. of up to
$575,000,000. As used in this Agreement, the aforementioned
entities shall hereinafter be referred to as the "FINANCING
ENTITIES." The aforementioned credit agreements and
commitments to purchase equity securities of MergerSub or
Operating Co. shall be referred to as the "FINANCING
AGREEMENTS" and the financing to be provided thereunder and
under the arrangements described in clause (b) above shall be
referred to as the "FINANCING." The aggregate proceeds of the
Financing are in an amount sufficient to pay the Merger
Consideration, to repay all of the Company's and its Sub-
sidiaries' indebtedness together with any interest, premium or
penalties payable in connection therewith, to provide a
reasonable amount of working capital financing and to pay
related fees and expenses (collectively, the "REQUIRED
AMOUNTS"). As of the date hereof, none of the commitment
letters relating to the Financing Agreements referred to above
has been withdrawn and MergerSub does not know of any facts or
circumstances that may reasonably be expected to result in any
of the conditions set forth in the commitment letters relating
to the Financing Agreements not being satisfied. MergerSub
believes that the Financing will not create any liability to
the directors and stockholders of the Company under any federal
or state fraudulent conveyance or transfer law.
27<PAGE>
MergerSub further believes that, upon the consummation of the
transactions contemplated hereby, including, without
limitation, the Financing, the Surviving Corporation (i) will
not become insolvent, (ii) will not be left with unreasonably
small capital, (iii) will not have incurred debts beyond its
ability to pay such debts as they mature, and (iv) the capital
of the Company will not become impaired.
Section 4.8. Capitalization. The authorized capital
stock of MergerSub consists of (i) 30,000,000 shares of
MergerSub Common Stock, of which as of the date hereof, there
were outstanding 101 shares and (ii) 15,000,000 shares of
MergerSub Preferred Stock, of which as of the date hereof no
shares were outstanding. All outstanding shares of capital
stock of MergerSub have been duly authorized and validly issued
and are fully paid and nonassessable. As of the moment
immediately prior to the Effective Time, 9,782,609 shares of
MergerSub Common Stock, 3,400,000 shares of MergerSub Preferred
Stock (or, in lieu thereof, Senior Discount Notes of MergerSub
in an equivalent proceeds amount of $85,000,000) and MergerSub
Warrants to acquire 1,417,180 shares of MergerSub Common Stock
at an exercise price of not less than $0.01 per share, will be
outstanding; provided that if any Shares are issued after the
date hereof but prior to the Effective Time in respect of
Options or Warrants as set forth in Section 1.04(a), the number
of MergerSub Warrants shall be increased to reflect any such
issuances.
ARTICLE 5
COVENANTS OF THE COMPANY
The Company agrees that:
Section 5.1. Conduct of the Company. Except as otherwise
specifically provided in this Agreement, from the date hereof
to the Effective Time, the Board of Directors of the Company
shall not approve or authorize any action that would allow the
Company and its Subsidiaries to carry on their respective
businesses other than in the ordinary and usual course of
business and consistent with past practice or any action that
would prevent the Company and its Subsidiaries from using their
best efforts to (i) preserve intact their respective present
business organizations, (ii) maintain in effect all federal,
state and local licenses, approvals and authorizations,
including, without limitation, all permits that are required
for the Company or any of its Subsidiaries to carry on its
business, (iii) keep available
28<PAGE>
the services of their respective key officers and employees and
(iv) maintain satisfactory relationships with their respective
customers, lenders, suppliers and others having business
relationships with any of them. Without limiting the
generality of the foregoing, and except as otherwise
specifically provided in this Agreement, without the prior
written consent of MergerSub, prior to the Effective Time, the
Board of Directors of the Company shall not, nor shall it
authorize or direct the Company or any Subsidiary, directly or
indirectly, to:
(a) adopt or propose any change in its certificate of
incorporation or bylaws (other than as contemplated by this
Agreement);
(b) except pursuant to existing agreements or arrange-
ments (i) acquire (by merger, consolidation or acquisition of
stock or assets) any material corporation, partnership or other
business organization or division thereof, or sell, lease or
otherwise dispose of a material subsidiary or a material amount
of assets or securities; (ii) make any investment whether by
purchase of stock or securities, contributions to capital or
any property transfer, or purchase any property or assets of
any other individual or entity other than the purchase of
inventory, supplies, office equipment or repairable parts in
the ordinary course of business (it being understood that
purchases pursuant to the agreement referenced in 8.02(i) are
in the ordinary course of business) in the aggregate for an
amount in excess of $3,000,000; (iii) waive, release, grant, or
transfer any rights of material value; (iv) modify or change in
any material respect any existing material license, lease, con-
tract, or other document; (v) other than endorsements of
negotiable instruments in the ordinary course, guaranties of
obligations of Subsidiaries or guaranties or other liabilities
related to the purchases of inventory, repairable parts, office
equipment or supplies which arise in the ordinary course of
business, assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise)
for the obligations of any other Person which, are in excess of
$1,500,000 in the aggregate; (vi) make any loans, advances or
capital contributions to, or investments in, any other Person
which, are in excess of $1,000,000 in the aggregate or (vii)
make any capital expenditure which, individually, is in excess
of $1,000,000 or, in the aggregate with any other such
expenditure, are in excess of $5,000,000;
(c) take any action that would make any representation
and warranty of the Company hereunder inaccurate in any respect
at, or as of any time prior to, the Effective Time, or omit to
take any action necessary to prevent any such representation or
warranty from being inaccurate in any respect at any such time;
29<PAGE>
(d) split, combine or reclassify any shares of its
capital stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock, other
than cash dividends and distributions by a wholly owned
subsidiary of the Company to the Company or to a subsidiary all
of the capital stock which is owned directly or indirectly by
the Company, or redeem, repurchase or otherwise acquire or
offer to redeem, repurchase, or otherwise acquire any of its
securities or any securities of its subsidiaries;
(e) adopt or amend any bonus, profit sharing, compensa-
tion, severance, termination, stock option, pension,
retirement, deferred compensation, employment or employee
benefit plan, agreement, trust, plan, fund or other arrangement
for the benefit and welfare of any director, officer or
employee, or (except for normal increases in the ordinary
course of business that are consistent with past practices and
that, in the aggregate, do not result in a material increase in
benefits or compensation expense to the Company or any
Subsidiary) increase in any manner the compensation or fringe
benefits of any director, officer or employee or pay any
benefit not required by any existing plan or arrangement
(including, without limitation, the granting of stock options
or stock appreciation rights or the removal of existing
restrictions in any benefit plans or agreements);
(f) revalue in any material respect any significant
portion of its assets, including, without limitation, writing
down the value of inventory in any material manner or write-off
of notes or accounts receivable in any material manner;
(g) pay, discharge or satisfy any material claims, li-
abilities or obligations (whether absolute, accrued, asserted
or unasserted, contingent or otherwise) other than the payment,
discharge or satisfaction in the ordinary course of business,
consistent with past practices, of liabilities reflected or
reserved against in the consolidated financial statements of
the Company or incurred in the ordinary course of business,
consistent with past practices;
(h) make any tax election with respect to or settle or
compromise any material income tax liability;
(i) take any action other than in the ordinary course of
business and consistent with past practices with respect to
accounting policies or procedures; or
30<PAGE>
(j) agree or commit to do any of the foregoing.
Section 5.2. Stockholder Meeting; Proxy Material. The
Company shall cause a meeting of its stockholders (the "COMPANY
STOCKHOLDER MEETING") to be duly called and held as soon as
reasonably practicable for the purpose of voting on the
approval and adoption of this Agreement and the Merger. The
Board of Directors of the Company shall, subject to its
fiduciary duties as determined in good faith and as advised by
counsel, recommend approval and adoption of this Agreement and
the Merger by the Company's stockholders. In connection with
such meeting, the Company (a) shall promptly prepare and file
with the SEC, shall use its reasonable best efforts to have
cleared by the SEC and shall thereafter mail to its
stockholders as promptly as practicable the Company Proxy
Statement and all other proxy materials for such meeting, (b)
subject to its fiduciary duties as determined in good faith and
as advised by counsel, shall use its reasonable best efforts to
obtain the necessary approvals by its stockholders of this
Agreement and the transactions contemplated hereby and (c)
shall otherwise comply with all legal requirements applicable
to such meeting.
Section 5.3. Access to Information. From the date hereof
until the Effective Time, the Company shall give MergerSub, its
counsel, financial advisors, auditors and other authorized
representatives full access to the offices, properties, books
and records of the Company and the Subsidiaries during normal
business hours, will furnish to MergerSub, their counsel,
financial advisors, auditors and other authorized
representatives such financial and operating data and other
information as such Persons may reasonably request and will
instruct the Company's and its Subsidiaries' employees, counsel
and financial advisors to cooperate with MergerSub in its
investigation of the business of the Company and the
Subsidiaries; provided that no investigation pursuant to this
Section shall affect any representation or warranty given by
the Company to MergerSub hereunder; and provided, further that
any information provided to MergerSub pursuant to this Section
5.03 shall be subject to the Confidentiality Agreement dated as
of March 19, 1997 between the Company and DLJ Merchant Banking
II, Inc. (the "CONFIDENTIALITY AGREEMENT").
Section 5.4. Other Offers. (a) Neither the Company nor
any of its Subsidiaries shall (whether directly or indirectly
through advisors, agents or other intermediaries), nor shall
the Company or any of its Subsidiaries authorize or permit any
of its or their officers, directors, agents, representatives,
advisors or Subsidiaries to, (i) solicit, initiate or take any
action knowingly to facilitate the submission of inquiries,
proposals or offers from any Third Party (as defined
31<PAGE>
below) (other than MergerSub) relating to (A) any acquisition
or purchase of 20% or more of the consolidated assets of the
Company and its Subsidiaries or of over 20% of any class of
equity securities of the Company or any of its Subsidiaries,
(B) any tender offer (including a self tender offer) or
exchange offer that if consummated would result in any Third
Party beneficially owning 20% or more of any class of equity
securities of the Company or any of its Subsidiaries, (C) any
merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation,
dissolution or similar transaction involving the Company, or
any of its Subsidiaries whose assets, individually or in the
aggregate, constitute more than 20% of the consolidated assets
of the Company, other than the transactions contemplated by
this Agreement, or (D) any other transaction the consummation
of which would, or could reasonably be expected to impede,
interfere with, prevent or materially delay the Merger or which
would, or could reasonably be expected to, materially dilute
the benefits to MergerSub of the transactions contemplated
hereby (collectively, "ACQUISITION PROPOSALS"), or agree to or
endorse any Acquisition Proposal, or (ii) enter into or
participate in any discussions or negotiations regarding any of
the foregoing, or furnish to any Third Party any information
with respect to its business, properties or assets or any of
the foregoing, or otherwise cooperate in any way with, or
knowingly assist or participate in, facilitate or encourage,
any effort or attempt by any Third Party (other than MergerSub)
to do or seek any of the foregoing; provided, however, that the
foregoing shall not prohibit the Company (either directly or
indirectly through advisors, agents or other intermediaries)
from (i) publicly disclosing in a press release, in a general
manner, the Company's permitted activities hereunder,
(ii) furnishing information pursuant to an appropriate
confidentiality letter (which letter shall not be less
favorable to the Company in any material respect than the
Confidentiality Agreement, and a copy of which shall be
provided for informational purposes only to MergerSub)
concerning the Company and its businesses, properties or assets
to a Third Party who has made a bona fide Acquisition Proposal,
(iii) engaging in discussions or negotiations with such a Third
Party who has made a bona fide Acquisition Proposal, (iv)
following receipt of a bona fide Acquisition Proposal, taking
and disclosing to its stockholders a position contemplated by
Rule 14d-9 or Rule 14e-2(a) under the Exchange Act or otherwise
making disclosure to its stockholders, (v) following receipt of
a bona fide Acquisition Proposal, failing to make or
withdrawing or modifying its recommendation referred to in
Section 5.02 and/or (vi) taking any non-appealable, final ac-
tion ordered to be taken by the Company by any court of
competent jurisdiction but in each case referred to in the
foregoing clauses (ii) through (vi) only to the extent that the
Board of Directors of the Company shall have
32<PAGE>
concluded in good faith on the basis of advice from counsel
that such action is required to prevent the Board of Directors
of the Company from breaching its fiduciary duties to the
stockholders of the Company under applicable law; provided,
further, that (A) the Board of Directors of the Company shall
not take any of the foregoing actions until reasonable notice
to MergerSub of its intent to take such action shall have been
give to MergerSub; and (B) if the Board of Directors of the
Company receives an Acquisition Proposal, to the extent it may
do so without breaching its fiduciary duties as advised by
counsel and as determined in good faith, and without violating
any of the conditions of such Acquisition Proposal, then the
Company shall promptly inform MergerSub of the terms and
conditions of such proposal and the identity of the person
making it. Subject to the provisions of the previous sentence,
the Company shall immediately cease and cause its Subsidiaries
and its and their advisors, agents and other intermediaries to
cease any and all existing activities, discussions or
negotiations with any parties (other than MergerSub) conducted
heretofore with respect to any of the foregoing, and shall use
its reasonable best efforts to cause any such parties in
possession of confidential information about the Company that
was furnished by or on behalf of the Company to return or
destroy all such information in the possession of any such
party (other than MergerSub) or in the possession of any agent
or advisor of any such party. As used in this Agreement, the
term "THIRD PARTY" means any Person or "GROUP," as described in
Rule 13d-5(b) promulgated under the Exchange Act, other than
MergerSub or any of its affiliates.
(b) If a Payment Event (as hereinafter defined) occurs,
the Company shall pay to MergerSub, within two business days
following such Payment Event, a fee of $20,947,000.00.
(c) "PAYMENT EVENT" shall mean that at least one enu-
merated event has occurred in all of the following clauses (i)-
(iii): (i) a Third Party shall have made an Acquisition
Proposal prior to the Company Stockholder Meeting, (ii) this
Agreement shall have been terminated pursuant to any of
Sections 9.01(e), 9.01(f) or 9.01(g) and (iii) any Acquisition
Proposal (whether or not proposed prior to the Company
Stockholders Meeting and whether or not it involves the Third
Party making the Acquisition Proposal referred to in Section
5.04(c)(i) above) shall have been consummated within 12 months
following the termination of this Agreement.
(d) Upon the termination of this Agreement for any reason
other than (i)
33<PAGE>
a termination by the Company pursuant to Section 9.01(c), (ii)
a termination by either the Company or MergerSub pursuant to
Section 9.01(a), (iii) a termination that follows a failure of
the condition set forth in Section 8.01(e) or Section 8.02(e)
to be satisfied, or (iv) any termination that follows a refusal
by MergerSub to consummate the Merger because Section 3.10(a)
or 3.10(h) is not true and correct as of the Effective Time, by
reason of an event that occurs between the date hereof and the
Effective Time, the Company shall reimburse MergerSub and its
affiliates not later than two business days after submission of
reasonable documentation thereof for 100% of their documented
out-of-pocket fees and expenses (including, without limitation,
the reasonable fees and expenses of their counsel and
investment banking fees), actually incurred by any of them or
on their behalf in connection with this Agreement and the
transactions contemplated hereby and the arrangement, obtaining
the commitment to provide or obtaining the Financing for the
transactions contemplated by this Agreement (including fees
payable to the Financing Entities and their respective counsel)
provided that the aggregate amount payable pursuant to this
Section 5.04(d) shall not exceed $8,250,000; provided further,
that (i) in the event that a fee is paid pursuant to Section
5.04(b) or (ii) in the event of any termination of this
Agreement which follows a refusal of MergerSub to consummate
the Merger by reason of the condition set forth in Section
8.01(c) or Section 8.02(b), the aggregate amount payable
pursuant to this Section 5.04(d) shall not include any
investment banking fee payable to DLJSC as disclosed in Section
4.06 and the limit set forth in the immediately proceeding
clause shall be reduced from $8,250,000 to $5,750,000.
(e) The Company acknowledges that the agreements con-
tained in this Section 5.04 are an integral part of the
transactions contemplated by this Agreement, and that, without
these agreements, MergerSub would not enter into this
Agreement; accordingly, if the Company fails to promptly pay
any amount due pursuant to this Section 5.04, and, in order to
obtain such payment, the other party commences a suit which
results in a judgment against the Company for the fee or fees
and expenses set forth in this Section 5.04, the Company shall
also pay to MergerSub its costs and expenses incurred in
connection with such litigation.
(f) Sections 5.04(b)-(e) shall survive any termination of
this Agreement, however caused.
Section 5.5. Notices of Certain Events. The Company
shall promptly notify MergerSub of:
(a) any notice or other communication from any Person
alleging that the
34<PAGE>
consent of such Person is or may be required in connection with
the transactions contemplated by this Agreement;
(b) any notice or other communication from any govern-
mental or regulatory agency or authority in connection with the
transactions contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or pro-
ceedings commenced or, to the best of its knowledge threatened
against, relating to or involving or otherwise affecting the
Company or any Subsidiary which, if pending on the date of this
Agreement, would have been required to have been disclosed
pursuant to Section 3.12 or which relate to the consummation of the
transactions contemplated by this Agreement.
Section 5.6. Resignation of Directors. Prior to the
Effective Time, the Company shall deliver to MergerSub evidence
satisfactory to MergerSub of the resignation of all directors
of the Company effective at the Effective Time.
Section 5.7. Preferred Stock. Provided that MergerSub
shall have provided to Company reasonably in advance of the
first mailing to stockholders of the Company Proxy Statement
the terms thereof, prior to the Effective Time, the Board of
Directors of the Company shall take all necessary action to
establish the terms of the Mirror Preferred Stock and file the
Certificate of Designations with the Delaware Secretary of
State, all in accordance with the applicable provisions of
Delaware Law. The "MIRROR PREFERRED STOCK" shall be Preferred
Stock of the Company, the terms of and certificate of
designations of which shall be identical in all respects
(except the name of the Company) to the terms of the MergerSub
Preferred Stock and the certificate of designations therefor.
Section 5.8. Solvency Advice. The Company shall request
an independent advisor to deliver the advice contemplated by
Section 8.03(a) as promptly as practicable.
ARTICLE 6
COVENANTS OF MERGERSUB
MergerSub agrees that:
35<PAGE>
Section 6.1. SEC Filings. As soon as practicable after
the date of announcement of the execution of the Merger
Agreement, MergerSub shall file (separately, or as part of the
Company Proxy Statement) with the SEC, if required, a Rule 13E-
3 Transaction Statement ("TRANSACTION STATEMENT") with respect
to the Merger (together with any supplements or amendments
thereto, collectively the "MERGERSUB DISCLOSURE DOCUMENTS").
MergerSub and the Company each agrees to correct any
information provided by it for use in the MergerSub Disclosure
Documents if and to the extent that it shall have become false
or misleading in any material respect. MergerSub agrees to
take all steps necessary to cause the MergerSub Disclosure
Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. The
Company and its counsel shall be given reasonable opportunity
to review and comment on each MergerSub Disclosure Document
prior to its being filed with the SEC.
Section 6.2. Voting of Shares. MergerSub agrees to vote
all Shares beneficially owned by it in favor of adoption of
this Agreement at the Company Stockholder Meeting.
Section 6.3. Director and Officer Liability. (a) For a
period of 6 years after the Effective Time, MergerSub shall
cause the Surviving Corporation to indemnify and hold harmless
the present and former officers and directors of the Company in
respect of acts or omissions occurring prior to the Effective
Time to the extent provided under the Company's certificate of
incorporation and bylaws in effect on the date hereof; provided
that such indemnification shall be subject to any limitation
imposed from time to time under applicable law. For a period
of 6 years after the Effective Time, MergerSub shall cause the
Surviving Corporation to provide officers' and directors'
liability insurance in respect of acts or omissions occurring
prior to the Effective Time covering each such Person currently
covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount
no less favorable than those of such policy in effect on the
date hereof (or, if such insurance policy cannot be obtained,
such insurance policy on terms with respect to coverage and
amount as favorable as can be obtained, subject to the proviso
at the conclusion of this sentence), provided that in
satisfying its obligation under this Section, MergerSub shall
not be obligated to cause the Surviving Corporation to pay
premiums in excess of 125% of the amount per annum the Company
paid in its last full fiscal year, which amount has been
disclosed to MergerSub.
(b) In furtherance of and not in limitation of the
preceding paragraph,
36<PAGE>
MergerSub agrees that the officers and directors of the Company
that are defendants in all litigation commenced by stockholders
of the Company with respect to (x) the performance of their
duties as such officers and/or directors under federal or state
law (including litigation under federal and state securities
laws) and (y) the Merger, including, without limitation, any
and all such litigation commenced on or after the date of this
Agreement (the "SUBJECT LITIGATION") shall be entitled to be
represented, at the reasonable expenses of the Company, in the
Subject Litigation by one counsel (and Delaware counsel if
appropriate and one local counsel in each jurisdiction in which
a case is pending) each of which counsel shall be selected by a
plurality of such director defendants; provided that the
Company shall not be liable for any settlement effected without
its prior written consent (which consent shall not be
unreasonably withheld) and that a condition to the
indemnification payments provided in Section 6.03(a) shall be
that such officer/director defendant not have settled any
Subject Litigation without the consent of the Surviving
Corporation (such consent not to be unreasonably withheld) and,
prior to the Effective Time, MergerSub; and provided further
that neither MergerSub nor the Surviving Corporation shall have
any obligation hereunder to any officer/director defendant when
and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final and
non-appealable, that indemnification of such officer/director
defendant in the manner contemplated hereby is prohibited by
applicable law.
Section 6.4. Employee Plans and Benefit Arrangements.
(a) From and after the Effective Time, subject to applicable
law, the Surviving Corporation and its subsidiaries will honor
obligations of the Company and its Subsidiaries incurred prior
to the Effective Time under all existing Employee Plans and
Benefit Arrangements (as defined in Section 3.14).
(b) MergerSub agrees that, for at least one year from the
Effective Time, subject to applicable law, the Surviving Cor-
poration and its Subsidiaries will provide benefits to their
employees which will, in the aggregate, be comparable to those
currently provided by the Company and its subsidiaries to their
employees. Notwithstanding the foregoing, nothing herein shall
obligate or require the Surviving Corporation or any of its
subsidiaries to provide its employees with a plan or
arrangement similar to any equity based compensation plans
currently maintained by the Company and nothing herein shall
otherwise limit the Surviving Corporation's right to amend,
modify or terminate any Employee Plan or Benefit Arrangement,
as defined in Section 3.14.
37<PAGE>
(c) It is MergerSub's current intention to maintain the
Surviving Corporation's headquarters at its present location or
another location in the greater Philadelphia area.
Section 6.5. Financing. MergerSub shall use its
reasonable best efforts to obtain the Financing. In the event
that any portion of such Financing becomes unavailable,
regardless of the reason therefor, MergerSub will use its
reasonable best efforts to obtain alternative financing on
substantially comparable or more favorable terms from other
sources.
Section 6.6. NASDAQ Listing. MergerSub will not take any
action, for at least three years after the Effective Time of
the Merger, to cause the Company Stock to be de-listed from The
NASDAQ National Market System ("NASDAQ"); provided, however,
that MergerSub may cause or permit the Company Stock to be de-
listed in connection with any transaction which results in the
termination of registration of such securities under Section 12
of the Exchange Act, and provided, further, that nothing in
this Section 6.06 shall require the Company to take any
affirmative action to prevent the Company Stock from being de-
listed by NASDAQ if the Company Stock ceases to meet the
applicable listing standards.
Section 6.7. Access to Information. From the date hereof
until the Effective Time, MergerSub shall give the Company and
its independent advisor any such information regarding
MergerSub as may be necessary to permit such independent
advisor to render the advice to be delivered to the Company's
Board of Directors pursuant to Section 8.03(b).
ARTICLE 7
COVENANTS OF MERGERSUB AND THE COMPANY
The parties hereto agree that:
Section 7.1. Best Efforts. Subject to the terms and
conditions of this Agreement, each party will use its
reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to
consummate the transactions
38<PAGE>
contemplated by this Agreement. Each party shall also refrain
from taking, directly or indirectly, any action contrary to or
inconsistent with the provisions of this Agreement, including
action which would impair such party's ability to consummate
the Merger and the other transactions contemplated hereby.
Without limiting the foregoing, the Company and its Board of
Directors shall use their reasonable best efforts to (a) take
all action necessary so that no state takeover statute or
similar statute or regulation is or becomes applicable to the
Merger or any of the other transactions contemplated by this
Agreement and (b) if any state takeover statute or similar
statute or regulation becomes applicable to any of the
foregoing, take all reasonable action necessary so that the
Merger and the other transactions contemplated by this
Agreement may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize
the effect of such statute or regulation on the Merger and the
other transactions contemplated by this Agreement.
Section 7.2. Certain Filings. (a) The Company and
MergerSub shall use their respective reasonable best efforts to
take or cause to be taken, (i) all actions necessary, proper or
advisable by such party with respect to the prompt preparation
and filing with the SEC a registration statement on Form S-4
(the "REGISTRATION STATEMENT"), the Company Disclosure
Documents and the MergerSub Disclosure Documents, (ii) such
actions as may be required to have the Registration Statement
declared effective under the Securities Act and to have the
Company Proxy Statement cleared by the SEC, in each case as
promptly as practicable, and (iii) such actions as may be
required to have to be taken under state securities or
applicable Blue Sky laws in connection with the issuance of the
securities contemplated hereby.
(b) The Company agrees to provide, and will cause its
Subsidiaries and its and their respective officers, employees
and advisors to provide, all necessary cooperation in
connection with the arrangement of any financing to be
consummated contemporaneous with or at or after the Closing in
respect of the transactions contemplated by this Agreement,
including without limitation, (x) participation in meetings,
due diligence sessions and road shows, (y) the preparation of
offering memoranda, private placement memoranda, prospectuses
and similar documents, and (z) the execution and delivery of
any commitment letters, underwriting or placement agreements,
pledge and security documents, other definitive financing
documents, or other requested certificates or documents,
including a certificate of the chief financial officer of the
Company with respect to solvency matters, comfort letters of
accountants and legal opinions as may be requested by
MergerSub; provided that the form and substance of any of the
39<PAGE>
material documents referred to in clause (y), and the terms and
conditions of any of the material agreements and other
documents referred to in clause (z), shall be substantially
consistent with the terms and conditions of the financing
required to satisfy the condition precedent set forth in
Section 8.01(e).
(c) The Company and MergerSub shall cooperate with one
another (i) in determining whether any action by or in respect
of, or filing with, any governmental body, agency or official,
or authority is required, or any actions, consents, approvals
or waivers are required to be obtained from parties to any
material contracts, in connection with the consummation of the
transactions contemplated by this Agreement (including the
Financing) and (ii) in seeking any such actions, consents,
approvals or waivers or making any such filings, furnishing
information required in connection therewith or with the
Registration Statement, the Company Disclosure Documents and
MergerSub Disclosure Documents and seeking timely to obtain any
such actions, consents, approvals or waivers.
Section 7.3. Public Announcements. MergerSub and the
Company will consult with each other before issuing any press
release or making any public statement with respect to this
Agreement and the transactions contemplated hereby and, except
for any press release or public statement as may be required by
applicable law or any listing agreement with any national
securities exchange, will not issue any such press release or
make any such public statement prior to such consultation.
Section 7.4. Further Assurances. At and after the
Effective Time, the officers and directors of the Surviving
Corporation will be authorized to execute and deliver, in the
name and on behalf of the Company or MergerSub, any deeds,
bills of sale, assignments or assurances and to take and do, in
the name and on behalf of the Company or MergerSub, any other
actions and things to vest, perfect or confirm of record or
otherwise in the Surviving Corporation any and all right, title
and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with,
the Merger.
ARTICLE 8
CONDITIONS TO THE MERGER
Section 8.1. Conditions to the Obligations of Each Party.
The
40<PAGE>
obligations of the Company and MergerSub to consummate the
Merger are subject to the satisfaction of the following
conditions:
(a) this Agreement shall have been adopted by the
stockholders of the Company in accordance with Delaware Law;
(b) any applicable waiting period under the HSR Act
relating to the Merger shall have expired or been terminated;
(c) no provision of any applicable law or regulation and
no judgment, order, decree or injunction shall prohibit or
restrain the consummation of the Merger; provided, however,
that the Company and MergerSub shall each use its reasonable
best efforts to have any such judgment, order, decree or
injunction vacated; and
(d) all consents, approvals and licenses of any govern-
mental or other regulatory body required in connection with the
execution, delivery and performance of this Agreement and for
the Surviving Corporation to conduct the business of the
Company in substantially the manner now conducted, shall have
been obtained, unless the failure to obtain such consents,
authorizations, orders or approvals would not have a Material
Adverse Effect after giving effect to the transactions
contemplated by this Agreement (including the Financing);
(e) the funds in an amount at least equal to the Required
Amounts shall have been made available to MergerSub and/or
Operating Co. as contemplated in Section 4.07; and
(f) the Registration Statement shall have been declared
effective and no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings
for such purpose shall be pending before or threatened by the
SEC.
Section 8.2. Conditions to the Obligations of MergerSub.
The obligations of MergerSub to consummate the Merger are
subject to the satisfaction of the following further
conditions:
(a) the Company shall have performed in all material
respects all of its obligations hereunder required to be
performed by it at or prior to the Effective Time, the
representations and warranties of the Company contained in this
Agreement and in any certificate or other writing delivered by
the Company
41<PAGE>
pursuant hereto shall be true in all material respects at and
as of the Effective Time (provided that representations made as
of a specific date shall be required to be true as of such date
only) as if made at and as of such time and MergerSub shall
have received a certificate signed by any Vice President of the
Company to the foregoing effect;
(b) There shall not be instituted or pending (x) any
action or proceeding by any government or governmental
authority or agency, or (y) any action or proceeding by any
other person, that has a reasonable likelihood of success, in
any case referred to in clauses (x) or (y), before any court or
governmental authority or agency, (i) challenging or seeking to
make illegal, to delay materially or otherwise directly or
indirectly to restrain or prohibit the consummation of the
Merger or seeking to obtain material damages or otherwise
directly or indirectly relating to the transactions
contemplated by this Agreement, (ii) seeking to restrain or
prohibit MergerSub's (including its Subsidiaries and
affiliates) ownership or operation of all or any material
portion of the business or assets of the Company and its
Subsidiaries, taken as a whole, or to compel MergerSub or any
of its Subsidiaries or affiliates to dispose of or hold
separate all or any material portion of the business or assets
of the Company and its Subsidiaries, taken as a whole, (iii)
seeking to impose or confirm material limitations on the
ability of MergerSub or any of its Subsidiaries or affiliates
to effectively control the business or operations of the
Company and its Subsidiaries, taken as a whole, or effectively
to exercise full rights of ownership of the Shares or Company
Stock, including, without limitation, the right to vote any
Shares or Company Stock acquired or owned by MergerSub or any
of its Subsidiaries or affiliates on all matters properly
presented to the Company's stockholders, or (iv) seeking to
require divestiture by MergerSub or any of its Subsidiaries or
affiliates of any Shares or Company Stock, and no court,
arbitrator or governmental body, agency or official shall have
issued any judgment, order, decree or injunction, and there
shall not be any statute, rule or regulation, that, in the sole
judgment of MergerSub is likely, directly or indirectly, to
result in any of the consequences referred to in the preceding
clauses (i) through (iv);
(c) MergerSub shall have received all documents it may
reasonably request relating to the existence of the Company and
the Subsidiaries and the authority of the Company for this
Agreement, all in form and substance satisfactory to MergerSub;
(d) the holders of not more than 3% of the outstanding
Shares shall have demanded appraisal of their Shares in
accordance with Delaware Law;
42<PAGE>
(e) MergerSub shall be reasonably satisfied that the
Merger will be recorded as a "recapitalization" for financial
reporting purposes;
(f) MergerSub shall have received undertakings in writing
from each person, if any, who according to counsel for the
Company might reasonably be considered "affiliates" of the
Company within the meaning of Rule 145(c) of the SEC pursuant
to the Securities Act (each, an "AFFILIATE"), in each case in
form and substance satisfactory to counsel for MergerSub
providing (i) such Affiliate will notify MergerSub in writing
before offering for sale or selling or otherwise disposing of
any shares of Company Stock owned by such Affiliate and (ii) no
such sale or other disposition shall be made unless and until
the Affiliate has supplied to MergerSub an opinion of counsel
for the Affiliate (which opinion and counsel shall be
reasonably satisfactory to MergerSub) to the effect that such
transfer is not in violation of the Securities Act;
(g) the Registration Rights Agreement dated as of October
20, 1995, entered into among the Company and the Significant
Security Holders (as defined therein), shall have been amended
in the manner previously agreed;
(h) The certificate of designation for the Mirror
Preferred Stock shall have been accepted for filing by the
Delaware Secretary of State; and
(i) Total indebtedness (long and short term) of the
Company and its Subsidiaries as of the Effective Time,
excluding any indebtedness attributable to "Phase II" as
defined in the Agreement for Services for End-Of-Life Inventory
Management dated as of June 7, 1996 between Operating Co. and
Compaq Computer Corporation ("ATTRIBUTABLE INDEBTEDNESS") shall
not exceed $240,000,000 and shall not exceed $255,000,000
including Attributable Indebtedness.
Section 8.3. Condition to the Obligation of the Company.
The obligation of the Company to consummate the Merger is
subject to the satisfaction of the following further
conditions:
(a) MergerSub shall have performed in all material
respects all of its obligations hereunder required to be
performed by it at or prior to the Effective Time, the
representations and warranties of MergerSub contained in this
Agreement and in any certificate or other writing delivered by
either of them pursuant hereto shall be true in all material
respects at and as of the Effective
43<PAGE>
Time (except for any inaccuracies in such representations and
warranties that are solely due to an action taken after the
date hereof of the type described in Section 5.01 which is taken
specifically in accordance with Section 5.01) (provided that
representations made as of a specific date shall be required to
be true as of such date only) as if made at and as of such time
and the Company shall have received a certificate signed by any
Vice President of MergerSub to the foregoing effect; and
(b) The Board of Directors of the Company shall have
received advice, reasonably satisfactory to the Board, from an
independent advisor confirming the belief of MergerSub set
forth in the last sentence of Section 4.07.
ARTICLE 9
TERMINATION
Section 9.1. Termination. This Agreement may be
terminated and the Merger may be abandoned at any time prior to
the Effective Time (notwithstanding any approval of this
Agreement by the stockholders of the Company):
(a) by mutual written consent of the Company and MergerSub;
(b) by either the Company or MergerSub, if the Merger has
not been consummated by the later of (x) the earlier of Sep-
tember 15, 1997 and ten business days after the Company
Stockholders Meeting, and (y) August 15, 1997, provided that
the party seeking to exercise such right is not then in breach
in any material respect of any of its obligations under this
Agreement;
(c) by either the Company or MergerSub, if MergerSub (in
the case of termination by the Company), or the Company (in the
case of termination by MergerSub) shall have breached in any
material respect any of its obligations under this Agreement or
any representation and warranty of MergerSub (in the case of
termination by the Company) or the Company (in the case of
termination by MergerSub) shall have been incorrect in any
material respect when made or at any time prior to the Closing;
(d) by either the Company or MergerSub, if there shall be
any law or regulation that makes consummation of the Merger
illegal or otherwise prohibited or if any judgment, injunction,
order or decree enjoining MergerSub or the
44<PAGE>
Company from consummating the Merger is entered and such
judgment, injunction, order or decree shall become final and
nonappealable;
(e) by MergerSub if the Board of Directors of the Company
shall have withdrawn or modified or amended, in a manner ad-
verse to MergerSub, its approval or recommendation of this
Agreement and the Merger or its recommendation that
stockholders of the Company adopt and approve this Agreement
and the Merger, or approved, recommended or endorsed any
proposal for a transaction other than the Merger (including a
tender or exchange offer for Shares) or if the Company has
failed to call the Company Stockholders Meeting or failed as
promptly as reasonably practicable after the Registration
Statement is declared effective to mail the Company Proxy
Statement to its stockholders or failed to include in such
statement the recommendation referred to above;
(f) by the Company if prior to the Effective Time the
Board of Directors of the Company shall have withdrawn or
modified or amended, in a manner adverse to MergerSub, its
approval or recommendation of this Agreement and the Merger or
its recommendation that stockholders of the Company adopt and
approve this Agreement and the Merger in order to permit the
Company to execute a definitive agreement providing for the
acquisition of the Company or in order to approve a tender or
exchange offer for any or all of the Shares, in either case, as
determined by the Board of Directors of the Company to be on
terms more favorable to the Company's stockholders than the
Merger from a financial point of view, provided that the
Company shall be in compliance with Section 5.04;
(g) by either the Company or MergerSub if, at a duly held
stockholders meeting of the Company or any adjournment thereof
at which this Agreement and the Merger is voted upon, the
requisite stockholder adoption and approval shall not have been
obtained.
The party desiring to terminate this Agreement pursuant to
Sections 9.01(b)-(g) shall give written notice of such
termination to the other party in accordance with Section 10.01.
Section 9.2. Effect of Termination. If this Agreement is
terminated pursuant to Section 9.01, this Agreement shall become
void and of no effect with no liability on the part of any
party hereto, except that the agreements contained in Sections
5.04(b)-(f) and 10.04 shall survive the termination hereof.
45<PAGE>
ARTICLE 10
MISCELLANEOUS
Section 10.1. Notices. All notices, requests and other
communications to any party hereunder shall be in writing
(including telecopy or similar writing) and shall be given,
if to MergerSub, to:
Peter T. Grauer
C/O DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, New York 10172
Telecopy: 212-892-7552
with a copy to:
George R. Bason, Jr.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopy: (212) 450-4800
if to the Company, to:
Thomas M. Molchan
DecisionOne Holdings Corp.
50 East Swedesford Road
Frazer, PA 19355
Telecopy: (610) 408-3820
with a copy to:
David R. King
Morgan, Lewis & Bockius LLP
2000 One Logan Square
Philadelphia, PA 19103-6993
46<PAGE>
Telecopy: (215) 963-5299
or such other address or telecopy number as such party may
hereafter specify for the purpose by notice to the other
parties hereto. Each such notice, request or other
communication shall be effective (a) if given by telecopy, when
such telecopy is transmitted to the telecopy number specified
in this Section and the appropriate telecopy confirmation is
received or (b) if given by any other means, when delivered at
the address specified in this Section.
Section 10.2. Survival of Representations and Warranties.
The representations and warranties and agreements contained
herein and in any certificate or other writing delivered
pursuant hereto shall not survive the Effective Time or the
termination of this Agreement except for the agreements set
forth in Sections 6.03, 6.04, 6.06 and 7.04 which will survive
the Effective Time and Sections 5.04(b)-(f) and 10.04 which
will survive any termination hereof.
Section 10.3. Amendments; No Waivers. (a) Any provision
of this Agreement may be amended or waived prior to the
Effective Time if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by the Company
and MergerSub or in the case of a waiver, by the party against
whom the waiver is to be effective; provided that after the
adoption of this Agreement by the stockholders of the Company,
no such amendment or waiver shall, without the further approval
of such stockholders, alter or change (i) the amount or kind of
consideration to be received in exchange for any shares of
capital stock of the Company, (ii) any term of the certificate
of incorporation of the Surviving Corporation or (iii) any of
the terms or conditions of this Agreement if such alteration or
change would adversely affect the holders of any shares of
capital stock of the Company.
(b) No failure or delay by any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 10.4. Expenses. Except as provided in Section 5.04,
all costs and expenses incurred in connection with this
Agreement shall be paid by the party incurring such cost or
expense.
Section 10.5. Successors and Assigns; Benefit. The
provisions of this
47<PAGE>
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns,
provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto. Nothing in
this Agreement, expressed or implied, shall confer on any
Person other than the parties hereto, and their respective
successors and assigns, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except that
the present and former officers and directors of the Company
shall have the rights set forth in Section 6.03 hereof.
Section 10.6. Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the
State of Delaware, without reference to the conflicts of laws
rules thereof.
Section 10.7. Counterparts; Effectiveness. This
Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto
shall have received counterparts hereof signed by all of the
other parties hereto.
Knowledge Defined. When used with respect to the Company,
"KNOWLEDGE" means the actual knowledge of any of the following
officers of the Company or any of their successors: Kenneth
Draeger, Stephen Felice, Thomas Fitzpatrick and Thomas Molchan.
48<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
DECISIONONE HOLDINGS CORP.
By: /s/ Kenneth Draeger
Name: Kenneth Draeger
Title: Chief Executive Officer
QUAKER HOLDING CO.
By: /s/ Peter T. Grauer
Name: Peter T. Grauer
Title: President
49<PAGE>
EXHIBIT A
CERTIFICATE OF INCORPORATION
OF THE
SURVIVING CORPORATION
*****
As of the Effective Time, the Certificate of Incorporation
of the Surviving Corporation shall be amended as follows:
Article Second shall be deleted in its entirety and
replaced with the following:
"SECOND: The address of its registered office in the
State of Delaware is 1013 Centre Road, Wilmington, Delaware
19805. The name of its registered agent at such address is
Corporation Service Company."
The first paragraph of Article Fourth shall be deleted in
its entirety and replaced with the following:
"FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is 45,000,000
consisting of 30,000,000 shares of Common Stock, par value $.01
per share (the "COMMON STOCK") and 15,000,000 shares of
Preferred Stock, par value $.01 per share (the "PREFERRED
STOCK")."
In addition, the second paragraph and Sections I and II of
Article Fourth shall be deleted. Section III of Article Fourth
shall be renumbered "Section I", Section IV of Article Fourth
shall be renumbered "Section III". Articles Fifth through
Seventh shall be deleted in their entirety, and replaced with
the following:
"FIFTH: The Board of Directors shall have the power to
adopt, amend or repeal the bylaws of the Corporation.
SIXTH: Election of directors need not be by written
ballot unless the bylaws of the Corporation so provide.
SEVENTH: (1) A director of the Corporation shall not be
liable to the Corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director to the
fullest extent permitted by Delaware Law.
(2)(a) Each person (and the heirs, executors or
administrators of such person) who was or is a party or is
threatened to be made a party to, or is involved in any
threatened, pending or
50<PAGE>
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that
such person is or was a director or officer of the Corporation
or is or was serving at the request of the Corporation as a
director or officer of another corporation, partnership, joint
venture, trust or other enterprise, shall be indemnified and
held harmless by the Corporation to the fullest extent per-
mitted by Delaware Law. The right to indemnification conferred
in this ARTICLE SEVENTH shall also include the right to be paid
by the Corporation the expenses incurred in connection with any
such proceeding in advance of its final disposition to the
fullest extent authorized by Delaware Law. The right to
indemnification conferred in this ARTICLE SEVENTH shall be a
contract right.
(b) The Corporation may, by action of its Board of
Directors, provide indemnification to such of the officers,
employees and agents of the Corporation to such extent and to
such effect as the Board of Directors shall determine to be
appropriate and authorized by Delaware Law.
(3) The Corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any expense,
liability or loss incurred by such person in any such capacity
or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such
liability under Delaware Law.
(4) The rights and authority conferred in this ARTICLE
SEVENTH shall not be exclusive of any other right which any
person may otherwise have or hereafter acquire.
(5) Neither the amendment nor repeal of this ARTICLE
SEVENTH, nor the adoption of any provision of this Certificate
of Incorporation or the bylaws of the Corporation, nor, to the
fullest extent permitted by Delaware Law, any modification of
law, shall eliminate or reduce the effect of this ARTICLE SEV-
ENTH in respect of any acts or omissions occurring prior to
such amendment, repeal, adoption or modification.
EIGHTH: The Corporation reserves the right to amend this
Certificate of Incorporation in any manner permitted by
Delaware Law and, with the sole exception of those rights and
powers conferred under the above ARTICLE SEVENTH, all rights
and powers conferred herein on stockholders, directors and
officers, if any, are subject to this reserved power."
Except as provided above, the Certificate of Incorporation
of the Surviving Corporation shall remain in full force and
effect.
51
Exhibit 2
CONFORMED COPY
SUBSCRIPTION AGREEMENT
dated as of
August 7, 1997
among
QUAKER HOLDING CO.
and
THE BUYERS NAMED HEREIN
relating to the purchase and sale
of
Common Stock
of
QUAKER HOLDING CO.<PAGE>
TABLE OF CONTENTS
_________________
Page
ARTICLE 1 Definitions
Section 1.01. Definitions................................ 1
ARTICLE 2 Purchase and Sale
Section 2.01. Purchase and Sale.......................... 3
Section 2.02. Closing.................................... 3
ARTICLE 3 Representations and Warranties of Seller
Section 3.01. Corporate Existence and Power.............. 4
Section 3.02. Corporate Authorization.................... 4
Section 3.03. Governmental Authorization................. 5
Section 3.04. Noncontravention........................... 5
Section 3.05. Capitalization and Voting Rights........... 5
Section 3.06. Valid Issuance of Common Stock............. 6
Section 3.07. Litigation................................. 6
Section 3.08. Brokers or Finders' Fees................... 6
Section 3.09. Newly Formed Corporation................... 6
Section 3.10. Meaning of Seller.......................... 6
ARTICLE 4 Representations and Warranties of Buyers
Section 4.01. Existence and Power........................ 7
Section 4.02. Authorization.............................. 7
Section 4.03. Governmental Authorization................. 7
Section 4.04. Purchase for Investment.................... 7
Section 4.05. Private Placement.......................... 7
Section 4.06. Litigation................................. 9
Section 4.07. Brokers or Finders' Fees................... 9
ARTICLE 5 Conditions to Closing<PAGE>
Section 5.01. Conditions to Obligations of Each Buyer
and Seller................................. 9
Section 5.02. Conditions to Obligation of Each Buyer..... 9
Section 5.03. Conditions to Obligation of Seller......... 10
ARTICLE 6 Survival; Indemnification
Section 6.01. Survival................................... 10
Section 6.02. Indemnification............................ 11
Section 6.03. Procedures and Third Party Claims.......... 11
Section 6.04. Calculation of Damages..................... 12
Section 6.05. Exclusivity................................ 13
ARTICLE 7 Termination
Section 7.01. Grounds for Termination.................... 13
Section 7.02. Effect of Termination...................... 13
ARTICLE 8 Miscellaneous
Section 8.01. Notices.................................... 14
Section 8.02. Amendments and Waivers..................... 15
Section 8.03. Expenses................................... 15
Section 8.04. Successors and Assigns..................... 15
Section 8.05. Governing Law.............................. 15
Section 8.06. Jurisdiction............................... 15
Section 8.07. Waiver Of Jury Trial....................... 16
Section 8.08. Counterparts; Third Party Beneficiaries.... 16
Section 8.09. Entire Agreement........................... 16
Section 8.10. Captions................................... 16
Section 8.11. Severability............................... 16
Section 8.12. Interpretation............................. 16
Schedule A Schedule of Investors
Exhibit A Certificate of Incorporation<PAGE>
SUBSCRIPTION AGREEMENT
AGREEMENT dated as of August 7, 1997 between Quaker
Holding Co., a Delaware corporation ("SELLER"), and the Persons
named on Schedule A hereto (each a "BUYER" and collectively,
the "BUYERS").
W I T N E S S E T H :
WHEREAS, the Seller has agreed to merge with and into
DecisionOne Holdings Corp. (the "COMPANY") on the terms and
conditions set forth in the Agreement and Plan of Merger dated
as of May 4, 1997 (the "MERGER") between Seller and the Company
(as subsequently amended, the "MERGER AGREEMENT");
WHEREAS, to finance, in part, the payment of the con-
sideration payable in the Merger, Seller intends to issue
shares of common stock, par value $0.01 per share (the "COMMON
STOCK" or the "SECURITIES");
WHEREAS, all of the outstanding capital stock of the
Seller is currently owned by DLJ Merchant Banking Partners II,
L.P. ("DLJMB") and affiliated funds and entities (collectively,
the "DLJMB FUNDS");
WHEREAS, certain institutional investors wish to in-
vest in the Seller incident to the Merger;
WHEREAS, Seller desires to issue and sell the Common
Stock to each of the Buyers, and each of the Buyers desires to
purchase the Common Stock from Seller, upon the terms and sub-
ject to the conditions hereinafter set forth;
The parties hereto agree as follows:
ARTICLE 1
Definitions
Section 1.1. Definitions. (a) The following terms,
as used herein, have the following meanings:
"AFFILIATE" means, with respect to any Person, any
other Person directly or <PAGE>
indirectly controlling, controlled by, or under common control
with such Person.
"CLOSING DATE" means the date of the Closing.
"COMMON SHARE" means one share of Common Stock.
"INVESTORS' AGREEMENT" means the Investors' Agreement
dated as of the date hereof among Quaker Holding Co., DLJ Mer-
chant Banking Partners II, L.P., DLJ Merchant Banking Partners
II-A, L.P., DLJ Offshore Partners II, C.V., DLJ Diversified
Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millenium
Partners, L.P., DLJ Funding II, Inc., DLJ EAB Partners, L.P.,
UK Investment Plan 1997 Partners, DLJ First ESC, LLC, and cer-
tain other shareholders listed on the signature pages thereto.
"LIEN" means, with respect to any property or asset,
any mortgage, lien, pledge, charge, security interest or encum-
brance in respect of such property or asset.
"1934 ACT" means the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereun-
der.
"1933 ACT" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"PERSON" means an individual, corporation, partner-
ship, limited liability company, association, trust or other
entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"TAX" means, with respect to any Person, any net in-
come tax, or franchise tax based on net income including any
alternative or add-on minimum tax, together with any interest,
penalty, addition to tax or additional amount due from such
Person imposed by any governmental authority (domestic or for-
eign) responsible for the imposition of any such tax.
"TAX BENEFIT" means any deduction, amortization, ex-
clusion from income or other allowance.
"TRANSACTION DOCUMENTS" means this Agreement, the
Merger Agreement and the Investors' Agreement.
(b) Each of the following terms is defined in the
Section set forth opposite such term:
2<PAGE>
TERM SECTION
Accredited Investor 4.06(h)
Certificate of Incorporation 3.08
Claim 6.03
Closing 2.02
Common Stock Recitals
Company Recitals
Damages 6.02
DLJMB Recitals
DLJMB Funds Recitals
Indemnified Party 6.03
Indemnifying Party 6.03
Purchase Price 2.01
Securities Recitals
Third Party Claim 6.03
ARTICLE 2
Purchase and Sale
Section 2.1. Purchase and Sale. Upon the terms and
subject to the conditions of this Agreement, Seller agrees to
issue and sell to each Buyer, and each Buyer agrees, severally
and not jointly, to purchase from Seller the Common Stock set
forth opposite such Buyer's name on Schedule A hereto at the
Closing. The purchase price for the Common Stock (the "PUR-
CHASE PRICE") is the amount in cash specified on Schedule A
hereto. The Purchase Price shall be paid as provided in Section
2.02.
Section 2.2 Closing. The closing (the "CLOSING") of
the purchase and sale of the Common Stock hereunder shall take
place at the offices of Davis Polk & Wardwell, 450 Lexington
Avenue, New York, New York, as soon as possible, but in no
event later than five business days, after satisfaction of the
conditions set forth in Article 5, or at such other time or
place as Buyers and Seller may agree. At the Closing:
(a) Each Buyer shall deliver to Seller, in im-
mediately available funds, the Aggregate Purchase Price set
forth opposite such Buyer's name on Schedule A
3<PAGE>
hereto, by wire transfer (or other means acceptable to Seller)
to an account of Seller with a bank in New York City designated
by Seller, by notice to such Buyer, not later than two business
days prior to the Closing Date.
(b) Seller shall deliver to each Buyer certificates
for the Common Shares duly registered in the name of such
Buyer.
(c) If the Closing has occurred but the Merger is
not consummated prior to the close of business on Friday, Au-
gust 8, 1997, then Seller shall immediately deliver to each
Buyer, against delivery by such Buyer of the stock certificates
representing the shares of Common Stock purchased by such
Buyer, the Aggregate Purchase Price paid to Seller by such
Buyer (as set forth opposite such Buyer's name on Schedule A
hereto), and this Agreement shall thereupon be terminated.
ARTICLE 3
Representations and Warranties of Seller
Seller represents and warrants to each Buyer as of
the date hereof and as of the Closing Date that:
Section 3.1. Corporate Existence and Power. Seller
is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of incorpora-
tion and has all corporate powers and all governmental li-
censes, authorizations, permits, consents and approvals re-
quired to carry on its business as now conducted and as pro-
posed to be conducted.
Section 3.2. Corporate Authorization. The execu-
tion, delivery and performance by Seller of each of the Trans-
action Documents and the consummation of the transactions con-
templated hereby and thereby (including the issuance and sale
of the Common Stock) are within Seller's corporate powers and
have been duly authorized by all necessary corporate action on
the part of Seller. Each of the Transaction Documents consti-
tutes a valid and binding agreement of Seller, enforceable
against Seller in accordance with its respective terms, except
(i) as limited by the applicable bankruptcy, insolvency, reor-
ganization, moratorium, and other laws of general application
affecting enforcement or creditors' rights generally, or (ii)
as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
Section 3.3. Governmental Authorization. The execu-
tion, delivery and performance by Seller of each of the Trans-
action Documents and the
4<PAGE>
consummation of the transactions contemplated hereby and
thereby require no order, license, consent, authorization or
approval of, or exemption by, or action by or in respect of, or
notice to, or filing or registration with, any governmental
body, agency or official except such as have been obtained.
Section 3.4. Noncontravention. The execution, de-
livery and performance by Seller of each of the Transaction
Documents and the consummation of the transactions contemplated
hereby and thereby do not and will not (i) violate the certifi-
cate of incorporation or bylaws of Seller, (ii) violate any
applicable law, rule, regulation, judgment, injunction, order
or decree, (iii) require any consent or other action by any
Person under, constitute a default under (with due notice or
lapse of time or both), or give rise to any right of termina-
tion, cancellation or acceleration of any right or obligation
of Seller or to a loss of any benefit to which Seller is en-
titled under any provision of any agreement or other instrument
binding upon Seller or any of Seller's assets or properties or
(iv) result in the creation or imposition of any material Lien
on any property or asset of Seller.
Section 3.5 Capitalization and Voting Rights. (a)
The authorized capital stock of the Seller consists of
30,000,000 shares of Common Stock and 15,000,000 shares of pre-
ferred stock, and the outstanding capital stock of the Seller
immediately prior to the Closing is 101 shares of Common Stock
and no shares of preferred stock. The rights, privileges and
preferences of the Common Stock are set forth in the Certifi-
cate of Incorporation attached hereto as Exhibit A (the "CER-
TIFICATE OF INCORPORATION").
(b) Immediately following the Closing the outstand-
ing capital stock of the Seller will be 10,918,979 shares of
Common Stock. 148,400 warrants to purchase 281,960 shares of
Common Stock will be issued shortly after Closing to purchasers
of Seller's 11-1/2% Senior Discount Debentures due 2008.
(c) Except as set forth in this Section 3.05 there
are, and immediately after the Closing there will be, no out-
standing (i) shares of capital stock or voting securities of
the Seller, (ii) securities of the Seller convertible into or
exchangeable for shares of capital stock or voting securities
of the Seller, (iii) options or other rights to acquire from
the Seller, or other obligation of the Seller to issue, any
capital stock, voting securities or securities convertible into
or exchangeable for capital stock or voting securities of the
Seller or (iv) other than as expressly permitted in the
Transaction Documents or employment plans, no obligation of the
Seller to repurchase or otherwise acquire or retire any shares
of capital stock or any convertible securities, rights or
options of the type described in (i), (ii), or (iii).
5<PAGE>
Section 3.6. Valid Issuance of Common Stock. The
shares of Common Stock which are being issued to the Buyers
hereunder, have been duly and validly authorized and when is-
sued, sold and delivered in accordance with the terms hereof
for the consideration expressed herein, will be fully paid and
nonassessable, and based in part on the representations of the
Buyers herein, will be validly issued in compliance with all
applicable federal and state securities laws.
Section 3.7. Litigation. There is no action, suit,
investigation or proceeding pending against, or to the knowl-
edge of Seller, threatened against or affecting Seller or any
of its respective properties before any court or arbitrator or
any governmental body, agency or official which in any manner
challenges or seeks to prevent, enjoin, alter or materially
delay the transactions contemplated by this Agreement or which
could reasonably be expected to have a material adverse effect
on the business, financial condition, properties or operations
of Seller, nor is Seller aware that there is any basis for the
foregoing.
Section 3.8. Brokers or Finders' Fees. Other than
Donaldson, Lufkin & Jenrette Securities Corporation there is no
investment banker, broker, finder or other intermediary which
has been retained by, will be retained by, or is authorized to
act on behalf of Seller who might be entitled to any fee or
commission from the Seller in connection with the transactions
contemplated by this Agreement.
Section 3.9. Newly Formed Corporation. Seller was
incorporated on April 30, 1997 in the State of Delaware solely
for the purpose of effectuating the transactions contemplated
in this Agreement and the Merger Agreement and has not con-
ducted any business or entered into any agreements or commit-
ments except with respect to the foregoing.
Section 3.10 Meaning of Seller. Except as otherwise
specifically provided herein, references to the Seller con-
tained in this Article 3 shall be construed to refer to the
Seller immediately prior to the consummation of the transac-
tions contemplated by the Merger Agreement.
ARTICLE 4
Representations and Warranties of Buyers
Each Buyer represents and warrants to Seller, sever-
ally as to itself only
6<PAGE>
and not jointly or as to any other Buyer, as of the date hereof
and as of the Closing Date that:
Section 4.1. Existence and Power. Such Buyer, if
not an individual, is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organiza-
tion and has all powers (corporate, partnership or otherwise)
and all material governmental licenses, authorizations, per-
mits, consents and approvals required to carry on its business
as now conducted. Such Buyer, if an individual, has the legal
capacity to enter into this Agreement and the Investors' Agree-
ment.
Section 4.2. Authorization. The execution, delivery
and performance by such Buyer of each of this Agreement and the
Investors' Agreement and the consummation of the transactions
contemplated hereby and thereby are within the powers (corpo-
rate, partnership or otherwise) of such Buyer and have been
duly authorized by all necessary action on the part of such
Buyer. Each of this Agreement and the Investors' Agreement con-
stitutes a valid and binding agreement of such Buyer, enforce-
able in accordance with their respective terms, except (i) as
limited by the applicable bankruptcy, insolvency, reorganiza-
tion, moratorium, and other laws of general application affect-
ing enforcement or creditors' rights generally, or (ii) as lim-
ited by laws relating to the availability of specific perfor-
mance, injunctive relief, or other equitable remedies.
Section 4.3. Governmental Authorization. The execu-
tion, delivery and performance by such Buyer of this Agreement
and the Investors' Agreement and the consummation of the trans-
actions contemplated hereby and thereby require no order, li-
cense, consent, authorization or approval of, or exemption by,
or action by or in respect of, or notice to, or filing or reg-
istration with, any governmental body, agency or official.
Section 4.4. Purchase for Investment. Such Buyer is
purchasing the Common Stock for investment for its own account
and not with a view to, or for sale in connection with, any
distribution thereof.
Section 4.5. Private Placement. (a) Such Buyer
understands that (i) the offering and sale of the Securities
hereby is intended to be exempt from registration under the
1933 Act and (ii) there is only a limited market for the Common
Stock, and there can be no assurance that any Buyer will be
able to sell or dispose of the Common Stock to be purchased by
such Buyer.
(b) Such Buyer's financial situation is such that
such Buyer can afford to bear the economic risk of holding the
Common Stock acquired
7<PAGE>
hereunder for an indefinite period of time, and such Buyer can
afford to suffer the complete loss of the investment in the
Common Stock.
(c) Such Buyer's knowledge and experience in finan-
cial and business matters are such that it is capable of evalu-
ating the merits and risks of the investment in the Common
Stock, or such Buyer has been advised by a representative pos-
sessing such knowledge and experience.
(d) Such Buyer understands that the Common Stock
acquired hereunder are a speculative investment which involves
a high degree of risk of loss of the entire investment therein,
that there are substantial restrictions on the transferability
of the Common Stock as set forth in the Investors' Agreement,
and that for an indefinite period following the date hereof
there will be no (or only a limited) public market for the Com-
mon Stock and that, accordingly, it may not be possible for
such Buyer to sell the Common Stock in case of emergency or
otherwise.
(e) Such Buyer and its representatives, including,
to the extent it deems appropriate, its professional, finan-
cial, tax and other advisors, have reviewed all documents pro-
vided to them in connection with the investment in the Common
Stock, and such Buyer understands and is aware of the risks
related to such investment.
(f) Such Buyer and its representatives have been
given the opportunity to examine all documents and to ask ques-
tions of, and to receive answers from, Seller and its represen-
tatives concerning the terms and conditions of the acquisition
of the Common Stock and related matters and to obtain all ad-
ditional information which such Buyer or its representatives
deem necessary.
(g) All information which such Buyer has provided to
Seller and its representatives concerning such Buyer and such
Buyer's financial position is true, complete and correct, and
such Buyer agrees to promptly notify Seller if at any time this
ceases to be the case prior to the Closing.
(h) Such Buyer is an "ACCREDITED INVESTOR" as such
term is defined in Regulation D under the 1933 Act.
Section 4.6. Litigation. There is no action, suit,
investigation or proceeding pending against, or to the knowl-
edge of such Buyer threatened against or affecting, such Buyer
before any court or arbitrator or any governmental body, agency
or official which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions contemplated
by this Agreement or the Investors' Agreement.
8<PAGE>
Section 4.7. Brokers or Finders' Fees. There is no
investment banker, broker, finder or other intermediary which
has been retained by, will be retained by or is authorized to
act on behalf of such Buyer who might be entitled to any fee or
commission from the Company, Seller or the DLJ entities upon
consummation of the transactions contemplated by this Agreement
(as defined in the Investors' Agreement of even date herewith).
ARTICLE 5
Conditions to Closing
Section 5.1. Conditions to Obligations of Each Buyer
and Seller. The obligations of Buyer and Seller to consummate
the Closing are subject to the satisfaction of the following
conditions:
(a) No provision of any applicable law, rule or
regulation and no judgment, injunction, order or decree by
any governmental entity of competent jurisdiction shall
prohibit the consummation of the Closing or the Merger.
(b) All material actions by or in respect of, or
filings with, any governmental body, agency, official or
authority required to permit the consummation of the Clos-
ing shall have been taken, made or obtained.
(c) The conditions to the consummation of the Merger
Agreement (other than the condition set forth in Section
8.01(e) thereof, which shall be reasonably certain to oc-
cur immediately after the Closing) shall have been satis-
fied or waived.
Section 5.2. Conditions to Obligation of Each Buyer.
The obligation of each Buyer to consummate the Closing is sub-
ject to the satisfaction of the following further conditions:
(a)(i) Seller shall have performed in all material
respects all of its obligations hereunder required to be
performed by it on or prior to the Closing Date and (ii)
the representations and warranties of Seller contained in
this Agreement and in any certificate or other writing
delivered by Seller pursuant hereto shall be true in all
material respects when made and at and as of the Closing
Date, as if made at and as of such date.
9<PAGE>
(b) Such Buyer shall have received all documents it
may reasonably request relating to the existence of Seller
and the authority of Seller for this Agreement, all in
form and substance reasonably satisfactory to such Buyer.
Section 5.3. Conditions to Obligation of Seller.
The obligation of Seller to consummate the Closing with respect
to any Buyer is subject to the satisfaction of the following
further conditions:
(a)(i) Such Buyer shall have performed in all mate-
rial respects all of its obligations hereunder required to
be performed by it at or prior to the Closing Date and
(ii) the representations and warranties of such Buyer
contained in this Agreement and in any certificate or
other writing delivered by such Buyer pursuant hereto
shall be true in all material respects when made and at
and as of the Closing Date, as if made at and as of such
date.
(b) Seller shall have received all documents it may
reasonably request relating to the existence of such Buyer
and the authority of such Buyer for this Agreement, all in
form and substance reasonably satisfactory to Seller.
ARTICLE 6
Survival; Indemnification
Section 6.1. Survival. The representations and war-
ranties of the parties hereto contained in this Agreement or in
any certificate delivered pursuant hereto or in connection
herewith shall survive the Closing until twelve months after
the Closing Date, provided that the representations and warran-
ties contained in Sections 3.01, 3.02, 3.04, 3.05, 3.06 and
4.01 shall survive indefinitely for the maximum period permit-
ted by applicable law, if longer. Notwithstanding the preceding
sentence, any representation or warranty in respect of which
indemnity may be sought under this Agreement shall survive the
time at which it would otherwise terminate pursuant to the pre-
ceding sentence, if notice of the inaccuracy or breach thereof
giving rise to such right of indemnity shall have been given to
the party against whom such indemnity may be sought prior to
such time, but only as to such inaccuracy or breach. A breach
of any representation or warranty made in this Agreement shall
not affect in any manner whatsoever the relative rights
10<PAGE>
and obligations of the parties to and under the Investors'
Agreement.
Section 6.2. Indemnification. (a) Seller hereby
indemnifies each Buyer and its Affiliates, limited partners,
general partners, directors, officers and employees against
and agrees to hold each of them harmless from any and all dam-
age, loss, liability and expense (including, without limita-
tion, reasonable expenses of investigation and reasonable at-
torneys' fees and expenses in connection with any action, suit
or proceeding) ("DAMAGES") incurred or suffered by any such
party arising out of any misrepresentation or breach of war-
ranty, covenant or agreement made or to be performed by Seller
pursuant to this Agreement; provided that with respect to any
Buyer, (i) Seller shall not be liable under this Section
6.02(a) unless the aggregate amount of Damages with respect to
all matters referred to in this Section 6.02(a) for which such
Buyer has sought indemnification exceeds $100,000 and then only
to the extent of such excess and (ii) Seller's maximum li-
ability under this Section 6.02(a) shall not exceed the amount
of the Purchase Price paid by such Buyer.
(b) Each Buyer hereby indemnifies, severally and not
jointly, Seller and its Affiliates, limited partners, general
partners, directors, officers and employees against and agrees
to hold each of them harmless from any and all Damages incurred
or suffered by any such party arising out of any misrepresenta-
tion or breach of warranty, covenant or agreement made or to be
performed by such Buyer pursuant to this Agreement; provided
that (i) such Buyer shall not be liable under this Section
6.02(b) unless the aggregate amount of Damages with respect to
all matters referred to in this Section 6.02(b) exceeds
$100,000 and then only to the extent of such excess and (ii)
such Buyer's maximum liability under this Section 6.02(b) shall
not exceed the amount of Purchase Price paid by such Buyer.
Section 6.3. Procedures and Third Party Claims. (a)
The party seeking indemnification under Section 6.02 (the "IN-
DEMNIFIED PARTY") agrees to give prompt notice to the party
against whom indemnity is sought (the "INDEMNIFYING PARTY") of
the assertion of any claim, or the commencement of any suit,
action or proceeding ("CLAIM") in respect of which indemnity
may be sought under such Section and will provide the Indemni-
fying Party such information with respect thereto that the In-
demnifying Party may reasonably request. The failure to so no-
tify the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder, except to the extent such
failure shall have adversely prejudiced the Indemnifying Party
(except that the Indemnifying Party shall not be liable for any
expenses incurred during the period in which the Indemnified
Party failed to give such notice).
11<PAGE>
(b) The Indemnifying Party shall be entitled to par-
ticipate in the defense of any Claim asserted by any third
party ("THIRD PARTY CLAIM") and, subject to the limitations set
forth in this Section, shall be entitled to control and appoint
lead counsel for such defense, in each case at its expense.
(c) If the Indemnifying Party shall assume the con-
trol of the defense of any Third Party Claim in accordance with
the provisions of this Section, (i) the Indemnifying Party
shall obtain the prior written consent of the Indemnified Party
(which shall not be unreasonably withheld) before entering into
any settlement of such Third Party Claim, if the settlement
does not release the Indemnified Party from all liabilities and
obligations with respect to such Third Party Claim or the
settlement imposes injunctive or other equitable relief against
the Indemnified Party and (ii) the Indemnified Party shall be
entitled to participate in the defense of such Third Party
Claim and to employ separate counsel of its choice for such
purpose. The fees and expenses of such separate counsel shall
be borne by the Indemnified Party.
(d) Each party shall cooperate, and cause its re-
spective Affiliates to cooperate, in the defense or prosecution
of any Third Party Claim and shall furnish or cause to be fur-
nished such records, information and testimony, and attend such
conferences, discovery proceedings, hearings, trials or ap-
peals, as may be reasonably requested in connection therewith.
Section 6.4. Calculation of Damages. (a) The
amount of any Damages payable under Section 6.02 by the Indem-
nifying Party shall be net of any (i) amounts recovered or re-
coverable by the Indemnified Party under applicable insurance
policies, (ii) Tax cost incurred by the Indemnified Party aris-
ing from the receipt of indemnity payments and (iii) Tax Ben-
efit realized by the Indemnified Party arising from the incur-
rence or payment of any such Damages. In computing the amount
of any such Tax cost or Tax Benefit, the Indemnified Party
shall be deemed to fully utilize, at the highest marginal tax
rate then in effect, all Tax items arising from the receipt of
any indemnity payment hereunder or the incurrence or payment of
any indemnified Damages.
(b) The Indemnifying Party shall not be liable under
Section 6.02 for any (i) incidental Damages, (ii) consequential
or punitive Damages or (iii) Damages for lost profits.
Section 6.5. Exclusivity. After the Closing, Sec-
tion 6.02 will provide the exclusive remedy for any misrepresenta-
tion, breach of warranty, covenant or other agreement or other
claim arising out of this Agreement or the transactions contem-
plated hereby.
12<PAGE>
ARTICLE 7
Termination
Section 7.1. Grounds for Termination. This Agree-
ment may be terminated at any time prior to the Closing:
(a) by mutual written agreement of Seller and Buy-
ers;
(b) by either Seller or any Buyer as to such Buyer
if the Closing shall not have been consummated as of the
close of business on Friday, August 8, 1997; or
(c) by either Seller or any Buyer if consummation of
the transactions contemplated hereby would violate any
non-appealable final order, decree or judgment of any
court or governmental body having competent jurisdiction.
The party desiring to terminate this Agreement pursu-
ant to clauses 7.01(b) or (c) shall give notice of such termi-
nation to the other party.
Section 7.2. Effect of Termination. If this Agree-
ment is terminated as permitted by Section 7.01, such termina-
tion shall be without liability of either party (or any stock-
holder, general partner, limited partner, director, officer,
employee, agent, consultant or representative of such party) to
the other party to this Agreement; provided that if such termi-
nation shall result from the willful (i) failure of either
party to fulfill a condition to the performance of the obliga-
tions of the other party, (ii) failure to perform a covenant of
this Agreement or (iii) breach by either party hereto of any
representation or warranty or agreement contained herein, such
party shall be fully liable for any and all Damages incurred or
suffered by the other party as a result of such failure or
breach. The provisions of Sections 8.03, 8.05 and 8.06 shall
survive any termination hereof pursuant to Section 7.01.
ARTICLE 8
Miscellaneous
13<PAGE>
Section 8.1. Notices. All notices, requests and
other communications to any party hereunder shall be in writing
(including facsimile transmission) and shall be given,
if to any Buyer, to such Buyer at the address speci-
fied by such Buyer on the signature pages of this Agreement or
in a notice given by such Buyer to Seller for such purpose;
if to Seller, to:
Quaker Holding Co.
c/o DLJ Merchant Banking Partners II, L.P.
277 Park Avenue
New York, New York 10172
Attention: Peter T. Grauer
Fax: (212) 892-7272
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: George R. Bason, Jr.
Fax: (212) 450-4800
or to such other address or telecopy number and with such other
copies as such party may hereafter specify for the purpose of
notice.
All such notices, requests and other communications
shall be deemed received on the date of receipt by the recipi-
ent thereof if received prior to 5 p.m. in the place of receipt
and such day is a business day in the place of receipt. Other-
wise, any such notice, request or communication shall be deemed
not to have been received until the next succeeding business
day in the place of receipt.
Section 8.2. Amendments and Waivers. (a) Any pro-
vision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed, in
the case of an amendment, by each party to this Agreement, or
in the case of a waiver, by the party against whom the waiver
is to be effective.
(b) No failure or delay by any party in exercising
any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial
14<PAGE>
exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
Section 8.3. Expenses. All costs and expenses in-
curred in connection with this Agreement shall be paid by the
party incurring such cost or expense, except that if the Clos-
ing shall occur, the Company shall reimburse (i) the Buyers
other than the DLJ Entities (as that term is defined in the
Investors' Agreement) for up to $20,000 in respect of fees and
expenses of one counsel retained to represent such Buyers and
(ii) the DLJ Entities for all costs and expenses incurred by
the DLJ Entities.
Section 8.4 Successors and Assigns. The provisions
of this Agreement shall be binding upon and inure to the ben-
efit of the parties hereto and their respective successors and
assigns; provided that no party may assign, delegate or other-
wise transfer any of its rights or obligations under this
Agreement without the consent of each other party hereto.
Section 8.5. Governing Law. This Agreement shall be
governed by and construed in accordance with the law of the
State of New York.
Section 8.6. Jurisdiction. The parties hereto agree
that any suit, action or proceeding seeking to enforce any pro-
vision of, or based on any matter arising out of or in connec-
tion with, this Agreement or the transactions contemplated
hereby may only be brought in the United States District Court
for the Southern District of New York or any New York State
court sitting in New York City, and each of the parties hereby
consents to the jurisdiction of such courts (and of the ap-
propriate appellate courts therefrom) in any such suit, action
or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought
in an inconvenient forum. Process in any such suit, action or
proceeding may be served on any party anywhere in the world,
whether within or without the jurisdiction of any such court.
Without limiting the foregoing, each party agrees that service
of process on such party as provided in Section 8.01 shall be
deemed effective service of process on such party.
Section 8.7. Waiver Of Jury Trial. EACH OF THE PAR-
TIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
15<PAGE>
HEREBY.
Section 8.8. Counterparts; Third Party Beneficia-
ries. This Agreement may be signed in any number of counter-
parts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same in-
strument. This Agreement shall become effective when each party
hereto shall have received a counterpart hereof signed by the
other party hereto. No provision of this Agreement is intended
to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
Section 8.9. Entire Agreement. This Agreement along
with the Investors' Agreement (including the documents, sched-
ules and exhibits referred to herein and therein) constitute
the entire agreement between the parties with respect to the
subject matter of this Agreement and supersedes all prior
agreements and understandings, both oral and written, between
the parties with respect to the subject matter of this Agree-
ment.
Section 8.10. Captions. The captions herein are
included for convenience of reference only and shall be ignored
in the construction or interpretation hereof.
Section 8.11. Severability. If one or more provi-
sions of this Agreement are held to be unenforceable under ap-
plicable law, such provision shall be executed from this Agree-
ment and the balance of the Agreement shall be interpreted as
if such provision were so excluded and shall be enforced in
accordance with its terms to the maximum extent permitted by
law.
Section 8.12. Interpretation. The headings con-
tained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of
this Agreement.
16<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective autho-
rized officers as of the day and year first above written.
QUAKER HOLDING CO.
By: /s/ Kirk Wortman
Name: Kirk Wortman
Title: Vice-President
DLJ MERCHANT BANKING PARTNERS II,
L.P., a Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Kirk Wortman
Name: Kirk B. Wortman
Title: Attorney-in-Fact
Address: c/o DLJ Merchant
Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
17<PAGE>
DLJ MERCHANT BANKING PARTNERS II-A,
L.P., a Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-Fact
Address: c/o DLJ Merchant
Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ OFFSHORE PARTNERS II, C.V., a
Netherlands Antilles Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as advisory general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-Fact
Address: c/o DLJ Merchant
Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
18<PAGE>
DLJ DIVERSIFIED PARTNERS, L.P., a
Delaware Limited Partnership
By: DLJ Diversified Partners II, Inc.,
as managing general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-Fact
Address: c/o DLJ Merchant Banking
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ DIVERSIFIED PARTNERS-A, L.P., a
Delaware Limited Partnership
By: DLJ Diversified Partners II, Inc.,
as managing general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-Fact
Address: c/o DLJ Merchant
Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
19<PAGE>
DLJ MILLENIUM PARTNERS, L.P., a
Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-Fact
Address: c/o DLJ Merchant
Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ MILLENIUM PARTNERS-A, L.P.
By: DLJ Merchant Banking II, Inc., as
managing general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-Fact
Address: c/o DLJ Merchant
Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJMB FUNDING II, INC., a Delaware
corporation
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
20<PAGE>
Title: Attorney-in-Fact
Address: c/o DLJ Merchant
Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ FIRST ESC, L.L.C.,
By: DLJ LBO Plans Management
Corporation, as manager
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-Fact
Address: c/o DLJ Merchant
Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
UK INVESTMENT PLAN 1997
PARTNERS
By: Donaldson, Lufkin & Jenrette,
Inc., as general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-Fact
Address: c/o DLJ Merchant
Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
21<PAGE>
DLJ EAB PARTNERS, L.P.
By: DLJ Merchant Banking Funding II,
Inc., its general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-Fact
Address: c/o DLJ Merchant
Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
APOLLO INVESTMENT FUND III, L.P.
By: Apollo Advisors II, L.P., its
general partner
By: Apollo Capital Management II,
Inc., its general partner
By: /s/ Josh Harris
Name: Josh Harris
Title: Vice President
Address: 1301 Avenue of the Americas
38th Floor
New York, NY 10019
22<PAGE>
APOLLO OVERSEAS PARTNERS III, L.P.
By: Apollo Advisors II, L.P., its
general partner
By: Apollo Capital Management II,
Inc., its general partner
By: /s/ Josh Harris
Name: Josh Harris
Title: Vice President
Address: 1301 Avenue of the Americas
38th Floor
New York, NY 10019
APOLLO U.K. PARTNERS III, L.P.
By: Apollo Advisors II, L.P., its
general partner
By: Apollo Capital Management II,
Inc., its general partner
By: /s/ Josh Harris
Name: Josh Harris
Title: Vice President
Address: 1301 Avenue of the Americas
38th Floor
New York, NY 10019
BAIN CAPITAL FUND V, L.P.
By: Bain Capital Partners V, L.P.,
its general partner
23<PAGE>
By: Bain Capital Investors V, Inc.,
its general partner
By: /s/ Stephen Pagliuca
Name: Stephen Pagliuca
Title: General Partner
Address: c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Attention: Stephen Pagliuca
BAIN CAPITAL FUND, V-B, L.P.
By: Bain Capital Partners V, L.P.,
its general partner
By: Bain Capital Investors V, Inc.,
its general partner
By: /s/ Stephen Pagliuca
Name: Stephen Pagliuca
Title: General Partner
Address: c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Attention: Stephen Pagliuca
24<PAGE>
BCIP ASSOCIATES
By: /s/ Stephen Pagliuca
Name: Stephen Pagliuca
Title: General Partner
Address: c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Attention: Stephen Pagliuca
BCIP TRUST ASSOCIATES, L.P.
By: Bain Capital Partners V, L.P.,
its general partner
By: Bain Capital Investors V, Inc.,
its general partner
By: /s/ Stephen Pagliuca
Name: Stephen Pagliuca
Title: General Partner
Address: c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Attention: Stephen Pagliuca
25<PAGE>
THOMAS H. LEE EQUITY FUND III, L.P.
By: THL Equity Advisors III
Limited Partnership
By: THL Equity Trust III
By: /s/ Scott Schoen
Name: Scott Schoen
Title: Managing Director
Address: 75 State Street
Boston, MA 02109
THOMAS H. LEE FOREIGN FUND III, L.P.
By: THL Equity Advisors III
Limited Partnership
By: THL Equity Trust III
By: /s/ Scott Schoen
Name: Scott Schoen
Title: Managing Director
Address: 75 State Street
Boston, MA 02109
THL CO-INVESTORS III-A LLC
By: /s/ Thomas H. Lee
Name: Thomas H. Lee
Title: Manager
Address: 75 State Street
26<PAGE>
Boston, MA 02109
THL CO-INVESTORS III-B LLC
By: /s/ Thomas H. Lee
Name: Thomas H. Lee
Title: Manager
Address: 75 State Street
Boston, MA 02109
DLJ CAPITAL CORP.
By: /s/ Richard E. Kroon
Name: Richard E. Kroon
Title: President
Address: 277 Park Avenue
New York, NY 10172
SPROUT GROWTH II, L.P.
By: DLJ Capital Corporation,
its managing general partner
By: /s/ Richard E. Kroon
Name: Richard E. Kroon
Title: President
Address: 277 Park Avenue
New York, NY 10172
THE SPROUT CEO FUND, L.P.
By: DLJ Capital Corporation,
its managing general partner
27<PAGE>
By: /s/ Richard E. Kroon
Name: Richard E. Kroon
Title: President
Address: 277 Park Avenue
New York, NY 10172
ONTARIO TEACHERS' PENSION PLAN BOARD
By: /s/ Dean Metcalf
Name: Dean Metcalf
Title: Portfolio Manager,
Merchant Banking
Address: 5650 Yonge Street
North York, Ontario
Canada, M2M 4H5
28<PAGE>
SCHEDULE A
________ _______________ _____________
INVESTOR NO. OF COMMON AGGREGATE
SHARES PURCHASE
PRICE
DLJ Merchant Banking Partners II, L.P. 4,703,762 96,932,137.08
DLJ Merchant Banking Partners II-A, L.P. 187,326 3,860,284.87
DLJ Offshore Partners, L.P. 231,307 4,766,622.62
DLJ Diversified Partners, L.P. 275,003 5,667,095.07
DLJ Diversified Partners-A, L.P. 102,127 2,104,560.24
DLJ Millennium Partners, L.P. 76,055 1,567,276.12
DLJ Millennium Partners - A, L.P. 14,834 305,685.43
DLJMB Funding II, Inc. 946,201 19,498,728.27
DLJ First ESC, L.L.C. 874,223 18,015,434.00
DLJ EAB Partners, L.P. 21,119 435,204.97
UK Investment Plan 1997 Partners 88,052 1,814,515.60
Apollo Investment Fund III, L.P. 738,693 15,222,519.19
Apollo Overseas Partners III, L.P. 44,117 909,143.31
Apollo (U.K.) Partners III, L.P. 27,307 562,718.22
Bain Capital Fund V L.P. 158,619 3,268,702.22
Bain Capital Fund V-B, L.P. 413,039 8,511,678.44
BCIP Associates 124,016 2,555,635.04
BCIP Trust Associates 114,443 2,358,365.01
Thomas H. Lee Equity Fund III, L.P. 695,016 14,322,454.99
Thomas H. Lee Foreign Fund III, 886,234.74
29<PAGE>
________ _______________ _____________
INVESTOR NO. OF COMMON AGGREGATE
SHARES PURCHASE
PRICE
L.P. 43,006
THL Co. - Investors III - A LLC 43,910 $904,865.69
THL Co. - Investors III - B LLC 28,185 580,825.30
DLJ Capital Corp. 10,568 217,752.91
Sprout Growth II, L.P. 457,319 9,424,167.36
The Sprout CEO Fund, L.P. 7,617 156,960.76
Ontario Teachers' Pension Plan Fund 493,115 10,161,797.96
30<PAGE>
EXHIBIT A
Certificate of Incorporation
31
Exhibit 3
CONFORMED COPY
INVESTORS' AGREEMENT
dated as of
August 7, 1997
among
DECISIONONE HOLDINGS CORP.,
DLJ MERCHANT BANKING PARTNERS II, L.P.,
DLJ MERCHANT BANKING PARTNERS II - A, L.P.,
DLJ OFFSHORE PARTNERS II, C.V.,
DLJ DIVERSIFIED PARTNERS, L.P.,
DLJ DIVERSIFIED PARTNERS - A, L.P.,
DLJ MILLENNIUM PARTNERS, L.P.,
DLJ MILLENNIUM PARTNERS - A, L.P.,
DLJMB FUNDING II, INC.,
UK INVESTMENT PLAN 1997 PARTNERS,
DLJ EAB PARTNERS, L.P.,
DLJ FIRST ESC, LLC,
AND
CERTAIN OTHER PERSONS NAMED HEREIN<PAGE>
TABLE OF CONTENTS
____________
Page
ARTICLE 1 DEFINITIONS
Section 1.01. Definitions................................ 2
ARTICLE 2 CORPORATE GOVERNANCE AND MANAGEMENT
Section 2.01. Composition of the Board................... 10
Section 2.02. Removal.................................... 10
Section 2.03. Vacancies.................................. 10
Section 2.04. Action by the Board........................ 11
Section 2.05. Conflicting Charter or Bylaw Provision..... 11
ARTICLE 3 RESTRICTIONS ON TRANSFER
Section 3.01. General.................................... 12
Section 3.02. Legends.................................... 12
Section 3.03. Permitted Transferees...................... 13
Section 3.04. Restrictions on Transfers by Institutional
Shareholders............................. 13
Section 3.05. Restrictions on Transfers by Management
Shareholders............................. 13
ARTICLE 4 TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; PREEMPTIVE
RIGHTS
Section 4.01. Rights to Participate in Transfer.......... 15
Section 4.02. Right to Compel Participation in Certain
Transfers................................ 17
Section 4.03. Preemptive Rights.......................... 19
Section 4.04. Certain Other Purchases of Common Stock.... 20
ARTICLE 5 REGISTRATION RIGHTS
Section 5.01. Demand Registration........................ 21
Section 5.02. Piggyback Registration..................... 23
Section 5.04. Registration Procedures.................... 25
Section 5.05. Indemnification by the Company............. 29<PAGE>
Section 5.06. Indemnification by Participating
Shareholders............................. 29
Section 5.08. Contribution............................... 31
Section 5.09. Participation in Public Offering........... 33
Section 5.10. Cooperation by the Company................. 33
Section 5.11. No Transfer of Registration Rights......... 33
ARTICLE 6 CERTAIN COVENANTS AND AGREEMENTS
Section 6.01. Confidentiality............................ 33
Section 6.02. Reports.................................... 34
Section 6.03. Limitations on Subsequent Registration..... 35
Section 6.04. Exclusive Financial Advisor and
Investment Banking Advisor............... 35
Section 6.05. Limitation on Purchase of Common Stock..... 35
ARTICLE 7 MISCELLANEOUS
Section 7.01. Entire Agreement........................... 35
Section 7.02. Binding Effect; Benefit.................... 36
Section 7.03. Assignability.............................. 36
Section 7.04. Amendment; Waiver; Termination............. 36
Section 7.05. Notices.................................... 37
Section 7.06. Headings................................... 38
Section 7.07. Counterparts............................... 38
Section 7.08. Applicable Law............................. 38
Section 7.09. Specific Enforcement....................... 38
Section 7.10. Consent to Jurisdiction; Expenses.......... 39
Section 7.11. Severability............................... 39<PAGE>
INVESTORS' AGREEMENT
AGREEMENT dated as of August 7, 1997 among (i) DecisionOne
Holdings Corp. (the "COMPANY"), (ii) DLJ Merchant Banking
Partners II, L.P. ("DLJMB"), DLJ Offshore Partners II, C.V.,
DLJ Diversified Partners, L.P., DLJMB Funding II, Inc., DLJ
Merchant Banking Partners II - A, L.P., DLJ Diversified
Partners - A., L.P., DLJ Millennium Partners, L.P., DLJ
Millennium Partners - A, L.P., UK Investment Plan 1997
Partners, DLJ EAB Partners, L.P., and DLJ First ESC, LLC (each
a "DLJ ENTITY" and a "SHAREHOLDER" and collectively the "DLJ
ENTITIES"), (iii) Apollo Investment Fund III L.P. ("APOLLO
INVESTMENT"), Apollo Overseas Partners III L.P. ("APOLLO
OVERSEAS"), Apollo (U.K.) Partners III, L.P. ("APOLLO U.K."),
Bain Capital Fund V L.P. ("BAIN CAPITAL V"), Bain Capital Fund,
V-B, L.P. ("BAIN CAPITAL V-B"), BCIP Associates ("BCIP"), BCIP
Trust Associates L.P. ("BCIP TRUST"), Thomas H. Lee Equity Fund
III, L.P. ("THL"), Thomas H. Lee Foreign Fund III, L.P. ("THL
FOREIGN FUND"), THL Co-Investors III-A, LLC ("THL CO-INVESTORS
A"), THL Co-Investors III-B, LLC ("THL CO-INVESTORS B"), DLJ
Capital Corp. ("DLJ CAPITAL"), Sprout Growth II, L.P.
("SPROUT"), The Sprout CEO Fund, L.P. ("SPROUT CEO FUND"), and
Ontario Teachers' Pension Plan Board (each a "SHAREHOLDER" and
collectively, the Shareholders listed in this clause (iii) are
referred to as the "INSTITUTIONAL SHAREHOLDERS") and (iv)
certain other Persons listed on the signature pages hereof
(each a "SHAREHOLDER" and collectively, the "MANAGEMENT
SHAREHOLDERS").
W I T N E S S E T H :
WHEREAS, pursuant to the Subscription Agreement and the
DecisionOne Direct Investment Program (as defined below)
certain parties hereto are or will be acquiring securities of
Quaker Holding Co. and the Company, respectively; and
WHEREAS, pursuant to the terms of the Merger Agreement (as
defined below), Quaker Holding Co. will be merged with and into
the Company, with the Company as the surviving corporation (the
"MERGER");
WHEREAS, the parties hereto desire to enter into this
Agreement to govern certain of their rights, duties and
obligations after consummation of the transactions contemplated
by the Merger Agreement, the Subscription Agreement and the
DecisionOne Direct Investment Program;
The parties hereto agree as follows:
ARTICLE 1<PAGE>
DEFINITIONS
Section 1.1. Definitions. (a) The following terms, as
used herein, have the following meanings:
"ADJUSTED INITIAL OWNERSHIP" means, with respect to any
Management Shareholder, the number of shares of Common Stock
and Common Stock Equivalents owned as of the date hereof, or in
the case of any Person that shall become a party to this
Agreement on a later date, as of such date, taking into account
any stock split, stock dividend, reverse stock-split or similar
event.
"ADVERSE PERSON" means any Person whom the Board of
Directors of the Company determines is a competitor or a
potential competitor of the Company or its Subsidiaries.
"AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or
under common control with such Person, provided that no
securityholder of the Company shall be deemed an Affiliate of
any other securityholder solely by reason of any investment in
the Company. For the purpose of this definition, the term
"CONTROL" (including with correlative meanings, the terms
"CONTROLLING", "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or
by contract or otherwise.
"AFFILIATED EMPLOYEE BENEFIT TRUST" means any trust that
is a successor to the assets held by a trust established under
an employee benefit plan subject to ERISA or any other trust
established directly or indirectly under such plan or any other
such plan having the same sponsor.
"APOLLO ENTITIES" means Apollo Investment, Apollo
Overseas, Apollo U.K. and their Permitted Transferees.
"BAIN ENTITIES" means Bain Capital V, Bain Capital V-B,
BCIP, BCIP Trust and their Permitted Transferees.
"BENEFICIALLY OWN" shall have the meaning set forth in
Rule 13d-3 of the Exchange Act.
"BOARD" means the board of directors of the Company.
2<PAGE>
"BUSINESS DAY" means any day except a Saturday, Sunday or
other day on which commercial banks in New York City are
authorized by law to close.
"CHANGE OF CONTROL" means such time as (a) the DLJ
Entities shall own less than 20% of the outstanding shares of
Common Stock, (b) the transfer of all or substantially all of
the assets of the Company to any Person or group shall have
been consummated, or (c) the Company shall have been
liquidated.
"CLOSING DATE" means August 7, 1997.
"COMMON STOCK" shall mean the common stock, par value $.01
per share, of the Company and any stock into which such Common
Stock may thereafter be converted or changed.
"COMMON STOCK EQUIVALENT" means
(20.61 - P) x N
20.61
where "N" equals the number of Roll-Over Options, and "P"
equals the exercise price of such Roll-Over Option.
"DECISIONONE DIRECT INVESTMENT PROGRAM" means the
investment program of the Company pursuant to which certain
members of the Company's management will acquire shares of
Common Stock.
"DRAG-ALONG PORTION" means, with respect to any Other
Shareholder and any class of Common Stock, the number of such
class of Common Stock beneficially owned by such Other
Shareholder multiplied by a fraction, the numerator of which is
the number of such class of Common Stock proposed to be sold by
the DLJ Entities on behalf of the DLJ Entities and the Other
Shareholders and the denominator of which is the total number
of such class of Common Stock on a Fully Diluted basis
beneficially owned by the Shareholders.
"EQUITY SECURITIES" means the Common Stock, securities
convertible into or exchangeable for Common Stock and options,
warrants or other rights to acquire Common Stock, preferred
stock or any other equity security issued by the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
"FIRST PUBLIC OFFERING" means the first sale after the
date hereof of
3<PAGE>
Common Stock pursuant to an effective registration statement
under the Securities Act (other than a registration statement
on Form S-8 or any successor form).
"FULLY DILUTED" means all outstanding shares of Common
Stock and all shares issuable in respect of securities
convertible into or exchangeable for such Common Stock, stock
appreciation rights or options, warrants and other irrevocable
rights to purchase or subscribe for such Common Stock or
securities convertible into or exchangeable for such Common
Stock; provided that no Person shall be deemed to own such
number of Fully Diluted shares of any Common Stock as such
Person has the right to acquire from any Person other than the
Company.
"INITIAL OWNERSHIP" means, with respect to any
Shareholder, the number of shares of Common Stock beneficially
owned (and (without duplication) which such Persons have the
right to acquire from any Person) as of the date hereof, or in
the case of any Person that shall become a party to this
Agreement on a later date, as of such date, taking into account
any stock split, stock dividend, reverse stock split or similar
event.
"MERGER AGREEMENT" means the Agreement and Plan of Merger
dated as of May 4, 1997, as subsequently amended, between the
Company and Quaker Holding Co.
"OTHER SHAREHOLDERS" means all Shareholders other than the
DLJ Entities.
"PERCENTAGE OWNERSHIP" means, with respect to any
Shareholder at any time, (i) the number of shares of Fully
Diluted Common Stock that such Shareholder beneficially owns
(and (without duplication) has the right to acquire from any
Person) at such time, divided by (ii) the total number of
shares of Fully Diluted Common Stock at such time.
"PERMITTED TRANSFEREE" means (i) in the case of an
Institutional Shareholder (a) any general or limited partner or
shareholder of such Shareholder, and any corporation,
partnership or other entity that is an Affiliate of such
Shareholder (collectively, "SHAREHOLDER AFFILIATES"), (b) any
general partner, limited partner, employee, officer or director
of such Shareholder or a Shareholder Affiliate, or any spouse,
lineal descendant, sibling, parent, heir, executor,
administrator, testamentary trustee, legatee or beneficiary of
any of the foregoing persons described in this clause (b)
(collectively, "SHAREHOLDER ASSOCIATES"), and (c) any trust,
the beneficiaries of which, or any corporation, limited
liability company or partnership, stockholders, members or
general or limited partners of
4<PAGE>
which include only such Shareholder, such Shareholder
Affiliates or Shareholder Associates;
(ii) in the case of a Management Shareholder (a) any
other Shareholder, (b) a spouse or lineal descendant (whether
natural or adopted), sibling, parent, heir, executor,
administrator, testamentary trustee, legatee or beneficiary of
any of such Management Shareholder, (c) any trust, the
beneficiaries of which, or any corporation, limited liability
company or partnership, stockholders, members or general or
limited partners of which include only the Persons named in
clauses (a) or (b) or (d) any charitable remainder trust; or
(iii) in the case of any DLJ Entity (A) any other DLJ
Entity, (B) any general or limited partner of any such entity
(a "DLJ PARTNER"), and any corporation, partnership, Affiliated
Employee Benefit Trust or other entity which is an Affiliate of
any DLJ Partner (collectively, the "DLJ AFFILIATES"), (C) any
managing director, general partner, director, limited partner,
officer or employee of such DLJ Entity or a DLJ Affiliate, or
the heirs, executors, administrators, testamentary trustees,
legatees or beneficiaries of any of the foregoing Persons
referred to in this clause (C) (collectively, "DLJ
ASSOCIATES"), and (D) any trust, the beneficiaries of which, or
any corporation, limited liability company or partnership, the
stockholders, members or general or limited partners of which,
include only such DLJ Entity, DLJ Affiliates, DLJ Associates,
their spouses or their lineal descendants. The term "DLJ
ENTITIES", to the extent such entities shall have transferred
any of their Shares to "PERMITTED TRANSFEREES", shall mean the
DLJ Entities and the Permitted Transferees of the DLJ Entities,
taken together, and any right or action that may be exercised
or taken at the election of the DLJ Entities may be exercised
or taken at the election of the DLJ Entities and such Permitted
Transferees.
"PERSON" means an individual, corporation, limited
liability company, partnership, association, trust or other
entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
"PRO RATA PORTION" means the number of Shares a
Shareholder holds (either Purchased Shares or non-Purchased
Shares, as the case may be) multiplied by a fraction, the
numerator of which is the number of Shares to be sold by the
DLJ Entities and the Institutional Shareholders and their
Permitted Transferees in a Public Offering and the denominator
of which is the total number of Shares, on a Fully Diluted
basis, held in the aggregate by the DLJ Entities and the
Institutional Shareholders and their Permitted Transferees
prior to such Public Offering.
5<PAGE>
"PUBLIC OFFERING" means any primary or secondary public
offering of Common Stock pursuant to an effective registration
statement under the Securities Act other than pursuant to a
registration statement filed in connection with a transaction
of the type described in Rule 145 of the Securities Act or for
the purpose of issuing securities pursuant to an employee
benefit plan.
"PURCHASED SHARES" means those Shares purchased by a
Management Shareholder on the Closing Date for cash and/or with
the proceeds of a promissory note of the type contemplated by
the DecisionOne Direct Investment Plan.
"REGISTRABLE SECURITIES" means at any time, with respect
to any Shareholder or its Permitted Transferees, any shares of
Common Stock then owned by such Shareholder or its Permitted
Transferees until (i) a registration statement covering such
securities has been declared effective by the SEC and such
securities have been disposed of pursuant to such effective
registration statement, (ii) such securities are sold under
circumstances in which all of the applicable conditions of Rule
144 (or any similar provisions then in force) under the
Securities Act are met or such securities may be sold pursuant
to Rule 144(k) or (iii) such securities are otherwise
transferred, the Company has delivered a new certificate or
other evidence of ownership for such securities not bearing the
legend required pursuant to this Agreement and such securities
may be resold without subsequent registration under the
Securities Act.
"REGISTRATION EXPENSES" means (i) all registration and
filing fees, (ii) fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky
qualifications of the securities registered), (iii) printing
expenses, (iv) internal expenses of the Company (including,
without limitation, all salaries and expenses of its officers
and employees performing legal or accounting duties), (v)
reasonable fees and disbursements of counsel for the Company
and customary fees and expenses for independent certified
public accountants retained by the Company (including expenses
relating to any comfort letters or costs associated with the
delivery by independent certified public accountants of a
comfort letter or comfort letters requested pursuant to Section
5.04(g) hereof), (vi) the reasonable fees and expenses of any
special experts retained by the Company in connection with such
registration, (vii) reasonable fees and expenses of up to one
counsel for the Shareholders participating in the offering,
(viii) fees and expenses in connection with any review of
underwriting arrangements by the National Association of
Securities Dealers, Inc. (the "NASD") including fees and
expenses of any "qualified independent underwriter" and (ix)
fees and disbursements of
6<PAGE>
underwriters customarily paid by issuers or sellers of
securities, but shall not include any underwriting fees,
discounts or commissions attributable to the sale of
Registrable Securities, or any out-of-pocket expenses (except
as set forth in clause (vii) above) of the Shareholders or any
fees and expenses of underwriter's counsel.
"RESTRICTION TERMINATION DATE" means the fourth
anniversary of the Closing Date.
"ROLL-OVER OPTION" means an option granted by the Company
to a Management Shareholder prior to the Merger which option,
at the effective time of the Merger, was converted into an
option to purchase shares of Common Stock of the surviving
corporation.
"SECTION 4.03 PORTION" means the pro rata portion of any
Equity Securities proposed to be issued by the Company with
respect to which Shareholders shall be entitled to exercise
their rights under Section 4.03,
(a) in the case of any Institutional Shareholder, based
upon such Institutional Shareholder's Initial Ownership of
shares of Common Stock as a percentage of the sum of (i) the
Initial Ownership of Common Stock of the DLJ Entities and all
Institutional Stockholders and (ii) the Adjusted Initial
Ownership of all Management Stockholders, or
(b) in the case of any Management Shareholder, based upon
such Management Shareholder's Adjusted Initial Ownership of
shares of Common Stock as a percentage of the sum of (i) the
Initial Ownership of the DLJ Entities and the Institutional
Shareholders and (ii) the Adjusted Initial Ownership of all
Management Shareholders.
"SECTION 4.04 PORTION" means, with respect to any
Shareholder at any time, the number of shares of common stock
purchased by DLJ Entities in a transaction subject to Section
4.04, multiplied by a fraction, the numerator of which is (i)
the number of shares of Common Stock on a Fully Diluted basis
that such Shareholder beneficially owns at such time, and the
denominator of which is (ii) the total number of shares of
Common Stock on a Fully Diluted basis beneficially owned at
such time by all Other Shareholders and the DLJ Entities.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as
amended.
7<PAGE>
"SHAREHOLDER" means each Person (other than the Company)
who shall be a party to this Agreement, whether in connection
with the execution and delivery hereof as of the date hereof,
pursuant to Section 7.03 or otherwise, so long as such Person
shall beneficially own any Common Stock.
"SHARES" means shares of Common Stock held by the
Shareholders.
"SPROUT ENTITIES" means DLJ Capital, Sprout, Sprout CEO
Fund, and their Permitted Transferees.
"SUBJECT SECURITIES" means the Common Stock beneficially
owned by the Management Shareholders and Institutional
Shareholders to be transferred in a Section 4.02 Sale.
"SUBSCRIPTION AGREEMENT" means the Subscription Agreement
of even date herewith among Quaker Holding Co., the DLJ
Entities and the Institutional Investors.
"SUBSIDIARY" means, with respect to any Person, any entity
of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at
the time directly or indirectly owned by such Person.
"THL ENTITIES" means THL, THL Foreign Fund, THL Co-
Investors A, THL Co-Investors B, and their Permitted
Transferees.
"TAG-ALONG PORTION" means the number of shares of Common
Stock held (or, without duplication, that such Shareholder has
the right to acquire from any Person) by the Tagging Person or
the Selling Person, as the case may be, multiplied by a
fraction, the numerator of which is the number of shares of
Common Stock proposed to be sold by the Selling Person pursuant
to Section 4.01, and the denominator of which is the aggregate
number of shares of Common Stock on a Fully Diluted basis owned
by all Shareholders.
"THIRD PARTY" means a prospective purchaser of Common
Stock in an arm's-length transaction from a Shareholder where
such purchaser is not a Permitted Transferee of such
Shareholder.
"UNDERWRITTEN PUBLIC OFFERING" means a firmly underwritten
public offering of Registrable Securities of the Company
pursuant to an effective registration statement under the
Securities Act.
8<PAGE>
(b) Each of the following terms is defined in the Section
set forth opposite such term:
TERM SECTION
Cause 2.02
Confidential Information 6.01(b)
Demand Registration 5.01(a)
Drag-Along Rights 4.02(a)
Holders 5.01(a)(ii)
Incidental Registration 5.02(a)
Indemnified Party 5.07
Indemnifying Party 5.07
Inspectors 5.04(g)
Maximum Offering Size 5.01(e)
Nominee 2.03(a)
Piggyback Registration 5.02(a)
Public Offering Limitations 3.05(a)
Records 5.04(g)
Representatives 6.01(b)
Section 4.01 Response Notice 4.01(a)
Section 4.02 Sale 4.02(a)
Section 4.02 Notice 4.02(a)
Section 4.02 Sale Price 4.02(a)
Section 4.02 Notice Period 4.02(a)
Section 4.03 Notice 4.03
Section 4.03 Portion 4.03
Section 4.04 Notice 4.04
Selling Person 4.01(a)
Selling Shareholder 5.01(a)
Shareholder 7.03
Tag-Along Notice 4.01(a)
Tag-Along Notice Period 4.01(a)
Tag-Along Offer 4.01(a)
Tag-Along Right 4.01(a)
Tag-Along Sale 4.01(a)
Tagging Person 4.01(a)
Transfer 3.01(a)
Trigger Date 6.05
9<PAGE>
ARTICLE 2
CORPORATE GOVERNANCE AND MANAGEMENT
Section 2.1. Composition of the Board. The Board shall
consist of seven members, of whom four shall be nominated by
DLJMB, two shall be nominated by DLJMB and shall be individuals
which are not "Affiliates" or "Associates" (as those terms are
used within the meaning of Rule 12b-2 of the General Rules
and Regulations under the Exchange Act) of any Shareholder or
its Affiliates, and one shall be nominated by the Management
Shareholders. Each Shareholder entitled to vote for the
election of directors to the Board agrees that it will vote its
shares of Common Stock or execute consents, as the case may be,
and take all other necessary action (including causing the
Company to call a special meeting of shareholders) in order to
ensure that the composition of the Board is as set forth in
this Section 2.01; provided that, no Shareholder shall be required
to vote for another Shareholder's nominee(s) if the number of
shares of Common Stock held by the Shareholder or group of
Shareholders, as applicable, making the nomination (or, in the
case of a nomination by DLJMB, of the DLJ Entities) is, at the
close of business on the day preceding such vote or execution
of consents, less than 10% of such Shareholder's or group of
Shareholders' (or the DLJ Entities'), as applicable, Initial
Ownership of Common Stock on a Fully Diluted basis.
Section 2.2. Removal. Each Shareholder agrees that if,
at any time, it is then entitled to vote for the removal of
directors of the Company, it will not vote any of its shares of
Common Stock in favor of the removal of any director who shall
have been designated or nominated pursuant to Section 2.01 unless
such removal shall be for Cause or the Person(s) entitled to
designate or nominate such director shall have consented to
such removal in writing, provided that if the Persons entitled
to designate or nominate any director pursuant to Section 2.01
shall request the removal, with or without Cause, of such
director in writing, such Shareholder shall vote its shares of
Common Stock in favor of such removal. Removal for "CAUSE"
shall mean removal of a director because of such director's (a)
willful and continued failure substantially to perform his
duties with the Company in his established position, (b)
willful conduct which is injurious to the Company or any of its
Subsidiaries, monetarily or otherwise, (c) conviction for, or
guilty plea to, a felony or a crime involving moral turpitude,
or (d) abuse of illegal drugs or other controlled substances or
habitual intoxication.
Section 2.3. Vacancies. If, as a result of death,
disability, retirement, resignation, removal (with or without
Cause) or otherwise, there shall exist or
10<PAGE>
occur any vacancy on the Board:
(a) The Shareholder(s) entitled under Section 2.01 to
nominate such director whose death, disability, retirement,
resignation or removal resulted in such vacancy, may, subject
to the provisions of Section 2.01, nominate another individual (the
"NOMINEE") to fill such vacancy and serve as a director of the
Company; and
(b) each Shareholder then entitled to vote for the
election of the Nominee as a director of the Company agrees
that it will vote its shares of Common Stock, or execute a
written consent, as the case may be, in order to ensure that
the Nominee be elected to the Board; provided that, no
Shareholder shall be required to vote for another party's
Nominee(s) if the Percentage Ownership of the Shareholder or
group of Shareholders, as applicable, making the nomination
(or, in the case of a nomination by DLJMB, of the DLJ
Entities), at the close of business of the day preceding such
vote or execution of consents, is less than 10% on a Fully
Diluted basis of such Shareholder's or group of Shareholders'
(or the DLJ Entities'), as applicable, Initial Ownership of
Common Stock.
Section 2.4. Action by the Board. (a) A quorum of the
Board shall consist initially of four directors; provided that
DLJMB shall have the right, in its sole discretion, until such
time as the Percentage Ownership of the DLJ Entities is less
than 10% on a Fully Diluted basis of the DLJ Entities' Initial
Ownership of Common Stock, to increase or decrease the number
of directors necessary to constitute a quorum.
(b) All actions of the Board shall require the
affirmative vote of at least a majority of the directors at a
duly convened meeting of the Board at which a quorum is present
or the unanimous written consent of the Board; provided that,
in the event there is a vacancy on the Board and an individual
has been nominated to fill such vacancy, the first order of
business shall be to fill such vacancy.
Section 2.5. Conflicting Charter or Bylaw Provision.
Each Shareholder shall vote its shares of Common Stock, and
shall take all other actions reasonably necessary, to ensure
that the Company's certificate of incorporation and bylaws
(copies of which are attached hereto as Exhibits A and B)
facilitate and do not at any time conflict with any provision
of this Agreement.
11<PAGE>
ARTICLE 3
RESTRICTIONS ON TRANSFER
Section 3.1. General. (a) Each Shareholder understands
and agrees that the Common Stock purchased pursuant to the
Subscription Agreement or the DecisionOne Direct Investment
Program have not been registered under the Securities Act and
are restricted securities. Each Shareholder agrees that it
will not, directly or indirectly, sell, assign, transfer, grant
a participation in, pledge or otherwise dispose of ("TRANSFER")
any Common Stock (or solicit any offers to buy or otherwise
acquire, or take a pledge of any Common Stock) except in
compliance with the Securities Act and the terms and conditions
of this Agreement.
(b) Any attempt to transfer any Common Stock not in
compliance with this Agreement shall be null and void and the
Company shall not, and shall cause any transfer agent not to,
give any effect in the Company's stock records to such
attempted transfer.
Section 3.2. Legends. (a) In addition to any other
legend that may be required, each certificate for shares of
Common Stock that is issued to any Shareholder shall bear a
legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS AND MAY NOT BE OFFERED OR SOLD EXCEPT IN COMPLIANCE
THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE INVESTORS'
AGREEMENT DATED AS OF AUGUST 7, 1997, COPIES OF WHICH MAY BE
OBTAINED UPON REQUEST FROM DECISIONONE HOLDINGS CORP. OR ANY
SUCCESSOR THERETO."
(b) If any Common Stock shall cease to be Registrable
Securities under clause (i) or clause (ii) of the definition
thereof, the Company shall, upon the written request of the
holder thereof, issue to such holder a new certificate
evidencing such shares without the first sentence of the legend
required by Section 3.02(a) endorsed thereon. If any Common Stock
cease to be subject to any and all restrictions on transfer set
forth in this Agreement, the Company shall, upon the written
request of the holder thereof, issue to such holder a new
certificate evidencing such Common Stock without the second
sentence of the legend required by Section 3.02(a) endorsed thereon.
12<PAGE>
Section 3.3. Permitted Transferees. Notwithstanding
anything in this Agreement to the contrary, any Shareholder may
at any time transfer any or all of its Common Stock to one or
more of its Permitted Transferees without the consent of the
Board or any other Shareholder or group of Shareholders and
without compliance with Sections 3.04, 3.05 and 4.01 so long as (a)
such Permitted Transferee shall have agreed in writing to be bound
by the terms of this Agreement and (b) the transfer to such
Permitted Transferee is not in violation of applicable federal
or state securities laws.
Section 3.4. Restrictions on Transfers by Institutional
Shareholders. (a) Except as provided in Section 3.03,
each Institutional Shareholder and each Permitted Transferee of
such Institutional Shareholder may transfer its Common Stock
only as follows:
(i) in a transfer made in compliance with Section 4.01
or 4.02;
(ii) in a Public Offering in connection with the
exercise of its rights under Article 5 hereof; or
(iii) following the earlier to occur of (i) the date
on which the Percentage Ownership of such Institutional
Shareholder is less than 25% of its Initial Ownership of
Common Stock and (ii) the seventh anniversary of the
Closing Date, to any Person other than any Adverse Person.
(b) The restrictions set forth in Section 3.04(a)(i) and (a)(ii)
shall terminate at such time as aggregate Percentage Ownership
of the DLJ Entities and their Permitted Transferees is equal to
or less than 50% of the aggregate Initial Ownership of Common
Stock of DLJ Entities.
Section 3.5. Restrictions on Transfers by Management
Shareholders. (a) Except as provided in Section 3.03, each
Management Shareholder and each Permitted Transferee of such
Management Shareholder may transfer its Common Stock only as
follows:
(i) in a transfer made in compliance with Section
4.01 or 4.02;
(ii) subject to the Public Offering Limitations (as
defined below), in a Public Offering in connection with
the exercise of its rights under Article 5 hereof;
13<PAGE>
(iii) 180 days following a Public Offering, to any
Third Party, in a transfer made in compliance with Rule
144 promulgated under the Securities Act; provided,
however, that until the Restriction Termination Date, the
Percentage Ownership of such Management Shareholder as a
result of such transfer shall be equal to or exceed the
greater of (x) 50% of such Management Shareholder's
Initial Ownership of Common Stock and (y) a percentage of
such Management Shareholder's Initial Ownership equal to
the Remaining Percentage. For purposes of this Section
3.05(a)(iii), "REMAINING PERCENTAGE" means the Percentage
Ownership of the DLJ Entities and the Institutional Investors
immediately prior to such proposed transfer pursuant to
this Section 3.05(a)(iii) calculated by subtracting from the
Initial Ownership of the DLJ Entities and the Institutional
Investors the number of shares of Common Stock theretofore
transferred by the DLJ Entities and the Institutional
Investors; or
(iv) following the Restriction Termination Date, to
any Third Party other than an Adverse Person for
consideration consisting solely of cash, provided,
however, that the number of Shares transferred by such
Management Shareholder pursuant to this Section 3.05(a)(iv)
in any twelve-month period shall not exceed 20% of such
Management Shareholder's Percentage Ownership at the
beginning of such twelve month period.
For purposes of this Agreement, "PUBLIC OFFERING
LIMITATIONS" means (A) except as set forth in the proviso at
the end of this paragraph, no Management Shareholder shall be
permitted to exercise its rights under Section 5.02 hereof (x)
with respect to the First Public Offering and (y) until such
time as the Percentage Ownership of the DLJ Entities and the
Institutional Shareholders and their Permitted Transferees
shall be less than 50% of their aggregate Initial Ownership of
Common Stock and (B) in each Public Offering following the
First Public Offering, such Management Shareholder shall be
entitled to transfer a number of Shares not exceeding such
Management Shareholder's Pro Rata Portion of non-Purchased
Shares; provided, however, that notwithstanding the
restrictions set forth in clauses (A) and (B), each Management
Shareholder shall be permitted to exercise its rights pursuant
to Section 5.02 hereof in respect of such Management Shareholder's
Pro Rata Portion of its Purchased Shares in any Public Offering
and transfer such Purchased Shares pursuant to Section
3.05(a)(ii).
(b) The provisions of Section 3.05(a) shall terminate
upon the earliest to occur of (i) one or more Public Offerings
of Shares yielding aggregate gross proceeds of at least
$100,000,000, (ii) the fourth anniversary of the Closing Date
and (iii) a Change of Control. Notwithstanding the foregoing
sentence, the
14<PAGE>
provisions of Section 3.05(a) shall not terminate with respect
to any Management Shareholder's Shares which shall have been
pledged to the Company as security in connection with any
indebtedness for borrowed money owed by such Management
Shareholder to the Company unless the proceeds from the sale of
such Shares, net of any taxes due on such proceeds, are applied
to repay the such indebtedness in full.
ARTICLE 4
TAG-ALONG RIGHTS; DRAG-ALONG RIGHTS; PREEMPTIVE RIGHTS
Section 4.1. Rights to Participate in Transfer. (a) If
DLJ Entities (the "SELLING PERSON") propose to transfer (other
than transfers of shares of Common Stock (i) in a Public
Offering, (ii) to any Permitted Transferee of any of the DLJ
Entities or (iii) up to 2.5% in the aggregate of the securities
of such class outstanding on the date of the first transfer of
any shares of Common Stock by any of the DLJ Entities (such
percentage, the "FREE PERCENTAGE")), in a transaction otherwise
permitted by Article 3 hereof, (a "TAG-ALONG SALE"), the Other
Shareholders may, at their option, elect to exercise their
rights under this Section 4.01 (each such Shareholder, a
"TAGGING PERSON"). In the event of such a proposed transfer,
the Selling Person shall provide each Other Shareholder written
notice of the terms and conditions of such proposed transfer
("TAG-ALONG NOTICE") and offer each Tagging Person the
opportunity to participate in such sale. The Tag-Along Notice
shall identify the number of shares of Common Stock subject to
the offer ("TAG-ALONG OFFER"), the cash price at which the
transfer is proposed to be made, and all other material terms
and conditions of the Tag-Along Offer, including the form of
the proposed agreement, if any. From the date of the Tag-Along
Notice, each Tagging Person shall have the right (a "TAG-ALONG
RIGHT"), exercisable by written notice ("SECTION 4.01 RESPONSE
NOTICE") given to the Selling Person within 5 Business Days
(the "TAG-ALONG NOTICE PERIOD"), to request that the Selling
Person include in the proposed transfer the number of Shares
held by such Tagging Person as is specified in such notice;
provided that if the aggregate number of Shares proposed to be
sold by the Selling Person and all Tagging Persons in such
transaction exceeds the number of Shares which can be sold on
the terms and conditions set forth in the Tag-Along Notice,
then only the Tag-Along Portion of Shares of the Selling Person
and each Tagging Person shall be sold pursuant to the Tag-Along
Offer. In the event the DLJ Entities shall propose to transfer
a number of Shares in excess of the Free Percentage, the Tag-
Along Portion shall be calculated with respect to all of the
15<PAGE>
Shares proposed to be transferred by the DLJ Entities. If the
Tagging Persons exercise their Tag-Along Rights hereunder, each
Tagging Person shall deliver, together with its Section 4.01
Response Notice, to the Selling Person the certificate or
certificates representing the Shares of such Tagging Person to
be included in the transfer, together with a limited
power-of-attorney authorizing the Selling Person to transfer
such Shares on the terms set forth in the Tag-Along Notice. It
is understood that to the extent the DLJ Entities can do so
without affecting the other terms on which the Tag-Along Sale
is proposed to be made, the DLJ Entities will seek to exclude
from the terms of such Tag-Along Sale any material restrictions
on the ability, following such Tag-Along Sale, of any Tagging
Person to conduct its business in a manner consistent with past
practice. Delivery of such certificate or certificates
representing the Shares to be transferred and the limited
power-of-attorney authorizing the Selling Person to transfer
such Shares shall constitute an irrevocable acceptance of the
Tag-Along Offer by such Tagging Persons. If, at the end of a
120 day period after such delivery, the Selling Person has not
completed the transfer of all such Shares on substantially the
same terms and conditions set forth in the Tag-Along Notice,
the Selling Person shall return to each Tagging Person the
limited power-of-attorney (and all copies thereof) together
with all certificates representing the Shares which such
Tagging Person delivered for transfer pursuant to this Section
4.01.
(b) Concurrently with the consummation of the Tag-Along
Sale, the Selling Person shall notify the Tagging Persons
thereof, shall remit to the Tagging Persons the total
consideration (by bank or certified check) for the Shares of
the Tagging Persons transferred pursuant thereto, and shall,
promptly after the consummation of such Tag-Along Sale furnish
such other evidence of the completion and time of completion of
such transfer and the terms thereof as may be reasonably
requested by the Tagging Persons.
(c) If at the termination of the Tag-Along Notice Period
any Tagging Person shall not have elected to participate in the
Tag-Along Sale, such Tagging Person will be deemed to have
waived its rights under Section 4.01(a) with respect to the transfer
of its securities pursuant to such Tag-Along Sale.
(d) If any Tagging Person declines to exercise its Tag-
Along Rights or elects to exercise its Tag-Along Rights with
respect to less than such Tagging Person's Tag-Along Portion,
the DLJ Entities shall be entitled to transfer, pursuant to the
Tag-Along Offer, a number of Shares held by the DLJ Entities
equal to the number of Shares constituting the portion of such
Tagging Person's Tag-Along Portion with respect to which Tag-
Along Rights were not exercised.
16<PAGE>
(e) The DLJ Entities and any Tagging Person who
exercises the Tag-Along Rights pursuant to this Section 4.01 may
sell the Shares subject to the Tag-Along Offer on the terms and
conditions set forth in the Tag-Along Notice (provided,
however, that the cash price payable in any such sale may
exceed the cash price specified in the Tag-Along Notice by up
to 10%) within 120 days of the date on which Tag-Along Rights
shall have been waived, exercised or expire.
Section 4.2. Right to Compel Participation in Certain
Transfers. (a) If (i) the DLJ Entities propose to transfer
not less than 50% of their Initial Ownership of Common Stock to
a Third Party in a bona fide sale, (ii) the DLJ Entities
propose a transfer in which the Shares to be transferred by the
DLJ Entities, the Institutional Shareholders and their
Permitted Transferees constitute more than 50% of the
outstanding shares of Common Stock (a "SECTION 4.02 SALE"), the
DLJ Entities may at their option require all Other Shareholders
to sell the Subject Securities ("DRAG-ALONG RIGHTS") then held
by every Other Shareholder, and (subject to and at the closing
of the Section 4.02 Sale) to exercise all, but not less than all,
of the options held by every Other Shareholder and to sell all
of the shares of Common Stock received upon such exercise to
such Third Party, for the same consideration per share of
Common Stock and otherwise on the same terms and conditions as
the DLJ Entities; provided that any Other Shareholder who holds
options the exercise price per share of which is greater than
the per share price at which the Shares are to be sold to the
Third Party may, if required by the DLJ Entities to exercise
such options, in place of such exercise, submit to irrevocable
cancellation thereof without any liability for payment of any
exercise price with respect thereto. In the event the Section 4.02
Sale is not consummated with respect to any shares acquired
upon exercise of such options, or the Section 4.02 Sale is not
consummated, such options shall be deemed not to have been
exercised or cancelled, as applicable. DLJMB shall provide
written notice of such Section 4.02 Sale to the Other Shareholders
(a "SECTION 4.02 NOTICE") not later than the 15th day prior to
the proposed Section 4.02 Sale. The Section 4.02 Notice shall identify
the transferee, the number of Subject Securities, the
consideration for which a transfer is proposed to be made (the
"SECTION 4.02 SALE PRICE") and all other material terms and
conditions of the Section 4.02 Sale. The number of shares of
Common Stock to be sold by each Other Shareholder will be the
Drag-Along Portion of the shares of Common Stock that such
Other Shareholder owns. Subject to Section 4.02(d), each Other
Shareholder shall be required to participate in the Section
4.02 Sale on the terms and conditions set forth in the Section
4.02 Notice and to tender all its Subject Securities as set
forth below. It is understood that to the extent the DLJ
Entities can do so without affecting the other terms on which
the Section 4.02 Sale is proposed to be made, the DLJ Entities
will seek to exclude from the terms of such
17<PAGE>
Section 4.02 Sale any material restrictions on the ability,
following such Section 4.02 Sale, of any Other Shareholder to
conduct its business in a manner consistent with past practice.
The price payable in such transfer shall be the Section 4.02
Sale Price. Not later than the 10th day following the date of
the Section 4.02 Notice (the "SECTION 4.02 NOTICE PERIOD"), each
of the Other Shareholders shall deliver to a representative of
DLJMB designated in the Section 4.02 Notice certificates
representing all Subject Securities held by such Other
Shareholder, duly endorsed, together with all other documents
required to be executed in connection with such Section 4.02 Sale
or, if such delivery is not permitted by applicable law, an
unconditional agreement to deliver such Subject Securities
pursuant to this Section 4.02 at the closing for such Section 4.02 Sale
against delivery to such Other Shareholder of the consideration
therefor. If an Other Shareholder should fail to deliver such
certificates to DLJMB, the Company shall cause the books and
records of the Company to show that such Subject Securities are
bound by the provisions of this Section 4.02 and that such Subject
Securities shall be transferred to the purchaser of the Subject
Securities immediately upon surrender for transfer by the
holder thereof.
(b) The DLJ Entities shall have a period of 90 days from
the date of receipt of the Section 4.02 Notice to consummate
the Section 4.02 Sale on the terms and conditions set forth in
such Section 4.02 Sale Notice. If the Section 4.02 Sale shall
not have been consummated during such period, DLJMB shall
return to each of the Other Shareholders all certificates
representing Shares that such Other Shareholder delivered for
transfer pursuant hereto, together with any documents in the
possession of DLJMB executed by the Other Shareholder in
connection with such proposed transfer, and all the
restrictions on transfer contained in this Agreement or
otherwise applicable at such time with respect to Common Stock
owned by the Other Shareholders shall again be in effect.
(c) Concurrently with the consummation of the transfer of
Shares pursuant to this Section 4.02, DLJMB shall give notice
thereof to all Shareholders, shall remit to each of the
Shareholders who have surrendered their certificates the total
consideration (by bank or certified check) for the Shares
transferred pursuant hereto and shall furnish such other
evidence of the completion and time of completion of such
transfer and the terms thereof as may be reasonably requested
by such Shareholders.
(d) Notwithstanding any provision of this Agreement to
the contrary, in the event the terms on which a Section 4.02
Sale is proposed to be made shall include a provision which
materially and adversely affects the ability of any Other
Shareholder to compete in any line of business or geographic
area, such Other
18<PAGE>
Shareholder shall not be required to participate in the Section
4.02 Sale on the terms and conditions set forth in the Section
4.02 Notice. In the event any Shareholder shall elect,
pursuant to the preceding sentence, not to participate in the
Section 4.02 Sale, the DLJ Entities shall have the right to
purchase, and such Shareholder shall be obligated to sell to
the DLJ Entities, such Shareholder's Subject Securities, at the
Section 4.02 Sale Price and on substantially the same terms
(other than any such non-compete provision), not later than
immediately prior to the consummation of the Section 4.02 Sale.
Section 4.3. Preemptive Rights. (a) The Company shall
provide each Shareholder with a written notice (a "SECTION 4.03
NOTICE") of any proposed issuance by the Company of Equity
Securities at least 10 days prior to the proposed issuance
date. Such notice shall specify the price at which the Equity
Securities are to be issued and the other material terms of the
issuance. In the event the DLJ Entities propose to purchase
any such Equity Securities from the Company, each Other
Shareholder shall be entitled to purchase, at the price and on
the terms at which the DLJ Entities propose to purchase such
Equity Securities and specified in such Section 4.03 Notice, such
Shareholder's Section 4.03 Portion of the Equity Securities
proposed to be issued. A Shareholder may exercise its rights
under this Section 4.03 by delivering written notice of its
election to purchase Equity Securities to the Company, DLJMB
and each Other Shareholder within 5 days of receipt of the
Section 4.03 Notice. A delivery of such a written notice (which
notice shall specify the number of shares (or amount) of Equity
Securities to be purchased by the Shareholder submitting such
notice) by such Shareholder shall constitute a binding
agreement of such Shareholder to purchase, subject to the
purchase by the DLJ Entities of their portion of such Equity
Securities, at the price and on the terms specified in the
Section 4.03 Notice, the number of shares (or amount) of Equity
Securities specified in such Shareholder's written notice. In
the event the Equity Securities proposed to be issued by the
Company are not shares of Common Stock, it shall be a condition
to the consummation of the purchase of such Equity Securities
pursuant to this Section 4.03 by any Shareholder that such
Shareholder shall execute an amendment of this Agreement on the
terms consistent with this Agreement reasonably satisfactory to
the Company and the DLJ Entities.
(b) In the event any Other Shareholder declines to
exercise its preemptive rights under this Section 4.03 or
elects to exercise such rights with respect to less than such
Shareholder's Section 4.03 Portion, the DLJ Entities shall be
entitled to purchase from the Company the number of Equity
Securities constituting the Section 4.03 Portion with respect to
which such Other Shareholder shall not have exercised its
preemptive rights.
19<PAGE>
(c) In the case of any issuance of Equity Securities, the
Company shall have 90 days from the date of the Section 4.03
Notice to consummate the proposed issuance of any or all of
such Equity Securities which the Shareholders have not elected
to purchase at the price and upon terms that are not materially
less favorable to the Company than those specified in the
Section 4.03 Notice. At the consummation of such issuance, the
Company shall issue certificates representing the Equity
Securities to be purchased by each Shareholder exercising
preemptive rights pursuant to this Section 4.03 registered in
the name of such Shareholder, against payment by such
Shareholder of the purchase price for such Equity Securities.
If the Company proposes to issue Equity Securities after such
90-day period, it shall again comply with the procedures set
forth in this Section.
(d) Notwithstanding the foregoing, no Shareholder shall
be entitled to purchase Equity Securities as contemplated by
this Section 4.03 in connection with issuances of Equity Securities
(i) to employees of the Company or any Subsidiary pursuant to
employee benefit plans or arrangements approved by the Board
(including upon the exercise of employee stock options), (ii)
in connection with any bona fide, arm's-length restructuring of
outstanding debt of the Company or any Subsidiary, or (iii) in
connection with any bona fide, arm's-length direct or indirect
merger, acquisition or similar transaction. The Company shall
not be under any obligation to consummate any proposed issuance
of Equity Securities, regardless of whether it shall have
delivered a Section 4.03 Notice in respect of such proposed
issuance.
(e) The Company will use its reasonable best efforts to
provide the Section 4.03 Notice at least 15 Business Days prior to
any proposed issuance of Equity Securities. In the event it is
impracticable to provide the Section 4.03 Notice at least 15
Business Days prior to such issuance, any Shareholder may offer
to finance or arrange to finance the purchase by any other
Shareholder of such other Shareholder's Section 4.03 Portion and
such financing or arranging Shareholder shall be entitled to
receive as compensation for such services reasonable and
customary fees and expenses. No Shareholder shall be under any
obligation to provide or arrange such financing for any other
Shareholder.
Section 4.4. Certain Other Purchases of Common Stock. In
the event, at any time prior to the Trigger Date, the DLJ
Entities shall acquire any shares of Common Stock from any
Person other than the Shareholders, the DLJ Entities shall
deliver, within five Business Days of the date of such
acquisition, a notice to each Other Shareholder (a "SECTION
4.04 NOTICE") specifying the number of shares of Common Stock
acquired and the weighted average of price per share paid by
20<PAGE>
the DLJ Entities. Such Section 4.04 Notice shall constitute an
offer to each such Other Shareholder to purchase such
Shareholder's Section 4.04 Portion of the number of shares of
Common Stock acquired by the DLJ Entities. A Shareholder may
exercise its rights under this Section 4.04 by delivering written
notice of its election to purchase its Section 4.04 Portion
within 10 days of receipt of the Section 4.04 Notice. A
delivery of such written notice (which shall specify the number
of shares of Common Stock to be purchased by the Shareholder
submitting such notice) by such Shareholder shall constitute a
binding agreement of such Shareholder to purchase, at the price
and on the terms specified in the Section 4.04 Notice, the
number of shares of Common Stock specified in such notice. At
the consummation of the transfer of the shares of Common Stock
purchased by the DLJ Entities to any Shareholder that shall
have exercised its rights hereunder, the DLJ Entities shall
deliver to such Shareholder certificates representing the
shares of Common Stock to be purchased against payment by such
Shareholder of the purchase price for such shares of Common
Stock.
ARTICLE 5
REGISTRATION RIGHTS
Section 5.1. Demand Registration. (a) If the Company shall
receive a written request by the DLJ Entities or their Permitted
Transferees (any such requesting Person, a "SELLING SHAREHOLDER")
that the Company effect the registration under the Securities Act
of all or a portion of such Selling Shareholder's Registrable
Securities, and specifying the intended method of disposition
thereof, then the Company shall promptly give written notice of
such requested registration (a "DEMAND REGISTRATION") at least 5
days prior to the anticipated filing date of the registration
statement relating to such Demand Registration to the Other
Shareholders and thereupon will use its best efforts to effect, as
expeditiously as possible, the registration under the Securities
Act of:
(i) the Registrable Securities which the Company has
been so requested to register by the Selling Shareholders,
then held by the Selling Shareholders; and
(ii) subject to the restrictions set forth in Section
5.02, all other Registrable Securities of the same type as
that to which the request by the Selling Shareholders
relates which any Other Shareholder entitled to request
the Company to effect a Piggyback Registration (as such
term is
21<PAGE>
defined in Section 5.02) pursuant to Section 5.02 (all
such Shareholders, together with the Selling Shareholders,
the "HOLDERS") has requested the Company to register by
written request received by the Company within 2 days (one
of which shall be a Business Day) after the receipt by
such Holders of such written notice given by the Company,
all to the extent necessary to permit the disposition (in
accordance with the intended methods thereof as aforesaid) of
the Registrable Securities so to be registered; provided that,
subject to Section 5.01(d) hereof, the Company shall not be obligated
to effect more than six Demand Registrations for the DLJ
Entities; and provided further that the Company shall not be
obligated to effect a Demand Registration unless the aggregate
proceeds expected to be received from the sale of the Common
Stock requested to be included in such Demand Registration, in
the reasonable opinion of DLJMB exercised in good faith, equals
or exceeds (x) $50,000,000 if such Demand Registration would
constitute the First Public Offering, or (y) $10,000,000 in all
other cases. In no event will the Company be required to
effect more than one Demand Registration within any four-month
period.
(b) Promptly after the expiration of the 2-day period
referred to in Section 5.01(a)(ii) hereof, the Company will notify all
the Holders to be included in the Demand Registration of the other
Holders and the number of Registrable Securities requested to
be included therein. The Selling Shareholders requesting a
registration under Section 5.01(a) may, at any time prior to the
effective date of the registration statement relating to such
registration, revoke such request, without liability to any of
the other Holders, by providing a written notice to the Company
revoking such request, in which case such request, so revoked,
shall be considered a Demand Registration unless such
revocation arose out of the fault of the Company or unless the
participating Shareholders reimburse the Company for all costs
incurred by the Company in connection with such registration,
in which case such request shall not be considered a Demand
Registration.
(c) The Company will pay all Registration Expenses in
connection with any Demand Registration.
(d) A registration requested pursuant to this Section 5.01
shall not be deemed to have been effected (i) unless the
registration statement relating thereto (A) has become
effective under the Securities Act and (B) has remained
effective for a period of at least 180 days (or such shorter
period in which all Registrable Securities of the Holders
included in such registration have actually been sold
thereunder); provided that if after any registration statement
requested pursuant to
22<PAGE>
this Section 5.01 becomes effective (x) such registration
statement is interfered with by any stop order, injunction or
other order or requirement of the SEC or other governmental
agency or court and (y) less than 75% of the Registrable
Securities included in such registration statement has been
sold thereunder, such registration statement shall not be
considered a Demand Registration, or (ii) if the Maximum
Offering Size (as defined below) is reduced in accordance with
Section 5.01(e) such that less than 66 2/3% of the Registrable
Securities of the Selling Shareholders sought to be included in
such registration are included.
(e) If a Demand Registration involves an Underwritten
Public Offering and the managing underwriter shall advise the
Company and the Selling Shareholders that, in its view, (i) the
number of shares of Registrable Securities requested to be
included in such registration (including any securities which
the Company proposes to be included which are not Registrable
Securities) or (ii) the inclusion of some or all of the shares
of Registrable Securities owned by the Holders, in any such
case, exceeds the largest number of shares which can be sold
without having an adverse effect on such offering, including
the price at which such shares can be sold (the "MAXIMUM
OFFERING SIZE"), the Company will include in such registration,
in the priority listed below, up to the Maximum Offering Size:
(A) first, all Registrable Securities requested
to be registered by the parties requesting such
Demand Registration and all Registrable Securities
requested to be included in such registration by any
other Holder (allocated, if necessary for the
offering not to exceed the Maximum Offering Size, pro
rata among such Holders on the basis of the relative
number of Registrable Securities so requested to be
included in such registration); and
(B) second, any securities proposed to be
registered by the Company.
(f) Upon written notice to each Selling Shareholder, the
Company may postpone effecting a registration pursuant to this
Section 5.01 on one occasion during any period of six consecutive
months for a reasonable time specified in the notice but not
exceeding 90 days (which period may not be extended or
renewed), if (1) an investment banking firm of recognized
national standing shall advise the Company and the Selling
Shareholders in writing that effecting the registration would
materially and adversely affect an offering of securities of
such Company the preparation of which had then been commenced
or (2) the Company is in possession of material non-public
information the disclosure of which during the
23<PAGE>
period specified in such notice the Company believes, in its
reasonable judgment, would not be in the best interests of the
Company.
(g) After the Company has effected two Demand
Registrations pursuant to this Section 5.01 of Common Stock,
the Other Shareholders, upon request of the Other Shareholders
owning a majority of the Shares acquired by the Other
Shareholders on Closing Date, may request that the Company
register Common Stock which are Registrable Securities then
owned by such Other Shareholders. In no event will the Company
be required to effect more than one such Demand Registration.
The provisions of this Article 5 shall apply, mutatis mutandis,
to any such Demand Registration.
Section 5.2. Piggyback Registration. (a) If the Company
proposes to register any of its Common Stock under the
Securities Act (including pursuant to a Demand Registration),
whether or not for sale for its own account, it will each such
time, subject to the provisions of Section 5.02(b) hereof, give
prompt written notice at least 5 days prior to the anticipated
filing date of the registration statement relating to such
registration to all Shareholders and their respective Permitted
Transferees (or, in the case of a Demand Registration requested
by the DLJ Entities, to all Other Shareholders), which notice
shall set forth such Shareholders' rights under this Section 5.02
and shall offer all Shareholders the opportunity to include in
such registration statement such number of shares of Common
Stock as each such Shareholder may request (a "PIGGYBACK
REGISTRATION"). Upon the written request of any such
Shareholder made within 2 days (one of which shall be a
Business Day) after the receipt of notice from the Company
(which request shall specify the number of shares of Common
Stock intended to be disposed of by such Shareholder), the
Company will use its reasonable best efforts to effect the
registration under the Securities Act of all shares of Common
Stock which the Company has been so requested to register by
such Shareholders, to the extent requisite to permit the
disposition of the shares of Common Stock so to be registered;
provided that (i) if such registration involves an Underwritten
Public Offering, all such Shareholders requesting to be
included in the Company's registration must sell their
Registrable Securities to the underwriters selected as provided
in Section 5.04(f) on the same terms and conditions as apply to the
Company or the Selling Shareholder, as applicable, and (ii) if,
at any time after giving written notice of its intention to
register any stock pursuant to this Section 5.02(a) and prior to the
effective date of the registration statement filed in
connection with such registration, the Company shall determine
for any reason not to register such stock, the Company shall
give written notice to all such Shareholders and, thereupon,
shall be relieved of its obligation to register any Registrable
Securities in connection with such registration; and provided
24<PAGE>
further that the right of the Management Shareholders and their
Permitted Transferees to request a Piggyback Registration will
be subject to the Public Offering Limitations. No registration
effected under this Section 5.02 shall relieve the Company of its
obligations to effect a Demand Registration to the extent
required by Section 5.01 hereof. The Company will pay all
Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this Section 5.02.
(b) If a registration pursuant to this Section 5.02
involves an Underwritten Public Offering (other than in the
case of an Underwritten Public Offering requested by the DLJ
Entities in a Demand Registration, in which case the provisions
with respect to priority of inclusion in such offering set
forth in Section 5.01(e) shall apply) and the managing
underwriter advises the Company that, in its view, the number
of shares of Common Stock which the Company and the selling
Shareholders intend to include in such registration exceeds the
Maximum Offering Size, the Company will include in such
registration, in the following priority, up to the Maximum
Offering Size:
(i) first, so much of the Common Stock proposed to
be registered for the account of the Company as would not
cause the offering to exceed the Maximum Offering Size;
and
(ii) second, all Registrable Securities requested to
be included in such registration by any Shareholder
pursuant to Section 5.02 (allocated, if necessary for the
offering not to exceed the Maximum Offering Size, pro rata
among such Shareholders on the basis of the relative
number of shares of Registrable Securities so requested to
be included in such registration).
Section 5.3. Holdback Agreements. With respect to each
and every firmly underwritten Public Offering, each Shareholder
agrees and their Permitted Transferees will agree not to offer
or sell any shares of Common Stock (except for shares of Common
Stock, if any, sold in that Public Offering) during the 14 days
prior to the effective date of the applicable registration
statement for a public offering of shares of Common Stock
(except as part of such registration) and during the period
after such effective date equal to the lesser of: (i) 180 days
or (ii) any such shorter period as the Company and the lead
managing underwriter of an Underwritten Public Offering agree.
Section 5.4. Registration Procedures. Whenever
Shareholders request that any Registrable Securities be
registered pursuant to Section 5.01 or 5.02 hereof, the Company will,
subject to the provisions of such Sections, use its
25<PAGE>
reasonable best efforts to effect the registration and the sale
of such Registrable Securities in accordance with the intended
method of disposition thereof as quickly as practicable, and in
connection with any such request:
(a) The Company will as expeditiously as possible prepare
and file with the SEC a registration statement on any form
selected by counsel for the Company and which form shall be
available for the sale of the Registrable Securities to be
registered thereunder in accordance with the intended method of
distribution thereof, and use its reasonable best efforts to
cause such filed registration statement to become and remain
effective for a period of not less than 180 days (or such
shorter period in which all of the Registrable Securities of
the Holders included in such registration statement shall have
actually been sold thereunder).
(b) The Company will, if requested, prior to filing a
registration statement or prospectus or any amendment or
supplement thereto, furnish to each Shareholder and each
underwriter, if any, of the Registrable Securities covered by
such registration statement copies of such registration
statement as proposed to be filed, and thereafter the Company
will furnish to such Shareholder and underwriter, if any, such
number of copies of such registration statement, each amendment
and supplement thereto (in each case including all exhibits
thereto and documents incorporated by reference therein), the
prospectus included in such registration statement (including
each preliminary prospectus) and such other documents as such
Shareholder or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Securities owned
by such Shareholder. Each Shareholder shall have the right to
request that the Company modify any information contained in
such registration statement, amendment and supplement thereto
pertaining to such Shareholder and the Company shall use its
reasonable best efforts to comply with such request, provided,
however, that the Company shall not have any obligation to so
modify any information if so doing would cause the prospectus
to contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(c) After the filing of the registration statement, the
Company will (i) cause the related prospectus to be
supplemented by any required prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the
Securities Act, (ii) comply with the provisions of the
Securities Act with respect to the disposition of all
Registrable Securities covered by such registration statement
during the applicable period in accordance with the intended
methods of disposition by the sellers thereof set forth in such
registration statement or
26<PAGE>
supplement to such prospectus and (iii) promptly notify each
Shareholder holding Registrable Securities covered by such
registration statement of any stop order issued or threatened
by the SEC or any state securities commission under state blue
sky laws and take all reasonable actions required to prevent
the entry of such stop order or to remove it if entered.
(d) The Company will use its reasonable best efforts to
(i) register or qualify the Registrable Securities covered by
such registration statement under such other securities or blue
sky laws of such jurisdictions in the United States as any
Shareholder holding such Registrable Securities reasonably (in
light of such Shareholder's intended plan of distribution)
requests and (ii) cause such Registrable Securities to be
registered with or approved by such other governmental agencies
or authorities as may be necessary by virtue of the business
and operations of the Company and do any and all other acts and
things that may be reasonably necessary or advisable to enable
such Shareholder to consummate the disposition of the
Registrable Securities owned by such Shareholder; provided that
the Company will not be required to (A) qualify generally to do
business in any jurisdiction where it would not otherwise be
required to qualify but for this paragraph (d), (B) subject
itself to taxation in any such jurisdiction or (C) consent to
general service of process in any such jurisdiction.
(e) The Company will immediately notify each Shareholder
holding such Registrable Securities covered by such
registration statement, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act,
of the occurrence of an event requiring the preparation of a
supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading and promptly prepare and make
available to each such Shareholder and file with the SEC any
such supplement or amendment.
(f) In connection with (i) any Demand Registration
requested by the DLJ Entities or their Permitted Transferees or
(ii) any registration of Registrable Securities pursuant to
this Article 5 the Company shall appoint the underwriter or
underwriters chosen by DLJMB. The Company will enter into
customary agreements (including an underwriting agreement in
customary form) and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of
such Registrable Securities, including the engagement of a
"qualified independent underwriter" in connection with the
qualification of the
27<PAGE>
underwriting arrangements with the NASD.
(g) Upon execution of confidentiality agreements in form
and substance reasonably satisfactory to the Company, the
Company will make available for inspection by any Shareholder
and any underwriter participating in any disposition pursuant
to a registration statement being filed by the Company pursuant
to this Section 5.04 and any attorney, accountant or other
professional retained by any such Shareholder or underwriter
(collectively, the "INSPECTORS"), all financial and other
records, pertinent corporate documents and properties of the
Company (collectively, the "RECORDS") as shall be reasonably
requested by any such Person, and cause the Company's officers,
directors and employees to supply all information reasonably
requested by any Inspectors in connection with such
registration statement.
(h) The Company will furnish to each such Shareholder and
to each such underwriter, if any, a signed counterpart,
addressed to such underwriter and the participating
Shareholders, of (i) an opinion or opinions of counsel to the
Company and (ii) a comfort letter or comfort letters from the
Company's independent public accountants, each in customary
form and covering such matters of the type customarily covered
by opinions or comfort letters, as the case may be, as a
majority of such Shareholders or the managing underwriter
therefor reasonably requests.
(i) The Company will otherwise use its reasonable best
efforts to comply with all applicable rules and regulations of
the SEC and the relevant state blue sky commissions, and make
available to its securityholders, as soon as reasonably
practicable, an earnings statement covering a period of 12
months, beginning within three months after the effective date
of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act.
(j) The Company may require each such Shareholder to
promptly furnish in writing to the Company information
regarding the distribution of the Registrable Securities as the
Company may from time to time reasonably request and such other
information as may be legally required in connection with such
registration.
(k) Each such Shareholder agrees that, upon receipt of
any notice from the Company of the happening of any event of
the kind described in Section 5.04(e) hereof, such Shareholder will
forthwith discontinue disposition of Registrable Securities
pursuant to the registration statement covering such
28<PAGE>
Registrable Securities until such Shareholder's receipt of the
copies of the supplemented or amended prospectus contemplated
by Section 5.04(e) hereof, and, if so directed by the Company,
such Shareholder will deliver to the Company all copies, other
than any permanent file copies then in such Shareholder's
possession, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice.
In the event that the Company shall give such notice, the
Company shall extend the period during which such registration
statement shall be maintained effective (including the period
referred to in Section 5.04(a) hereof) by the number of days
during the period from and including the date of the giving of
notice pursuant to Section 5.04(e) hereof to the date when the
Company shall make available to such Shareholder a prospectus
supplemented or amended to conform with the requirements of
Section 5.04(e) hereof.
(l) The Company will use its reasonable best efforts to
list such Registrable Securities on any securities exchange on
which the Common Stock is then listed or on NASDAQ if the
Common Stock is then quoted on NASDAQ not later than the
effective date of such registration statement.
Section 5.5. Indemnification by the Company. The Company
agrees to indemnify and hold harmless each Shareholder holding
Registrable Securities covered by a registration statement, its
officers, directors, employees, partners and agents, and each
Person, if any, who controls such Shareholder within the
meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act (and officers, directors, employees, partners
and agents of such controlling Persons) from and against any
and all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating
to the Registrable Securities (as amended or supplemented if
the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or
omission so made in strict conformity with information
furnished in writing to the Company by such Shareholder or on
such Shareholder's behalf expressly for use therein; provided
that with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary
prospectus, or in any prospectus, as the case may be, the
indemnity agreement contained in this paragraph shall not apply
to the extent that any such loss, claim, damage, liability or
expense results from the fact that a current copy of the
prospectus (or, in the case of a prospectus, the
29<PAGE>
prospectus as amended or supplemented) was not sent or given to
the Person asserting any such loss, claim, damage, liability or
expense at or prior to the written confirmation of the sale of
the Registrable Securities concerned to such Person if it is
determined that the Company has provided such current copy of
such prospectus (or such amended or supplemented prospectus, as
the case may be) to such Shareholder in a timely manner prior
to such sale and it was the responsibility of such Shareholder
under the Securities Act to provide such Person with a current
copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) and such current copy of the
prospectus (or such amended or supplemented prospectus, as the
case may be) would have cured the defect giving rise to such
loss, claim, damage, liability or expense. The Company also
agrees to indemnify any underwriters of the Registrable
Securities, their officers and directors and each person who
controls such underwriters on substantially the same basis as
that of the indemnification of the Shareholders provided in
this Section 5.05.
Section 5.6. Indemnification by Participating
Shareholders. Each Shareholder holding Registrable Securities
included in any registration statement agrees, severally but
not jointly, to indemnify and hold harmless the Company, its
officers, directors and agents and each Person (other than such
Shareholder) if any, who controls the Company within the
meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such Shareholder, but only (i)
with respect to information furnished in writing by such
Shareholder or on such Shareholder's behalf expressly for use
in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto,
or any preliminary prospectus or (ii) to the extent that any
loss, claim, damage, liability or expense described in Section
5.05 results from the fact that a current copy of the
prospectus (or, in the case of a prospectus, the prospectus as
amended or supplemented) was not sent or given to the Person
asserting any such loss, claim, damage, liability or expense at
or prior to the written confirmation of the sale of the
Registrable Securities concerned to such Person if it is
determined that it was the responsibility of such Shareholder
to provide such Person with a current copy of the prospectus
(or such amended or supplemented prospectus, as the case may
be) and such current copy of the prospectus (or such amended or
supplemented prospectus, as the case may be) would have cured
the defect giving rise to such loss, claim, damage, liability
or expense. Each such Shareholder shall be prepared, if
required by the underwriting agreement, to indemnify and hold
harmless underwriters of the Registrable Securities,
their officers and directors and each person who controls such
underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 5.06. As a
30<PAGE>
condition to including Registrable Securities in any
registration statement filed in accordance with Article 5
hereof, the Company may require that it shall have received an
undertaking reasonably satisfactory to it from any underwriter
to indemnify and hold it harmless to the extent customarily
provided by underwriters with respect to similar securities.
No Shareholder shall be liable under Section 5.06 for any
damage thereunder in excess of the net proceeds realized by
such Shareholder in the sale of the Registrable Securities of
such Shareholder.
Section 5.7. Conduct of Indemnification Proceedings. In
case any proceeding (including any governmental investigation)
shall be instituted involving any Person in respect of which
indemnity may be sought pursuant to this Article 5, such Person
(an "INDEMNIFIED PARTY") shall promptly notify the Person
against whom such indemnity may be sought (the "INDEMNIFYING
PARTY") in writing and the Indemnifying Party shall assume the
defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Party, and shall assume the
payment of all fees and expenses; provided that the failure of
any Indemnified Party so to notify the Indemnifying Party shall
not relieve the Indemnifying Party of its obligations hereunder
except to the extent that the Indemnifying Party is materially
prejudiced by such failure to notify. In any such proceeding,
any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party shall have
mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of such Indemnified Party representation of
both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. It is
understood that the Indemnifying Party shall not, in connection
with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any
local counsel) at any time for all such Indemnified Parties,
and that all such fees and expenses shall be reimbursed as they
are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing
by the Indemnified Parties. The Indemnifying Party shall not
be liable for any settlement of any proceeding effected without
its written consent, but if settled with such consent, or if
there be a final judgment for the plaintiff, the Indemnifying
Party shall indemnify and hold harmless such Indemnified
Parties from and against any and all losses, claims, damages,
liabilities and expenses or liability (to the extent stated
above) by reason of such settlement or judgment. No
Indemnifying Party shall, without the prior written consent of
the Indemnified Party, effect any settlement of any pending or
31<PAGE>
threatened proceeding in respect of which any Indemnified Party
is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such
settlement includes an unconditional release of such
Indemnified Party from all liability arising out of such
proceeding.
Section 5.8. Contribution. If the indemnification
provided for in this Article 5 is held by a court of competent
jurisdiction to be unavailable to the Indemnified Parties in
respect of any losses, claims, damages or liabilities referred
to herein, then each such Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of
such losses, claims, damages or liabilities (i) as between the
Company and the Shareholders holding Registrable Securities
covered by a registration statement and their related
Indemnified Parties on the one hand and the underwriters and
their related Indemnified Parties on the other, in such
proportion as is appropriate to reflect the relative benefits
received by the Company and such Shareholders on the one hand
and the underwriters on the other, from the offering of the
Shareholders' Registrable Securities, or if such allocation is
not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits but also
the relative fault of the Company and such Shareholders on the
one hand and of such underwriters on the other in connection
with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant
equitable considerations and (ii) as between the Company and
their related Indemnified Parties on the one hand and each such
Shareholder and their related Indemnified Parties on the other,
in such proportion as is appropriate to reflect the relative
fault of the Company and of each such Shareholder in connection
with such statements or omissions, as well as any other
relevant equitable considerations. The relative benefits
received by the Company and such Shareholders on the one hand
and such underwriters on the other shall be deemed to be in the
same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting
expenses) received by the Company and such Shareholders bear to
the total underwriting discounts and commissions received by
such underwriters, in each case as set forth in the table on
the cover page of the prospectus. The relative fault of the
Company and such Shareholders on the one hand and of such
underwriters on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged
omission to state a material fact relates to information
supplied by the Company and such Shareholders or by such
underwriters. The relative fault of the Company on the one
hand and of each such Shareholder on the other shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a
32<PAGE>
material fact relates to information supplied by such party,
and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such
statement or omission.
The Company and the Shareholders agree that it would not
be just and equitable if contribution pursuant to this Section 5.08
were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party
as a result of the losses, claims, damages or liabilities
referred to in the immediately preceding paragraph shall be
deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of
this Section 5.08 no underwriter shall be required to contribute
any amount in excess of the underwriting discount applicable to
securities purchased by such underwriter in such offering, less
the aggregate amount of any damages which such underwriter has
otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and
no Shareholder shall be required to contribute any amount in
excess of the amount by which the net proceeds realized on the
sale of the Registrable Securities of such Shareholder exceeds
the amount of any damages which such Shareholder has otherwise
been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. Each Shareholder's obligation to contribute
pursuant to this Section 5.08 is several in the proportion that the
proceeds of the offering received by such Shareholder bears to
the total proceeds of the offering received by all such
Shareholders and not joint.
Section 5.9. Participation in Public Offering. No Person
may participate in any Underwritten Public Offering hereunder
unless such Person (a) agrees to sell such Person's securities
on the basis provided in any underwriting arrangements approved
by the Persons entitled hereunder to approve such arrangements
and (b) completes and executes all questionnaires, powers
of attorney, indemnities, underwriting agreements and other
documents reasonably required under the terms of such
underwriting arrangements and the provisions of this Agreement
in respect of registration rights.
Section 5.10. Cooperation by the Company. In the event
any Shareholder shall transfer any Registrable Securities
pursuant to Rule 144A under
33<PAGE>
the Securities Act, the Company shall cooperate, to the extent
commercially reasonable, with such Shareholder and shall
provide to such Shareholder such information as such
Shareholder shall reasonably request.
Section 5.11. No Transfer of Registration Rights. None
of the rights of Shareholders under this Article 5 shall be
assignable by any Shareholder to any Person acquiring
securities of such Shareholder in any Public Offering or
pursuant to Rule 144A of the Securities Act.
ARTICLE 6
CERTAIN COVENANTS AND AGREEMENTS
Section 6.1. Confidentiality. (a) Each Shareholder
hereby agrees that Confidential Information (as defined below)
furnished and to be furnished to it was and will be made
available in connection with such Shareholder's investment in
the Company. Each Shareholder agrees that it will use the
Confidential Information only in connection with its investment
in the Company and not for any other purpose. Each Shareholder
further acknowledges and agrees that it will not disclose any
Confidential Information to any Person; provided that
Confidential Information may be disclosed (i) to such
Shareholder's Representatives (as defined below) in the normal
course of the performance of their duties or to any financial
institution providing credit to such Shareholder, (ii) to the
extent required by applicable law, rule or regulation
(including complying with any oral or written questions,
interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar process to
which a Shareholder is subject; provided that such Shareholder
gives the Company prompt notice of such request(s), to the
extent practicable, so that the Company may seek an appropriate
protective order or similar relief (and the Shareholder shall
cooperate with such efforts by the Company, and shall in any
event make only the minimum disclosure required by such law,
rule or regulation)), (iii) to any Person to whom such
Shareholder is contemplating a transfer of its Shares (provided
that such transfer would not be in violation of the provisions
of this Agreement and as long as such potential transferee is
advised of the confidential nature of such information and
agrees to be bound by a confidentiality agreement in form and
substance satisfactory to the Company (it being understood that
a confidentiality agreement consistent with the provisions
hereof shall be satisfactory to the Company)) or (iv) if the
prior written consent of the Board shall have been obtained.
Nothing contained herein shall prevent the use (subject, to the
extent
34<PAGE>
possible, to a protective order) of Confidential Information in
connection with the assertion or defense of any claim by or
against the Company or any Shareholder.
(b) "CONFIDENTIAL INFORMATION" means any information
concerning the Company and Persons which are or become its
subsidiaries or the financial condition, business, operations
or prospects of the Company and Persons which are or become its
subsidiaries in the possession of or furnished to any
Shareholder (including, without limitation by virtue of its
present or former right to designate a director of the
Company); provided that the term "Confidential Information"
does not include information which (i) is or becomes generally
available to the public other than as a result of a disclosure
by a Shareholder or its partners, directors, officers,
employees, agents, counsel, investment advisers or
representatives (all such persons being collectively referred
to as "REPRESENTATIVES") in violation of the Merger Agreement
or this Agreement, (ii) is or was available to such Shareholder
on a nonconfidential basis prior to its disclosure to such
Shareholder or its Representatives by the Company or (iii) was
or becomes available to such Shareholder on a non-confidential
basis from a source other than the Company, provided that such
source is or was (at the time of receipt of the relevant
information) not, to the best of such Shareholder's knowledge,
bound by a confidentiality agreement with (or other
confidentiality obligation to) the Company or another Person.
Section 6.2. Reports. The Company will furnish the
Institutional Shareholders with the quarterly and annual
financial reports that the Company is required to file with the
Securities and Exchange Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act promptly after the filing
thereof or, in the event the Company is not required to file
such reports, quarterly and annual reports containing the same
information as would be required in such reports on the date
that such reports would otherwise be filed.
Section 6.3.. Limitations on Subsequent Registration.
The Company shall not enter into any agreement with any holder
or prospective holder of any securities of the Company (a) that
would allow such holder or prospective holder to include such
securities in any registration filed pursuant to Section 5.01
or 5.02 hereof, unless under the terms of such agreement, such
holder or prospective holder may include such securities in any
such registration only to the extent that the inclusion of such
securities would not reduce the amount of the Registrable
Securities of the Shareholders included therein or (b) on terms
otherwise more favorable than this Agreement.
Section 6.4. Exclusive Financial Advisor and Investment
Banking
35<PAGE>
Advisor. During the period from and including the date hereof
through and including the fifth anniversary of the date hereof,
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC"),
or any Affiliate that DLJMB may choose in its sole discretion,
shall be engaged as the exclusive financial advisor and
investment banker for the Company on financial and other terms
customary in the industry to be agreed between the Company and
DLJSC.
Section 6.5. Limitation on Purchase of Common Stock.
Until the earlier to occur of (i) the seventh anniversary of
the Closing Date or (i) the date on which at least 40% of the
outstanding Common Stock on a Fully Diluted basis of the
Company is held by Persons other than the Shareholders (the
"TRIGGER DATE"), no Institutional Shareholder shall acquire any
shares of Common Stock except 4.03 (i) in a purchase of Equity
Securities pursuant to Section 4.04 or Section hereof or (ii) in a
transfer from any other Shareholder which is otherwise
permitted under the terms of Article 3 hereof.
ARTICLE 7
MISCELLANEOUS
Section 7.1. Entire Agreement. This Agreement, the
Merger Agreement and the Subscription Agreement constitute the
entire agreement among the parties with respect to the subject
matter hereof and thereof and supersede all prior and
contemporaneous agreements and understandings, both oral and
written, between the parties with respect to the subject matter
hereof and thereof.
Section 7.2. Binding Effect; Benefit. This Agreement
shall inure to the benefit of and be binding upon the parties
hereto and their respective heirs, successors, legal
representatives and permitted assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any
Person other than the parties hereto, and their respective
heirs, successors, legal representatives and permitted assigns,
any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
Section 7.3. Assignability. (a) Neither this Agreement
nor any right, remedy, obligation or liability arising
hereunder or by reason hereof shall be assignable by the
Company or any Shareholder; provided that any Person acquiring
shares of Common Stock who is required by the terms of this
36<PAGE>
Agreement to become a party hereto shall execute and deliver to
the Company an agreement to be bound by this Agreement and
shall thenceforth be a "Shareholder".
(b) Any Permitted Transferee of a Management Shareholder
who shall become a party hereto shall be deemed a "MANAGEMENT
SHAREHOLDER".
(c) Any Permitted Transferee of an Institutional
Shareholder who shall become a party to this Agreement shall be
deemed an "INSTITUTIONAL SHAREHOLDER".
Section 7.4. Amendment; Waiver; Termination. (a) No
provision of this Agreement may be waived except by an
instrument in writing executed by the party against whom the
waiver is to be effective. No provision of this Agreement may
be amended or otherwise modified except by an instrument in
writing executed by the Company with approval of the Board of
Directors and holders of at least 50% of the Shares held by the
parties to this Agreement at the time of such proposed
amendment or modification.
(b) In addition, any amendment or modification of any
provision of this Agreement that would adversely affect any DLJ
Entity may be effected only with the consent of such DLJ
Entity.
(c) In addition, any amendment or modification of any
provision of this Agreement that would adversely affect any (i)
Institutional Shareholder may be effected only with the consent
of Institutional Shareholders holding at least 50% of the
shares held by the Institutional Shareholders or (ii) Management
Shareholder may be effected only with the consent of Management
Shareholders holding at least 50% of the shares held by the
Management Shareholders.
(d) This Agreement shall terminate on the tenth
anniversary of the date hereof unless earlier terminated.
Section 7.5. Notices. (a) All notices and other
communications given or made pursuant hereto or pursuant to any
other agreement among the parties, unless otherwise specified,
shall be in writing and shall be deemed to have been duly
given and received when sent by fax (with confirmation in
writing via first class U.S. mail) or delivered personally or
on the third Business Day after being sent by registered or
certified U.S. mail (postage prepaid, return receipt requested)
to the parties at the fax number or address set forth below or
at such other addresses as shall be furnished by the parties by
like notice:
37<PAGE>
if to the Company to:
DecisionOne Holdings Corp.
50 East Swedesford Road
Frazer, PA 19355
Attention: Thomas M. Molchan, Esq.
Fax: 610-408-3820
if to any Shareholder, to such
Shareholder at the address specified by
such Shareholder on the signature pages
of this Agreement or in a notice given by
such Shareholder to the Company for such
purpose with a copy, in the case of the
Institutional Shareholders (other than
the Sprout Entities), to
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: David A. Katz, Esq.
Fax: 212-403-2000
Any Person who becomes a Shareholder shall provide its
address and fax number to the Company, which shall promptly
provide such information to each other Shareholder.
(b) Notices required to be given pursuant to Sections
5.01(a) and 5.01(b) and Section 5.02 by the Company shall be
deemed given only if such notices are also be given
telephonically and by fax to the following persons (or any
other individual the respective entities may designate in
writing to the Company to replace such person):
(i) for the benefit of the Management
Shareholders, to Thomas M. Molchan at 610-296-6212 and
fax: 610-408-3820;
(ii) for the benefit of the Apollo Entities, to
any of Michael Gross at 212-261-4009, fax: 212-___-____,
Joshua Harris at 212-261-4032, fax: 212-___-____, or Marc
Becker at 212-261-4061, fax: 212-___-____;
(iii) for the benefit of the Bain Entities, to
Stephen Pagliuca at 617-572-2629, fax: 617-___-____ or
Domenic Ferrante at 617-572-2563, fax: 617-___-____;
38<PAGE>
(iv) for the benefit of the THL Entities, to any
of Scott A. Schoen, Scott M. Sperling or Kent R. Weldon at
617-227-1050, fax: 617-___-____;
(v) for the benefit of the Sprout Entities, to
__________;
(vi) for the benefit of the Ontario Teachers'
Pension Plan Board, to Dean Metcalf at 416-730-6166, fax:
416-___-____;
(vii) in the case of any registration not
requested by the DLJ Entities, for the benefit of the DLJ
Entities, to Peter Grauer, at 212-892-3636, fax: 212-892-
7272; and
(viii) to David Katz at 212-403-1000, fax: 212-403-
2000.
Section 7.6. Headings. The headings contained in this
Agreement are for convenience only and shall not affect the
meaning or interpretation of this Agreement.
Section 7.7. Counterparts. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed to be an original and all of which together shall be
deemed to be one and the same instrument.
Section 7.8. Applicable Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of New York, without regard to the conflicts of laws
rules of such state.
Section 7.9. Specific Enforcement. Each party hereto
acknowledges that the remedies at law of the other parties for
a breach or threatened breach of this Agreement would be
inadequate and, in recognition of this fact, any party to this
Agreement, without posting any bond, and in addition to all
other remedies which may be available, shall be entitled to
obtain equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be
available.
Section 7.10. Consent to Jurisdiction; Expenses. (a) Any
suit, action or proceeding seeking to enforce any provision of,
or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby shall
be brought in any Federal Court sitting in New York, New York,
or any New York State court sitting in New York, New York, and
each of the parties hereby
39<PAGE>
consents to the exclusive jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit,
action or proceeding and irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit,
action or proceeding which is brought in any such court has
been brought in an inconvenient forum. Process in any such
suit, action or proceeding may be served on any party anywhere
in the world, whether within or without the jurisdiction of any
such court. Without limiting the foregoing, each party agrees
that service of process on such party by any method provided in
Section 7.05 shall be deemed effective service of process on such
party and consents to the personal jurisdiction of any Federal
Court sitting in New York, New York, or any New York State
court sitting in New York, New York.
(b) In any dispute arising under this Agreement among any
of the parties hereto, the costs and expenses (including,
without limitation, the reasonable fees and expenses of
counsel) incurred by the prevailing party shall be paid by the
party that does not prevail.
Section 7.11. Severability. If one or more provisions of
this Agreement are held to be unenforceable to any extent under
applicable law, such provision shall be interpreted as if it
were written so as to be enforceable to the maximum possible
extent so as to effectuate the parties' intent to the maximum
possible extent, and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms to the maximum extent
permitted by law.
40<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
DECISIONONE HOLDINGS CORP.
By: /s/ Thomas J. Fitzpatrick
Name: Thomas J. Fitzpatrick
Title: Vice President and Chief
Financial Officer
DLJ MERCHANT BANKING PARTNERS
II, L.P., a Delaware Limited
Partnership
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-fact
Address:
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ MERCHANT BANKING PARTNERS
II-A, L.P., a Delaware Limited
Partnership
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
41<PAGE>
Title: Attorney-in-fact
Address:
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ OFFSHORE PARTNERS II, C.V., a
Netherlands Antilles Limited
Partnership
By: DLJ Merchant Banking II, Inc.,
as advisory general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-fact
Address:
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ DIVERSIFIED PARTNERS, L.P., a
Delaware Limited Partnership
By: DLJ Diversified Partners II, Inc.,
as managing general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-fact
Address:
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
42<PAGE>
New York, NY 10172
Fax: 212-892-7272
DLJ DIVERSIFIED PARTNERS-A, L.P., a
Delaware Limited Partnership
By: DLJ Diversified Partners II, Inc.,
as managing general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-fact
Address:
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ MILLENNIUM PARTNERS, L.P., a
Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-fact
Address:
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
43<PAGE>
DLJ MILLENNIUM PARTNERS-A, L.P.,
a Delaware Limited Partnership
By: DLJ Merchant Banking II, Inc.,
as managing general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-fact
Address:
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJMB FUNDING II, INC., a Delaware
corporation
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-fact
Address:
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
DLJ FIRST ESC, L.L.C.,
By: DLJ LBO Plans Management
Corporation, as manager
44<PAGE>
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-fact
Address:
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
UK INVESTMENT PLAN 1997 PARTNERS
By: Donaldson, Lufkin & Jenrette, Inc.,
as general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-fact
Address:
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
45<PAGE>
DLJ EAB PARTNERS, L.P.
By: DLJ Merchant Banking Funding II,
Inc.,
its general partner
By: /s/ Kirk B. Wortman
Name: Kirk B. Wortman
Title: Attorney-in-fact
Address:
c/o DLJ Merchant Banking II, Inc.
277 Park Avenue
New York, NY 10172
Fax: 212-892-7272
APOLLO INVESTMENT FUND III, L.P.
By Apollo Advisors II, L.P., its
general partner
By Apollo Capital Management II, Inc.,
its general partner
By: /s/ Josh Harris
Name: Josh Harris
Title: Vice President
Address:
1301 Avenue of the Americas
38th Floor
New York, NY 10019
Fax: 212-261-4102
46<PAGE>
APOLLO OVERSEAS PARTNERS III L.P.
By Apollo Advisors II, L.P., its
general partner
By Apollo Capital Management II, Inc.,
its general partner
By: /s/ Josh Harris
Name: Josh Harris
Title: Vice President
Address:
1301 Avenue of the Americas
38th Floor
New York, NY 10019
Fax: 212-261-4102
APOLLO U.K. PARTNERS III, L.P.
By Apollo Advisors II, L.P., its
general partner
By Apollo Capital Management II, Inc.,
its general partner
By: /s/ Josh Harris
Name: Josh Harris
Title: Vice President
Address:
1301 Avenue of the Americas
38th Floor
New York, NY 10019
Fax: 212-261-4102
47<PAGE>
BAIN CAPITAL FUND V L.P.
By: Bain Capital Partners V, L.P.,
its general partner
By: Bain Capital Investors V, Inc., its
general partner
By: /s/ Stephen Pagliuca
Name: Stephen Pagliuca
Title: General Partner
Address:
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Attention: Stephen Pagliuca
Fax: 617-572-3274
BAIN CAPITAL FUND, V-B, L.P.
By: Bain Capital Investors V, L.P., its
general partner
By: Bain Capital Investors V, Inc.,
its general partner
By: /s/ Stephen Pagliuca
Name: Stephen Pagliuca
Title: General Partner
Address:
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Attention: Stephen Pagliuca
Fax: 617-572-3274
48<PAGE>
BCIP ASSOCIATES
By: /s/ Stephen Pagliuca
Name: Stephen Pagliuca
Title: General Partner
Address:
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Attention: Stephen Pagliuca
Fax: 617-572-3274
BCIP TRUST ASSOCIATES, L.P.
By: Bain Capital Investors V, L.P., its
general partner
By: /s/ Stephen Pagliuca
Name: Stephen Pagliuca
Title: General Partner
Address:
c/o Bain Capital, Inc.
Two Copley Place
Boston, MA 02116
Attention: Stephen Pagliuca
Fax: 617-572-3274
49<PAGE>
THOMAS H. LEE EQUITY FUND III, L.P.
By: THL Equity Advisors III
Limited Partnership
By: THL Equity Trust III
By: /s/ Scott Schoen
Name: Scott Schoen
Title: Managing Director
Address:
c/o Thomas H. Lee Company
75 State Street
Boston, MA 02109
Fax: 617-227-3514
THOMAS H. LEE FOREIGN
FUND III, L.P.
By: THL Equity Advisors III
Limited Partnership
By: THL Equity Trust III
By: /s/ Scott Schoen
Name: Scott Schoen
Title: Managing Director
Address:
c/o Thomas H. Lee Company
75 State Street
Boston, MA 02109
Fax: 617-227-3514
50<PAGE>
THL CO-INVESTORS III-A LLC
By: /s/ Thomas H. Lee
Name: Thomas H. Lee
Title: Manager
Address:
c/o Thomas H. Lee Company
75 State Street
Boston, MA 02109
Fax: 617-227-3514
THL CO-INVESTORS III-B LLC
By: /s/ Thomas H. Lee
Name: Thomas H. Lee
Title: Manager
Address:
c/o Thomas H. Lee Company
75 State Street
Boston, MA 02109
Fax: 617-227-3514
DLJ CAPITAL CORP.
By: /s/ Art Zuckerman
Name: Art Zuckerman
Title:
Address:
277 Park Avenue
New York, NY 10172
Fax: 212-892-3444
51<PAGE>
SPROUT GROWTH II, L.P.
By: DLJ Capital Corporation,
its managing general partner
By: /s/ Art Zuckerman
Name: Art Zuckerman
Title:
Address:
277 Park Avenue
New York, NY 10172
Fax: 212-892-3444
THE SPROUT CEO FUND, L.P.
By: DLJ Capital Corporation,
its managing general partner
By: /s/ Art Zuckerman
Name: Art Zuckerman
Title:
Address:
277 Park Avenue
New York, NY 10172
Fax: 212-892-3444
52<PAGE>
ONTARIO TEACHERS' PENSION
PLAN BOARD
By: /s/ Dean Metcalf
Name: Dean Metcalf
Title: Portfolio Manager, Merchant
Banking
Address:
5650 Yonge Street
North York, Ontario
Canada M2M 4H5
Fax: 416-730-5374
53<PAGE>
By: /s/ Kenneth Drager
Kenneth Draeger
By: /s/ Steve Felice
Steve Felice
By: /s/ Tom Fitzpatrick
Tom Fitzpatrick
By: /s/ Steve Friedman
Steve Friedman
By: /s/ Joe Giordano
Joe Giordano
By: /s/ Jim Greenwell
Jim Greenwell
By: /s/ Tom Molchan
Tom Molchan
By: /s/ Dwight Wilson
Dwight Wilson
By: /s/ John Baldus
John Baldus
By: /s/ Bill Beaumont
Bill Beaumont
54<PAGE>
By: /s/ Mark Davis
Mark Davis
By: /s/ Tom Farrell
Tom Farrell
By: /s/ Tom Fogarty
Tom Fogarty
By: /s/ Tom Fogelsong
Tom Fogelsong
By: /s/ Dan Harkins
Dan Harkins
By: /s/ Judy Johnson
Judy Johnson
By: /s/ Bill Lanam
Bill Lanam
By: /s/ Mike Rogers
Mike Rogers
By: /s/ Kirk Scott
Kirk Scott
By: /s/ Tom Walker
55<PAGE>
Tom Walker
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