DECISIONONE HOLDINGS CORP, DEF 14A, 1997-10-28

DECISIONONE HOLDINGS CORP
DEF 14A, 1997-10-28
COMPUTER INTEGRATED SYSTEMS DESIGN

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<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement

[ ] Definitive Additional Materials

[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

DecisionOne Holdings Corp.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.

(1) Title of each class of securities to which transaction applies:

- --------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

- --------------------------------------------------------------------------------

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.

(1) Amount previously paid:

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(2) Form, schedule or registration statement no.:

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(3) Filing party:

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(4) Date filed:

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<PAGE> 2

LOGO

DECISIONONE HOLDINGS CORP.
50 EAST SWEDESFORD ROAD
FRAZER, PENNSYLVANIA 19355

--------------------------------------------------------------

NOTICE OF 1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
DECEMBER 9, 1997
--------------------------------------------------------------

To the Stockholders of
DecisionOne Holdings Corp.:

Notice is hereby given that the 1997 annual meeting of stockholders (the
"Annual Meeting") of DECISIONONE HOLDINGS CORP. (the "Company" or "DecisionOne")
will be held at The Desmond Great Valley Hotel and Conference Center, One
Liberty Boulevard, Malvern, Pennsylvania 19355 on Tuesday, December 9, 1997, at
9:00 a.m., local time, for the following purposes:

1. To elect five directors;

2. To approve and adopt the DecisionOne Holdings Corp. 1997 Management
Incentive Plan; and

3. To transact such other business as may properly come before the Annual
Meeting or any adjournments thereof.

Only stockholders of record as of the close of business on October 22, 1997
will be entitled to notice of the Annual Meeting and to vote at the Annual
Meeting and any adjournments thereof. A list of stockholders entitled to vote at
the Annual Meeting will be available for inspection by any stockholder, for any
purpose relevant to the Annual Meeting, during the Annual Meeting and during
normal business hours for ten days prior to the Annual Meeting at The Desmond
Great Valley Hotel and Conference Center.

By order of the Board of Directors,

Thomas M. Molchan
Secretary

Frazer, Pennsylvania
October 28, 1997

EACH STOCKHOLDER IS URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IF A STOCKHOLDER DECIDES TO ATTEND THE MEETING, HE OR SHE MAY, IF SO
DESIRED, REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.
<PAGE> 3

LOGO

DECISIONONE HOLDINGS CORP.
50 EAST SWEDESFORD ROAD
FRAZER, PENNSYLVANIA 19355
-------------------------------------------------

PROXY STATEMENT
FOR
1997 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
DECEMBER 9, 1997
-------------------------------------------------

This proxy statement and the accompanying form of proxy are being mailed on
or about November 5, 1997 to the stockholders of DecisionOne Holdings Corp. (the
"Company" or "DecisionOne"). These materials are being furnished in connection
with the solicitation by the Board of Directors of the Company of proxies to be
voted at the 1997 annual meeting of stockholders (the "Annual Meeting") to be
held at The Desmond Great Valley Hotel and Conference Center, One Liberty
Boulevard, Malvern, Pennsylvania 19355 on Tuesday, December 9, 1997, at 9:00
a.m., local time, and at any adjournments thereof.

At the Annual Meeting, stockholders of the Company will be asked to vote
upon (1) the election of five directors and (2) the approval and adoption of the
DecisionOne Holdings Corp. 1997 Management Incentive Plan (the "Plan"), and such
other business as may properly come before the meeting and any adjournments
thereof.

The cost of solicitation of proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by telephone by
officers and directors and a small number of regular employees of the Company
who will not be specially compensated for such services. The Company also will
request banks and brokers to solicit proxies from their customers, where
appropriate, and will reimburse such persons for reasonable expenses incurred in
that regard.

The Company's annual report to stockholders for the year ended June 30,
1997, including financial statements, is being mailed to stockholders with this
proxy statement but does not constitute a part of this proxy statement.

VOTING AT THE MEETING

Holders of shares of the Company's common stock, $.01 par value per share
(the "Common Stock"), of record at the close of business on October 22, 1997
(the "Record Date") are entitled to vote at the Annual Meeting. As of that date,
there were 12,503,326 shares of Common Stock outstanding. Each stockholder
entitled to vote shall have the right to one vote for each share of Common Stock
outstanding in such stockholder's name on the books of the Company as of the
close of business on the Record Date.

The Company presently has no other class of stock outstanding and entitled
to be voted at the Annual Meeting. The presence in person or by proxy of
stockholders entitled to cast a majority of all votes entitled to be cast at the
Annual Meeting will constitute a quorum.

Shares cannot be voted at the Annual Meeting unless the holder of record is
present in person or by proxy. The enclosed form of proxy is a means by which a
stockholder may authorize the voting of his, her or its shares at the Annual
Meeting. The shares of Common Stock represented by each properly executed proxy
will be voted at the Annual meeting in accordance with each stockholder's
directions. Stockholders are urged to specify their choices by marking the
appropriate boxes on the enclosed proxy card. If no choice has been specified
and the enclosed proxy card is properly executed and returned, the shares will
be voted as
<PAGE> 4

recommended by the Board of Directors. If any other matters are properly
presented to the Annual Meeting for action, the proxy holders will vote the
proxies (which confer discretionary authority to vote on such matters) in
accordance with their best judgment.

Execution of the accompanying proxy will not affect a stockholder's right
to attend the Annual Meeting and vote in person. Any stockholder giving a proxy
has the right to revoke it by giving written or oral notice of revocation to the
Secretary of the Company, or by delivering a subsequently executed proxy, at any
time before the proxy is voted.

Assuming that a quorum is present, the affirmative vote of a plurality of
the shares of Common Stock present in person or represented by proxy at the
Annual Meeting and entitled to vote is required for the election of directors,
and the affirmative vote of a majority of the shares present in person or
represented by proxy at the Annual Meeting is required to approve and adopt the
Plan. With regard to the election of directors, votes may be cast in favor or
withheld; votes that are withheld will be excluded entirely from the vote and
will have no effect. Abstentions may be specified on the proposal to approve and
adopt the Plan; abstentions will be considered present and entitled to vote at
the Annual Meeting, but will not be counted as votes cast in the affirmative and
will have the effect of a negative vote because such proposal requires the
affirmative vote of a majority of the shares present in person or represented by
proxy at the Annual Meeting entitled to vote.

The Company believes that brokers who are member firms of the New York
Stock Exchange and who hold shares in street name for customers have the
authority to vote those shares with respect to the election of directors if they
have not received instructions from the beneficial owner. The Company does not
believe that brokers have the authority to vote those shares with respect to the
approval and adoption of the Plan. Assuming a quorum is present, failure by
brokers to attend the meeting by proxy and vote those shares will have no effect
on the outcome of the election of directors, as the directors are to be elected
by a plurality of the votes cast, or in the case of the proposal to approve and
adopt the Plan, which requires the affirmative vote of a majority of the shares
present in person or by proxy at the Annual Meeting and entitled to vote.

Your proxy vote is important. Accordingly, please complete, sign and return
the accompanying proxy card whether or not you plan to attend the Annual
Meeting. If you plan to attend the Annual Meeting to vote in person and your
shares are registered with the Company's transfer agent in the name of a broker
or bank, you must secure a proxy from your broker or bank assigning voting
rights to you for your shares of Common Stock.

RECAPITALIZATION AND MERGER

On August 7, 1997, the Company consummated a recapitalization and merger
(the "Recapitalization") with an affiliate of DLJ Merchant Banking Partners II,
L.P. ("DLJMB"). Pursuant to the Recapitalization, DLJ, certain funds affiliated
with DLJ, and third-party investors who have entered into an agreement (the
"Investors' Agreement") with DLJ in respect of the voting and disposition of
shares acquired by them (collectively, the "DLJ Group"), acquired approximately
10.9 million shares, or 87.4% of the outstanding Common Stock in exchange for
approximately $225 million. Such equity proceeds, along with $145.5 million of
net proceeds from the sale of 9 3/4% Senior Subordinated Notes due 2007, $81.6
million of net proceeds from the sale of units consisting of 11 1/2% Senior
Discount Debentures due 2008 and 148,400 Warrants to purchase 281,960 shares of
Common Stock exercisable at $23 per share, and borrowings of $470.0 million
under a $575 million senior secured loan facility were used to repurchase
approximately 26.5 million shares for approximately $609.7 million, cash out
existing options and warrants, repay the Company's then-existing revolving
credit facility, and pay fees and expenses incurred in connection with the
Recapitalization.

2
<PAGE> 5

(PROPOSAL NO. 1)

ELECTION OF DIRECTORS

The Board of Directors of the Company consists of such number of directors
as is fixed from time to time by resolutions adopted by the Board. At the Annual
Meeting, five directors are to be elected. The term of office for each director
will expire at the 1998 annual meeting of stockholders, and each director will
hold office until the election and qualification of the director's successor or
until the director's earlier death, removal or resignation.

The Board of Directors has nominated for election as directors of the
Company Messrs. Draeger, Grauer, Greig, Schloss and Wortman. All nominees are
presently directors of the Company whose terms expire at the Annual Meeting.

All nominees have consented to be named and to serve if elected. Unless
otherwise instructed by the stockholders, the persons named in the proxies will
vote the shares represented thereby for the election of such nominees. The Board
of Directors believes all nominees will be able to serve as directors; if this
should not be the case, however, the proxies may be voted for one or more
substitute nominees to be designated by the Board of Directors or the Board may
decide to reduce the number of directors.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE NOMINEES.

----------------------------------

NOMINEES FOR ELECTION
----------------------------------

<TABLE>
<CAPTION>
YEAR FIRST BECAME DIRECTOR, PRINCIPAL OCCUPATIONS
DURING
NAME OF DIRECTOR AGE PAST FIVE YEARS AND CERTAIN DIRECTORSHIPS
- ------------------------------ --- -------------------------------------------------------
<S> <C> <C>
Kenneth Draeger............... 57 Mr. Draeger has been a director of the Company since
1992. Mr. Draeger has served as the Chief Executive
Officer of the Company since July 1992 and Chairman of
the Company since November 1995. Prior to joining the
Company, Mr. Draeger was President of
Agfa/Compugraphics, a manufacturer of electronic
pre-press equipment. Mr. Draeger is also a director of
Galileo Corporation.
Peter T. Grauer............... 52 Mr. Grauer has been a Managing Director of DLJ Merchant
Banking II, Inc. since September 1992. From April 1989
to September 1992, he was Co-Chairman of Grauer &
Wheat, Inc., an investment firm specializing in
leveraged buyouts. Prior thereto Mr. Grauer was a
Senior Vice President of Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJSC"). Mr. Grauer is a
director of Doane Products Co., Nebco Evans Holding
Company, AmeriServe Food Distribution, Inc. and Total
Renal Care Holdings, Inc. (NYSE:TRL).

Thomas G. Greig............... 49 Mr. Greig is a Managing Director in the Investment
Banking Group of Donaldson, Lufkin & Jenrette, Inc.
("DLJ") and serves as co-head of the Technology
Investment Banking Group. Mr. Greig is a director of
Manufacturers Services Limited, a contract electronics
manufacturer. Mr. Greig has over 20 years of experience
in the investment banking industry, the majority of
which he has spent working with technology based
companies.
</TABLE>

3
<PAGE> 6

Kirk B. Wortman............... 35 Mr. Wortman has been a Principal of DLJ Merchant
Banking II, Inc. since February 1997. For the five
years prior to joining DLJ Merchant Banking, Inc. he
worked in the Leveraged Finance Group within DLJ's
Investment Banking Group, most recently as a Senior
Vice President.
</TABLE>

GENERAL INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES

The Board of Directors of the Company met on seven occasions during fiscal
1997. The Delaware General Corporation Law provides that the Board of Directors,
by resolution adopted by a majority of the entire Board, may designate one or
more committees, each of which shall consist of one or more directors. The Board
of Directors has established an Audit Committee and a Compensation Committee. In
connection with the Recapitalization and the resulting change in majority
ownership of the Company, Messrs. Grauer, Greig, Schloss and Wortman were
elected to the Board replacing the then current outside directors. The only
current director of the Company who was also a director during fiscal year 1997
is Mr. Draeger. Mr. Draeger attended at least 75% of the meetings of the Board
of Directors held during the period for which he was a director and the meetings
of the committee or committees on which he served during such period.

Audit Committee. The Audit Committee is responsible for providing general
oversight with respect to the accounting principles employed in DecisionOne's
financial reporting. The Audit Committee meets periodically with the Company's
principal financial and accounting officers and independent public accountants
to review the scope of auditing procedures and the Company's policies relating
to internal auditing and accounting procedures and controls. The Audit Committee
met three times during fiscal 1997. The Audit Committee is currently composed of
two non-employee directors, Messrs. Schloss and Wortman.

Compensation Committee. The Compensation Committee determines the annual
salary and bonus and reviews the amount of remuneration in stock options of the
Company's senior executives; reviews the operation of the Company's executive
compensation programs; and establishes and periodically reviews policies in the
area of management benefits. None of the members of the Compensation Committee
may be officers or employees of the Company. The current members of the
Compensation Committee are Messrs. Grauer and Greig. The Compensation Committee
met three times during fiscal 1997. Prior to December 1996, the Stock Option
Committee administered the Company's stock option plan. In December 1996, the
Board merged the Stock Option Committee into the Compensation Committee, which
assumed the former Committee's responsibilities.

4
<PAGE> 7

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of October 22, 1997
(except as otherwise noted) regarding the ownership of Common Stock (i) by each
person known by the Company to be the beneficial owner of more than five percent
of the Company's outstanding Common Stock, (ii) by each director of the Company,
(iii) by each executive officer of the Company named in the Summary Compensation
Table included elsewhere in this proxy statement and (iv) by all current
executive officers and directors of the Company as a group.

<TABLE>
<CAPTION>
NUMBER OF
SHARES BENEFICIALLY PERCENTAGE
BENEFICIAL OWNER OWNED(1) OF CLASS(1)
- ----------------------------------------------------------------- ------------------- -----------
<S> <C> <C>
DLJ Merchant Banking Partners II, L.P. group..................... 11,295,930 88.37%
277 Park Avenue, New York, NY 10172(2)
Kenneth Draeger(2)(3)............................................ 3,473 *
Stephen J. Felice(2)(3).......................................... -- --
Thomas J. Fitzpatrick(2)(3)...................................... -- --
James J. Greenwell(2)(3)......................................... -- --
Thomas M. Molchan(2)(3).......................................... -- --
Peter T. Grauer(4)............................................... -- --
Tom G. Greig(4).................................................. -- --
Lawrence M. v.D. Schloss(4)...................................... -- --
Kirk B. Wortman(4)............................................... -- --
All current executive officers and directors as a group (11
persons)(2)(3)................................................. 3,473 *
</TABLE>

- ---------------
* Less than one percent.
(1) Applicable percentage of ownership is based on 12,503,326 shares of Common
Stock outstanding as of October 22, 1997, together with applicable options
for such stockholders. In accordance with the rules of the Securities and
Exchange Commission, options to purchase shares of Common Stock that are
exercisable as of October 22, 1997 or exercisable within 60 days thereafter
are deemed to be beneficially owned by the person holding such option for
purpose of computing such person's percentage ownership, but are not
treated as outstanding for the purpose of computing the percentage of any
other person. The nature of ownership consists of sole voting or investment
power unless noted otherwise.

(2) Consists of the following:

(a) 7,520,009 shares held directly by DLJMB and the following investors related
to DLJMB (collectively, "DLJ Entities") DLJ Offshore Partners, II, C.V.
("Offshore"), a Netherlands Antilles limited partnership, DLJ Diversified
Partners, L.P. ("Diversified"), a Delaware limited partnership, DLJMB
Funding II, Inc. ("Funding"), a Delaware corporation, DLJ Merchant Banking
Partners II-A, L.P. ("DLJMBPIIA"), a Delaware limited partnership, DLJ
Diversified Partners-A L.P. ("Diversified A"), a Delaware limited
partnership, DLJ Millennium Partners, L.P. ("Millennium"), a Delaware
limited partnership, DLJ Millennium Partners-A, L.P. ("Millennium A"), a
Delaware limited partnership, DLJ EAB Partners, L.P. ("EAB"), a Delaware
limited partnership, UK Investment Plan 1997 Partners ("UK Partners"), a
Delaware partnership, and DLJ First ESC LLC, a Delaware limited liability
company ("DLJ First"). See "Certain Relationships and Related
Transactions." The address of each of DLJMB, Diversified, Funding,
DLJMBPIIA, Diversified A, Millenium, Millenium A, DLJ First and EAB is 277
Park Avenue, New York, New York 10172. The address of Offshore is John B.
Gorsiraweg 14, Willemstad, Curacao, Netherlands, Antilles, The address of
UK Partners is 2121 Avenue of the Stars, Fox Plaza, Suite 3000, Los
Angeles, California 90067.

(b) 3,398,970 shares held by the following institutional investors
(collectively, "Institutional Investors") which are parties to the
Investors' Agreement: Apollo Advisors II, L.P. ("Apollo"), Bain Capital,
Inc.

5
<PAGE> 8

("Bain Capital"), Thomas H. Lee Company ("THL"), certain investment funds
associated with DLJ Capital Corp. ("Sprout") and Ontario Teacher's Pension
Plan Board ("Teachers").

Apollo's shares (representing approximately 6.48% of the outstanding Common
Stock) are held by Apollo Investment Fund III, L.P., a Delaware limited
partnership ("AIF III"), Apollo Overseas Partners III, L.P., a Delaware
limited partnership ("Overseas Partners"), and Apollo (U.K.) Partners III,
L.P., a limited partnership organized under the laws of England ("Apollo UK
Partners") (collectively, "Apollo Entities"). Each of the Apollo Entities
is principally engaged in the business of investment securities.

Apollo Advisors II, L.P., a Delaware limited partnership ("Advisors"), is
the general partner of AIF III and the managing general partner of Overseas
Partners and Apollo UK Partners. Advisors is principally engaged in the
business of providing advice regarding investments by, and serving as the
general partner of, the Apollo Entities. The address of Apollo is 1301
Avenue of the Americas, 38th Floor, New York, New York 10019.

Bain Capital's shares (representing approximately 6.48% of the outstanding
Common Stock) are held by Bain Capital Fund V, L.P., Bain Capital Fund,
V-B, L.P., BCIP Associates, and BCIP Trust Associates, L.P. Bain Capital
Investors V, Inc. is the general partner of Bain Capital Partners V, L.P.
("BCP V"), a Delaware limited partnership. BCP V is the general partner of
Bain Capital Fund V, L.P. and Bain Capital Fund V-B, L.P. (the "Bain Fund
Vs"), both of which are Delaware limited partnerships. The Bain Fund Vs'
primary business activity is to make investments in private equity
securities and other interests in business organizations, domestic and
foreign.

BCIP Associates, a general partnership, and BCIP Trust Associates, L.P., a
limited partnership (together the "BCIPs"), are both organized under the
laws of the state of Delaware. The BCIPs' primary business activity is to
make investments in private equity securities and other interests in
business organizations, domestic and foreign. The address of Bain Capital
is Two Copley Place, Boston, Massachusetts 02116.

THL's shares (representing approximately 6.48% of the outstanding Common
Stock) are held by Thomas H. Lee Equity Fund III, L.P., a Delaware limited
partnership ("Fund III"), Thomas H. Lee Foreign Fund III, L.P., a Delaware
limited partnership ("Foreign Fund"), THL Co-Investors III-A, LLC, a
Massachusetts limited liability company ("Co-Investors A"), the THL
Co-Investors III-B, LLC, a Massachusetts limited liability company
("Co-Investors B"). The general partners of each of Fund III and Foreign
Fund is THL Equity Advisors III Limited Partnership, a Massachusetts
limited partnership ("Equity Advisors"). The general partner of Equity
Advisors is THL Equity Trust III, a Massachusetts business trust, the
beneficial owners of which are affiliates of Thomas H. Lee Company. The
manager of each of Co-Investors A and Co-Investors B. is Thomas H. Lee. The
address of THL is 75 State Street, 26th Floor, Boston, Massachusetts 02109.

DLJ Capital Corp. ("DLJCC"), a Delaware corporation, Sprout Growth II,
L.P., a Delaware limited partnership, The Sprout CEO Fund, L.P., a Delaware
limited partnership and one additional entity managed by the Sprout Group,
the venture capital affiliate of DLJ, also own Common Stock. DLJCC is a
wholly owned subsidiary of DLJ. Sprout Growth II, L.P. has two general
partners: DLJCC is also the managing general partner and DLJ Growth
Associates II, L.P. is the general partner. DLJ Growth Associates II, L.P.
is a Delaware limited partnership, whose general partners are a group of
individual employees of DLJCC and DLJ Growth Associates (II), Inc. a
Delaware corporation which is a wholly owned subsidiary of DLJCC. DLJCC is
the managing general partner of The Sprout CEO Fund. The address of Sprout
is 277 Park Avenue, New York, New York 10172.

Teachers is an independent corporation established in 1990 to administer
the benefits and manage the investments of the pension plan for over
200,000 Ontario teachers. At year end 1995, the fund assets stood at a
total of Cdn $51 billion. The address of Teachers is 5650 Yonge Street, 5th
Floor, North York, Ontario M2M 4H5;

6
<PAGE> 9

(c) 97,520 shares held by certain members of management of the Company who are
parties to the Investors' Agreement (the "Management Shareholders"),
including shares held by the executive officers named in the Summary
Compensation Table as follows: Mr. Felice -- 12,130; Mr.
Fitzpatrick -- 5,661; Mr. Molchan -- 4,851; and Mr. Greenwell -- 5,094;

(d) 243,993 shares, which shares are subject to the Investors' Agreement,
issuable upon exercise of fully-vested options (the "Rollover Options")
resulting from the conversion by certain Management Shareholders of options
outstanding at the time of the Recapitalization, including 96,104; 24,459;
18,601; 7,812; and 12,066 Rollover Options held by Messrs. Draeger, Felice,
Fitzpatrick, Greenwell, and Molchan, respectively; and

(e) 35,438 shares, which shares are subject to the Investors' Agreement,
issuable upon exercise of options granted to Mr. Draeger under the Plan on
August 7, 1997 that are exercisable as of October 22, 1997 or within 60
days thereafter.

(3) Mr. Draeger owns 3,473 shares of common stock which are not subject to the
Investors' Agreement and as to which he is the beneficial owner. Messrs.
Felice, Fitzpatrick, Greenwell and Molchan own no shares or options that
are not subject to the Investors' Agreement. See footnotes 2(c), 2(d) and
2(e) above.

(4) Messrs. Schloss, Grauer and Wortman are officers of DLJ Merchant Banking
II, Inc., an affiliate of DLJMB. DLJ Merchant Banking II, Inc. is the
general partner of DLJ Merchant Banking II, L.P. Mr. Greig is an officer of
DLJSC. Share data shown for such individuals excludes shares shown as held
by the DLJMB Funds, as to which such individuals disclaim beneficial
ownership.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Investors' Agreement restricts transfers of the shares of Common Stock
by the Management Shareholders, permits the Management Shareholders to
participate in certain sales of shares of Common Stock by the DLJ Entities,
requires the Management Shareholders to sell shares of Common Stock in certain
circumstances should the DLJMB Entities choose to sell any such shares owned by
the DLJ Entities, permits the Management Shareholders and the Institutional
Shareholders to purchase equity securities proposed to be issued by the Company
on a preemptive basis in the event the DLJ Entities choose to acquire any such
equity securities, and provides for certain registration rights. The Investors'
Agreement also provides that the DLJ Entities have the right to appoint a
majority of the members of the Board of Directors of the Company.

In addition, DLJ Capital Funding, Inc., an affiliate of the DLJ Entities,
received customary fees and reimbursement of expenses in connection with the
arrangement and syndication of the new credit facility entered into by a
subsidiary of the Company in connection with the Recapitalization and as a
lender thereunder. DLJSC received customary fees in connection with the
underwriting of the Senior Subordinated Notes and the Debentures issued by the
Company in connection with the Recapitalization. DLJSC received a merger
advisory fee of $5.0 million from the Company upon consummation of the
Recapitalization.

The Company has entered into an agreement with DLJSC pursuant to which
DLJSC will act as the Company's exclusive financial advisor for an annual fee of
$500,000. In addition, the Company agrees to engage DLJSC in connection with any
financial transaction (as defined in the agreement) on usual and customary terms
for such engagements. The agreement continues until the earlier of (i) August 6,
2002 or (ii) such time as the DLJ Entities shall own less than 20% of the
outstanding Common Stock.

In connection with the Recapitalization, the Company extended non-recourse
loans (the "Loans") to the following executive officers, in the amounts shown,
to fund, in whole or in part, their purchase of shares of Common Stock: Stephen
J. Felice -- $249,979.89; Thomas J. Fitzpatrick -- $116,664.15; Joseph S.
Giordano -- $99,971.35; James J. Greenwell -- $104,979.19; Thomas M.
Molchan -- $99,971.35; and Dwight T. Wilson -- $99,971.35. Each of the Loans
matures on August 7, 2001, with interest at the rate of 6.39% per annum and
principal due and payable at maturity. The Loans are secured by a pledge of the
shares of

7
<PAGE> 10

Common Stock purchased with the Loans and any shares of Common Stock obtained
through the borrower's exercise of Rollover Options or options issued under the
Plan. The loan amounts shown above represent the amount outstanding as of
October 28, 1997 and the largest aggregate amount of indebtedness outstanding at
any time since July 1, 1996.

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The following table sets forth certain information concerning the current
directors and executive officers of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------- ---- -------------------------------------------------
<S> <C> <C>
Kenneth Draeger.................... 57 Chairman and Chief Executive Officer and Director
Stephen J. Felice.................. 40 President
Thomas J. Fitzpatrick.............. 39 Vice President and Chief Financial Officer
Joseph S. Giordano................. 42 Senior Vice President -- Operations
James J. Greenwell................. 38 Senior Vice President -- Sales & Marketing
Thomas M. Molchan.................. 42 General Counsel and Corporate Secretary
Dwight T. Wilson................... 41 Vice President -- Human Resources
Peter T. Grauer.................... 52 Director
Thomas G. Greig.................... 49 Director
Lawrence M. v.D. Schloss........... 43 Director
Kirk B. Wortman.................... 35 Director
</TABLE>

Kenneth Draeger has been the Chief Executive Officer of the Company since
July 1992 and Chairman of the Company since November 1995. From 1988 to 1991,
Mr. Draeger was President of Agfa/Compugraphic, a manufacturer of electronic
pre-press equipment. Mr. Draeger is also a director of Galileo Corporation.

Stephen J. Felice has been the President of the Company since October 1995.
Mr. Felice joined Bell Atlantic Business Systems Services, Inc. ("BABSS") (which
was acquired by the Company in October 1995) in March 1987. He served as Vice
President and General Manager, Sales and Operations from January 1991 to October
1995 and was responsible for all service delivery, sales activity, customer
management, and marketing channels with management responsibility over almost
3,000 employees.

Thomas J. Fitzpatrick has been the Vice President and Chief Financial
Officer of the Company since August 1996. Prior to August 1996 Mr. Fitzpatrick
was Vice President of Network Finance at Bell Atlantic Network Services, Inc.
Mr. Fitzpatrick served more than eight years at BABSS, including over four years
as Vice President and Chief Financial Officer.

Joseph S. Giordano has been Senior Vice President -- Operations of the
Company since October 1995. From October 1993 to October 1995, Mr. Giordano was
Vice President Sales and Service Delivery of BABSS. From January 1991 to October
1993, he was an Area General Manager of BABSS.

James J. Greenwell has been Senior Vice President -- Sales & Marketing of
the Company since October 1995, and was Vice President Sales and Marketing of
the Company from 1993 to October 1995. From January 1992 to 1993, Jr. Greenwell
was Director of Operations of the Company's Qantel operation. Prior to January
1992, he was Vice President, Sales and Marketing of Qantel Corporation.

Thomas M. Molchan has been General Counsel and Corporate Secretary of the
Company since October 1995. From December 1986 to October 1995, he was Vice
President and General Counsel of BABSS.

Dwight T. Wilson has been Vice President -- Human Resources of the Company
since October 1995. From April 1994 to October 1995, Mr. Wilson was Vice
President -- Human Resources of BABSS. From October 1990 to March 1994, Mr.
Wilson was Director, Human Resources Policies and Planning of BABSS.

Peter T. Grauer has been a Managing Director of DLJ Merchant Banking II,
Inc. since September 1992. From April 1989 to September 1992, he was Co-Chairman
of Grauer & Wheat, Inc., an investment firm

8
<PAGE> 11

specializing in leveraged buyouts. Prior thereto Mr. Grauer was a Senior Vice
President of Donaldson, Lufkin & Jenrette Securities Corporation. Mr. Grauer is
a director of Doane Products Co., Nebco Evans Holding Company, AmeriServe Food
Distribution, Inc., and Total Renal Care Holdings, Inc. (NYSE:TRL).

Thomas G. Greig is a Managing Director of the Investment Banking Group of
DLJ and serves a co-head of the Technology Investment Banking Group. Mr. Greig
is a director of Manufacturers Services Limited, a contract electronics
manufacturer. Mr. Greig has over 20 years of experience in the investment
banking industry, the majority of which he has spent working with technology
based companies.

Lawrence M.v.D. Schloss has been the Managing Partner of DLJ Merchant
Banking II, Inc. since November 1995. Prior to November 1995, he was the Chief
Operating Officer and Managing Director of DLJ Merchant Banking, Inc. Mr.
Schloss currently serves as Chairman of the Board of McCulloch Corporation and
as a director of Wilson Greatbatch, Inc. Mr. Schloss has previously served as a
director of GTECH Corporation (NYSE:GTK), Krueger International, Inc., OSi
Specialties, Inc. and MPB Corporation.

Kirk B. Wortman has been a Principal of DLJ Merchant Banking II, Inc. since
February 1997. For the five years prior to joining DLJ Merchant Banking, Inc. he
worked in the Leveraged Finance Group within DLJ's Investment Banking Group,
most recently as a Senior Vice President.

COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth for the years ended June 30, 1997, 1996 and
1995 certain compensation paid by the Company to its Chief Executive Officer and
the four other most highly paid executive officers of the Company whose cash
compensation exceeded $100,000 for the year ended June 30, 1997.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION
COMPENSATION ------------
-------------------------------------- SECURITIES
OTHER UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS ANNUAL OPTIONS/SARS
- --------------------------------- ---- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Kenneth Draeger.................. 1997 425,000 500,000 -- 50,000
Chief Executive Officer 1996 355,000 484,500(1) -- 70,000
1995 250,625 375,000 -- --
Stephen J. Felice................ 1997 225,000 300,000 -- 9,000
President 1996 157,500(2) 130,340(2) -- 100,000
1995 -- -- -- --
Thomas J. Fitzpatrick............ 1997 168,077(3) 155,000(3) 224,908(4) 100,000
Vice President and Chief 1996 -- -- -- --
Financial Officer 1995 -- -- -- --
Thomas M. Molchan................ 1997 139,300 95,000 -- 10,000
General Counsel and Corporate 1996 90,020(2) 42,725(2) -- 33,000
Secretary 1995 -- -- -- --
James J. Greenwell............... 1997 140,500 85,088 -- --
Senior Vice President -- Sales 1996 131,000 58,460 -- 10,000
and Marketing 1995 129,500 90,000 -- 40,000
</TABLE>

- ---------------
(1) Mr. Draeger's bonus for fiscal 1996 was paid in two parts. $357,000 of this
bonus was paid on August 15, 1996. The remaining $127,500 was paid on May
15, 1997 after completion of ten consecutive trading days where the share
price of Common Stock closed above $18.00.

(2) Messrs. Felice and Molchan joined the Company and were named executive
officers on October 21, 1995. The salaries and bonuses shown reflect the
amount earned after such date through June 30, 1996.

(3) Mr. Fitzpatrick joined the Company and was named an executive officer on
August 12, 1996. The salary and bonus reflect the amount earned after such
date through June 30, 1997. Of the bonus amount, $30,000 was a one-time
signing bonus.

(4) Of this amount, $223,908 is for relocation assistance. The other $1,000 was
for tax preparation assistance.

9
<PAGE> 12

The following table summarizes stock options granted during fiscal 1997 to
the person named in the Summary Compensation Table.

OPTIONS/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OF FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -------------------------
NAME(2) GRANTED(1) FISCAL 1997 ($/SH) DATE 5% 10%
- ----------------------- ---------- ------------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Kenneth Draeger........ 50,000 4.3% $16.750 12/04/06 $ 526,699 $1,334,759
Stephen J. Felice...... 9,000 0.8 16.750 12/04/06 94,806 240,257
Thomas J.
Fitzpatrick.......... 100,000(3) 8.7 22.875 08/12/06 1,438,596 3,645,686
100,000 8.7 14.000 09/08/06 880,452 2,231,239
Thomas M. Molchan...... 10,000 0.9 16.750 12/04/06 105,340 266,952
James J. Greenwell..... -- -- -- -- -- --
</TABLE>

- ---------------
(1) Options vest in four equal annual installments commencing on the first
anniversary date of grant. Unvested options are subject to termination upon
termination of the optionee's service with the Company.

(2) Potential Realizable Values are based on an assumption that the share price
of the Company Common Stock starts equal to the exercise price shown for
each particular option grant and appreciates at the annual rate shown
(compounded annually) from the date of the grant until the end of the term
of the option. These amounts are reported net of the option exercise price,
but before any taxes associated with exercise or subsequent sale of the
underlying stock. The actual value, if any, an optionholder may realize will
be a function of the extent to which the share price exceeds the exercise
price on the date the option is exercised and also will depend on the
optionholder's continued employment through the vesting period. The actual
value to be realized by the option holder may be greater or less than the
values estimated in this table.

(3) This grant which was issued on August 13, 1996 was subsequently canceled
and, as shown in the table, replaced by another grant on September 9, 1996.

The following table summarizes option exercises during fiscal 1997 and the
value of vested and unvested options for the person named in the Summary
Compensation Table at June 30, 1997. Year-end values are based upon a price of
$22.75 per share, which was the closing market price of a share of Common Stock
on June 30, 1997, the last trading day of the fiscal year.

AGGREGATED OPTION/SAR EXERCISES IN LAST YEAR AND YEAR-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT JUNE 30, 1997 AT JUNE 30, 1996
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth Draeger............. 25,000 337,500 1,109,780 102,500 24,561,355 1,074,375
Stephen J. Felice........... 3,000 24,750 22,000 84,000 324,500 1,160,250
Thomas J. Fitzpatrick....... -- -- -- 100,000 -- 875,000
Thomas M. Molchan........... -- -- 8,250 34,750 121,688 425,063
James J. Greenwell.......... 60,000 1,040,000 79,000 27,500 1,629,000 445,625
</TABLE>

The Company does not currently grant any long-term incentives, other than
stock options, to its executives or other employees, nor does it sponsor any
defined benefit or actuarial plans at this time.

10
<PAGE> 13

In connection with the Recapitalization, all outstanding options granted to
employees and directors, whether or not vested, were cancelled, and the holders
of such options either received a cash payment in respect of such options or
converted them into fully-vested options to purchase Common Stock.

EMPLOYMENT AND SEVERANCE AGREEMENTS

Mr. Draeger entered into an employment agreement with DecisionOne Holdings
Corp. and DecisionOne Corporation (the "Companies") as of August 7, 1997
pursuant to which he serves as the Chairman and Chief Executive Officer of the
Companies. Under the agreement, which has an initial two year term and provides
for two automatic one year extensions unless notice is given to the contrary,
Mr. Draeger receives a base salary of at least $450,000, is eligible to receive
an annual bonus based on the consolidated operating performance of the Company
and enjoys certain perquisites. Mr. Draeger also received options to purchase
290,000 shares under the Plan, which vest 7.5% on the date of the grant and
1.18% on the first day of every month for the 36 months beginning the month
following the date of grant and the remaining 50% of which vest based upon the
achievement of performance goals. Upon a change of control of the Companies in
which the DLJ Group generate an internal rate of return on their investment in
excess of 40%, Mr. Draeger is entitled to a special bonus ranging from
$5,000,000 to $15,000,000. Upon a termination of employment without cause, Mr.
Draeger will receive an amount equal to 150% of his base salary and the annual
cash bonus received by him with respect to the immediately preceding fiscal
year, 50% of which is payable immediately and 50% of which is payable over an
eighteen month period, and a prorated bonus for the year of termination. Upon a
termination of employment by Mr. Draeger for any reason, he will receive
continued payment of his base salary for a six month period and a prorated bonus
for the year of termination. In addition, upon any termination of employment,
Mr. Draeger will continue to be provided with health benefits until the earlier
of his reaching the age of 65 or becoming a full time employee at another
company. Mr. Draeger is subject to a perpetual confidentiality covenant, a one
year noncompetition covenant (which the Companies may elect to extend for an
additional year in exchange for continued payment of base salary for such one
year period) and a two year nonsolicitation covenant. The agreement also governs
the transferability of certain rollover options held by Mr. Draeger.

Mr. Felice entered into an employment agreement with the Companies as of
August 7, 1997 pursuant to which he serves as the President and Chief Operating
Officer of the Companies. Under the agreement, which has an initial two year
term and provides for automatic one year extensions unless notice is given to
the contrary, Mr. Felice receives a base salary of at least $250,000, is
eligible to receive an annual bonus based on the consolidated operating
performance of the Companies and enjoys certain perquisites. Upon a change of
control of the Companies in which the initial investors generate an internal
rate of return on their initial investment in excess of 40%, Mr. Felice is
entitled to receive a special bonus ranging from $2,500,000 to $7,500,000. Upon
a termination of employment without cause, by Mr. Felice for "good reason" (as
defined in the agreement) or by the Companies' election not to extend the term,
Mr. Felice will receive an amount equal to 150% of his base salary annual cash
bonus received by him with respect to the immediately preceding fiscal year
(125% in the case of a termination for good reason), payable over an eighteen
(or fifteen, as applicable) month period. Upon a termination of employment by
reason of death or disability, Mr. Felice will receive continued payment of base
salary for a one year period and a prorated bonus for the year of termination.
Mr. Felice is subject to a perpetual confidentiality covenant, a one year
noncompetition covenant and a two year nonsolicitation covenant.

Messrs. Fitzpatrick, Giordano, Greenwell, Molchan and Wilson have severance
arrangements with the Company which in various instances provide for a severance
payment of up to one times base annual salary, a pro-rata portion of accrued
bonus, and the continuation of certain benefits for up to one year in the event
of termination without cause.

COMPENSATION OF DIRECTORS

During fiscal year 1997, non-employee directors received an annual retainer
of $10,000 as well as $1,500 for attendance at any meeting of the Board of
Directors or any meeting of the Audit Committee or

11
<PAGE> 14

Compensation Committee, except telephonic meetings and committee meetings held
on the same date as a Board meeting. There is no current policy with respect to
compensation of non-employee directors

The following Compensation Committee Report and the Comparative Stock
Performance Graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933, as amended, or under the Securities Exchange Act of
1934, as amended, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.

REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board (the "Committee") is responsible
for setting the base salaries and the total compensation levels of the Chief
Executive Officer (the "CEO") and the other executive officers of the Company.
In addition, the Committee is responsible for setting the performance criteria
for annual cash incentive awards and determining the achievement levels and
payout for the executive officers. Finally, the Committee is responsible for
determining which executives and other key employees, including the CEO, will be
granted stock options and restricted stock and the size of such grants. Prior to
December 5, 1996, these duties were divided between the Committee and a Stock
Option Committee, which administered the Company's stock option plan; on that
date, the Board merged the Stock Option Committee into the Committee.

In connection with the Recapitalization, the entire membership of the
Committee changed and no current member of the Committee was a member of the
Board at the end of the fiscal year. Except as otherwise stated in this report,
the current members of the Committee have determined to maintain the policies
set by the former members of the Committee.

COMPENSATION POLICIES

The Company's compensation policies for executive officers, as established
by the Board and continued by the Committee, are designed to (a) provide
competitive compensation packages that will attract and retain superior
executive talent, (b) link a significant portion of compensation to financial
results, so as to reward successful performance, and (c) provide long-term
equity compensation, to further align the interests of executive officers with
those of stockholders and further reward successful performance. The principal
components of the Company's executive officer compensation program are base
salary, annual cash incentive awards, and grants of stock options.

ANNUAL COMPENSATION

The primary factor used to set cash compensation for the Company's
executive officers is an analysis of competitive executive compensation based
upon general business compensation surveys as well as more specific compensation
surveys of companies of comparable business, size and complexity to the Company.
The Committee relies on the Human Resources Department of the Company to analyze
competitive compensation with respect to executive compensation. The Company
engages William M. Mercer, Inc., an independent compensation consultant, to
advise on competitive compensation. The Committee relies on the analysis to
choose the most direct competitors for executive talent, which are not the same
companies that are included in the S&P Computer Software and Services Index (See
Performance Graph). Thus, the compensation peer group is not the same as the
companies in the index used in the Performance Graph included in this Proxy
Statement.

The Company's policy is to pay its executive officers at competitive
compensation medians for comparable positions. Compensation levels of individual
executive officers vary depending upon a subjective assessment of individual
factors such as the executive's position, skills, achievements and historical
compensation levels. Incentive awards are designed to give competitive cash
compensation if performance targets are met, more than competitive compensation
if performance targets are exceeded, and less than competitive compensation if
performance targets are not met. Previously granted stock options are not
considered in setting cash compensation levels.

12
<PAGE> 15

Subsequent to the fiscal year-end and effective with the change in majority
ownership of the Company, Messrs. Draeger and Felice signed employment
agreements with the Company (see "Employment and Severance Agreements" herein).
Both agreements set target cash compensation at the 75th percentile of the
aforementioned compensation peer group. Base salaries remain unchanged, so the
entire change in cash compensation is higher targets for cash incentive awards.
It is the opinion of the Committee that this increase is required because the
continued leadership of these two individuals is important to the future worth
of the Company and because of the very competitive labor market for experienced
executives in the technology and service industries.

Executive officers, including the CEO (as discussed separately below),
earned cash incentive awards in fiscal 1997 based upon individual annual
accomplishments measured against individual the pre-established goals.
Seventy-five percent (75%) of the target award for each executive was calculated
based on achievement of specified earnings per share goals. The remaining 25% of
the target award was based on achievement of individual performance objectives
by each executive officer. The individual performance objectives included:
targets for revenue growth, operating cash flow, materials management, and
accounts receivable; goals for customer satisfaction and productivity; the
development of market positions for new offerings; the development of advanced
call management systems; the design and implementation of enhanced managerial
reporting; the design and implementation of incentive plans; and the design and
implementation of compliance and audit programs. Performance criteria varied by
executive officer, and each executive officer had different weighting for his
individual performance objectives. Executive officers, excluding the Chief
Executive Officer, received one-eighth of their annual incentive award target in
quarterly payments for each quarter in which the Company met or exceeded its
year-to-date earnings per share target. These payments were deducted from the
final incentive payment for fiscal 1997.

LONG-TERM COMPENSATION

The Company has granted stock options at irregular intervals at the
discretion of the Committee. The number of options in each grant is not based on
any specific criteria. However, the Committee considered primarily the
executive's position, skills and achievements, and the level and timing of
previously granted stock options.

COMPENSATION OF CHIEF EXECUTIVE OFFICER

Mr. Draeger's annual base salary was raised to $450,000 by the outside
directors effective on January 1, 1997. The Committee is of the opinion that Mr.
Draeger's base salary is comparable to the median of competitive base salaries
for executives from companies of similar annual revenues, operating earnings and
growth potential.

The Committee set a target for Mr. Draeger's annual cash award based on the
median of competitive cash compensation for executives from companies of similar
annual revenues, operating earnings and growth potential. The outside directors
of the Board established a formula for Mr. Draeger's 1997 annual cash incentive
award based on earnings per share performance. The Committee retained the
discretion to award an additional amount based on an evaluation of Mr. Draeger's
achievements. The Company's earnings per share exceeded the target for fiscal
1997. In making its determination, the Committee evaluated Mr. Draeger's
achievement of other objectives, including those for revenue and customer
satisfaction, new service offerings, and various non-financial personal and
organizational goals. The Committee did not assign specific weights to the
performance objectives. Based on the earnings per share results and its overall
assessment, the Committee awarded Mr. Draeger a bonus of $500,000.

The long-term incentive for Mr. Draeger is provided in the form of stock
options. In recognition of the Company's growth and Mr. Draeger's leadership in
achieving the Company's growth and profitability over the term of his
employment, the Committee granted him in December 1996, options to acquire
50,000 shares, vesting in equal annual increments over four years and
exercisable at $16.75 per share, the fair market value at the time of grant.

13
<PAGE> 16

DEDUCTIBILITY OF CERTAIN COMPENSATION

Section 162(m) of the Internal Revenue Code generally denies a federal
income tax deduction for certain compensation exceeding $1,000,000 paid to the
chief executive officer or any of the four other highest paid executive
officers, excluding (among other things) certain performance-based compensation.
Through June 30, 1997, this provision has not affected the Company's tax
deductions, but the Committee will continue to monitor the potential impact of
section 162(m) on the Company's ability to deduct executive compensation. The
Committee notes that the Company's compensation plan contains provisions
relating to stock options that are designed to preserve the deductibility of
income realized upon exercise of stock options.

COMMITTEE MEMBERSHIP

From July 1, 1996 through December 5, 1996, the Compensation Committee
consisted of Thomas E. McInerney and Don E. Ackerman; from December 5, 1996
through August 7, 1997, the Committee consisted of Mr. McInerney, Bruce K.
Anderson and Michael C. Brooks; and currently consists of Peter T. Grauer and
Thomas G. Grieg.

14
<PAGE> 17

COMPARATIVE STOCK PERFORMANCE GRAPH

The graph below compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative total stockholder return of (i) the
Standard & Poor's 500 Stock Index (the "S & P Index"), and (ii) the Standard &
Poor's Computer Software & Services Index (the "Computer Index"), assuming an
investment of $100 on April 4, 1996 in each of the Common Stock of the Company,
the stocks comprising the S & P Index and the stocks comprising the Computer
Index, and further assuming reinvestment of dividends. The graph commences as of
April 4, 1996, the date the Common Stock became publicly-traded.

DECISIONONE VS. S&P 500 VS. S&P COMPUTER SOFTWARE AND SERVICES INDEX
RELATIVE STOCK PRICE COMPARISON
APRIL 4, 1996 THROUGH JUNE 30, 1997

<TABLE>
<CAPTION>
S&P COMPUTER
MEASUREMENT PERIOD SOFTWARE|AND
(FISCAL YEAR COVERED) DECISIONONE S&P 500 SERVICES INDEX
<S> <C> <C> <C>
4/4/96 100.000 100.000 100.000
6/28/96 108.571 102.258 111.771
12/31/96 75.429 112.942 136.429
6/30/97 104.000 134.959 185.720
</TABLE>

The graph assumes $100 invested in DecisionOne and the two indices on April 4,
1996.

(PROPOSAL NO. 2)

APPROVAL OF MANAGEMENT INCENTIVE PLAN

At the Annual Meeting, there will be presented to stockholders a proposal
to approve and adopt the Plan. On August 7, 1997, the Board of Directors of the
Company approved and adopted the Plan.

The Board believes the Plan helps the Company and its subsidiaries attract,
retain and motivate employees of, and others employed by or performing services
for, the Company or its subsidiaries and to encourage such persons to devote
their best efforts to the business and financial success of the Company. By
providing key employees with the opportunity to acquire an equity interest in
the Company over time and because benefit is only received through improved
stock performance, the Board believes stock options serve to align the interests
of key employees closely with other stockholders.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
PLAN.

15
<PAGE> 18

THE PLAN IS SET FORTH AS EXHIBIT A TO THIS PROXY STATEMENT. THE DESCRIPTION
OF THE PLAN CONTAINED HEREIN IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
EXHIBIT A.
------------------------
DESCRIPTION OF THE PLAN
------------------------

GENERAL INFORMATION

The purpose of the Plan is to promote the interests of the Company and its
stockholders by (i) attracting and retaining exceptional executive personnel and
other key employees of the Company and its Subsidiaries, as defined in Section 2
of the Plan; (ii) motivating such employees by means of performance-related
incentives to achieve longer-range performance goals; and (iii) enabling such
employees to participate in the long-term growth and financial success of the
Company. In addition, the Plan shall cover certain "rollover" options resulting
from the Recapitalization (the "Rollover Options"). Awards granted pursuant to
the Plan ("Awards") may be in the form of options and stock appreciation rights.

SHARES SUBJECT TO THE PLAN

The number of Shares in respect of which Awards may be granted under the
Plan is 1,447,452 plus the number of Shares necessary to accommodate the
Rollover Options and the number of Shares with respect to which incentive stock
options may be granted under the Plan shall be 1,447,452 plus the number of
Shares necessary to accommodate any Rollover Options that are incentive stock
options. If, after the effective date of the Plan, any Shares covered by an
Award granted under the Plan or to which such Award relates are forfeited, or if
such an Award is settled for cash or otherwise terminates or is canceled without
the delivery of Shares, then the Shares covered by such Award, or to which such
Award relates, or the number of Shares otherwise counted against the aggregate
number of Shares with respect to which Awards may be granted, to the extent of
any such settlement, forfeiture, termination or cancellation, shall, in the
calendar year in which such settlement, forfeiture, termination or cancellation
occurs, again become Shares with respect to which Awards may be granted unless
any dividends have been paid thereon prior to such settlement, forfeiture,
termination or cancellation. In addition, Shares tendered in satisfaction or
partial satisfaction of the exercise price of any Award or any tax withholding
obligations will again become Shares with respect to which Awards may be
granted. Notwithstanding the foregoing and subject to adjustment as provided in
Section 4(b) of the Plan, no employee of the Company may receive options and/or
stock appreciation rights in any calendar year that relate to more than 375,000
Shares.

Any Shares delivered pursuant to an Award may consist, in whole or in part,
of authorized and unissued Shares or of treasury Shares.

ADMINISTRATION

The Plan is administered by a committee (the "Committee") of the Board of
Directors of the Company (the "Board") designated by the Board to administer the
Plan and composed of not less than the minimum number of persons from time to
time required by Rule 16b-3 of the Securities Exchange Act of 1934 (the "1934
Act") and Section 162(m) of the Internal Revenue Code (the "Code"). Each member
of the Committee is a "Non-Employee Director" and an "Outside Director" within
the meaning of Rule 16b-3 and Section 162(m), respectively.

ELIGIBILITY

Any employee, including any officer or employee-director of the Company or
any Subsidiary, and any former director of the Company receiving a Rollover
Option, shall be eligible to be designated a Participant. Currently,
approximately 107 employees participate in the Plan.

16
<PAGE> 19

GRANTS AND AWARDS

The Committee has broad discretion under the Plan in determining Awards,
including but not limited to the number of Shares covered thereby and provisions
regarding grant price, expiration date, exercisability, vesting, forfeiture,
transfer restrictions, payment and the impact, if any, of termination of
employment on the foregoing. Accordingly, it is not possible to determine the
amount or form of any future Award that may be granted to any individual during
the term of the Plan.

OPTIONS. Under the Plan, the Committee may grant incentive stock options
(each an "Incentive Stock Option" or "ISO"), non-qualified stock options (each a
"Non-Qualified Stock Option" or "NQSO") or both types of options ("Option", as
used herein, refers to any Incentive Stock Option or Non-Qualified Stock
Option). In the case of Incentive Stock Options, the terms and conditions of
such grants shall be subject to, and comply with, the requirements of Section
422 of the Code, as from time to time amended, and any regulations implementing
such statute. Each Option shall be exercisable at such times and subject to such
terms and conditions as the Committee may, in its sole discretion, specify in
the applicable Award agreement or thereafter.

Except as otherwise specifically provided in the Plan and in any option
rollover agreement, the Rollover Options shall continue to be governed by the
terms under which they were originally granted.

STOCK APPRECIATION RIGHTS. Under the Plan, the Committee may grant stock
appreciation rights (each a "Stock Appreciation Right") entitling the holder
thereof to receive an amount equal to the excess of the Fair Market Value of a
Share on the date of exercise of the Stock Appreciation Right over the exercise
price thereof. A Stock Appreciation Right will be settled in such form as the
Committee shall determine. A Stock Appreciation Right may be granted in tandem
with another Award, in addition to another Award or freestanding and unrelated
to another Award. Stock Appreciation Rights granted in tandem with or in
addition to an Award may be granted either at the same time as the Award or at a
later time. Stock Appreciation Rights shall not be exercisable earlier than six
months after the date of grant and shall have an exercise price as determined by
the Committee on the date of grant. The Committee shall determine whether a
Stock Appreciation Right shall be settled in cash, Shares or a combination of
cash and Shares.

EFFECT OF TERMINATION OR SUSPENSION OF EMPLOYMENT OR SERVICE ON OPTIONS AND
STOCK APPRECIATION RIGHTS.

Except as the Committee may at any time otherwise provide or as required to
comply with applicable law, if the Participant's employment or service with the
Company or its Subsidiaries is terminated for any reason other than death,
Disability (as defined in Section 2 of the Plan), retirement at age 62 or older
or by the Company for Cause (as defined in Section 2 of the Plan), the
Participant's right to exercise any Option or Stock Appreciation Right shall
terminate, and such Option or Stock Appreciation Right shall expire, on the
earlier of (A) the ninetieth day following such termination of employment or
service or (B) the date such Option or Stock Appreciation Right would have
expired had it not been for the termination of employment or service. The
Participant shall have the right to exercise such Option or Stock Appreciation
Right prior to such expiration to the extent it was exercisable at the date of
such termination of employment or service and shall not have been exercised.

Except as the Committee may at any time otherwise provide or as required to
comply with applicable law, if the Participant's employment or service with the
Company or its Subsidiaries is terminated by reason of death, Disability, or
retirement at age 62 or older, all Time Vesting Options (as defined in an Award
agreement) shall vest and become immediately exercisable and the Participant or
his successor (if employment or service is terminated by death) shall have the
right to exercise any Option or Stock Appreciation Right during the one-year
period following such termination of employment or service, to the extent it was
exercisable and outstanding at the date of such termination of employment or
service, but in no event shall such option be exercisable later than the date
the Option would have expired had it not been for the termination of such
employment or service.

17
<PAGE> 20

If the Participant's employment or service with the Company or its
Subsidiaries is terminated by the Company for Cause, all Awards other than the
Rollover Options (whether vested or unvested) shall be forfeited.

In the event of a Participant's termination of employment by reason of
death or Disability, termination of employment by the Company other than for
Cause or termination by a Participant for Good Reason (as defined in Section 2
of the Plan) (and, in the case of the Rollover Options, upon any type of
termination), the Company or its designee shall have the right to purchase all
or a portion of the vested Options and/or Shares acquired upon the exercise of
Options, and the Participant shall have the right to cause the Company to
purchase all or a portion of the vested Options and/or Shares acquired upon the
exercise of Options, at a per share price equal to the Fair Market Value on the
date of purchase, less the exercise price in the case of vested Options.

The Committee, in its sole discretion, may provide in an Award agreement
for the accelerated vesting of an Award in the event of a Change of Control (as
defined in Section 2 of the Plan).

RESTRICTIONS ON TRANSFER

Except to the extent otherwise provided in an Award agreement, no Award
shall be assigned, alienated, pledged, attached, sold or otherwise transferred
or encumbered by a Participant except by will or the laws of descent and
distribution.

AMENDMENTS AND TERMINATION

Under the Plan, the Board may amend, alter, suspend, discontinue or
terminate the Plan or any portion thereof at any time; provided that shareholder
approval must be obtained if such approval is necessary to comply with any tax
or regulatory requirement that the Board deems desirable, including exemptive
relief under Section 16(b) of the 1934 Act. The Committee may amend the Plan in
such manner as may be necessary for the Plan to conform with local rules and
regulations in any jurisdiction outside the United States. Subject to the terms
of the Plan and applicable law, the Committee may waive any conditions or rights
under, amend any terms of, or alter, suspend, discontinue, cancel or terminate,
any Award theretofore granted, prospectively or retroactively; provided that any
such waiver, amendment, alteration, suspension, discontinuance, cancellation or
termination that would adversely affect the rights Participant or any holder or
beneficiary of any Award theretofore granted shall not be effective without the
consent of the affected Participant, holder or beneficiary. Any provision of the
Plan or any Award agreement to the contrary notwithstanding, in the event of a
Change in Control or an offer to Participants generally relating to the
acquisition of Shares, including through purchase, merger or otherwise, the
Committee may cause any Award to be canceled in consideration of a cash payment
or alternative Award made to the holder of such canceled Award equal in value to
the Fair Market Value of such canceled Award.

RESTRICTIONS ON RESALE

Any person receiving Shares under the Plan who is an "affiliate" of the
Company (as the term "affiliate" is used in Rule 144 promulgated by the
Commission under the Securities Act of 1933 (the "1933 Act")) may resell such
Shares only pursuant to a registration statement filed under the 1933 Act (the
Company having no obligation to file any such registration statement) or within
the restrictions, including the sales volume limitations, imposed by Rule 144
other than the one-year holding period requirement in the Rule. In addition,
certain Participants may be subject to the "short-swing profits" sanction of
Section 16(b) of the 1934 Act.

FEDERAL INCOME TAX CONSEQUENCES

The federal income tax treatment of options granted under the Plan under
present tax law is described generally below. Local and state tax authorities
may also tax incentive compensation awarded under the Plan.

Non-Qualified Stock Options. There are no federal income tax consequences
to a recipient or to the Company upon the grant of an NQSO under the Plan. Upon
the exercise of an NQSO, a recipient thereof will

18
<PAGE> 21

recognize ordinary compensation income in an amount equal to the excess of the
fair market value of the shares of Common Stock at the time of exercise over the
exercise price of the NQSO, and the Company generally will be entitled to a
corresponding federal income tax deduction. Upon the sale of shares of Common
Stock acquired by the exercise of an NQSO, a recipient will have a capital gain
or loss (long-term, mid-term or short-term depending upon the length of time the
shares were held) in an amount equal to the difference between the amount
realized upon the sale and the recipient's adjusted tax basis in such shares
(the exercise price plus the amount of ordinary income recognized by the
recipient at the time of exercise of the NQSO).

Incentive Stock Options. A recipient of an ISO will not recognize taxable
income for purposes of the regular income tax, upon either the grant or exercise
of the ISO. However, for purposes of the alternative minimum tax imposed under
the Code, in the year in which an ISO is exercised, the amount by which the fair
market value of the shares of Common Stock acquired upon exercise exceeds the
option price will be treated as an item of adjustment and included in the
computation of the recipient's alternative minimum taxable income in the year of
exercise. An ISO recipient who disposes of the shares of Common Stock acquired
upon exercise of an ISO after two years from the date the ISO was granted and
after one year from the date such shares were transferred to him or her will
recognize mid-term or long-term capital gain or loss in the amount of the
difference between the amount realized on the sale and the option price (or the
recipient's other tax basis in such shares), and the Company will not be
entitled to any tax deduction by reason of the grant or exercise of the ISO. As
a general rule, if an ISO recipient disposes of the shares of Common Stock
acquired upon exercise of an ISO before satisfying both holding period
requirements (a "disqualifying disposition"), his or her gain recognized on such
a disposition will be taxed as ordinary income to the extent of the difference
between the fair market value of such shares on the date of exercise and the
option price, and the Company will be entitled to a deduction in that amount.
The gain, if any, in excess of the amount recognized as ordinary income on such
a disqualifying disposition will be long-term, mid-term or short-term capital
gain, depending upon the length of time the recipient held his or her shares
prior to the disposition.

Section 162(m). Under section 162(m) of the Code, the Company may be
precluded from claiming a federal income tax deduction for total remuneration in
excess of $1,000,000 paid to the chief executive officer or to any of the other
four most highly compensated officers in any one year. Total remuneration would
include amounts received upon the exercise of options granted under the Plan and
the value of shares of Common Stock received when the shares of restricted stock
or other Awards became transferable (or such other time when income is
recognized). An exception does exist, however, for "performance-based
compensation," including amounts received upon the exercise of stock options
pursuant to a plan approved by stockholders that meets certain requirements. The
Plan is intended to make grants of options thereunder that meet the requirements
of "performance-based compensation." Awards of restricted stock generally will
not qualify as "performance-based compensation."

NEW PLAN BENEFITS

DECISIONONE HOLDINGS CORP. 1997 MANAGEMENT INCENTIVE PLAN

<TABLE>
<CAPTION>
NUMBER OF
NAME AND POSITION OPTIONS
------------------------------------------------------------------ ---------
<S> <C>
Kenneth Draeger -- Chairman and Chief Executive Officer........... 290,000(1)
Stephen J. Felice -- President.................................... 173,000(1)
Thomas J. Fitzpatrick -- Vice President and Chief Financial
Officer......................................................... 87,000(1)
Thomas M. Molchan -- General Counsel and Corporate Secretary...... 30,000(1)
James J. Greenwell -- Vice President, Sales & Marketing........... 30,000(1)
Executive Officer Group........................................... 665,000
Non-Executive Officer Director Group.............................. 0
Non-Executive Officer Employee Group.............................. 525,000
</TABLE>

- ---------------
(1) Each of the option grants for the above-named individuals was made on August
7, 1997 at an exercise price of $20.6084. Except with respect to Mr.
Draeger, one-half of each grant vests in four equal annual

19
<PAGE> 22
increments on the grant anniversary date; the other half vests in one
installment on the seventh anniversary of the grant date, but vesting may
be accelerated to 25% a year over four years if annual corporate financial
objectives are met. Mr. Draeger's options vested 7.5% on the date of grant
and vest 1.18% on the first day of every month for the 36 months beginning
the month following the date of grant, with the 50% balance vesting upon
the attainment of certain performance goals. The market value of the Common
Stock underlying the options was approximately $31.00 as of October 22,
1997.

INDEPENDENT PUBLIC ACCOUNTANTS

Deloitte & Touche LLP served as the Company's independent auditors for the
fiscal year ended June 30, 1997 and has been appointed to serve as the Company's
independent auditors with respect to the consolidated financial statements of
the Company and its subsidiaries for the current fiscal year. Representatives of
Deloitte & Touche LLP are expected to be present at the Annual Meeting and will
have an opportunity to make a statement if they desire to do so, and are
expected to be available to respond to appropriate questions.

OTHER MATTERS

The Board of Directors is not aware of any matters not set forth herein
that may come before the meeting. If, however, further business properly comes
before the meeting, the persons named in the proxies will vote the shares
represented thereby in accordance with their judgment.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and
greater-than-ten-percent stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file. Based solely on
its review of the copies of such reports received by the Company and written
representations from certain reporting persons that no Forms 5 were required for
those persons, the Company believes that during the year ended June 30, 1997 all
filing requirements applicable to its officers, directors and ten-percent
stockholders were satisfied.

STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING

Stockholders may submit proposals on matters appropriate for stockholder
action at annual meetings in accordance with regulations adopted by the SEC. To
be considered for inclusion in the proxy statement and form of proxy relating to
the 1998 annual meeting, such proposals must be received by the Company no later
than June 30, 1998. Proposals should be directed to the attention of the
Secretary of the Company.

ANNUAL REPORT ON FORM 10-K

The Company will furnish without charge to each person whose proxy is being
solicited, upon the written request of such person, a copy of the Company's
annual report on Form 10-K for the year ended June 30, 1997, including the
financial statements, but excluding exhibits. Requests for copies of such report
should be directed to the Company, Attention: Investor Relations.

By order of the Board of Directors,

Thomas M. Molchan
Corporate Secretary

Frazer, Pennsylvania
October 28, 1997

<PAGE> 23

ANNEX A

DECISIONONE HOLDINGS CORP.
1997 MANAGEMENT INCENTIVE PLAN

Section 1. Purpose. The purposes of the DecisionOne Holdings Corp. 1997
Management Incentive Plan are to promote the interests of DecisionOne Holdings
Corp. (the "Company") and its stockholders by (i) attracting and retaining
exceptional executive personnel and other key employees of the Company and its
Subsidiaries, as defined below; (ii) motivating such employees by means of
performance-related incentives to achieve longer-range performance goals; and
(iii) enabling such employees to participate in the long-term growth and
financial success of the Company. In addition, the Plan shall cover certain
"rollover" options resulting from the merger of the Company with Quaker Holding
Co.

Section 2. Definitions. As used in the Plan, the following terms shall
have the meanings set forth below:

"Affiliate" means (i) any entity that is, directly or indirectly,
controlled by the Company and (ii) any other entity in which the Company
has a significant equity interest or which has a significant equity
interest in the Company, in either case as determined by the Committee.

"Award" means any Option or Stock Appreciation Right.

"Award Agreement" means any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.

"Board" means the Board of Directors of the Company.

"Cause" means, unless otherwise defined in any Employment Agreement or
Award Agreement:

(a) a Participant's willful and continued failure substantially to
perform his duties (other than as a result of total or partial
incapacity due to physical or mental illness);

(b) an act or acts on a Participant's part constituting a felony
under the laws of the United States or any state thereof or any other
jurisdiction in which the Company conducts business;

(d) any other act or omission which is materially injurious to the
financial condition or business reputation of the Company or any of its
Affiliates as determined in the reasonable discretion of the Company,
including a Participant's breach of the provisions of any
non-competition, non-solicitation or confidentiality covenant in favor
of the Company or its Affiliates binding upon such Participant.

"Change of Control" shall mean, unless otherwise defined in any
Employment Agreement or Option Agreement,

(i) any "person" (as such term is used in Section 3(a)(9) and
13(d)(3) of the Exchange Act) other than (A) the DLJ Entities, the
Institutional Shareholders (as defined in the Investors' Agreement)
and/or their respective Permitted Transferees (as defined in the
Investors' Agreement) or (B) any "group" (within the meaning of such
Section 13(d)(3)) of which any of the DLJ Entities or any of the
Institutional Shareholders is a part, acquires, directly or indirectly,
by virtue of the consummation of any purchase, merger or other
combination, securities of the Company representing more than 51% of the
combined voting power of the Company's then outstanding voting
securities with respect to matters submitted to a vote of the
stockholders generally; or

(ii) a sale or transfer by the Company or any of its Subsidiaries
of substantially all of the consolidated assets of the Company and its
Subsidiaries to an entity which is not an Affiliate of the Company prior
to such sale or transfer.

"Code" means the Internal Revenue Code of 1986, as amended from time
to time.

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<PAGE> 24

"Committee" means a committee of the Board designated by the Board to
administer the Plan and composed of not less than the minimum number of
persons from time to time required by Rule 16b-3 and Section 162(m) each of
whom, to the extent necessary to comply with Rule 16b-3 and Section 162(m)
only, is a "Non-Employee Director" and an "Outside Director" within the
meaning of Rule 16b-3 and Section 162(m), respectively. Until otherwise
determined by the Board, the full Board shall be the Committee under the
Plan.

"Disability" shall mean a Participant's inability, as a result of
physical or mental illness, to perform the duties of his position(s) for a
period of 90 consecutive days or for an aggregate of 150 days in any twelve
consecutive month period. Any question as to the existence of the
Disability of a Participant as to which such Participant and the Company
cannot agree shall be determined in writing by a qualified independent
physician selected by the Company and reasonably acceptable to the
Participant. The determination of Disability made in writing to the Company
and the Participant shall be final and conclusive for all purposes of the
Plan.

"Employee" means an employee of the Company or any Subsidiary.

"Employment Agreement" means an employment agreement entered into
between the Company or any Subsidiary and a Participant.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Fair Market Value" means with respect to the Shares, as of the
consummation of the merger of the Company and Quaker Holding Co., $20.6084
per share, and as of any other given date or dates, the average reported
closing price of a share of such class of common stock on such exchange or
market as is the principal trading market for such class of common stock
for the three trading days immediately preceding such date or dates. If
such class of common stock is not traded on an exchange or principal
trading market on such date, the fair market value of a Share shall be
determined by the Committee in good faith taking into account as
appropriate recent sales of the Shares, recent valuations of the Shares and
such other factors as the Committee shall in its discretion deem relevant
or appropriate.

"Good Reason" shall mean, unless otherwise defined in any Employment
Agreement or Award Agreement:

(A) A Participant is removed from his/her position or assigned
duties and responsibilities materially inconsistent with his/her
position; or

(B) A Participant's base salary and benefits (including target
bonus opportunities and criteria but not actual bonus payments) are
reduced by more than 10% in the aggregate, except for across-the-board
reductions similarly affecting similarly situated employees.

"Incentive Stock Option" means a right to purchase Shares from the
Company that is granted under Section 6 of the Plan and that is intended to
meet the requirements of Section 422 of the Code or any successor provision
thereto.

"Investors' Agreement" means the Investors' Agreement dated as of the
date hereof among Quaker Holding Co., 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
Millenium Partners, L.P., DLJ Millenium 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 shareholders listed on the signature pages
thereto.

"Non-Qualified Stock Option" means a right to purchase Shares from the
Company that is granted under Section 6 of the Plan and that is not
intended to be an Incentive Stock Option.

"Option" means an Incentive Stock Option or a Non-Qualified Stock
Option.

A-2
<PAGE> 25

"Participant" means any Employee selected by the Committee to receive
an Award under the Plan and any former director who receives a Rollover
Option (and to the extent applicable, any heirs or legal representatives
thereof).

"Permitted Transferee" shall have the meaning assigned to it in the
Investors' Agreement.

"Person" means any individual, corporation, limited liability company,
partnership, association, joint-stock company, trust, unincorporated
organization, government or political subdivision thereof or other entity.

"Plan" means this DecisionOne Holdings Corp. 1997 Management Incentive
Plan.

"Rollover Option" means any employee or director options "rolled over"
in connection with the merger of the Company with Quaker Holding Co.

"Rule 16b-3" means Rule 16b-3 as promulgated and interpreted by the
SEC under the Exchange Act, or any successor rule or regulation thereto as
in effect from time to time.

"Sec" means the Securities and Exchange Commission or any successor
thereto.

"Section 162(m)" means Section 162(m) of the Code, or any successor
section thereto as in effect from time to time.

"Shares" means shares of common stock, $.01 par value, of the Company
or such other securities as may be designated by the Committee from time to
time.

"Stock Appreciation Right" means any right granted under Section 7 of
the Plan.

"Subsidiary" shall mean, with respect to any Person, any corporation
or other 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.

"Substitute Awards" means Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by a company
acquired by the Company or with which the Company combines.

Section 3. Administration.

(a) Authority of Committee. The Plan shall be administered by the
Committee. Subject to the terms of the Plan, applicable law and contractual
restrictions affecting the Company, and in addition to other express powers and
authorizations conferred on the Committee by the Plan, the Committee shall have
full power and authority to: (i) designate Participants; (ii) determine the type
or types of Awards to be granted to a Participant; (iii) determine the number of
Shares to be covered by, or with respect to which payments, rights, or other
matters are to be calculated in connection with, Awards; (iv) determine the
terms and conditions of any Award and Award Agreement; (v) determine whether. to
what extent, and under what circumstances Awards may be settled or exercised in
cash, Shares, other securities, other Awards or other property, or canceled,
forfeited, or suspended and the method or methods by which Awards may be
settled, exercised, canceled, forfeited. or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, Shares, other securities,
other Awards, other property, and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the holder thereof
or of the Committee; (vii) interpret and administer the Plan and any instrument
or agreement relating to, or Award made under, the Plan; (viii) establish,
amend, suspend, or waive such rules and regulations and appoint such agents as
it shall deem appropriate for the proper administration of the Plan; and (ix)
make any other determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan.

(b) Committee Discretion Binding. Unless otherwise expressly provided in
the Plan, all designations, determinations, interpretations, and other decisions
under or with respect to the Plan or any Award shall be within the sole
discretion of the Committee, may be made at any time and shall be final,
conclusive and

A-3
<PAGE> 26

binding upon all Persons, including the Company, any Subsidiary, any
Participant, any holder or beneficiary of any Award, any shareholder and any
Employee.

Section 4. Shares Available for Awards.

(a) Shares Available. Subject to adjustment as provided in Section 4(b)
and 4(c), the number of Shares with respect to which Awards may be granted under
the Plan shall be 1,447,452 plus the number of Shares necessary to accommodate
the Rollover Options and the number of Shares with respect to which Incentive
Stock Options may be granted under the Plan shall be 1,447,452 plus the number
of Shares necessary to accommodate any Rollover Options which are Incentive
Stock Options. If, after the effective date of the Plan, any Shares covered by
an Award granted under the Plan or to which such an Award relates are forfeited,
or if such an Award is settled for cash or otherwise terminates or is canceled
without the delivery of Shares, then the Shares covered by such Award, or to
which such Award relates, or the number of Shares otherwise counted against the
aggregate number of Shares with respect to which Awards may be granted, to the
extent of any such settlement, forfeiture, termination or cancellation, shall,
in the calendar year in which such settlement, forfeiture, termination or
cancellation occurs, again become Shares with respect to which Awards may be
granted unless any dividends have been paid thereon prior to such settlement,
forfeiture, termination or cancellation. In addition, Shares tendered in
satisfaction or partial satisfaction of the exercise price of any Award or any
tax withholding obligations will again become Shares with respect to which
Awards may be granted. Notwithstanding the foregoing and subject to adjustment
as provided in Section 4(b), no Employee of the Company may receive Options
and/or Stock Appreciation Rights in any calendar year that relate to more than
375,000 Shares.

(b) Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, reclassification, merger, consolidation, split-up,
spin-off, combination, repurchase, or exchange of Shares or other securities of
the Company, issuance of warrants or other rights to purchase Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number of Shares of the Company (or number and kind of other securities
or property) with respect to which Awards may thereafter be granted, (ii) the
number of Shares or other securities of the Company (or number and kind of other
securities or property) subject to outstanding Awards, and (iii) the grant or
exercise price with respect to any Award, or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award; provided, in
each case that, with respect to Awards of Incentive Stock Options, no such
adjustment shall be authorized to the extent that such authority would cause the
Plan to violate Section 422(b)(1) of the Code, as from time to time amended.

(c) Substitute Awards. Any Shares underlying Substitute Awards shall not
be counted against the Shares available for Awards under the Plan.

(d) Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.

Section 5. Eligibility. Any Employee, including any officer or
employee-director of the Company or any Subsidiary, and any former director of
the Company receiving a Rollover Option, shall be eligible to be designated a
Participant.

Section 6. Stock Options.

A-4
<PAGE> 27

Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant
both types of options. In the case of Incentive Stock Options, the terms and
conditions of such grants shall be subject to and comply with such rules as may
be prescribed by Section 422 of the Code, as from time to time amended, and any
regulations implementing such statute.

(b) Exercise Price. The Committee in its sole discretion shall establish
the exercise price at the time each Option is granted.

(c) Exercise. Each Option shall be exercisable at such times and subject
to such terms and conditions as the Committee may, in its sole discretion,
specify in the applicable Award Agreement or thereafter. The Committee may
impose such conditions with respect to the exercise of Options, including
without limitation, any relating to the application of Federal or state
securities laws, as it may deem necessary or advisable.

(d) Payment. No Shares shall be delivered pursuant to any exercise of an
Option until payment in full of the exercise price, or adequate provision
therefor, is received by the Company. Such payment may be made: (i) in cash;
(ii) in Shares owned by the Participant for at least six months (the value of
such Shares shall be their Fair Market Value on the date of exercise); (iii) by
a combination of cash and Shares; (iv) if approved by the Committee, in
accordance with a cashless exercise program; or (v) in such other manner as
permitted by the Committee at the time of grant or thereafter.

(e) Rollover Options. Except as otherwise specifically provided herein and
in any option rollover agreement, the Rollover Options shall continue to be
governed by the terms under which they were originally granted.

Section 7. Stock Appreciation Rights.

(a) Grant. Subject to the provisions of the Plan and contractual
restrictions affecting the Company, the Committee shall have sole and complete
authority to determine the Employees to whom Stock Appreciation Rights shall be
granted, the number of Shares to be covered by each Stock Appreciation Right
Award, the grant thereof and the conditions and limitations applicable to the
exercise thereof. Stock Appreciation Rights may be granted in tandem with
another Award, in addition to another Award, or freestanding and unrelated to
another Award. Stock Appreciation Rights granted in tandem with or in addition
to an Award may be granted either at the same time as the Award or at a later
time. Stock Appreciation Rights shall not be exercisable earlier than six months
after grant and shall have an exercise price as determined by the Committee on
the date of grant.

(b) Exercise and Payment. A Stock Appreciation Right shall entitle the
Participant to receive an amount equal to the excess of the Fair Market Value of
a Share on the date of exercise of the Stock Appreciation Right over the
exercise price thereof. The Committee shall determine whether a Stock
Appreciation Right shall be settled in cash, Shares or a combination of cash and
Shares.

(c) Other Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine, at or after the grant
of a Stock Appreciation Right, the term, methods of exercise, methods and form
of settlement, and any other terms and conditions of any Stock Appreciation
Right. Any such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation Rights
granted or exercised prior to such determination as well as Stock Appreciation
Rights granted or exercised thereafter. The Committee may impose such conditions
or restrictions on the exercise of any Stock Appreciation Right as it shall deem
appropriate.

Section 8. Termination or Suspension of Employment or Service. The
following provisions shall apply in the event of the Participant's termination
of employment or service unless the Committee shall have provided otherwise,
either at the time of the grant of the Award or thereafter.

(i) Termination of Employment or Service. Except as the Committee may at
any time otherwise provide or as required to comply with applicable law, if the
Participant's employment or service with the Company or its Subsidiaries is
terminated for any reason other than death, Disability, retirement at age 62 or
older or by the Company for Cause, the Participant's right to exercise any
Option or Stock Appreciation Right

A-5
<PAGE> 28

shall terminate, and such Option or Stock Appreciation Right shall expire, on
the earlier of (A) the ninetieth day following such termination of employment or
service or (B) the date such Option or Stock Appreciation Right would have
expired had it not been for the termination of employment or service. The
Participant shall have the right to exercise such Option or Stock Appreciation
Right prior to such expiration to the extent it was exercisable at the date of
such termination of employment or service and shall not have been exercised.

(ii) Death, Disability or Retirement. Except as the Committee may at any
time otherwise provide or as required to comply with applicable law, if the
Participant's employment or service with the Company or its Subsidiaries is
terminated by reason of death, Disability, or retirement at age 62 or older, all
Time Vesting Options (as defined in an Award Agreement) shall vest and become
immediately exercisable and the Participant or his successor (if employment or
service is terminated by death) shall have the right to exercise any Option or
Stock Appreciation Right during the one-year period following such termination
of employment or service, to the extent it was exercisable and outstanding at
the date of such termination of employment or service, but in no event shall
such option be exercisable later than the date the Option would have expired had
it not been for the termination of such employment or service.

(iii) Cause. If the Participant's employment or service with the Company
or its Subsidiaries is terminated by the Company for Cause, all Awards other
than the Rollover Options (whether vested or unvested) shall be forfeited.

(iv) Puts, Calls. In the event of a Participant's termination of
employment by reason of death or Disability, termination of employment by the
Company other than for Cause or termination by a Participant for Good Reason
(and, in the case of the Rollover Options, upon any type of termination), the
Company or its designee shall have the right to purchase all or a portion of the
vested Options and/or Shares acquired upon the exercise of Options, and the
Participant shall have the right to cause the Company to purchase all or a
portion of the vested Options and/or Shares acquired upon the exercise of
Options, at a per share price equal to Fair Market Value on the date of
purchase, less the exercise price in the case of vested Options. If either the
Company or a Participant elects to exercise its right under this clause (iv),
the Company or the Participant, as the case may be, shall deliver written notice
(a "PURCHASE NOTICE") to the other to such effect within 60 days of a
termination of employment. For purposes of this Section 8, the "date of
purchase" shall mean the third business day following the receipt of notice by
the other party that the purchase right is to be exercised. Payment of the
purchase price may be made in cash or by certified check; provided that if the
terms of any agreement to which the Company is a party, or any of the indentures
governing any debt securities issued by the Company or any of its subsidiaries
would prohibit the Company from effecting such payment, payment may be effected
through a promissory note having such commercially reasonable terms and interest
rate as may be determined by the Company in its reasonable discretion, provided
that in any event such note shall become due at such time as the prohibitions
described above shall lapse.

Section 9. Change of Control. The Committee, in its sole discretion, may
provide in an Award Agreement for the accelerated vesting of an Award in the
event of a Change of Control.

Section 10. Amendment and Termination.

(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without shareholder approval if such approval is necessary to
comply with any tax or regulatory requirement, including for these purposes any
approval requirement which is a prerequisite for exemptive relief from Section
16(b) of the Exchange Act, for which or with which the Board deems it necessary
or desirable to qualify or comply. Notwithstanding anything to the contrary
herein, the Committee may amend the Plan in such manner as may be necessary so
as to have the Plan conform with local rules and regulations in any jurisdiction
outside the United States.

(b) Amendments to Awards. Subject to the terms of the Plan and applicable
law, the Committee may waive any conditions or rights under, amend any terms of,
or alter, suspend, discontinue, cancel or terminate, any Award theretofore
granted, prospectively or retroactively; provided that any such waiver,
amendment, alteration, suspension, discontinuance, cancellation or termination
that would adversely affect the rights

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<PAGE> 29

Participant or any holder or beneficiary of any Award theretofore granted shall
not to that extent be effective without the consent of the affected Participant,
holder or beneficiary.

(c) Cancellation. Any provision of this Plan or any Award Agreement to the
contrary notwithstanding, in the event of a Change of Control or an offer to
Participants generally relating to the acquisition of Shares, including through
purchase, merger or otherwise, the Committee may cause any Award granted
hereunder to be canceled in consideration of a cash payment or alternative Award
made to the holder of such canceled Award equal in value to the Fair Market
Value of such canceled Award.

Section 11. General Provisions.

(a) Dividend Equivalents. In the sole and complete discretion of the
Committee, an Award may provide the Participant with dividends or dividend
equivalents, payable in cash, Shares, other securities or other property on a
current or deferred basis.

(b) Nontransferability. Except to the extent otherwise provided in an
Award Agreement, no Award shall be assigned, alienated, pledged, attached, sold
or otherwise transferred or encumbered by a Participant, except by will or the
laws of descent and distribution.

(c) No Rights to Awards. No Employee, Participant or other Person shall
have any claim to be granted any Award, and there is no obligation for
uniformity of treatment of Employees, Participants, or holders or beneficiaries
of Awards. The terms and conditions of Awards need not be the same with respect
to each recipient.

(d) Share Certificates. Certificates issued in respect of Shares shall,
unless the Committee otherwise determines, be registered in the name of the
Participant or its Permitted Transferees and, so long as a Participant continues
to be governed by the provisions of any Loan, shall be deposited by such
Participant or Permitted Transferee, together with a stock power endorsed in
blank, with the Company. When the Participant ceases to be bound by the
provisions of any Loan, the Company shall deliver such certificates to the
Participant upon request. Such stock certificate shall carry such appropriate
legends, and such written instructions shall be given to the Company's transfer
agent, as may be deemed necessary or advisable by counsel to the Company in
order to comply with the requirements of (i) the Securities Act of 1933, any
state securities laws or any other applicable laws, (ii) the Investors'
Agreement and (iii) any Loan. Subject to the provisions of the Investors'
Agreement, all certificates for Shares or other securities of the Company or any
Subsidiary delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan or the rules, regulations and
other requirements of the Securities and Exchange Commission or any stock
exchange upon which such Shares or other securities are then listed and any
applicable laws or rules or regulations, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.

(e) Withholding. A Participant may be required to pay to the Company or
any Subsidiary, and the Company or any Subsidiary shall have the right and is
hereby authorized to withhold from any Award, from any payment due or transfer
made under any Award or under the Plan or from any compensation or other amount
owing to a Participant the amount (in cash, Shares, other securities, other
Awards or other property) of any applicable withholding taxes in respect of an
Award, its exercise, or any payment or transfer under an Award or under the Plan
and to take such other action as may be necessary in the opinion of the Company
to satisfy all obligations for the payment of such taxes. The Committee may
provide for additional cash payments to holders of Awards to defray or offset
any tax arising from any such grant, lapse, vesting, or exercise of any Award.

(f) Award Agreements. Each Award hereunder shall be evidenced by an Award
Agreement which shall be delivered to the Participant and shall specify the
terms and conditions of the Award and any rules applicable thereto.

(g) No Limit on Other Compensation Arrangements. Nothing contained in the
Plan shall prevent the Company or any Subsidiary from adopting or continuing in
effect other compensation arrangements, which

A-7
<PAGE> 30

may, but need not, provide for the grant of options, restricted stock, Shares
and other types of Awards provided for hereunder (subject to shareholder
approval if such approval is required), and such arrangements may be either
generally applicable or applicable only in specific cases.

(h) No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ or service of the
Company or any Subsidiary. Further, the Company or an Subsidiary may at any time
dismiss a Participant from employment or service, free from any liability or any
claim under the Plan, unless otherwise expressly provided in the Plan or in any
Award Agreement.

(i) Rights as a Stockholder. Subject to the provisions of the applicable
Award, no Participant or holder or beneficiary of any Award shall have any
rights as a stockholder with respect to any Shares to be issued under the Plan
until he or she has become the holder of such Shares.

(j) Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan and any Award Agreement shall be
determined in accordance with the laws of the State of Delaware.

(k) Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as
to any Person or Award, or would disqualify the Plan or any Award under any law
deemed applicable by the Committee, such provision shall be construed or deemed
amended to conform to the applicable laws, or if it cannot be construed or
deemed amended without, in the determination of the Committee, materially
altering the intent of the Plan or the Award, such provision shall be stricken
as to such jurisdiction, Person or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.

(l) Other Laws. The Committee may refuse to issue or transfer any Shares
or other consideration under an Award if, acting in its sole discretion, it
determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recover the same under Section 16(b) of the Exchange Act, and any
payment tendered to the Company by a Participant in connection therewith shall
be promptly refunded to the relevant Participant, holder or beneficiary. Without
limiting the generality of the foregoing, no Award granted hereunder shall be
construed as an offer to sell securities of the Company, and no such offer shall
be outstanding, unless and until the Committee in its sole discretion has
determined that any such offer, if made, would be in compliance with all
applicable requirements of the U.S. federal securities laws and any other laws
to which such offer, if made, would be subject.

(m) No Trust or Fund Created. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Subsidiary and a Participant or any
other Person. To the extent that any Person acquires a right to receive payments
from the Company or any Subsidiary pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any
Subsidiary.

(n) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash or other securities or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.

(o) Transfer Restrictions. Shares acquired hereunder may not be sold,
assigned, transferred, pledged or otherwise disposed of, except as provided in
the Plan, the applicable Award Agreement and the Investors' Agreement.

(p) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.

(q) Investors' Agreement. A Participant shall, as a condition precedent to
the exercise or settlement of an Award, execute an instrument agreeing to be
bound by the terms of the Investors' Agreement or, at the election of the
Company, a counterpart of the Investors' Agreement. In any event, any Shares
acquired upon

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<PAGE> 31

exercise or settlement shall be subject to the provisions in the Investors'
Agreement regarding restrictions on transfer and the Company's rights to compel
sales and repurchase Shares.

Section 12. Term of the Plan.

(a) Effective Date. The Plan shall be effective as of August 7, 1997,
subject to approval by the shareholders of the Company. Awards may be granted
hereunder prior to such shareholder approval subject in all cases, however, to
such approval.

(b) Expiration Date. No Incentive Stock Option shall be granted under the
Plan after August 6, 2007. Unless otherwise expressly provided in the Plan or in
an applicable Award Agreement, any Award granted hereunder may, and the
authority of the Board or the Committee to amend, alter, adjust, suspend,
discontinue, or terminate any such Award or to waive any conditions or rights
under any such Award shall, continue after the authority for grant of new Awards
hereunder has been exhausted.

A-9
<PAGE> 32
PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
DECISIONONE HOLDINGS CORP.

The undersigned hereby appoints Kenneth Draeger, Stephen J. Felice and Thomas
M. Molchan as proxies, each with power to act without the other and with power
of substitution, and hereby authorizes them to represent and vote, as
designated on the reverse side, all the shares of Common Stock of DecisionOne
Holdings Corp. held of record by the undersigned with all powers which the
undersigned would possess if present at the Annual Meeting of Stockholders of
the Company to be held on Tuesday, December 9, 1997 and any adjournments
thereof.

THE SHARES OF THE COMPANY'S COMMON STOCK WILL BE VOTED AS SPECIFIED, AND IN THE
DISCRETION OF THE PROXIES ON ALL OTHER MATTERS PROPERLY BROUGHT BEFORE THE
MEETING. IF NOT OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ALL NOMINEES
AND FOR THE PROPOSAL SPECIFIED IN ITEM 2. YOU MAY REVOKE THIS PROXY AT ANY TIME
PRIOR TO THE TIME IT IS VOTED AT THE ANNUAL MEETING.

(Continued, and to be marked, dated and signed, on the reverse side.)

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<PAGE> 33
The Board of Directors recommends a vote Please mark your vote as
FOR all nominees and FOR Item 2. indicated in this sample box [X]

Item 1 - ELECTION OF Nominees: Kenneth Draeger, Peter T. Grauer,
DIRECTORS Thomas G. Greig, Lawrence M.v.D. Schloss,
Kirk B. Wortman

FOR WITHHELD WITHHOLD FOR: (Write the name of the nominee(s)
FOR ALL in the space provided below):
[ ] [ ]
------------------------------------------------

Item 2 - APPROVAL OF MANAGEMENT
INCENTIVE PLAN

FOR AGAINST ABSTAIN CHECK BOX IF YOU
PLAN TO ATTEND THE [ ]
[ ] [ ] [ ] ANNUAL MEETING

Signature Signature Date
---------------------- -------------------- ---------

NOTE: Please sign as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such.

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FOLD AND DETACH HERE