-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KC9nGyV5tFtWQmUpQesXOVnQSG+bWH4QNYRkFVqf6RP/4J8MdNcvcHfNiUNnxrYn ZJhyu+7QzFihETxPanFbow== 0000950172-03-000146.txt : 20030114 0000950172-03-000146.hdr.sgml : 20030114 20030114173112 ACCESSION NUMBER: 0000950172-03-000146 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 27 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20030114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMDISCO HOLDING CO INC CENTRAL INDEX KEY: 0001179484 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER RENTAL & LEASING [7377] IRS NUMBER: 542066534 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-49968 FILM NUMBER: 03513977 BUSINESS ADDRESS: STREET 1: 6111 N RIVER RD CITY: ROSEMONT STATE: IL ZIP: 60018 BUSINESS PHONE: 8476983000 MAIL ADDRESS: STREET 1: 6111 NORHT RIVER RD CITY: ROSEMONT STATE: IL ZIP: 60018 10-K 1 ch340956.txt FORM 10-K ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________ FORM 10-K ___________________ [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended September 30, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ Commission file number 000-499-68 COMDISCO HOLDING COMPANY, INC. (Exact name of registrant as specified in charter) Delaware 54-2066534 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification no.) 6111 North River Road Rosemont, Illinois 60018 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (847) 698-3000 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered ------------------- ----------------------------------------- N/A N/A Securities registered pursuant to Section 12(g) of the Act: Title of Each Class - ------------------------------------------------------------------------------ Common Stock, par value $0.01 per share Contingent Distribution Rights Indicate by a check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. |X| Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes |_| No |X| The aggregate market value of common stock held by non-affiliates of Comdisco, Inc.* was approximately $27.8 million based on its closing price per share of $0.33 on March 28, 2002. On March 28, 2002, there were 151,028,708 shares of common stock of Comdisco, Inc. outstanding. Shares of common stock held by each officer and director and each shareholder who owned 5 percent or more of the outstanding common stock at that time have been excluded in that such persons may be deemed affiliates. The determination of affiliate status is not necessarily a conclusive determination for other purposes. Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes |X| No |_| Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
Title of Each Class Number of Shares Outstanding at January 6, 2003 - --------------------------------------- ----------------------------------------------- Common Stock, par value $0.01 per share 4,200,000 DOCUMENTS INCORPORATED BY REFERENCE: NONE =========================================================================================== *See Explanatory Note on second following page.
COMDISCO HOLDING COMPANY, INC. 2002 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS PAGE ---- PART I ITEM 1. DESCRIPTION OF BUSINESS.............................................................................2 ITEM 2. DESCRIPTION OF PROPERTY............................................................................14 ITEM 3. LEGAL PROCEEDINGS..................................................................................14 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................................................15 PART II ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..............................15 ITEM 6. SELECTED FINANCIAL DATA............................................................................16 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..............................................................................18 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.........................................38 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........................................................40 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE...............40 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.................................................83 ITEM 11. EXECUTIVE COMPENSATION.............................................................................87 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.....94 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................................................95 ITEM 14. CONTROLS AND PROCEDURES............................................................................96 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K....................................96 SIGNATURES ..................................................................................................101 CERTIFICATIONS...............................................................................................102
COMDISCO HOLDING COMPANY, INC. 2002 ANNUAL REPORT ON FORM 10-K EXPLANATORY NOTE ---------------- As more fully described below in Item 1, Description of Business, Comdisco, Inc. filed for bankruptcy under Chapter 11 of the Bankruptcy Code on July 16, 2001. Comdisco Holding Company, Inc., as the successor company to Comdisco, Inc., emerged from bankruptcy under a confirmed plan of reorganization that became effective on August 12, 2002. Pursuant to the plan of reorganization, all outstanding shares of common stock of Comdisco, Inc. were cancelled on August 12, 2002. On August 12, 2002, Comdisco Holding Company, Inc. became the successor entity to Comdisco, Inc. On September 30, 2002, Comdisco Holding Company, Inc. made an initial distribution to former creditors of Comdisco, Inc. in accordance with the plan of reorganization. The initial distribution included, among other things, the issuance of 4.2 million shares of common stock of Comdisco Holding Company, Inc. The aggregate market value of common stock held by non-affiliates of Comdisco Holding Company, Inc. was approximately $165 million based on the closing price per share on the Over-the-Counter Bulletin Board of $78.25 on January 6, 2003. On January 6, 2003, there were 4.2 million shares of common stock outstanding. PART I ------ Forward-Looking Statements This Annual Report on Form 10-K contains, and our periodic filings with the Securities and Exchange Commission and written and oral statements made by the Company's officers and directors to press, potential investors, securities analysts and others, will contain, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and the Company intends that such forward-looking statements be subject to the safe harbors created thereby. These forward-looking statements are not historical facts, but rather are predictions and generally can be identified by use of statements that include phrases such as "believe," "expect," "anticipate," "estimate," "intend," "plan," "foresee," "looking ahead," "is confident," "should be," "will," "predicted," "likely" or other words or phrases of similar import. Similarly, statements that describe or contain information related to matters such as our intent, belief, or expectation with respect to financial performance, claims resolution under the Plan, cash availability and cost-cutting measures are forward-looking statements. These forward-looking statements often reflect a number of assumptions and involve known and unknown risks, uncertainties and other factors that could cause our actual results to differ materially from those currently anticipated in these forward-looking statements. In light of these risks and uncertainties, the forward-looking events might or might not occur, which may affect the accuracy of forward-looking statements and cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from those suggested by these written or oral forward-looking statements, and could adversely affect our future financial performance, include the risk factors discussed in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operation, below. Many of the risk factors that could affect the results of the Company's operations are beyond our ability to control or predict. ITEM 1. DESCRIPTION OF BUSINESS COMDISCO HOLDING COMPANY, INC. WAS FORMED ON AUGUST 8, 2002 FOR THE PURPOSE OF SELLING, COLLECTING OR OTHERWISE REDUCING TO MONEY IN AN ORDERLY MANNER THE REMAINING ASSETS OF THE COMPANY AND ALL OF ITS DIRECT AND INDIRECT SUBSIDIARIES, INCLUDING COMDISCO, INC. THE COMPANY'S BUSINESS PURPOSE IS LIMITED TO THE ORDERLY SALE OR RUN-OFF OF ALL OF ITS REMAINING ASSETS. PURSUANT TO THE PLAN OF REORGANIZATION AND RESTRICTIONS CONTAINED IN ITS CERTIFICATE OF INCORPORATION, THE COMPANY IS SPECIFICALLY PROHIBITED FROM ENGAGING IN ANY BUSINESS ACTIVITIES INCONSISTENT WITH ITS LIMITED BUSINESS PURPOSE. AS A RESULT OF THE REORGANIZATION AND THE IMPLEMENTATION OF FRESH-START REPORTING, AS FURTHER DESCRIBED HEREIN, THE COMPANY'S RESULTS OF OPERATIONS AFTER JULY 31, 2002 ARE NOT COMPARABLE TO RESULTS REPORTED IN PRIOR PERIODS FOR COMDISCO, INC. General Development of Business Reorganized Corporate History On July 16, 2001, Comdisco, Inc. and fifty of its domestic subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois (consolidated case number 01-24795). Comdisco Holding Company, Inc., as the successor company to Comdisco, Inc., emerged from bankruptcy under a confirmed plan of reorganization (the First Amended Joint Plan of Reorganization (the "Plan")) that became effective on August 12, 2002. Prior to the effective date of the Plan, Comdisco, Inc. formed Comdisco Holding Company, Inc., a Delaware corporation (the "Company" or "Comdisco Holding"), and Comdisco Holding, in turn, formed Comdisco Leasing Merger Subsidiary, Inc., a Delaware corporation and a wholly-owned subsidiary of Comdisco Holding. On August 12, 2002, in accordance with the Plan, Comdisco Leasing Merger Subsidiary, Inc. merged with and into Comdisco, Inc. such that Comdisco, Inc. emerged as the surviving corporation of the merger and a wholly-owned subsidiary of Comdisco Holding. As a result of that merger, Comdisco Holding became the successor to Comdisco, Inc. A copy of the Plan for Comdisco, Inc., as well as other information related to distributions of cash and securities pursuant to the Plan, can be found in a Current Report on Form 8-K filed on August 9, 2002 with the Securities and Exchange Commission by Comdisco, Inc. A copy of the Plan is filed as an exhibit hereto. In this Annual Report on Form 10-K, references to "the Company," "Comdisco Holding," "we," "us" and "our" mean Comdisco Holding Company, Inc., its consolidated subsidiaries, including Comdisco Global Holding Company, Inc., Comdisco, Inc., Comdisco Domestic Holding Company, Inc. and Comdisco Ventures, Inc., and its predecessors, except in each case where the context indicates otherwise. All references to "Comdisco, Inc." mean Comdisco, Inc. and its subsidiaries, other than the Prism entities, prior to the Company's emergence from bankruptcy on August 12, 2002, except where the context indicates otherwise. Prior to the bankruptcy, Comdisco, Inc. provided technology services worldwide to help its customers maximize technology functionality, predictability and availability, while freeing them from the complexity of managing their technology. Comdisco, Inc. leased information technology equipment to a variety of industries and more specialized equipment to key vertical industries, including semiconductor manufacturing and electronic assembly, healthcare, telecommunications, pharmaceutical, biotechnology and manufacturing. Through its Ventures group, Comdisco, Inc. provided equipment leasing and other financing and services to venture capital-backed companies. Implementation of the Plan resulted in the reorganization of Comdisco, Inc. and its domestic and foreign subsidiaries into Comdisco Holding Company, Inc. and three new primary subsidiaries: (i) Comdisco Global Holding Company, Inc. (a direct wholly-owned subsidiary of Comdisco Holding), which manages the sale and run-off of the Company's reorganized European IT Leasing operations and assets; (ii) Comdisco, Inc. (a direct wholly-owned subsidiary of Comdisco Holding), which manages the sale and run-off of the Company's reorganized US Leasing operations and assets; and (iii) Comdisco Ventures, Inc. (a direct wholly-owned subsidiary of Comdisco, Inc.), which manages the sale and run-off of the Company's venture financing operations and assets ("Ventures"). The Company's Corporate Asset Management, or CAM, group is responsible for the sale and run-off of certain corporate and leasing assets held by Comdisco Global Holding Company, Inc., Comdisco, Inc. and their subsidiaries that remained after certain pre-emergence bankruptcy asset sales. The CAM group's operations are managed through Comdisco, Inc. Implementation of the Plan also resulted in the reorganization of Prism Communication Services, Inc. and its subsidiaries ("Prism"); as a consequence, Prism is now a direct wholly-owned subsidiary of Comdisco Domestic Holding Company, Inc., which is itself a direct wholly-owned subsidiary of Comdisco, Inc. Comdisco Holding was formed on August 8, 2002 for the purpose of selling, collecting or otherwise reducing to money in an orderly manner the remaining assets of the Company and all of its direct and indirect subsidiaries, including Comdisco, Inc. As more fully described in the Plan, the Company's business purpose is limited to the orderly sale or run-off of all of its remaining assets. Pursuant to the Plan and restrictions contained in its certificate of incorporation, the Company is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. General Terms of the Plan of Reorganization Approximately $10.7 billion in claims were initially filed in the Comdisco, Inc. bankruptcy case. By September 30, 2002, the claims amount was reduced to not more than approximately $4.4 billion. This amount may be further reduced as Disputed Claims are resolved. The $4.4 billion claims amount consists of $3.9 billion in Allowed Claims, of which $3.6 billion is from Allowed Class C-3 Claims and Allowed Class C-4 Claims and $0.3 billion is from Allowed Class C-1 Claims, and an estimated $0.5 billion in claims that are still unresolved (the "Disputed Claims"). A claim is deemed allowed by the bankruptcy court when it is resolved and settled pursuant to the Plan or court order (an "Allowed Claim"). In very general terms, the Plan contemplates six different classes of claims against the Comdisco, Inc. bankruptcy estate: o "Class C-1" Claims. This class is comprised of secured claims against Comdisco, Inc. o "Class C-2" Claims. This class is comprised of certain priority claims against Comdisco, Inc., not including Administrative Claims or Priority Tax Claims, as each are defined in the Plan. o "Class C-3" Claims. This class is comprised of general unsecured convenience claims against Comdisco, Inc. that were $15,000 or less and claims in excess of $15,000, but whose holder elected to reduce his or her claims to $15,000 in the aggregate and have the reduced single claim reclassified as a general unsecured convenience claim. o "Class C-4" Claims. The largest class of claims against the Comdisco, Inc. bankruptcy estate, this class is comprised of general unsecured claims other than Class C-3 Claims and includes holders of Comdisco, Inc. notes, bonds, credit lines and other trade debt. o "Class C-5A" Claims. This class is comprised of equity claims, consisting of holders of shares of Comdisco, Inc. common stock and other "Interests" as defined in the Plan. All shares of common stock of Comdisco, Inc. were cancelled on August 12, 2002 in accordance with the Plan. o "Class C-5B" Claims. This class is comprised of subordinated claims against Comdisco, Inc. The Plan provides that holders of Allowed Class C-1 Claims, Allowed Class C-2 Claims, Administrative Claims and Priority Tax Claims will be unimpaired. Class C-1 Claims primarily relate to discounted lease rentals where the Company generated cash proceeds by selling the future rental payments for specific domestic lease contracts on a non-recourse basis. As these rental payments are collected from our customers, they are remitted to holders of the Allowed C-1 Claims. The face amount of Class C-2 Claims, Administrative Claims and Priority Tax Claims is approximately $8.8 million. Administrative Claims total $5.9 million and Priority Tax Claims total $2.9 million. These claims, if and when allowed, will be paid in cash from operations of the Company. On August 12, 2002, pursuant to the Plan, the Company, along with its direct wholly-owned subsidiary, Comdisco, Inc., co-issued variable rate senior secured notes due 2004 (the "Senior Notes") in the principal amount of $400 million and 11 percent subordinated secured notes due 2005 (the "Subordinated Notes") in the principal amount of $650 million. Further, on September 30, 2002, the Company issued 4.2 million shares of common stock, $0.01 par value per share (the "Common Stock"). On September 30, 2002, the Company also made an initial distribution to holders of Allowed Class C-3 and Class C-4 Claims based upon an aggregate allowed amount of approximately $3.6 billion. As part of the initial distribution, Allowed Claims for Class C-3 creditors were paid in cash at the rate of approximately 89.8 percent of the allowed amount of their claims. Allowed Claims for Class C-4 creditors received a distribution valued at 89.8 percent of the allowed amount of their claims, comprised of cash equal to approximately 55 percent of their allowed claims, and pro-rata shares of the Senior Notes, Subordinated Notes, new Common Stock of the Company and rights to the Trust Assets (as defined below). In addition, Allowed Claims for Class C-5A received contingent distribution rights ("Contingent Distribution Rights") that may be entitled to distributions from the Company in increasing amounts based upon Class C-4 creditor recoveries achieving specified thresholds. If and when any Class C-5B claims are allowed, holders of such claims also will receive Contingent Distribution Rights. However, no Class C-5B claims have been allowed to date. More information on the Contingent Distribution Rights can be found in a Registration Statement on Form 8-A filed by the Company on August 12, 2002 with the Securities and Exchange Commission. Approximately $1.3 billion face amount of outstanding claims are Disputed Claims. Pursuant to the Plan, the Company established a reserve for Disputed Claims in the face amount of $450 million (the "Disputed Claims Reserve"), which has been funded based upon a bankruptcy court order granting authority to Comdisco, Inc. to estimate certain claims. The Disputed Claims Reserve has been established to fund a claim once the claim is deemed an Allowed Claim so long as funds are available. Disputed Claims will be settled only with funds in the Disputed Claims Reserve. The process of resolving the Disputed Claims is ongoing. If a Disputed Claim is not settled consensually, it will ultimately be heard and determined by the bankruptcy court. The Company cannot predict with accuracy when the claims resolution process will be completed or what the total amount of Allowed Claims will be upon completion. Payments and distributions from the Disputed Claims Reserve will be made as appropriate to the holder of any Disputed Claim that has become an Allowed Claim, on the next Quarterly Distribution Date (as defined by the Plan) after the date the Disputed Claim becomes an Allowed Claim. Such distributions will be based upon the cumulative distributions that would have been made to the holder of such a claim under the Plan if the Disputed Claim had been allowed on the Effective Date (as defined by the Plan) and will not be limited by the Disputed Claim Amounts (as defined by the Plan) previously reserved with respect to such Disputed Claim to the extent that additional amounts are available in the Disputed Claims Reserve, but only to the extent that such additional amounts have not yet been distributed to holders of Allowed Claims. Upon distribution, the Disputed Claims Reserve is reduced by an amount equal to the amount reserved with respect to the Disputed Claim. To the extent the amount reserved for the Disputed Claim exceeds the allowed amount, if any, of the claim, the remainder may be distributed quarterly in supplemental distributions to holders of Class C-4 Claims that have been allowed in accordance with the provisions of the Plan. The Plan further provides that, under certain circumstances, subrogation rights that the Company may have against senior managers (the "SIP Participants") who participated in Comdisco, Inc.'s Shared Investment Plan ("SIP") be placed in a trust for the benefit of creditors (the "Trust Assets"). In February 1998, pursuant to the SIP, the SIP Participants took out full recourse, personal loans to purchase approximately six million shares of Comdisco, Inc.'s common stock. In connection therewith, Comdisco, Inc. executed a guaranty dated February 2, 1998 (the "Guaranty") providing a guaranty of the loans in the event of default by the SIP Participants to the lenders under the SIP (the "SIP Lenders"). On November 29, 2001, the SIP Lenders filed a master proof of claim in the Comdisco, Inc. bankruptcy in the amount of $133 million ("SIP Guaranty Claim"). The SIP Guaranty Claim is a Disputed Claim. On July 29, 2002, the Company filed an objection to the SIP Guaranty Claim asserting various arguments in support of its defense against the SIP Guaranty Claim. As of September 30, 2002, the loans had a scheduled outstanding principal balance of approximately $102 million. To the extent that the Company makes a payment or distribution to the SIP Lenders, and as a result thereof obtains subrogation rights, whether by operation of law, by agreement with the SIP Lenders or otherwise, such subrogation rights may become part of the Trust Assets. Pursuant to the Plan, the Company has been authorized to provide various levels of relief (the "SIP Relief") to the SIP Participants on account of any subrogation claims which the Company may have against the SIP Participants. Such SIP Relief ranges from 20 to 80 percent with respect to repayment on account of subrogation claims at graduated levels based upon the employee's service to the Company and other considerations. On November 27, 2002, the bankruptcy court approved the offering by the Company of enhanced SIP Relief of 70 percent to former employees and 80 percent to post-emergence employees who remained with the Company following its emergence from bankruptcy, provided that such employees executed waivers and releases in favor of the Company, made irrevocable and unconditional agreements to pay their unreleased SIP Subrogation Claims (as defined in the Plan) and fulfilled certain other conditions. As of December 31, 2002, five of sixty-three former employees and twenty-one of twenty-three post-emergence employees have executed such waivers and releases, agreements to pay and provided additional documentation in support of the fulfillment of certain other conditions. As part of the acquisition of Comdisco, Inc.'s Availability Solutions business by SunGard Data Systems, Inc. ("SunGard"), SunGard agreed to assume certain of Comdisco, Inc.'s obligations and rights under the Guaranty as it related to nine transferred employees. See Sales of Assets in this Item 1, below, for information regarding the acquisition. Effective November 12, 2002, the Company and SunGard agreed, subject to bankruptcy court approval or a determination that such approval is not necessary, to a release of the assumption of such obligations and the transfer back to Comdisco, Inc. of the rights, if any, in exchange for cash consideration paid by SunGard to Comdisco, Inc. In regard to Prism and its subsidiaries, Comdisco, Inc. had intercompany secured claims against Prism that exceeded the value of the assets of Prism. Pursuant to the Plan, Comdisco, Inc. reduced its Allowed Claims against the Prism entities to no more than one-third of the total distribution to Prism creditors. The assets of the Prism entities will continue to be liquidated and to the extent any proceeds are realized from such liquidation, they will be distributed to creditors of Prism in accordance with the Plan. As more fully described in the Plan, the Company's business purpose is limited to the orderly sale or run-off of all of its remaining assets. Pursuant to the Plan and restrictions contained in its certificate of incorporation, the Company is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. Changes in Management On August 12, 2002, Ronald C. Mishler, 42, was appointed Chairman, Chief Executive Officer and President of the reorganized Company. Mishler, who joined Comdisco, Inc. in July 2001 as a senior vice president and treasurer, had been serving as president and chief operating officer of Comdisco, Inc. since April 26, 2002. Pursuant to the Plan, Mishler replaced Norman P. Blake, who had been serving as chairman and chief executive officer of Comdisco, Inc. since he joined Comdisco, Inc. in February 2001. In addition, the following individuals have been named to serve for two-year terms on the board of directors of the reorganized Company: Ronald C. Mishler (chairman), Jeffrey A. Brodsky, Robert M. Chefitz, William A. McIntosh and Randolph I. Thornton. See Item 10, Directors and Executive Officers of the Registrant, below, for biographical information for each member of the Company's board of directors. On August 12, 2002, they succeeded all of the former directors of Comdisco, Inc. to serve on the board of directors of Comdisco Holding as set forth in the Plan. Fresh-Start Reporting Upon its emergence from bankruptcy on August 12, 2002, the Company adopted fresh-start reporting in accordance with Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" ("SOP 90-7") effective as of July 31, 2002 for financial reporting purposes. SOP 90-7 requires the Company to allocate the reorganization value of the reorganized Company to its assets, and to state liabilities existing at the Plan confirmation date at present values of amounts to be paid determined at appropriate current interest rates. As a result, the adjustments made in accordance with SOP 90-7 have materially impacted the financial statements of the Company. For financial reporting purposes only, the "effective date" of the emergence from bankruptcy was selected as the close of business on July 31, 2002. Accordingly, the effects of the adjustments on the reported amounts of individual assets and liabilities resulting from the adoption of fresh-start reporting are reflected in the Company's financial statements as of July 31, 2002. As a result of the reorganization and the recording of the restructuring transaction and the implementation of fresh-start reporting pursuant to SOP 90-7, the Company's results of operations after July 31, 2002 are not comparable to results reported in prior periods for Comdisco, Inc. Basis of Presentation The Company and fifty of its domestic subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois on July 16, 2001. Prior to emerging from Chapter 11 on August 12, 2002, Comdisco, Inc. operated its business as a debtor-in-possession subject to the jurisdiction of the United States Bankruptcy Court. The reorganized Company adopted fresh-start reporting and gave effect to its emergence as of July 31, 2002 for financial reporting purposes. Under fresh-start reporting, the final consolidated balance sheet as of July 31, 2002 became the opening consolidated balance sheet of the reorganized Company. Since fresh-start reporting has been reflected in the accompanying consolidated balance sheet as of September 30, 2002, the consolidated balance as of that date is not comparable in certain material respects to any such balance sheet for any period prior to July 31, 2002. In addition, Comdisco, Inc.'s results of operations prior to July 31, 2002 are not comparable to the Company's results of operations after its emergence from bankruptcy due to the adoption of fresh-start reporting. Sales of Assets Leasing Asset Sales ------------------- On January 14, 2002, Comdisco, Inc. announced the sale of substantially all of its electronics and laboratory and scientific equipment leasing assets to General Electric Capital Corporation ("GE Capital"). The bankruptcy court approved the sale on January 24, 2002. On April 24, 2002, Comdisco, Inc. received approximately $548 million for the sale of these assets, which included the assumption of approximately $258 million of related secured debt and other obligations. On May 31, 2002, Comdisco, Inc. and GE Capital completed a second closing on the sale of electronics and laboratory and scientific assets, for which Comdisco, Inc. received an additional approximately $24 million, including the assumption of approximately $5 million of related secured debt and other obligations. The purchase price for both closings is subject to adjustment based upon the completion of a post-closing review of the purchase price calculation. A portion of the purchase price was held back at each closing pending the resolution of that review. In addition the Company may receive additional consideration based on the future performance of the electronics assets sold to GE Capital. Certain electronics and laboratory and scientific assets were not purchased by GE Capital due to documentation, credit or other issues. The Company, through its CAM group, continues to manage the sale or run-off of these assets. On April 4, 2002, Comdisco, Inc. announced the sale of substantially all of its healthcare leasing assets to GE Capital. The bankruptcy court approved the sale on April 18, 2002. On May 31, 2002, Comdisco, Inc. and GE Capital completed a first closing on the sale of the healthcare assets. Comdisco, Inc. received approximately $117 million for the sale of these assets, including the assumption of approximately $46 million of related secured debt and other liabilities. On June 30, 2002, Comdisco, Inc. and GE Capital completed a second closing on the sale of healthcare assets for which Comdisco, Inc. received an additional $20 million, including the assumption of approximately $5 million of related secured debt and other liabilities. The purchase price for both closings is subject to an adjustment to the proceeds based upon the completion of a post-closing review of the purchase price calculation. A portion of the purchase price was held back at each closing pending the resolution of that review. Certain healthcare assets were not purchased by GE Capital due to documentation, credit, or other issues. The Company, through its CAM group, continues to manage the sale or run-off of these assets. On April 9, 2002, Comdisco, Inc. announced that it had agreed to sell substantially all of its information technology (IT) leasing assets in Australia and New Zealand to Allco, an Australian company specializing in equipment and infrastructure finance and leasing. The bankruptcy court approved the sale on April 18, 2002. Under the terms of the sale agreement, Allco agreed to hire all of the Comdisco Australia and New Zealand employees and purchase most of its assets in Australia and New Zealand in a series of closings. On June 28, 2002, Comdisco, Inc. and Allco completed the first closing on the sale of leased assets in Australia and New Zealand. Comdisco, Inc. received approximately $8 million for the sale of these assets. Comdisco, Inc. has received $24 million for the assets sold through November 2002 and the final closing is expected to occur during the second fiscal quarter of 2003. Allco did not purchase all of the Company's IT leasing assets in Australia and New Zealand. As such, the Company, through its CAM group, continues to manage the sale or run-off of these assets. On October 18, 2002, the Company announced that it had sold Computer Discount GmbH, a leasing subsidiary of Comdisco, Inc. formerly known as Comdisco Austria GmbH, to the Austrian company PH Holding GmbH. Under the terms of the purchase agreement, PH Holding GmbH agreed to pay (euro) 8.7 million (approximately U.S. $8.6 million as of September 30, 2002) for 100 percent of the stated share capital of Computer Discount GmbH. As part of the deal, PH Holding GmbH agreed to continue to oversee the liquidation of Comdisco Ceska Republika S.R.O., a wholly-owned Czech subsidiary of Computer Discount GmbH. PH Holding GmbH is owned by Peter Huber, a former employee of the Company who, until the sale, had been serving as the regional manager for the Company's Austrian and Swiss operations. The Company's operations in Austria comprised approximately two percent of the Company's total European assets as of August 14, 2002, the closing date of the sale. On October 18, 2002, the Company announced that it had sold Comprendium Finance S.A., formerly known as Comdisco (Switzerland) S.A., a leasing subsidiary of Comdisco Global Holding Company, Inc., to Comprendium Investments S.A., a Swiss company. Pursuant to the terms of the sale agreement, the Company received CHF 13.0 million (approximately U.S. $8.7 million as of September 30, 2002). Comprendium Investments S.A. is owned by Thomas Flohr, a former employee of the Company who, until January 2001, served as President of Comdisco Europe. The Company's operations in Switzerland comprised approximately two percent of the Company's total European assets as of October 10, 2002, the closing date of the sale. On October 18, 2002, the Company announced that it, along with Comdisco Global Holdings Company, Inc., had entered into an agreement for the sale of the stock of the Company's French leasing subsidiaries, Comdisco France SA and Promodata SNC, to Econocom Group SA/NV. Comdisco France S.A. was a wholly-owned subsidiary of Comdisco Global Holding Company, Inc. and Promodata SNC was a wholly-owned subsidiary of Comdisco France S.A. The sale of the leasing assets closed on December 23, 2002 and proceeds in the amount of approximately (euro) 69 million were received. These proceeds were converted into U.S. $70 million and repatriated by the Company. The Company's operations in France comprised approximately thirteen percent of the Company's total European assets as of September 30, 2002. IT CAP Services Asset Sales --------------------------- Comdisco, Inc. announced on February 5, 2002 that it had executed an agreement for the sale of substantially all of its North American IT CAP Services contracts to T-Systems Inc. for approximately $7 million, plus consideration for future business with those accounts. The sale was approved by the bankruptcy court on February 14, 2002 and closed on February 28, 2002. Prior to its sale to T-Systems Inc., the Company's IT CAP Services business provided strategic solutions for desktop management services to its customers to assist them in managing their information technology assets with the objective of increasing productivity and reducing technology cost and risk. These technology service solutions were built around the collection, integration, and management of information on enterprise assets through the implementation of an integrated database of asset information. These solutions also included improving, supporting, and managing distributed systems and critical business processes through a single point of contact. The services, which were designed to complement the Company's leasing activities, included transitional strategies, integration planning and implementation, and financing (hardware and software). The Company's integrated desktop management software tools allowed customers to order, track and manage their inventory of distributed systems equipment. Availability Solutions Asset Sales ---------------------------------- On October 12, 2001, Comdisco, Inc. announced the sale of its availability solutions business to SunGard. The bankruptcy court approved the sale on November 9, 2001. On November 11, 2001, Comdisco, Inc. announced that it had completed the sale for $825 million in cash (plus approximately $25 million in cash for estimated working capital received in excess of agreed-upon levels). At closing, $45 million of the purchase price was put into escrow to satisfy any post-closing indemnity claims and $15 million was put into escrow to satisfy any closing date working capital shortfalls. Of the $45 million put into escrow, approximately $2 million continues to be held in escrow pending resolution of disputed matters. During the second quarter of fiscal 2002, Comdisco, Inc. returned the entire $15 million working capital escrow to SunGard to settle all outstanding working capital adjustment issues. The sale included the purchase of assets of the domestic operations of the availability solutions business and the stock of Comdisco, Inc.'s subsidiaries in the United Kingdom, France and Canada. The sale excluded the purchase of the stock of subsidiaries in Germany and Spain, as well as other identified assets, including network management services and IT CAP services businesses. Prior to its sale to SunGard, the Company's availability solutions business provided web-hosting, including production hosting, for both primary and alternate sites. These services included multi-site protection of a customer's data, servers, network and applications. The Company's availability solutions business offered continuous web-availability to ensure a continuous web presence. Availability solutions also addressed the challenges of managing through peak demand periods via a shared infrastructure service. Discontinued Operations Leasing Operations ------------------ On April 9, 2002, Comdisco, Inc. announced that it had agreed to sell substantially all of its information technology (IT) leasing assets in Australia and New Zealand to Allco, an Australian company specializing in equipment and infrastructure finance and leasing. On October 18, 2002, the Company announced that it had sold Computer Discount GmbH, a leasing subsidiary of Comdisco, Inc. formerly known as Comdisco Austria GmbH, to the Austrian company PH Holding GmbH. On the same day, the Company announced that it had sold Comprendium Finance S.A., formerly known as Comdisco (Switzerland) S.A., a leasing subsidiary of Comdisco Global Holding Company, Inc., to Comprendium Investments S.A., a Swiss company. Finally, also on October 18, 2002, the Company announced that it, along with Comdisco Global Holdings Company, Inc., had entered into an agreement for the sale of the stock of the Company's French leasing subsidiaries, Comdisco France SA and Promodata SNC, to Econocom Group SA/NV. As a result of these sales, the Australian, New Zealand, Austrian, French and Swiss leasing operations have been accounted for as discontinued operations, and accordingly, amounts in the financial statements and related notes for all historical periods shown have been restated to reflect the Australian, New Zealand, Austrian, French and Swiss leasing operations as discontinued operations. Availability Solutions ---------------------- Comdisco, Inc.'s availability solutions business was offered for sale in the third quarter of fiscal 2001 and the sale was completed in the first quarter of fiscal 2002. As a result of the sale, the availability solutions segment has been accounted for as a discontinued operation, and accordingly, amounts in the financial statements and related notes for all historical periods shown have been restated to reflect availability solutions as a discontinued operation. Network Management ------------------ During the second quarter of fiscal 2001, the network management services segment of Comdisco, Inc. was discontinued and was subsequently transferred to a new provider. As a result of the transfer, the network management segment has been accounted for as a discontinued operation, and accordingly, amounts in the financial statements and related notes for all historical periods shown have been restated to reflect network management as a discontinued operation. Prism ----- On October 1, 2000, Comdisco, Inc. ceased funding Prism and, as a result, Prism began winding down its operations. Pursuant to the Plan, the assets of the Prism entities will continue to be liquidated and proceeds, if any, realized from the liquidation will continue to be distributed to creditors of Prism. As a result, Prism has been accounted for as a discontinued operation, and accordingly, amounts in the financial statements and related notes for all historical periods shown have been restated to reflect Prism as a discontinued operation. Financial Information about Segments See Note 21 of Notes to Consolidated Financial Statements, which is incorporated in this section by reference, for financial information about the Company's reportable business segments. The Company has restated the corresponding items of segment information for earlier periods to reflect the post-emergence reorganization changes made to its reportable segments. Narrative Description of Business General Since Comdisco, Inc. emerged from Chapter 11 bankruptcy proceedings on August 12, 2002, the Company's business activities have been limited to the orderly sale or run-off of all of its existing asset portfolios. Pursuant to the Plan and restrictions contained in its certificate of incorporation, the Company is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. The Company has not engaged in any new leasing or financing activities, except for previously existing customer commitments and to restructure existing equipment leases and loans to maximize the value of the Company's assets. Principal Business Segments Following Comdisco, Inc.'s emergence from bankruptcy on August 12, 2002, the Company's operations were re-organized into four reportable business groups. These business groups are: (i) US Leasing, which includes leasing operations in the US and Canada and is managed by Comdisco, Inc.; (ii) European IT Leasing, which is managed by Comdisco Global Holdings Company, Inc.; (iii) Ventures, which is managed by Comdisco Ventures, Inc.; and (iv) the Corporate Asset Management, or CAM, group. For business segment reporting purposes, the CAM group includes various corporate assets and liabilities managed by corporate staff. The Company's operations are primarily conducted through its principal office in Rosemont, Illinois and regional offices located in North America and Europe. All of the Company's business segments are directed by their own management teams and have their own account management operations and customer support personnel. Overall corporate control and coordination are achieved through centralized policies and procedures, financial reporting, cash management, legal services, additional customer support and strategic planning. The following is a narrative description of the US Leasing, European IT Leasing, Ventures and CAM business segments as operated in fiscal year 2002. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, below, for recent developments relating to the Company's reportable business segments. US Leasing ---------- The Company's post-bankruptcy business purpose is limited to the orderly sale or run-off of all of its remaining asset portfolios, including those in the US Leasing portfolio. Pursuant to the Plan and restrictions contained in its certificate of incorporation, the Company is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. Prior to the bankruptcy, the Company provided a variety of leasing products and related services to its customers. These services included acquisition management, expenditure tracking, asset tracking and reselling of third party services. The rate and all other transaction terms were individually negotiated with customers. The leased equipment was owned by the Company, which purchased the equipment from a variety of manufacturers. Substantially all equipment leases that the Company originated had specified non-cancelable initial terms ranging from two to five years. The general terms and conditions of all of its leases were substantially similar and were embodied in a master lease agreement. For each lessee, the lease term, rent interval, lease rate factor and other specific terms for each piece of leased equipment were set forth on equipment schedules, which also incorporated the terms and conditions of its master lease agreement. The Company bought, sold, leased and remarketed technology equipment made by most of the leading manufacturers. Specifically, the Company leased PCs, point of sale, server, enterprise, network, telecommunications and other equipment. The Company's strategy for the distributed systems market was to provide financing, asset management and reconditioning services, and software tools to its customers. The Company offered a variety of leasing products to the marketplace and many times the leases were enhanced with service products for its customers. The Company differentiated itself from competitors through a number of service offerings tied into the assets on lease. For example, the Company's asset management services included procurement, tracking, help desk and break/fix services for the assets on lease. The Company's telecommunications group, which is part of the Company's US Leasing operations, provided leasing and remarketing, asset management and reconditioning services for telecommunications equipment. The Company focused on helping carriers competitively respond to network capacity requirements through customized financing, reconditioned equipment options and other services for various switches, routers and other telecommunications equipment. Today, the Company's US Leasing operations are managed and directed from the Company's Rosemont, Illinois headquarters. Regional sales offices also are maintained by the Company in several locations throughout the United States. European IT Leasing ------------------- The Company's post-bankruptcy business purpose is limited to the orderly sale or run-off of all of its remaining asset portfolios, including those in the European IT Leasing portfolio. Pursuant to the Plan and restrictions contained in its certificate of incorporation, the Company is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. The European IT Leasing segment's operations, assets and business strategy are substantially similar to those of the US Leasing segment. However, the European IT Leasing segment offered a different variety of leasing products to the marketplace than those of US Leasing. For example, the technology refresh option product, offered primarily in Europe, involves long-term funding commitments and allowed customers to reduce technology risk while maintaining a predictable spending pattern. Prior to bankruptcy, the Company's European IT Leasing operations were conducted through its subsidiaries with multiple operations centers across Europe. Today, European IT Leasing has substantially consolidated its operations into a single operation located in Germany. Ventures -------- The Company's post-bankruptcy business purpose is limited to the orderly sale or run-off of all of its remaining asset portfolios, including those in the Ventures business segment. Pursuant to the Plan and restrictions contained in its certificate of incorporation, the Company is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. Prior to bankruptcy, however, the Ventures group structured financial relationships specific to a company's needs and provided services specific to the company's stage of development. The Ventures group served as a strategic financing source to complement venture capital and commercial banking relationships and provided a means for leveraging the equity capital invested. The Ventures group invested in various stages of companies from seed stage to pre-IPO companies and offered financing products that included leasing, subordinated debt, secured debt (e.g., lines of credit, working capital), bridge loans, expansion loans, acquisition financing, landlord guarantees, convertible debt, and equity. The Ventures group also offered the value added services of the Company, such as discounted purchasing of new equipment and access to reconditioned equipment. The Ventures group provided venture leases, venture debt and direct equity financing to venture capital-backed companies. Venture leases were leases with warrants that were intended to compensate the Ventures group for providing equipment leases with terms having lower periodic cash costs than leases without warrants. Similarly, venture debt was a high-risk loan with warrants or a conversion-to-equity feature with more flexible terms than more traditional debt financing. Direct equity financings involved the Ventures group's purchase of convertible preferred stock and common stock from its customers. The Ventures group provided financing to companies providing Internet services, and in industries that included software and computer services, communications and networking, hardware, semiconductors, biotechnology and medical devices, and others. Although Comdisco, Inc. funded the Ventures group's contractual financing commitments in place as of July 16, 2001, the Company has not made new venture financing commitments since the second quarter of fiscal 2001. On the effective date of the Plan, the assets of the Ventures group were transferred to Comdisco Ventures, Inc., which is responsible for the orderly sale or run-off of the remaining assets in the portfolio. The Corporate Asset Management Group ("CAM") -------------------------------------------- CAM was established as a separate business unit pursuant to the Plan, operating as a division of Comdisco, Inc. CAM's business purpose is limited to the orderly sale or run-off of all of the remaining assets that it manages. For business segment reporting purposes, the CAM group includes various corporate assets and liabilities managed by corporate staff. CAM manages a diverse set of assets located globally including: o management of the amounts due from buyers on portfolio sales including performance based payments; o management of the remaining assets for industry specific leasing portfolios including assets located in North America, Europe and the Pacific Rim; o realizing value on various corporate assets including real estate and equity positions; o the orderly liquidation of the network leasing portfolio; and o the orderly liquidation of the Japanese and Mexican IT portfolios. Substantially all equipment leases managed by CAM have specified non-cancelable initial terms ranging from two to five years. The general terms and conditions of all of its leases were substantially similar and were embodied in a master lease agreement. For each lessee, the lease term, rent interval, lease rate factor and other specific terms for each piece of leased equipment were set forth on equipment schedules, which also incorporated the terms and conditions of its master lease agreement. Prior to the bankruptcy proceeding, the Company provided leasing and remarketing, asset management and reconditioning services for industry specific equipment including the following leasing groups: o Electronics Group: The Company leased new and used electronic manufacturing, testing and monitoring equipment, including semiconductor production equipment, automated test equipment and assembly equipment to customer's globally. Additionally, the Company maintains a dedicated refurbishing and sales facility in the Silicon Valley area. CAM continues to manage the sale or run-off of the electronics assets remaining after the sale to GE Capital. o Healthcare Group: The Company leased medical and other high technology equipment to healthcare providers, including used reconditioned medical equipment. The Company's portfolio included angiography, MRI systems, CT scanners, nuclear imaging devices, test equipment such as oscilloscopes, analyzers and testers and other laboratory equipment. CAM continues to manage the sale or run-off of the healthcare assets remaining after the sale to GE Capital. o Laboratory and Scientific Group: The Company assisted organizations in the pharmaceutical, chemical, research, healthcare and biotechnology industries through the implementation of an equipment life-cycle management strategy for various laboratory and scientific equipment. CAM continues to manage the sale or run-off of the laboratory and scientific assets remaining after the sale to GE Capital. Customers Due to the Company's limited business purpose, the Company does not expect to be dependent upon a single customer or group of customers to generate future investment or revenue opportunities. However, the Company does have a concentration of its current investments in a few customers. Such concentration is exemplified by the following customers: o T-Systems and Victoria group are technology refresh option leasing customers of the European IT Leasing business that have leased assets in the amount of approximately (euro) 390 million (approximately U.S. $384 million) and approximately (euro) 70 million (approximately U.S. $68 million), respectively, as of September 30, 2002. o AT&T Solutions was a leasing customer of the US Leasing business that had leased assets in the amount of approximately $74 million as of September 30, 2002. On November 7, 2002, AT&T Solutions repurchased its remaining lease obligations from the Company thereby eliminating this concentration. Competition The Company's post-bankruptcy business purpose is limited to the orderly sale or run-off of all of its remaining asset portfolios. Pursuant to the Plan and restrictions contained in its certificate of incorporation, the Company is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. However, the Company may experience competition as part of its ongoing remarketing operations. Such competition may come from manufacturers and other financing sources attempting to replace the Company's existing leased equipment with updated equipment or with similar equipment on more favorable terms. Employees On September 30, 2002, the Company had approximately 355 U.S. employees and 196 non-U.S. employees, for a total of 551 employees. No employees are represented by a labor union. French and German employees are, however, represented by a "works council" (the Company's French operations were sold to Econocom Group SA/NV, as discussed above). The Company anticipates further reductions in its workforce to coincide with future sales and run-off of its remaining asset portfolios. Other The Company does not own any patents, trademarks, licenses, franchises or concessions which it considers to be material to the Company's businesses. The Company's businesses are not seasonal; however, quarter-to-quarter results from operations can vary significantly. Because of the nature of the Company's business, the Company is not required to carry significant amounts of inventory either for delivery requirements or to assure continuous availability of goods from suppliers. Financial Information about Geographic Areas See Note 21 of Notes to Consolidated Financial Statements, which is incorporated in this section by reference, for information about foreign and domestic operations. ITEM 2. DESCRIPTION OF PROPERTY Owned Property The Company owns its principal executive office building in Rosemont, Illinois that has approximately 286,000 square feet. The Company's technical services division utilizes a 250,000 square foot building owned by the Company in Schaumburg, Illinois. This space is used primarily for refurbishing, maintenance and storage of equipment held for lease or sale to customers by the Company. The Company owns a 75,000 square foot data center in Carlstadt, New Jersey and a 36,000 square foot data center in Eching, Germany. All four owned properties are being offered for sale by the Company at this time. This sale process is being managed by the CAM group. Leased Property The Company leases office space for its US Leasing and European IT Leasing operations in various domestic and international locations. The Company leases office space for its Ventures operations in San Francisco, California (8,661 square feet). Finally, the Company leases warehouse space in Hayward, California (112,800 square feet) and office/warehouse space in San Jose, California (67,582 square feet) for its electronics operations. ITEM 3. LEGAL PROCEEDINGS Bankruptcy Proceeding On July 16, 2001, Comdisco, Inc. and fifty of its domestic subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois (Case No. 01-24795) to facilitate the restructuring of Comdisco, Inc.'s debt, trade and other obligations. Comdisco, Inc. continued to operate its business and manage its property as a debtor-in-possession subject to the bankruptcy court's supervision and orders until the Company's reorganization Plan was confirmed on July 30, 2002 and became effective on August 12, 2002. The provisions of the Plan are further described under Item 1, Description of Business, of this Report and in a Current Report on Form 8-K filed on August 9, 2002 with the Securities and Exchange Commission by Comdisco, Inc. Securities Litigation On February 7, 2001, a purported class action complaint was filed in the United States District Court for the Northern District of Illinois against Comdisco, Inc., Nicholas K. Pontikes, and John J. Vosicky, alleging violations of Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934, as amended. See Blitzer v. Comdisco, et al., No. 01-C-0874. Nicholas K. Pontikes is a former chief executive officer and director of Comdisco, Inc.; John J. Vosicky formerly served as a director, executive vice president, and chief financial officer of Comdisco, Inc. In addition, fourteen other similar purported class action lawsuits were filed against Comdisco, Inc., Nicholas K. Pontikes and John J. Vosicky in the United States District Court for the Northern District of Illinois. Those individual class action lawsuits, along with the first filed Blitzer case, were dismissed and the complaints were combined into a single action, captioned In re: Comdisco Securities Litigation, No. 01-C-2110. As a result of the bankruptcy filing on July 16, 2001, the consolidated lawsuit against Comdisco, Inc. was stayed pursuant to the automatic stay issued by the bankruptcy court. The lead plaintiff filed a motion to lift the automatic stay in order to permit the lawsuit to proceed against Comdisco, Inc. and the bankruptcy court denied this motion. The consolidated lawsuit, however, was allowed to proceed individually against Nicholas K. Pontikes and John J. Vosicky. In connection with the Plan confirmation process, plaintiffs in the consolidated lawsuit agreed to dismiss the action with respect to Comdisco, Inc., but maintained their rights, if any, against Nicholas K. Pontikes, John Vosicky and any person not released from liability by the Plan. The settlement with such plaintiffs is pursuant to a stipulation and agreed order dated June 13, 2002. On November 15, 2002, the plaintiffs in the consolidated lawsuit filed their Amended Class Action Complaint in the United States District Court for the Northern District of Illinois, Eastern Division, Master File No. 01 C 2110 ("Amended Complaint"). Neither the Company nor Comdisco, Inc. were named as a defendant in the Amended Complaint. The only defendants named in the Amended Complaint were Nicholas K. Pontikes and John J. Vosicky. On December 10, 2002, Messrs. Pontikes and Vosicky filed a motion to dismiss the Amended Complaint. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders during the three months ended September 30, 2002. PART II ------- ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Prior to Comdisco, Inc.'s bankruptcy proceedings, the common stock of Comdisco, Inc. was traded on the New York Stock Exchange ("NYSE") under the symbol "CDO." On April 11, 2002, the NYSE announced that it would suspend trading and move to delist Comdisco, Inc.'s common stock because the common stock had traded below $1.00 per share for more than 30 consecutive trading days. As a result, the common stock of Comdisco, Inc. began to be traded on the Over-the-Counter Bulletin Board system under the symbol "CDSOQ." On August 12, 2002, in conjunction with the effective date of the Plan, all shares of common stock of Comdisco, Inc. were cancelled. In connection with the September 30, 2002 initial distribution under the Plan, the Company issued approximately 3.74 million shares of Common Stock to holders of Allowed Claims in Class C-4. Approximately 460,000 additional shares of Common Stock were deposited in the Disputed Claims Reserve for future distribution pending the outcome of Disputed Claims. The Company's Common Stock currently trades on the Over-the-Counter Bulletin Board system under the symbol "CDCO." In addition, the Contingent Distribution Rights currently trade on the Over-the-Counter Bulletin Board system under the symbol "CDCOR." Over-the-Counter Bulletin Board quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. The Plan authorizes, but does not require, the issuance of additional shares of the Company's Common Stock to make distributions to holders of Contingent Distribution Rights if Class C-4 creditor recoveries achieve specified thresholds. The Company may choose to distribute cash to holders of Contingent Distribution Rights in lieu of shares of Common Stock. More information on distributions to holders of Contingent Distribution Rights can be found in a Registration Statement on Form 8-A filed by the Company on August 12, 2002 with the Securities and Exchange Commission. As of January 6, 2003, there were fifty-nine shareholders of record of the Company's Common Stock. The following tables set forth the high and low sales prices for the common stock of Comdisco, Inc. for fiscal 2001 and from October 1, 2001 through August 12, 2002. Between August 13, 2002 and September 30, 2002, Comdisco Holding had no shares of Common Stock outstanding; as such, the Company does not have information on trading that may have occurred during that time. On September 30, 2002, Comdisco Holding made an initial distribution of Common Stock to its creditors in accordance with the Plan. The first day that trading information is available for the shares of Common Stock is October 3, 2002. Between October 3, 2002 and January 6, 2003, the Common Stock traded on the Over-the-Counter Bulletin Board at a high of $80.00 and a low of $46.00. Due to the bankruptcy proceedings and the reorganization transactions, share prices for the Common Stock are not comparable to those reported in prior periods for Comdisco, Inc.
Comdisco, Inc. Comdisco, Inc. Stock Price Stock Price September 30, 2001 Fiscal Year 2001 to August 12, 2002 (1) High Low High Low ---- --- ---- --- First Quarter $19.13 $10.13 First Quarter $0.94 $0.27 Second Quarter 16.95 7.03 Second Quarter 1.14 0.29 Third Quarter 7.90 0.53 Third Quarter 0.41 0.01 Fourth Quarter 1.91 0.42 Fourth Quarter 0.08 0.01 (July 1, 2002 to August 12, 2002)
(1) In accordance with the Plan, all shares of common stock of Comdisco, Inc. were cancelled on August 12, 2002. The Company's transfer agent and registrar is Mellon Investor Services, L.L.C., P.O. Box 590, Ridgefield Park, New Jersey, 07660-0590. The shareholder relations telephone number is (800) 205-7699 and the internet address is http://www.mellon-investor.com. From February 1979 to March 2001, Comdisco, Inc. paid quarterly dividends to shareholders of record in the prior calendar quarter. In the first and second quarters of fiscal 2001, Comdisco, Inc. paid out dividends in the amount of $0.025 per share. In May 2001, Comdisco, Inc. suspended the payment of quarterly dividends. The Company anticipates that distributions will be made to holders of its Common Stock as provided in the Plan. However, in accordance with the Plan and the indentures governing the Senior Notes and the Subordinated Notes, distributions to shareholders cannot occur before all debt with respect to the Senior Notes and Subordinated Notes is extinguished. ITEM 6. SELECTED FINANCIAL DATA The selected consolidated financial data of the Company for the two months from August 1, 2002 to September 30, 2002 and for Comdisco, Inc. for the ten months from October 1, 2001 to July 31, 2002 and the years ended September 30, 2001, 2000, 1999 and 1998, has been derived from the Company's and/or Comdisco, Inc.'s audited consolidated financial statements. This information should be read in conjunction with the consolidated financial statements and the related notes thereto appearing elsewhere in this Report and in conjunction with Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. Certain reclassifications have been made to the prior period financial statements to conform to the presentation used in the September 30, 2002 consolidated financial statements. As a result of the reorganization, the recording of the restructuring transactions, the asset disposition transactions and the implementation of fresh-start accounting pursuant to SOP 90-7, the Company's results of operations after July 31, 2002 are not comparable to results reported in prior periods for Comdisco, Inc.
| SUCCESSOR | PREDECESSOR Two Months | Ten Months ended | ended September 30, | July 31, Years ended September 30, (in millions except per share data) 2002 | 2002 2001 2000 1999 1998 ------------ | ------------ -------- -------- -------- ------- Consolidated summary of earnings (losses) | Revenue | Leasing $ 98 | $ 830 $ 1,630 $ 2,053 $ 2,418 $ 2,229 Sales 50 | 297 280 390 261 287 Mainframe, medical and vendor portfolio sale - | - - - 598 - Technology services 10 | 70 128 119 76 46 Other 12 | 48 453 530 119 52 ------------ | ----------- - -------- -------- -------- ------- Total revenue 170 | 1,245 2,491 3,092 3,472 2,614 Costs and expenses | Leasing 77 | 593 1,155 1,479 1,784 1,633 Sales 31 | 289 237 308 220 238 Mainframe, medical and vendor portfolio sale - | - - - 596 - Technology services 10 | 39 123 119 71 55 Selling, general and administrative 34 | 170 312 362 267 218 Write-down of equity securities 3 | 70 129 7 - - Bad debt expense 4 | 149 489 141 36 12 Interest 15 | 47 341 340 325 315 Reorganization items - | 439 34 - - - Fresh-start accounting adjustments - | 369 - - Other - | - - - 120 - ------------ | ----------- --------- -------- -------- ------- Total costs and expenses 174 | 2,165 2,820 2,756 3,419 2,471 Earnings (loss) from continuing operations before | income taxes (benefit), extraordinary gain | and cumulative effect of | change in accounting principle (4) | (920) (329) 336 53 143 Income taxes (benefit) 4 | 45 (132) 120 19 56 ------------ | ----------- --------- -------- -------- ------- Earnings (loss) from continuing operations before | extraordinary gain and cumulative effect of | change in accounting principle (8) | (965) (197) 216 34 87 Earnings (loss) from discontinued operations, | net of income tax (9) | 271 (77) (283) 14 66 Extraordinary gain 241 | 153 - - - - Cumulative effect of change in accounting | principle, net of income tax - | - 2 - - - Preferred dividends - | - - - - (2) ------------ | ----------- --------- -------- -------- ------- Net earnings (loss) to common stockholders $ 224 | $ (541) $ (272) $ (67) $ 48 $ 151 ============ | =========== ========= ======== ======== ======= | Per common share data: | Earnings (loss) from continuing operations-diluted (1.81) | $ (6.41) $ (1.31)$ 1.34 $ 0.21 $ 0.52 Earnings (loss) from discontinued operations-diluted (2.20) | 1.80 (0.50) (1.75) 0.09 0.41 Earnings from extraordinary gain-diluted 57.38 | 1.02 - - - - Cumulative effect of change in accounting principle - | - 0.01 - - - ------------ | ----------- --------- -------- -------- ------- Net earnings (loss) to common stockholders-diluted $ 53.37 | $ (3.59)$ (1.80) $ (0.41) $ 0.30 $ 0.93 ============ | =========== ========= ======== ======== ======= | Cash dividends paid on common stock - | - 0.05 .10 .10 .10 Average common shares (in thousands)-diluted 4,200 | 150,559 151,132 161,782 161,787 162,770 | Financial position: | Total assets $ 2,341 | $ 2,291 $ 6,202 $ 8,697 $ 7,807 $7,063 Notes payable 1,050 | 1,050 1,096 1,314 820 1,121 Total long-term debt 1,113 | N/A 2,999 4,147 4,236 3,318 Discounted lease rentals 262 | 304 964 794 515 596 Stockholders' equity 641 | 413 447 1,214 1,060 979 | Other data: | Total rents of new leases $ 69 | $ 241 $ 1,500 $ 2,800 $ 3,100 $3,400 Future contractual cash flows 1,798 | N/A 5,397 7,063 6,731 6,089
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General Overview On July 16, 2001, Comdisco, Inc. and fifty of its domestic subsidiaries voluntarily filed for bankruptcy. Prior to bankruptcy, Comdisco, Inc. provided technology services including leasing to customers worldwide, offered leasing to key vertical industries and, through its venture financing group, provided equipment leasing and other financing and services to venture capital-backed companies. Comdisco Holding Company, Inc., as the successor company to Comdisco, Inc., emerged from bankruptcy under a confirmed plan of reorganization that became effective on August 12, 2002. In accordance with the Plan, Comdisco Holding became the successor to Comdisco, Inc. In addition, the Company's operations were reorganized into four reportable business groups: US Leasing; European IT Leasing; Ventures; and the Corporate Asset Management, or CAM, group. See Item 1, Description of Business, above, for more details about the Company's business operations. Comdisco Holding was formed on August 8, 2002 for the purpose of selling, collecting or otherwise reducing to money in an orderly manner the remaining assets of the Company and all of its direct and indirect subsidiaries, including Comdisco, Inc. As more fully described in the Plan, the Company's business purpose is limited to the orderly sale or run-off of all of its remaining assets. Pursuant to the Plan and restrictions contained in its certificate of incorporation, the Company is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. All funds generated from the Company's remaining asset portfolios in excess of defined cash reserves and operating expenses are required by the Plan to be used to satisfy creditors of the Company and, if available after the redemption of all debt with respect to the Senior Notes and Subordinated Notes, pay dividends on the Company's Common Stock and, if applicable, make distributions with respect to the Contingent Distribution Rights in the manner and priorities set forth in the Plan. Because of the composition and nature of its asset portfolios, over time, the Company expects to generate funds from the sale or run-off of its asset portfolios at a decreasing rate. Events Leading to Bankruptcy In February 1999, Comdisco, Inc. acquired Prism, a provider of dedicated high-speed connectivity, for a cash purchase price of approximately $53 million. From the date of acquisition through September 30, 2000, Comdisco, Inc. provided Prism with cash totaling $478 million for the expansion of its network and for its operating costs. However, Prism's operations through September 2000 resulted in significant cash losses. On October 1, 2000, Comdisco, Inc.'s Board of Directors voted to cease funding the ongoing operations of Prism. On October 1, 2000, Prism's Board of Directors voted to cease operations and pursue the immediate sale of Prism's assets. Comdisco's wind-down of Prism has continued since that time and the Company expects to complete this process pursuant to the Plan. The venture leases, venture debt and direct equity financing provided by the Ventures group to venture capital-backed companies in the technology and Internet-based industries were, by their nature, high risk. For fiscal 2000, Ventures had net income of $246 million on revenues of $673 million. However, during the first and second calendar quarter of 2001, a market downturn in the technology and Internet-based sectors resulted in a substantial decrease in the revenues of Ventures, deterioration in the credit quality of the Ventures portfolio and significant increases in bad debt expense. As a result of these factors, the Ventures operation posted a loss of $150 million for the fiscal year ended September 30, 2001. As a result of the losses associated with Prism and the Ventures group, Comdisco, Inc.'s cash reserves, overall financial performance and financial condition were significantly negatively impacted. As a result, in part, of the erosion of the Ventures' business and the losses associated with Prism, Comdisco, Inc.'s debt ratings were downgraded below investment grade and Comdisco, Inc. lost access to the commercial paper market. In order to retire commercial paper obligations and other scheduled debt maturities and to finance operations, Comdisco, Inc. borrowed the remaining availability under its prepetition credit agreements in April 2001. Another fundamental challenge faced by Comdisco, Inc. was its debt structure, which involved relatively short-term debt maturities and long-term lease and financing obligations associated with their principal business products. Accordingly, although Comdisco, Inc.'s operations generally generated sufficient cash to meet its working capital needs, without access to the commercial paper market, Comdisco, Inc. could not generate sufficient cash to retire all of the debt maturities scheduled to be repaid during 2001 and 2002. As a result of these events, on July 15, 2001, Comdisco, Inc. concluded that filing for bankruptcy was in the best interests of all of its stakeholders. Comdisco Inc.'s Chapter 11 bankruptcy proceeding commenced the next day on July 16, 2001. Critical Accounting Policies The Company's consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires Comdisco to use estimates and assumptions that affect reported amounts of assets and liabilities, revenues and expenses and disclosure of contingent assets and liabilities. These estimates are subject to known and unknown risks, uncertainties and other factors that could materially impact the amounts reported and disclosed in the financial statements. The Securities and Exchange Commission issued Financial Reporting Release No. 60, "Cautionary Advice Regarding Disclosure About Critical Accounting Policies" ("FFR No. 60") which recommends that companies provide additional disclosure and analysis of those accounting policies considered most critical. The Company believes the following to be among the most critical judgment areas in the application of its accounting policies: o Fresh-Start Reporting: Upon the emergence from bankruptcy proceedings, the Company adopted fresh-start reporting which resulted in material adjustments to the historical carrying amounts of the Company's assets and liabilities. Fresh-start reporting was applied in accordance with SOP 90-7, which required the Company to allocate the reorganization value to its assets and liabilities based upon their estimated fair value in accordance with the procedures specified by Statement of Financial Accounting Standards No. 141, Business Combinations ("SFAS No. 141"). The fair values of the assets as determined for fresh-start reporting were based on estimates of anticipated future cash flows of assets discounted at rates consistent with the discount rates used in the Plan. Liabilities existing at the Plan confirmation date are stated at the present values of amounts to be paid discounted at appropriate current rates. Deferred taxes are reported in conformance with existing generally accepted accounting principles. Debt issued in connection with the Plan is recorded at the stated value. The difference between the net fair value of the assets and the liabilities existing at the confirmation date (excluding restructured debt in accordance with the Plan) and the reorganization value is "Excess of the Net Fair Value over Reorganization Value." "Excess of the Net Fair Value over Reorganization Value" is subject to the provisions of SFAS No. 141. Under SFAS No. 141, the excess of the net fair value is used to reduce certain assets, as defined by SFAS No. 141 (generally long-lived non-financial assets), to zero. Any excess net fair value remaining after the reduction is recognized as an extraordinary gain. The determination of the net fair values of the assets and liabilities is subject to significant estimation and assumptions. Actual results could differ from the estimates made. o Ventures Investments: Ventures provided venture leases, venture debt and direct equity financing to venture capital-backed companies (collectively the "investments"). Venture leases are leases with warrants that were intended to compensate Ventures for providing equipment leases with terms having lower periodic rental payments than leases without warrants. Similarly, venture debt is a high-risk loan with warrants or a conversion-to-equity feature with more flexible terms than more traditional debt financing. Direct equity financings involved Ventures' purchase of convertible preferred stock and common stock from its customers. The Company carries the investments at the lower cost or net realizable value. The Company regularly estimates the net realizable value of these investments by adjusting their carrying value for known trends and historical collection experience. This estimate could require further adjustment based on changing circumstances, including changes in the economy or in the particular circumstances of a specific investment. o Allowance for Doubtful Accounts: The Company maintains an allowance for doubtful accounts. This allowance reflects management's estimate of the amount of the Company's receivables that it will be unable to collect and is based on current trends and historical collection experience. The estimate could require adjustments based on changing circumstances, including changes in the economy or in the particular circumstances of individual customers. Accordingly, the Company may be required to increase or decrease the allowance. o Residual Value of Rental Equipment: Direct financing and sale-type leased assets consist of the present value of the future minimum lease payments plus the present value of the residual (collectively referred to as the "Net Investment"). Residual is the estimated fair market value of the equipment on lease at lease termination. Revenue on operating leases consists of the contractual lease payments which is recognized on a straight-line basis over the lease term. Costs and expenses are principally depreciation of the equipment. Depreciation is recognized on a straight-line basis over the lease term to the Company's estimate of the equipment's fair market value at lease termination, commonly referred to as "residual value." In estimating the equipment's fair value at lease termination, the Company relies on historical experience by equipment type and manufacturer and, where available, valuations by independent appraisers, adjusted for known trends. The Company's estimates are reviewed continuously to ensure reasonableness, however, the amounts the Company will ultimately realize could differ from the amounts assumed in determining the fair market value of the equipment at lease termination and the ultimate gain or loss on disposition of assets The above listing is not intended to be a comprehensive list of all the Company's accounting policies. Please refer to the Company's consolidated financial statements and notes thereto which contain the Company's significant accounting policies and other disclosures required by accounting principles generally accepted in the United States of America. Basis of Presentation The Company and fifty of its domestic subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois on July 16, 2001. Prior to emerging from Chapter 11 on August 12, 2002, Comdisco, Inc. operated its business as a debtor-in-possession subject to the jurisdiction of the United States Bankruptcy Court. The reorganized Company adopted fresh-start reporting and gave effect to its emergence as of July 31, 2002 for financial reporting purposes. Under fresh-start reporting, the final consolidated balance sheet as of July 31, 2002 became the opening consolidated balance sheet of the reorganized Company. Since fresh-start reporting has been reflected in the accompanying consolidated balance sheet as of September 30, 2002, the consolidated balance as of that date is not comparable in certain material respects to any such balance sheet for any period prior to July 31, 2002. In addition, Comdisco, Inc.'s results of operations prior to July 31, 2002 are not comparable to the Company's results of operations after its emergence from bankruptcy due to the adoption of fresh-start reporting. Recent Developments On October 18, 2002, the Company announced that it had sold Computer Discount GmbH, a leasing subsidiary of Comdisco, Inc. formerly known as Comdisco Austria GmbH, to the Austrian company PH Holding GmbH. Under the terms of the purchase agreement, PH Holding GmbH agreed to pay (euro) 8.7 million (approximately U.S. $8.6 million as of September 30, 2002) for 100 percent of the stated share capital of Computer Discount GmbH. As part of the deal, PH Holding GmbH agreed to continue to oversee the liquidation of Comdisco Ceska Republika S.R.O., a wholly-owned Czech subsidiary of Computer Discount GmbH. PH Holding GmbH is owned by Peter Huber, a former employee of the Company who, until the sale, had been serving as the regional manager for the Company's Austrian and Swiss operations. The Company's operations in Austria comprised approximately two percent of the Company's total European assets as of August 14, 2002, the closing date of the sale. On October 18, 2002, the Company announced that it had sold Comprendium Finance S.A., formerly known as Comdisco (Switzerland) S.A., a leasing subsidiary of Comdisco Global Holding Company, Inc., to Comprendium Investments S.A., a Swiss company. Pursuant to the terms of the sale agreement, the Company received CHF 13.0 million (approximately U.S. $8.7 million as of September 30, 2002). Comprendium Investments S.A. is owned by Thomas Flohr, a former employee of the Company who, until January 2001, served as President of Comdisco Europe. The Company's operations in Switzerland comprised approximately two percent of the Company's total European assets as of October 10, 2002, the closing date of the sale. On October 18, 2002, the Company announced that it, along with Comdisco Global Holdings Company, Inc., had entered into an agreement for the sale of the stock of the Company's French leasing subsidiaries, Comdisco France SA and Promodata SNC, to Econocom Group SA/NV. Comdisco France S.A. was a wholly-owned subsidiary of Comdisco Global Holding Company, Inc. and Promodata SNC was a wholly-owned subsidiary of Comdisco France S.A. The sale of the leasing assets closed on December 23, 2002 and proceeds in the amount of approximately (euro) 69 million were received. These proceeds were converted into U.S. $70 million and repatriated by the Company. The Company's operations in France comprised approximately thirteen percent of the Company's total European assets as of September 30, 2002. On October 21, 2002, the Company voluntarily redeemed the entire $400 million outstanding principal amount of its Senior Notes at a price equal to 100 percent of their principal amount plus accrued and unpaid interest from August 12, 2002 to the redemption date. On November 14, 2002, pursuant to its mandatory redemption obligations under the Subordinated Notes, the Company made a partial redemption of $65 million of the outstanding principal amount of its Subordinated Notes at a price equal to 100 percent of their principal amount plus accrued and unpaid interest from August 12, 2002 to the redemption date. On December 23, 2002, the Company made a voluntary partial redemption of $200 million of the outstanding principal amount of its Subordinated Notes at a price equal to 100 percent of their principal amount plus accrued and unpaid interest from August 12, 2002 to the redemption date. On December 31, 2002, the Company made an approximately $16 million interest payment with respect to the Subordinated Notes. In addition, on January 9, 2003, the Company made a voluntary partial redemption of $100 million of the outstanding principal amount of its Subordinated Notes at a price equal to 100 percent of their principal amount plus accrued and unpaid interest to the redemption date. After the January 9, 2003 redemption, the outstanding principal balance of Subordinated Notes is $285 million. Results of Operations For purposes of this Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, the results of operations of the Company for the fiscal year ended September 30, 2002 are comprised of selected consolidated financial data of the Company for the two months from August 1, 2002 to September 30, 2002 and of Comdisco, Inc. for the ten months from October 1, 2001 to July 31, 2002. In addition, certain reclassifications have been made to the prior period financial statements to conform to the presentation used in the September 30, 2002 consolidated financial statements. As a result of the reorganization, the recording of the restructuring transactions, the asset disposition transactions and the implementation of fresh-start accounting pursuant to SOP 90-7, the Company's results of operations after July 31, 2002 are not comparable to the results reported in prior periods for Comdisco, Inc. The information in this section should be read in conjunction with the consolidated financial statements and the related notes thereto appearing in Item 8, Financial Statements and Supplementary Data. Fiscal Year Ended September 30, 2002 Compared to the Fiscal Year Ended September 30, 2001 Total Revenue Total revenue decreased 44 percent to $1.4 billion for the fiscal year ended September 30, 2002 from $2.5 billion for the fiscal year ended September 30, 2001. The decrease is due to lower revenues from all of the Company's operations. During fiscal 2002, the Company's operations were limited by the Company's financial constraints and the related impact on new business volume and remarketing, general economic conditions, anticipated asset sales and actual lease portfolio sales, significant reductions in personnel and the impact of the filing on the business. See the Risk Factor entitled "Uncertainties Relating to the Bankruptcy Plan" in this Item 7, below, for more information. Additional revenue information for each of the four business segments, US Leasing, European IT Leasing, Ventures and CAM group, is set forth below. Total Leasing Revenue Total leasing revenue from US Leasing operations decreased 55 percent to $271 million for the fiscal year ended September 30, 2002. Total leasing revenue from European IT Leasing operations decreased 11 percent to $163 million for the fiscal year ended September 30, 2002. Total leasing revenue from CAM group decreased 50 percent to $277 million for the fiscal year ended September 30, 2002. Total leasing revenue from Ventures operations decreased 26% to $217 million for the fiscal year ended September 30, 2002. The decrease in total leasing revenue from CAM group is primarily due to the leased asset sales to GE Capital and other organizations discussed in Note 5 of Notes to Consolidated Financial Statements. As such, total leasing revenue from operations decreased 42 percent to $928 million for the fiscal year ended September 30, 2002 from $1.6 billion for the fiscal year ended September 30, 2001. Total leasing revenue is comprised of three revenue components: (i) operating lease revenue; (ii) direct financing lease revenue; and (iii) sales-type lease revenue. Operating lease revenue: US Leasing operating lease revenue decreased 51 percent to $202 million for the fiscal year ended September 30, 2002 from $415 million for the fiscal year ended September 30, 2001 primarily due to the continued orderly run-off of the lease base, the absence of any new business volume and the emphasis by the Company on remarketing, primarily by sales. European IT Leasing operating lease revenue decreased 24 percent to $122 million for the fiscal year ended September 30, 2002 from $160 million for the fiscal year ended September 30, 2001 primarily due to reduced IT leasing volume in Europe compared to prior years. CAM group operating lease revenue decreased 48 percent to $243 million for the fiscal year ended September 30, 2002 from $466 million for the fiscal year ended September 30, 2001. Venture operating lease revenue decreased 26 percent to $216 million for the fiscal year ended September 30, 2002 from $293 million for the fiscal year ended September 30, 2001. Direct financing lease revenue: US Leasing direct financing lease revenue decreased 48 percent to $57 million for the fiscal year ended September 30, 2002 from $109 million for the fiscal year ended September 30, 2001 primarily due to the decrease in leased assets. European IT Leasing direct financing lease revenue increased 100 percent to $26 million for the fiscal year ended September 30, 2002 from $13 million for the fiscal year ended September 30, 2001 primarily due to continued funding of its commitments in Germany for its technology refresh option product, primarily for T-Systems. T-Systems is the Company's largest lessee in Europe and one of its largest customers worldwide. CAM group direct financing lease revenue decreased 56 percent to $19 million for the fiscal year ended September 30, 2002 from $43 million for the fiscal year ended September 30, 2001. Sales-type revenue: The Company's emphasis on sales rather than remarketing by extending existing leases resulted in decreases in fiscal 2002 compared to fiscal 2001 for revenue from sales-type leases, domestically, while in Europe, sales-type lease revenue increased slightly. US Leasing sales-type lease revenue decreased to $12 million for the fiscal year ended September 30, 2002 from $77 million for the fiscal year ended September 30, 2001. European IT Leasing sales-type lease revenue increased 36 percent to $15 million for the fiscal year ended September 30, 2002 from $11 million for the fiscal year ended September 30, 2001 primarily from its UK operations. CAM group sales-type lease revenue decreased 64 percent to $15 million for the fiscal year ended September 30, 2002 from $42 million for the fiscal year ended September 30, 2001. Venture sales-type lease revenue was $1 million for both the fiscal year ended September 30, 2002 and 2001. Sales Revenue The Company generates sales from two sources: (a) the sale of used equipment from its lease portfolio; and (b) the sale or re-lease of equipment either at original lease termination or during the original lease. These transactions may be with existing lessees or, when equipment is returned, with new customers. Revenue from sales increased 24 percent to $347 million for the fiscal year ended September 30, 2002 from $280 million for the fiscal year ended September 30, 2001. The increase is due to the Company's emphasis on remarketing transactions structured as sales rather than as leases and the overall business purpose of the Company to sell or orderly liquidate its assets. US Leasing sales revenue increased 12 percent to $154 million for the fiscal year ended September 30, 2002 from $137 million for the fiscal year ended September 30, 2001. European IT Leasing sales revenue increased 50 percent to $33 million for the fiscal year ended September 30, 2002 from $22 million for the fiscal year ended September 30, 2001. CAM group sales revenue increased 26 percent to $139 million for the fiscal year ended September 30, 2002 from $110 million for the fiscal year ended September 30, 2001. Ventures sales revenue increased 91 percent to $21 million for the fiscal year ended September 30, 2002 from $11 million for the fiscal year ended September 30, 2001. Technology Services Revenue Revenue from technology services were $80 million and $128 million for the fiscal years ended September 30, 2002 and 2001, respectively. The decrease in the current year period compared to the year earlier period is primarily the result of reduced revenues from the IT CAP services, business. The IT CAP Services North America business was sold in February 2002. Other Revenue Other revenue, which is primarily comprised of revenue from the sale of Ventures' equity investments, interest income earned on notes from Ventures' customers and other revenue, decreased 87 percent to $60 million for the fiscal year ended September 30, 2002 from $453 million for the fiscal year ended September 30, 2001. The decrease is primarily due to reduced revenue from the sale of equity securities. Revenue from the sale of equity securities was $16 million for the year ended September 30, 2002, compared to $353 million for the year ended September 30, 2001. During fiscal 2002 and the last six months of fiscal 2001, there was a significant decline in the number of public offerings and mergers/acquisitions within the Company's portfolio of venture companies. Interest income on notes decreased 53 percent to $30 million compared for the fiscal year ended September 30, 2002 from $64 million for the fiscal year ended September 30, 2001. The components of other revenue were as follows (in millions): Years ended --------------- 2002 2001 ---- ---- Ventures: Sale of equity holdings $ 16 $ 353 Interest income on notes 30 64 Other - 2 ---- ---- Total 46 419 Other reportable segments: Equity sales - - Investment income 7 28 Other 7 6 ---- ---- Total 14 34 ---- ---- Total other revenue $ 60 $ 453 ==== ==== Total Costs and Expenses Total operating costs and expenses decreased 18 percent to $2.3 billion for the fiscal year ended September 30, 2002 from $2.8 billion for the fiscal year ended September 30, 2001. The decrease is due to reduced leasing costs and reduced interest expense as a result of the filing, offset by $439 million of reorganization items, including the $263 million of pre-tax charges for the sales of electronics, laboratory and scientific and healthcare leased equipment and Australian and New Zealand IT assets (see Note 5 of Notes to Consolidated Financial Statements), and $369 million of charges related to the Company's emergence from bankruptcy and the adoption of fresh-start reporting. Additional cost and expense information for each of the business segments is set forth below. Total Leasing Costs and Expenses Total leasing costs and expenses from US Leasing operations decreased 63 percent to $143 million for the fiscal year ended September 30, 2002 from $383 million for the fiscal year ended September 30, 2001. Total leasing costs and expenses from European IT Leasing operations decreased 9 percent to $138 million for the fiscal year ended September 30, 2002 from $151 million for the fiscal year ended September 30, 2001. Total leasing costs and expenses from CAM group decreased 47 percent to $202 million for the fiscal year ended September 30, 2002 from $380 million for the fiscal year ended September 30, 2001. Total leasing costs and expenses from Ventures decreased 22 percent to $187 million for the fiscal year ended September 30, 2002 from $241 million for the fiscal year ended September 30, 2001. As such, total leasing costs and expenses operations decreased 44 percent to $670 million for the fiscal year ended September 30, 2002 from $1.2 billion for the fiscal year ended September 30, 2001. Total leasing costs and expenses is comprised of two components: (i) operating lease costs and expenses and (ii) sales-type lease costs and expenses. Operating lease costs and expenses: US Leasing operating lease costs and expenses decreased 59 percent to $132 million for the fiscal year ended September 30, 2002 from $320 million for the fiscal year ended September 30, 2001 reflecting the continued decrease in operating leased assets and the related revenue from operating leased assets. European IT Leasing operating lease costs and expenses decreased 13 percent to $125 million for the fiscal year ended September 30, 2002 from $143 million for the fiscal year ended September 30, 2001 primarily due to declines in total operating leased assets. CAM group operating lease costs and expenses decreased 46 percent to $191 million for the fiscal year ended September 30, 2002 from $354 million for the fiscal year ended September 30, 2001. Ventures operating lease costs and expenses decreased 23 percent to $186 million for the fiscal year ended September 30, 2002 from $241 million for the fiscal year ended September 30, 2001. Sales-type lease costs and expenses: US Leasing sales-type lease costs and expenses decreased 83 percent to $11 million for the fiscal year ended September 30, 2002 from $63 million for the fiscal year ended September 30, 2001 primarily reflecting the emphasis on sales remarketing rather than lease remarketing as noted above. European IT Leasing sales-type lease costs and expenses increased 63 percent to $13 million for the fiscal year ended September 30, 2002 from $8 million for the fiscal year ended September 30, 2001, primarily from its UK operations. CAM group sales-type lease costs and expenses decreased 58 percent to $11 million for the fiscal year ended September 30, 2002 from $26 million for the fiscal year ended September 30, 2001. Ventures sales-type lease costs and expenses were $1 million for the fiscal year ended September 30, 2002. Ventures did not have any sales-type lease costs and expenses during fiscal year 2001. Sales Costs and Expenses Sales costs and expenses increased 35 percent to $320 million for the fiscal year ended September 30, 2002 from $237 million for the fiscal year ended September 30, 2001. The increase in fiscal 2002 compared to fiscal 2001 is due to an increased focus on sales remarketing activities. US Leasing sales costs and expenses increased 3 percent to $117 million for the fiscal year ended September 30, 2002 from $114 million for the fiscal year ended September 30, 2001. Margins on those sales were twenty-four percent and seventeen percent in the years ended September 30, 2002 and 2001, respectively. European IT Leasing sales costs and expenses decreased 6 percent to $15 million for the fiscal year ended September 30, 2002 from $16 million for the fiscal year ended September 30, 2001. CAM group sales costs and expenses increased 70 percent to $175 million for the fiscal year ended September 30, 2002 from $103 million for the fiscal year ended September 30, 2001. CAM group sales are primarily electronics equipment remarketed from inventory. Published reports indicate continued earnings pressures for the semi-conductor and contract manufacturers and the year-to-year declines in bookings has negatively impacted the market for used electronics equipment. Ventures sales costs and expenses increased 225 percent to $13 million for the fiscal year ended September 30, 2002 from $4 million for the fiscal year ended September 30, 2001. Technology Services Costs and Expenses Services costs were $49 million and $123 million for the fiscal years ended September 30, 2002 and 2001, respectively. The decrease reflects the overall reduction in services revenue and the sale of IT CAP services North America in February 2002. Selling, General and Administrative Expenses Selling, general and administrative expenses decreased 33 percent to $204 million for the fiscal year ended September 30, 2002 from $312 million for the fiscal year ended September 30, 2001. The following table summarizes selling, general and administrative expenses (in millions): 2002 2001 ------------- -------------- Incentive compensation $ 68 $ 91 Estimated severance payments 18 8 Other compensation and benefits 71 114 Outside professional services 48 42 Foreign exchange gain (21) - Other expenses 20 57 ------------- -------------- $ 204 $ 312 ============= ============== The reductions in incentive compensation and other compensation and benefits, and the increase in severance payouts in the current year compared to the year earlier period reflect the continued reduction in personnel. As of July 16, 2001, the date Comdisco, Inc. filed bankruptcy, it had approximately 2,100 domestic employees. As of the date of emergence from bankruptcy, the Company had approximately 400 domestic employees. Write-down of Equity Securities The charge for write-down of equity securities decreased 43 percent to $73 million for the fiscal year ended September 30, 2002 from $129 million for the fiscal year ended September 30, 2001. The decrease reflects the overall reduction in the carrying value of the Company's equity securities. Bad Debt Expense Bad debt expense decreased 69 percent to $153 million for the fiscal year ended September 30, 2002 from $489 million for the fiscal year ended September 30, 2001 primarily due to declines in bad debt expense for Ventures. Interest Expense Interest expense decreased 82 percent to $62 million for the fiscal year ended September 30, 2002 from $341 million for the fiscal year ended September 30, 2001. Interest expense for the ten months ended July 31, 2002 primarily represents interest accrued on Comdisco, Inc.'s secured debt obligations and debt obligations of its foreign subsidiaries. Effective August 12, 2002, the Company, along with its direct wholly-owned subsidiary, Comdisco, Inc., co-issued variable rate senior secured notes due 2004 in the principal amount of $400 million and 11 percent subordinated secured notes due 2005 in the principal amount of $650 million. As of July 16, 2001, Comdisco, Inc. ceased accruing interest on the unsecured debt obligations of the Debtors. Contractual interest on all obligations for the ten months ended July 31, 2002 and the year ended September 30, 2001 was $245 million, which is $198 million in excess of recorded interest expense included in the accompanying financial statements, and $391 million, which is $50 million in excess of recorded interest expense included in the accompanying financial statements, respectively. Reorganization Items Charges for reorganization items were $439 million for the fiscal year ended September 30, 2002 compared to $34 million for the fiscal year ended September 30, 2001. See Note 5 of Notes to Consolidated Financial Statements, which is incorporated in this section by reference, for a discussion of reorganization items. Included in reorganization items is the pre-tax charge of $263 million for the sales of electronics, laboratory and scientific and healthcare leased equipment and Australian IT assets. Fresh-Start Accounting Adjustments Fresh-start accounting adjustments, which reflect the impact of fresh-start reporting on the assets and liabilities of Comdisco, Inc. as of July 31, 2002, totaled $369 million for the ten months ended July 31, 2002. See Notes 3 and 6 to Consolidated Financial Statements, which are incorporated in this section by reference, for details of the fresh-start accounting adjustments. Income Taxes See Note 14 of Notes to Consolidated Financial Statements, which is incorporated in this section by this reference, for details about the Company's income tax provision. Net Loss from Continuing Operations The net loss from continuing operations was $973 million in fiscal 2002, compared to a net loss of $197 million, or $1.31 per share-diluted in fiscal 2001. The loss in fiscal 2002 is primarily the result of losses on asset sales during fiscal 2002 (see Note 5 of Notes to Consolidated Financial Statements), offset by lower selling, general and administrative expenses and lower interest expense. As a result of the leased asset sales, the related impact on future taxable income and continued constraints on business expansion in the near-term, the Company established an income tax valuation allowance totaling $23 million, or $.15 per share, during the quarter ended March 31, 2002. This was based on management's assessment that it was more likely than not that the Company would not realize its net deferred tax assets. The loss from continuing operations for the year ended September 30, 2001 was primarily a result of decreased earnings contributions from all of the Company's business lines and it reflects reduced earnings contributions from leasing as a result of the decline in leased assets. The loss in fiscal 2001 also reflects the following items: o a $365 million pretax charge ($234 million after-tax) for additions to the allowance for credit losses in the Ventures group's portfolio; o a $124 million pretax charge ($79 million after-tax) for additions to allowance for credit losses in the leasing business; o a $129 million pretax charge for equity securities written-off; o a $8 million pretax charge for restructuring and other charges; and o $34 million of reorganization related expenses. Discontinued operations Net earnings from discontinued operations were $262 million for the year ended September 30, 2002 compared to a net loss of $77 million for the year ended September 30, 2001. o International leasing: On October 18, 2002, the Company announced that it had sold Comprendium Finance S.A., Computer Discount GmbH and the Company's French leasing subsidiaries, Comdisco France SA and Promodata SNC. The results of operations of these European subsidiaries as well as the Company's Australian and New Zealand operations ("International Leasing") have been classified as discontinued operations and prior year periods have been restated. Revenue from International Leasing was $155 million and $215 million for the years ended September 30, 2002 and 2001, respectively. Costs and expenses for these operations were $163 million for the year ended September 30, 2002 compared to $231 million for the year ended September 30, 2001. The decrease in both revenues and costs in the current year period compared to the prior year period reflect the reduction in operations of these subsidiaries as a result of the declining financial condition of the Company. Net loss for International Leasing was $39 million in the year ended September 30, 2002, including a loss of approximately $37 million on sales of assets, compared to a loss of $14 million in the year ended September 30, 2001. The net loss in fiscal 2001 was primarily the result of additions to the allowance for credit losses of approximately $16 million in Comprendium Finance S.A. o Availability Solutions: On November 15, 2001, Comdisco, Inc. completed the sale of its availability solutions business to SunGard. The results of operations of Availability Solutions have been classified as discontinued operations and prior periods have been restated. Revenue from Availability Solutions was $67 million and $487 million for the years ended September 30, 2002 and 2001, respectively. Availability Solutions costs were $54 million and $460 million during year ended September 30, 2002 and 2001, respectively. The decreases in both revenues and costs were due to the sale of the business effective November 15, 2001. Net earnings of the Availability Solutions business were $313 million for the year ended September 30, 2002 compared to a net loss of $13 million in the prior year period. Approximately $301 million of the net earnings within discontinued operations for the year ended September 30, 2002 relates to the gain on the sale of the Availability Solutions business. The sale excluded the purchase of the stock of subsidiaries in Germany and Spain. However, as a result of the Company's intention to exit the availability solutions businesses of Germany and Spain (including the possible sale of assets in either or both countries), the Company has also accounted for these businesses as discontinued operations. Revenue and expenses for the Company's operations in Germany and Spain for the years ended September 30, 2002 and 2001 were immaterial. o Network Services: During the second quarter of fiscal 2001, the network management services business of Comdisco, Inc. was discontinued. The network management services were transferred to a new provider during the third quarter of fiscal 2001. Loss from discontinued operations of network services for the year ended September 30, 2001 was $32 million. o Prism Communications: Due to unfavorable market conditions, Prism reduced its estimated proceeds from the sale of assets from $80 million at September 30, 2000 to $20 million at March 31, 2001. Given these negative market conditions, Prism accelerated the process of shutting down its operations, thereby reducing operating costs by approximately $30 million. As a result, Comdisco, Inc. recorded in the quarter ended March 31, 2001 a noncash pre-tax charge of $30 million, $18 million after tax, or $.12 per common share, to write down these assets to current estimated fair market value. Continued declines in the telecommunications industry in the three months ended June 30, 2002 negatively impacted the market for telecommunications equipment. As a result, Comdisco, Inc. recorded a charge of $3 million, or $.02 per common share, to write down these assets to current fair market value. The estimated fair market value of these assets is approximately $2 million at September 30, 2002. Through September 30, 2002, Prism has received approximately $15 million in proceeds from various sales of its equipment. Extraordinary gain For the ten months ended July 31, 2002, the Company recorded a $153 million extraordinary gain resulting from the discharge of indebtedness. See Note 3 of Notes to Consolidated Financial Statements. During the two months ended September 30, 2002, the Company recorded a $241 million extraordinary gain related to the elimination of the excess fair value of net assets over the reorganization value in accordance with SFAS No. 141, "Business Combinations." Net Loss Net loss increased 17 percent to $317 million for the fiscal year ended September 30, 2002 from $272 million for the fiscal year ended September 30, 2001. Fiscal Year Ended September 30, 2001 Compared to the Fiscal Year Ended September 30, 2000 Throughout the second half of fiscal 2001 and continuing into fiscal 2002, Comdisco, Inc. continued to seek additional liquidity through the sale of certain of its remaining business lines, including the possible sale of certain of its leasing assets. Comdisco, Inc.'s bankruptcy and the potential sale of some or all of these businesses created uncertainty that had an adverse impact on its business, ability to obtain credit, customer's confidence and its ability to retain employees. The Company believes this uncertainty negatively impacted its financial results for the year ended September 30, 2001. Total Revenue Total revenue decreased 19 percent to $2.5 billion for the fiscal year ended September 30, 2001 from $3.1 billion for the fiscal year ended September 30, 2000. The decrease is primarily due to decreases in leasing revenue resulting from reductions in the re-lease of equipment, which the Company refers to as "remarketing," and significant declines in leasing volume as the Company liquidated its assets in an orderly manner. Additional revenue information for each of the Company's business segments is set forth below. Total Leasing Revenue Total leasing revenue from US Leasing operations decreased 44 percent to $601 million for the fiscal year ended September 30, 2001. Total leasing revenue from European IT Leasing operations decreased 13 percent to $184 million for the fiscal year ended September 30, 2001. Total leasing revenue from Ventures increased 49 percent to $294 million for the fiscal year ended September 30, 2001. Total leasing revenue from CAM group decreased 4 percent to $551 million for the year ended September 30, 2001 from $572 million for the fiscal year ended September 30, 2000. Total leasing revenue decreased 21 percent to $1.6 billion for the fiscal year ended September 30, 2001 from $2.1 billion for the fiscal year ended September 30, 2000. Total leasing revenue is comprised of three revenue components: (i) operating lease revenue; (ii) direct financing lease revenue; and (iii) sales-type lease revenue. Weakening economic conditions, the bankruptcy, and capital constraints had a negative impact on the Company's ability to provide the necessary financial support for new lease volume. As a result, equipment purchased for leasing decreased from $2.6 billion in fiscal 2000 to $1.3 billion in fiscal 2001. Declining leased assets resulted in declines in total lease revenue and earnings. Operating lease revenue: US Leasing operating lease revenue decreased 40 percent to $415 million for the fiscal year ended September 30, 2001 from $686 million for the fiscal year ended September 30, 2000. European IT Leasing operating lease revenue decreased 18 percent to $160 million for the fiscal year ended September 30, 2001 from $195 million for the fiscal year ended September 30, 2000. CAM group operating lease revenue increased 10 percent to $466 million for the fiscal year ended September 30, 2001 from $423 million for the fiscal year ended September 30, 2000. Ventures operating lease revenue increased 50 percent to $293 million for the fiscal year ended September 30, 2001 from $195 million for the fiscal year ended September 30, 2000. Direct financing lease revenue: US Leasing direct financing lease revenue decreased 13 percent to $109 million for the fiscal year ended September 30, 2001 from $125 million for the fiscal year ended September 30, 2000. European IT Leasing direct financing lease revenue increased to $13 million for the fiscal year ended September 30, 2001 from $5 million for the fiscal year ended September 30, 2000 primarily due to continued funding of its commitments in Germany for its technology refresh option product. CAM group direct financing lease revenue was $43 million for the fiscal years ended September 30, 2001 and 2000. Sales-type lease revenue: US Leasing sales-type lease revenue decreased to $77 million for the fiscal year ended September 30, 2001 from $261 million for the fiscal year ended September 30, 2000. European IT Leasing sales-type lease revenue decreased 8 percent to $11 million for the fiscal year ended September 30, 2001 from $12 million for the fiscal year ended September 30, 2000. CAM group sales-type revenue decreased 60 percent to $42 million for the fiscal year ended September 30, 2001 from $106 million in the fiscal year ended September 30, 2000. Ventures sales-type revenue decreased to $1 million for the fiscal year ended September 30, 2001 from $2 million in the fiscal year ended September 30, 2000. Sales Revenue Revenue from sales decreased 28 percent to $280 million for the fiscal year ended September 30, 2001 from $390 million for the fiscal year ended September 30, 2000. The decrease in fiscal 2001 compared to fiscal 2000 is due a decrease in remarketing activities. US Leasing sales revenue decreased 38 percent to $137 million for the fiscal year ended September 30, 2001 from $222 million for the fiscal year ended September 30, 2000. European IT Leasing sales revenue decreased 50 percent to $22 million for the fiscal year ended September 30, 2001 from $44 million for the fiscal year ended September 30, 2000. CAM group sales revenue decreased 3 percent to $110 million for the fiscal year ended September 30, 2001 from $113 million for the fiscal year ended September 30, 2000. Venture sales revenue was $11 million for both the fiscal year ended September 30, 2001 and 2000. Technology Services Revenue Revenue from technology services was $128 million and $119 million for the fiscal years ended September 30, 2001 and 2000, respectively. The increases are primarily the result of the growth in IT CAP services. Other Revenue Other revenue, which was primarily comprised of revenue from the sale of equity holdings, decreased 15 percent to $453 million for the fiscal year ended September 30, 2001 from $530 million for the fiscal year ended September 30, 2000. The decrease is primarily due to the reduced revenue from the sale of equity holdings and other investment income. The components of other revenue were as follows (in millions): Years ended ------------------ 2001 2000 ------- ------- Ventures: Sale of equity holdings $ 353 $ 406 Interest income on notes 64 56 Other 2 3 ------- ------- Total 419 465 Other reportable segments: Equity sales - 42 Investment income 28 16 Other 6 7 ------- ------- Total 34 65 ------- ------- Total other revenue $ 453 $ 530 ======= ======= Total Costs and Expenses Total costs and expenses were $2.8 billion for the fiscal year ended September 30, 2001 and $2.8 billion for the fiscal year ended September 30, 2000. Reduced leasing and sales costs in fiscal 2001 compared to fiscal 2000 were offset by higher additions to the allowance for credit losses in the US Leasing and European IT Leasing and the Ventures group businesses and restructuring and reorganizational costs incurred in fiscal 2001. Additional operating cost and expense information for each of the business segments is set forth below. Total Leasing Costs and Expenses Total leasing costs and expenses from US Leasing operations decreased 49 percent to $383 million for the fiscal year ended September 30, 2001. Total leasing costs and expenses from European IT Leasing operations decreased 16 percent to $151 million for the fiscal year ended September 30, 2001. Total leasing costs and expenses for CAM group decreased 6 percent to $380 million for the fiscal year ended September 30, 2001. Total leasing costs and expenses for Ventures increased 60 percent to $241 million for the fiscal year ended September 30, 2001. As such, total leasing costs and expenses operations decreased 20 percent to $1.2 billion for the fiscal year ended September 30, 2001 from $1.5 billion for the fiscal year ended September 30, 2000. Total leasing costs and expenses is comprised of two components: (i) operating lease costs and expenses; and (ii) sales-type lease costs and expenses. Operating lease costs decreased in fiscal 2001 compared to fiscal 2000 due to the decrease in lease volume discussed above. Remarketing activities, including sales-type leases, also decreased in fiscal 2001 compared to fiscal 2000, primarily due to the uncertainty of the Company's financial position and other factors as discussed above. Operating lease costs and expenses: US Leasing operating lease costs and expenses decreased 42 percent to $320 million for the fiscal year ended September 30, 2001 from $551 million for the fiscal year ended September 30, 2000. European IT Leasing operating lease costs and expenses decreased 17 percent to $143 million for the fiscal year ended September 30, 2001 from $173 million for the fiscal year ended September 30, 2000. CAM group operating lease costs and expenses increased 11 percent to $354 million for the fiscal year ended September 30, 2001 from $320 million for fiscal year ended September 30, 2000. Ventures operating lease costs and expenses increased 61 percent to $241 million for the fiscal year ended September 30, 2001 from $150 million for fiscal year ended September 30, 2000. Sales-type lease costs and expenses: US Leasing sales-type lease costs and expenses decreased 68 percent to $63 million for the fiscal year ended September 30, 2001 from $195 million for the fiscal year ended September 30, 2000. European IT Leasing sales-type lease costs and expenses increased 33 percent to $8 million for the fiscal year ended September 30, 2001 from $6 million for the fiscal year ended September 30, 2000 primarily due to remarketing of lower margin equipment. CAM group sales-type lease costs and expenses decreased 69 percent to $26 million for the fiscal year ended September 30, 2001 from $83 million for the fiscal year ended September 30, 2000. Ventures sales-type lease costs and expenses were $1 million for the fiscal year ended September 30, 2000. Sales Costs and Expenses Sales costs and expenses decreased 23 percent to $237 million for the fiscal year ended September 30, 2001 from $308 million for the fiscal year ended September 30, 2001. The decrease in fiscal 2001 compared to fiscal 2000 is due to a decrease in remarketing activities. US Leasing sales costs and expenses increased 32 percent to $114 million for the fiscal year ended September 30, 2001 from $167 million for the fiscal year ended September 30, 2000. Margins on those sales were 17 percent and 24 percent in the years ended September 30, 2001 and 2000, respectively. Margins on remarketing activities in fiscal 2001 reflected a decrease in the market for high technology equipment. European IT Leasing sales costs and expenses decreased 64 percent to $16 million for the fiscal year ended September 30, 2002 from $44 million for the fiscal year ended September 30, 2001. CAM group sales costs and expenses increased 17 percent to $103 million for the fiscal year ended September 30, 2001 from $88 million for the fiscal year ended September 30, 2001. CAM group sales are primarily electronics equipment remarketed from inventory. Ventures sales costs and expenses decreased 56 percent to $4 million for the fiscal year ended September 30, 2001 from $9 million for the fiscal year ended September 30, 2001. Technology Services Costs and Expenses Services costs were $123 million and $119 million for the fiscal years ended September 30, 2001 and 2000, respectively. The increases were due to higher personnel costs and an increase in customer base. Selling, General and Administrative Expenses Selling, general and administrative expenses decreased 14 percent to $312 million for the fiscal year ended September 30, 2001 from $362 million for the fiscal year ended September 30, 2000. The decrease is primarily the result of reduced compensation and outside professional services (excludes professional services related to reorganization). The following table summarizes selling, general and administrative expenses (in millions): 2001 2000 ------- ------ Incentive compensation $ 91 $134 Estimated severance payments 8 - Other compensation and benefits 114 121 Outside professional services 42 58 Other expenses 57 49 ------- ------ $312 $362 ======= ====== Write-down of Equity Securities The charge for write-down of equity securities totaled $129 million for the fiscal year ended September 30, 2001 compared to $7 million for the fiscal year ended September 30, 2000. The increase in fiscal 2001 compared to fiscal 2000 was primarily due to the rapid deterioration in the Ventures portfolio as well as continued declines in the markets for equity securities. Bad Debt Expense Bad debt expense increased 247 percent to $489 million for the fiscal year ended September 30, 2001 from $141 million for the fiscal year ended September 30, 2000 primarily due to the rapid deterioration in the Ventures group portfolio as well as provisions needed for US Leasing and European IT Leasing. Interest Expense Interest expense was $341 million and $340 million for the fiscal years ended September 30, 2001 and 2000, respectively. As of July 16, 2001, Comdisco, Inc. ceased accruing interest on the senior notes and borrowings by the Debtors under Comdisco, Inc.'s lines of credit. Contractual interest on these obligations for the year ended September 30, 2001 was $391 million, which is $50 million in excess of recorded interest expense included in the accompanying financial statements. The increase in contractual interest in fiscal 2001 compared to fiscal 2000 interest expense results primarily from borrowings associated with Comdisco, Inc.'s discontinued operations (see discussion on Prism following) and higher interest costs due to credit ratings downgrades in the first quarter of fiscal 2001. Reorganization Items Charges for reorganization items were $34 million for the fiscal year ended September 30, 2001. See Note 6 of Notes to Consolidated Financial Statements, which is incorporated in this section by reference, for a discussion of reorganization items. Income Taxes See Note 14 of Notes to Consolidated Financial Statements, which is incorporated in this section by this reference, for details about the Company's income tax provision. Net Loss from Continuing Operations The net loss from continuing operations was $197 million, or $1.31 per share-diluted, in fiscal 2001, compared to net earnings of $216 million, or $1.34 per share-diluted, in fiscal 2000. The loss from continuing operations for the year ended September 30, 2001 was primarily a result of decreased earnings contributions from all of the Company's business lines and it reflects decreases in remarketing activities and reduced earnings contributions from leasing as a result of the decline in leased assets. It also reflects the following items: o a $365 million pretax charge ($234 million after-tax) for additions to the allowance for credit losses in the Ventures group's portfolio (compared to after-tax charges of $67 million in fiscal 2000); o a $124 million pretax charge ($79 million after-tax) for additions to allowance for credit losses in the leasing business (compared to after-tax charges of $23 million in fiscal 2000); o a $129 million pretax charge for equity securities written-off (compared to $7 million in fiscal 2000); o a $8 million pretax charge for restructuring and other charges; and o a $34 million of reorganization related expenses. Discontinued operations Net loss from discontinued operations was $77 million for the year ended September 30, 2001 compared to a net loss of $283 million for the year ended September 30, 2000. o International leasing: On October 18, 2002, the Company announced that it had sold Comprendium Finance S.A., Computer Discount GmbH and the Company's French leasing subsidiaries, Comdisco France SA and Promodata SNC. The results of operations of these European subsidiaries as well as the Company's Australian and New Zealand operations ("International leasing") have been classified as discontinued operations and the prior year periods have been restated. Revenue from International leasing was $215 million and $264 million for the years ended September 30, 2001 and 2002, respectively. Costs and expenses for these operations were $231 million for the year ended September 30, 2001 compared to $263 million for the year ended September 30, 2000. The decrease in both revenues and costs in the current year period compared to the prior year period reflect the reduction in operations of these subsidiaries as a result of the declining financial condition of the Company. Net loss for these European subsidiaries was $14 million in the year ended September 30, 2001 compared to net earnings of $0 in the year ended September 30, 2000. The net loss in fiscal 2001 was primarily the result of additions to the allowance for credit losses of approximately $16 million in Comprendium Finance S.A. o Availability Solutions: On November 15, 2001, the Company completed the sale of its availability solutions business to SunGard. The results of operations of availability solutions have been classified as discontinued operations and prior periods have been restated. Revenue from availability solutions was $487 million and $480 million for the years ended September 30, 2001 and 2000, respectively. The increase in revenue was primarily due to the growth in products and services. Availability solutions costs were $460 million and $405 million during year ended September 30, 2001 and 2000, respectively. The increase in costs was due to higher personnel costs and continued investment in new service development. Net loss of the availability solutions business were $13 million for the year ended September 30, 2001 compared to net earnings of $48 million in the prior year period. The sale excluded the purchase of the stock of subsidiaries in Germany and Spain. However, as a result of the Company's intention to exit the availability solutions businesses of Germany and Spain (including the possible sale of assets in either or both countries), the Company has also accounted for these businesses as discontinued operations. Revenue and expenses for the Company's operations in Germany and Spain for years ended September 30, 2001 and 2000 were immaterial. o Network Services: During the second quarter of fiscal 2001, the network management services business of the Company was discontinued. The network management services were transferred to a new provider during the third quarter of fiscal 2001. Loss from discontinued operations of network services for the year ended September 30, 2001 was $32 million compared to a $9 million loss in the prior period. o Prism Communications: On October 2, 2000, Comdisco, Inc. decided to cease funding ongoing operations of Prism Communication Services, Inc. ("Prism"), a wholly-owned subsidiary. Prism decided to cease operations and pursue the immediate sale of Prism's assets. Comdisco, Inc.'s fourth quarter results for fiscal 2000 reflected after tax charges of $238 million, or $1.49 per share diluted, for the expected loss on disposal as well as the operating losses on the discontinued operations during the quarter. The estimated loss on disposal represented the Company's estimate of operational losses to be incurred and the expected losses from the disposition of the assets. Due to unfavorable conditions in the telecommunications market, Prism reduced its estimated proceeds from the sale of assets from $80 million at September 30, 2000 to $20 million at March 31, 2001. Given these negative market conditions, Prism accelerated the process of shutting down its operations, thereby reducing operating costs by approximately $30 million. As a result, Comdisco, Inc. recorded in the quarter ended March 31, 2001 a noncash pre-tax charge of $30 million, $18 million after tax, or $.12 per common share, to write down these assets to estimated fair market value. During the fourth quarter of fiscal 2001, Prism reduced its estimated proceeds from the sale of assets from $13 million at June 30, 2001 to $6 million at September 30, 2001. The estimated wind-down costs were also reduced by $7 million. Loss from discontinued operations of Prism for the year ended September 30, 2000 was $322 million, or $1.99 per common share. Liquidity and Capital Resources On September 30, 2002, in accordance with the Plan, the Company made an initial distribution to the holders of certain Allowed Claims against the Comdisco, Inc. bankruptcy estate. As part of that initial distribution, the Company, along with its direct wholly-owned subsidiary, Comdisco, Inc., co-issued the Senior Notes in the principal amount of $400 million and the Subordinated Notes in the principal amount of $650 million. The Senior Notes were issued pursuant to an indenture dated as of August 12, 2002 and amended as of October 7, 2002 (the "Senior Note Indenture"). Similarly, the Subordinated Notes were issued pursuant to an indenture dated as of August 12, 2002 and amended as of October 7, 2002 (the "Subordinated Note Indenture"). The Company's obligations with respect to payment of interest and principal under the Senior Notes and the Subordinated Notes have been secured by a first-priority security interest in all the capital stock of Comdisco Global Holding Company, Inc., Comdisco, Inc., Comdisco Domestic Holding Company, Inc. and Comdisco Ventures, Inc. and certain other property that may be acquired by the Company in the future. Because the Company's investments in its subsidiaries are pledged to secure the obligations under the Senior Notes and the Subordinated Notes, Comdisco Holding's ability to obtain additional or alternate financing is severely restricted. Accordingly, the Company must rely on cash generated from the orderly sale and run-off of its assets to meet its liquidity needs. Permitted uses of cash are specified in the Senior Note Indenture, the Subordinated Note Indenture and the Plan. Generally, the Company is permitted to use cash only to fund its operating reserve, pay operating expenses, and make certain payments under its management incentive plan and stay-bonus plan. All cash in excess of amounts necessary to satisfy those obligations must be used to redeem Senior Notes and Subordinated Notes in accordance with their respective indentures. The Company is not permitted to make distributions with respect to its Common Stock or Contingent Distribution Rights until all debt evidenced by the Senior Notes and the Subordinated Notes is extinguished. On October 21, 2002, the Company voluntarily redeemed the entire $400 million outstanding principal amount of its Senior Notes at a price equal to 100 percent of their principal amount plus accrued and unpaid interest from August 12, 2002 to the redemption date. On November 14, 2002 pursuant to its mandatory redemption obligations under the Subordinated Note Indenture, the Company made a partial redemption of $65 million of the outstanding principal amount of its Subordinated Notes at a price equal to 100 percent of their principal amount plus accrued and unpaid interest from August 12, 2002 to the redemption date. On December 23, 2002, the Company made a voluntary partial redemption of $200 million of the outstanding principal amount of its Subordinated Notes at a price equal to 100 percent of their principal amount plus accrued and unpaid interest from August 12, 2002 to the redemption date. On December 31, 2002, the Company made an approximately $16 million interest payment with respect to the Subordinated Notes. In addition, on January 9, 2003, the Company made a voluntary partial redemption of $100 million of the outstanding principal amount of its Subordinated Notes at a price equal to 100 percent of their principal amount plus accrued and unpaid interest to the redemption date. After the January 9, 2003 redemption, the outstanding principal balance of Subordinated Notes is $285 million. The Company continually evaluates opportunities for the orderly sale and run-off of its remaining assets, including the sale of one or more of its leasing asset portfolios. Comdisco, Inc.'s bankruptcy filing and the potential sale of some or all of these businesses created uncertainty that had an adverse impact on the Company's business, ability to obtain credit, customer's confidence, its ability to retain employees and employees' performance in future periods. The Company believes this uncertainty negatively impacted the Company's financial results for the year ended September 30, 2002. Furthermore, due to the Company's limited business purpose, there can be no assurance that this uncertainty will not continue to have an impact on the Company's operations and its ability to develop, implement and execute the Plan. See the Risk Factors contained in this Item 7, below, for additional risks associated with the bankruptcy filing and the Company's future results of operations. At September 30, 2002, the Company had unrestricted cash and cash equivalents of approximately $575 million, an increase of approximately $29 million compared to September 30, 2001. Net cash provided by operating activities for the year ended September 30, 2002 was $3.6 billion. Net cash used in investing activities was $391 million in the year ended September 30, 2002. Funds provided by secured non-recourse debt during the year ended September 30, 2002 totaled $10 million compared to $589 million in the year earlier period. The Company's operating activities during the year ended September 30, 2002, including capital expenditures, were funded primarily by cash flows from operations (primarily lease receipts), including the realization of residual values through remarketing activities. The Company's liquidity has typically been augmented by the realization of cash from the future remarketing of leased equipment. Liquidity from remarketing in fiscal 2002 decreased compared to fiscal 2001 and this trend is expected to continue for fiscal 2003. See the Risk Factor entitled "Remarketing Results Are Uncertain" in this Item 7, below, for information regarding remarketing. The Company's current and future liquidity depends on cash on hand, cash provided by operating activities and asset sales. As of January 9, 2003, the Company's unrestricted cash balances exceeded $100 million. The Company expects its cash on hand and cash flow from operations to be sufficient to fund operating expenses, interest payments and debt obligations for the foreseeable future. Net cash provided by operating activities was $3.6 billion in fiscal 2002, $3.3 billion in fiscal 2001 and $3.2 billion in fiscal 2000. The Company's cash flow from operating activities is dependent on a number of variables, including, but not limited to, the ability of the Company to implement its reorganization plan, timely payment by its customers, global economic conditions and controlling operating costs and expenses. Contingent Distribution Rights As previously discussed, all shares of Comdisco, Inc. common stock were cancelled on August 12, 2002. Holders of Comdisco, Inc. common stock meeting certain requirements may exchange their shares for Contingent Distribution Rights. More information on the Contingent Distribution Rights can be found in a Registration Statement on Form 8-A filed by the Company on August 12, 2002 with the Securities and Exchange Commission. Pursuant to the terms of the Contingent Distribution Rights distributed in accordance with the Plan, the Company agreed to provide information regarding the present value of distributions to certain former creditors of Comdisco, Inc. in its annual and quarterly reports. As the present value of distributions to those creditors reaches certain levels of recovery established pursuant to the Plan, the holders of the Contingent Distribution Rights are entitled to share in distributions made by the Company on the terms set forth in the Plan and further clarified in the Comdisco Contingent Equity Distribution Agreement. As of January 9, 2003, the present value of the distributions to creditors holding Class C-4 Claims that have been allowed was approximately $2.6 billion and the aggregate amount of Class C-4 Claims that have been allowed was $3.6 billion. Accordingly, the percentage recovery of creditors holding Class C-4 Claims that have been allowed is approximately seventy-two percent as of January 9, 2003. The present value of distributions to creditors includes the initial distribution on September 30, 2002, the optional redemption of the Senior Notes on October 21, 2002, the mandatory redemption of $65 million of Subordinated Notes on November 14, 2002, the optional partial redemption of $200 million of Subordinated Notes on December 23, 2002, the $16 million interest payment with respect to the Subordinated Notes on December 31, 2002 and the optional partial redemption of $100 million of Subordinated Notes on January 9, 2003, in each case net of cash amounts contributed to the Disputed Claims Reserve. Cash contributed to the Disputed Claims Reserve in respect of claims that have not been allowed through January 9, 2003 totaled approximately $333 million. The first scheduled distribution from the Disputed Claims Reserve to allowed claimholders, if any, will be on or about February 14, 2003 as required in the Plan. Recently Issued Professional Accounting Standards During 2001, FASB issued SFAS No. 141, "Business Combinations," No. 142, "Goodwill and Other Intangible Assets," No. 143, "Accounting for Asset Retirement Obligations," and No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No. 143 establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and associated asset retirement costs. SFAS No. 144 supercedes SFAS No. 121, "Accounting for the Impairment of Long-lived Assets and for Long-lived Assets To Be Disposed Of," and APB Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions," and amends ARB No. 51, "Consolidated Financial Statements." In conjunction with the Company's reorganization and Fresh- Start Reporting, Comdisco adopted the provisions of SFAS Nos. 141, 142, 143 and 144, the effects of which are included in the results of operations and financial position. In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections." SFAS 145 requires that gains and losses from extinguishment of debt be classified as extraordinary items only if they meet the criteria in Accounting Principles Board Opinion No. 30. Applying the provisions of Opinion No. 30 will distinguish transactions that are part of an entity's recurring operations from those that are unusual and infrequent and meet the criteria for classification as an extraordinary item. Management does not believe the adoption of SFAS No. 145 has had a significant impact on the Company's consolidated financial statements. In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities." This standard requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. Management does not believe the adoption of SFAS No. 146 has had a significant impact on the Company's consolidated financial statements. Risk Factors Relating to the Company The following risk factors and other information included in this Annual Report on Form 10-K should be carefully considered. The risks and uncertainties described below are not the only ones the Company confronts. Additional risks and uncertainties not presently known to it or that it currently deems immaterial also may impair the Company's business operations and the implementation of the Plan. If any of the following risks actually occurs, the Company's business, financial condition, operating results and the implementation of the Plan could be materially adversely affected. Uncertainties Relating to the Bankruptcy Plan The results of the Company's operations may be affected by (i) the reluctance of customers and third parties to do business with a company recently emerged from bankruptcy proceedings; (ii) the ability of the Company to retain employees; (iii) limitations imposed by the Plan's focus on the orderly run-off or sale of assets; and (iv) third party competitive pressures. In addition, the Company has incurred and will continue to incur significant costs associated with its reorganization and implementation of the Plan. The amount of these costs, which are being expensed as incurred, are expected to have a significant adverse affect on the results of operations. Inherent Uncertainty of Limited Business Plan The Company's post-bankruptcy business plan is limited to an orderly run-off or sale of its remaining assets. Pursuant to the Plan and restrictions contained in its certificate of incorporation, the Company is specifically prohibited from engaging in any business activities inconsistent with its limited business plan. This business plan is based on numerous assumptions including the anticipated future performance of the Company in running off its operations, the time frame for the run-off, general business and economic conditions, and other matters, many of which are beyond the control of the Company and some of which may not materialize. As a result, the Company's ability to effectively implement this business plan is inherently uncertain. In addition, unanticipated events and circumstances occurring subsequent to the date of this Annual Report may affect the actual financial results of the Company's operations. The Company's Liquidity is Dependent on a Number of Factors The Company's liquidity generally depends on cash provided by operating activities. The Company's cash flow from operating activities is dependent on a number of variables, including, but not limited to, timely payment by its customers, global economic and political conditions, control of operating costs and expenses and the ability of the Company to dispose of its assets. In addition, the Company continues to honor its existing lease funding obligations, including significant obligations related to its Technology Refresh Option product within European IT Leasing. If the technology refresh option assets are not sold in the near term, the continued funding requirement could have a negative impact on liquidity. Any inability of the Company to fund such commitments could have a negative impact on the realization of value from these assets. Remarketing Results Are Uncertain Quarterly operating results and cash from the sale of assets depend substantially upon remarketing transactions, which are difficult to forecast accurately. The general economic slowdown and particularly the decrease in corporate technology equipment spending may have a negative impact on equipment values and remarketing results. There can be no assurance that the Company's current financial condition and emergence from bankruptcy will not continue to have a negative impact on the ability of the Company to sell its remaining assets. The Company is Affected By Product and Market Development The markets for the Company's principal products are characterized by rapidly changing technology, frequent new product announcements and enhancements, evolving industry standards and customer demands and declining prices. These rapidly changing market conditions could adversely affect the Company's business, including its leasing and remarketing revenue and earnings contributions. The Company's Investments in Certain Industries May Cause Business and Broader Financial Results to Suffer The Company has significant exposures to companies engaged in the telecommunications, electronics and other high-technology industries that have been severely negatively impacted by the recent economic downturn. To the extent that these companies are unable to meet their business plans, or are unable to obtain funding at reasonable rates to execute their business plans, there could be an increase in the Company's credit losses. There can be no assurance that the economic and operating environment for these industries will rebound to levels seen prior to the economic downturn, nor that the environment for these industries will not continue to deteriorate. Current Economic Conditions Have Made It Difficult for Ventures. to Timely Realize on its Investments and Have Adversely Affected the Ability of Ventures Customers to Timely Meet Their Obligations to the Company Ventures, through Comdisco, Inc.'s former Ventures group, leased equipment to, made loans to and equity investments in various privately held companies. The Company's Ventures operations are now directed by Comdisco Ventures, Inc., a wholly-owned subsidiary of Comdisco, Inc. Prior to the bankruptcy filing, the companies in which Ventures invested were typically in an early stage of development with limited operating histories and limited or no revenues and expectations of substantial losses. The current slowdown in economic growth has and could continue to materially affect these companies. Accordingly, investments in these companies may not result in any return and the Company may lose its entire investment and/or principal balance. Many of the companies to which Ventures provided venture financing prior to the bankruptcy filing are dependent on third parties for liquidity. The significant change in the availability of funds has had, and may continue to have, a material impact on the fair market value of the Company's equity instruments and credit risk on its debt instruments. If more of these companies are unable to meet their business plans, or unable to obtain funding or funding at reasonable rates to execute their business plans, there could be an increase in the Company's credit losses. Further, increases in credit losses during fiscal year 2002 indicate that there is an increasing number of companies in the Ventures' portfolio that are currently experiencing or will be experiencing liquidity shortfalls in the near term. Early-stage companies, unable to obtain additional financing, are reducing overhead or closing down completely. Management has an on-going portfolio review process intended to identify problem companies within the Ventures' financing portfolio. To the extent there are revisions in management's estimates requiring additional bad debt provisions, the Company's operating results and financial condition could be materially adversely affected. Current economic conditions also have adversely affected the opportunities for the acquisition/merger of the Internet-related, communications and other high technology and emerging growth companies that make up the substantial majority of Ventures' portfolio. Additionally, the public market for high technology and other emerging growth companies is extremely volatile. Such volatility has adversely affected the ability of the Company to dispose of the equity securities and the value of those securities on the date of sale. Exacerbating these conditions is the fact that the equity instruments held by the Company are subject to lockup agreements restricting its ability to sell until several months after an initial public offering. Without an available liquidity event, the Company is unable to dispose of its equity securities. As a result, Ventures may not be able to generate gains or receive proceeds from the sale of equity holdings and the Company's business and financial results may suffer. Additionally, liquidation preferences may continue to be offered by companies in the Ventures portfolio to parties willing to lend to such companies. The liquidation preferences have had, and may continue to have, an adverse impact on the value of Ventures equity and warrant holdings. For those securities without a public trading market, the realizable value of Ventures' interests may prove to be lower than the carrying value currently reflected in the financial statements. Company Exposed to Customer Concentration Risk The Company's customer concentrations expose the Company to additional risk in that the failure of any single customer, which represents a concentration in the Company's existing portfolio of assets, to meet its obligations to the Company could significantly negatively impact the Company's revenues and cash flows (see Item 1, "Customers," for examples of significant customer concentrations). Impact of Interest Rates and Foreign Exchanges Rates Changes in interest rates and foreign exchange rates affect the fair market value of the Company's leased assets. Decreases in interest rates would positively impact the US dollar value of the Company's assets and a strengthening of the dollar would negatively impact the value of our net foreign assets. Discontinued Operations and the Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported period. With respect to the Company's discontinued operations, actual losses could differ from those estimates and will be reflected as adjustments in future financial statements when probable and estimable. Limited Public Market for Common Stock There is currently a limited public market for the Company's Common Stock. Holders of the Company's Common Stock may, therefore, have difficulty selling their Common Stock, should they decide to do so. In addition, there can be no assurances that such markets will continue or that any shares of Common Stock which may be purchased may be sold without incurring a loss. Any such market price of the Common Stock may not necessarily bear any relationship to the Company's book value, assets, past operating results, financial condition or any other established criteria of value, and may not be indicative of the market price for the Common Stock in the future. Further, the market price of the Common Stock may be volatile depending on a number of factors, including the status of the Company's business performance, industry dynamics, news announcements or changes in general economic conditions. Limited Public Market for Contingent Distribution Rights There is currently a limited public market for the Company's Contingent Distribution Rights. Holders of the Company's Contingent Distribution Rights may, therefore, have difficulty selling their Contingent Distribution Rights, should they decide to do so. In addition, there can be no assurances that such markets will continue or that any Contingent Distribution Rights which may be purchased may be sold without incurring a loss. Any such market price of the Contingent Distribution Rights may not necessarily bear any relationship to the Company's book value, assets, past operating results, financial condition or any other established criteria of value, and may not be indicative of the market price for the Contingent Distribution Rights in the future. Further, the market price of the Contingent Distribution Rights may be volatile depending on a number of factors, including the status of the Company's business performance, industry dynamics, news announcements or changes in general economic conditions. Other Other uncertainties include general business conditions, ability to sell assets, reductions in technology budgets and related spending plans and the impact of workforce reductions on the Company's operations. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's primary market risk exposures are interest rate risk, primarily related to the Company's interest-bearing obligations, equity security price risk and foreign exchange rate risk. Interest Rate Risk and Market Risk Presently, the Company invests its cash and cash equivalents in money market and other interest bearing accounts. Such cash and cash equivalents are essentially the only floating rate assets held by the Company. The Company does not expect to hold or invest any significant amounts of cash as it is required to distribute cash in accordance with the Plan and the terms of the Subordinated Notes. The primary investment objective is to ensure capital preservation of its invested principal funds by limiting default and market risk. Currently, the Company does not use derivative financial instruments in its investment portfolio. The Company is subject to interest rate risk on the Senior Notes and the term notes (the term notes are more fully described in Note 11 to the Consolidated Financial Statements). On October 21, 2002, the Company voluntarily redeemed the entire $400 million outstanding principal amount of its Senior Notes at a price equal to 100 percent of their principal amount plus accrued and unpaid interests from August 12, 2002 to the redemption date, thereby significantly reducing the Company's outstanding floating rate debt and the related exposure to changes in interest rates. The table below presents principal amounts and related weighted-average interest rates by year of maturity for the Company's Subordinated Notes, Senior Notes and term notes as of September 30, 2002. 2003 2004 2005 --------- --------- ------- Notes Payable: Subordinated Notes: Fixed rate $ - $ - $650 Interest rate 11.00% Senior Notes: Floating interest rate $ - $ 400 $ - Interest rate at September 30, 2002 4.74% Term Notes: Floating interest rate $35 $ - $ - Interest rate at September 30, 2002 2.19% The Company's investment in marketable equity securities is subject to market price risk. A ten percent decrease in market values would not have a material impact on the Company. Many of these equity securities are highly volatile stocks. Foreign Exchange Risk The Company is exposed to the risk of future currency exchange rate fluctuations, which is accounted for as an adjustment to stockholders' equity. Therefore, changes from reporting period to reporting period in the exchange rates between various foreign currencies and the U.S. Dollar have had and will continue to have an impact on the accumulated other comprehensive loss component of stockholders' equity reported by the company, and such effect may be material in any individual reporting period. In order to reduce the uncertainty of foreign exchange rate movements on transactions denominated in foreign currencies, the Company enters into derivative financial instruments with major international financial institutions. Risk Management The Company uses derivatives in certain identifiable situations to manage risk. The Company does not speculate on interest rates or foreign exchange rates, but rather manages its portfolio of assets and liabilities to mitigate the impact of interest rate and foreign exchange rate fluctuations. The Company does not use derivatives for trading purposes. See Note 11 of Notes to Consolidated Financial Statements, which is incorporated in this section by this reference, for information on the Company's average daily borrowings, effective interest rates and the Company's derivative financial instruments. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO FINANCIAL STATEMENTS Page ---- Reports of Independent Accountants............................................................ 41 Consolidated Statements of Earnings (Loss) for the two-month period ended September 30, 2002 (Successor), the ten-month period ended July 31, 2002 and each of the years ended September 30, 2001 (Successor) and 2000 (Predecessor)................................................................................. 42 Consolidated Balance Sheets as of September 30, 2002 (Successor) and 2001 (Predecessor)................................................................................. 44 Consolidated Statements of Stockholders' Equity: For the ten-month period ended July 31, 2002 and the years ended September 30, 2001 and 2000 (Predecessor)................................................ 45 For the two-month period ended September 30, 2002 (Successor)............................ 46 Consolidated Statements of Cash Flows for the two-month period ended September 30, 2002 (Successor), the ten-month period ended July 31, 2002 and each of the years ended September 30, 2001 and 2000 (Predecessor)......................... 47 Notes to Consolidated Financial Statements................................................... 50
REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Comdisco Holding Company, Inc.: We have audited the accompanying consolidated balance sheet of Comdisco Holding Company, Inc. and subsidiaries as of September 30, 2002 (the Successor), and of Comdisco, Inc. as of September 30, 2001 (the Predecessor) and the related consolidated statement of earnings (loss), stockholders' equity, and cash flows for the period from August 1, 2002 to September 30, 2002 (the Successor), the period from October 1, 2001 to July 31, 2002 (the Predecessor) and each of the two years in the period ended September 30, 2001 (the Predecessor). These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As discussed in note 1 to the consolidated financial statements, on July 16, 2001, the Predecessor and fifty of its domestic U.S. subsidiaries filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code from which it emerged on August 12, 2002. Accordingly, the accompanying consolidated financial statements have been prepared in conformity with AICPA Statement of Position 90-7, "Financial Reporting for Entities in Reorganization Under the Bankruptcy Code," for the Successor as a new entity with assets, liabilities, and a capital structure having carrying values not comparable with prior periods as described in note 2. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Comdisco Holding Company, Inc. at September 30, 2002 and Comdisco, Inc. at September 30, 2001, and the consolidated results of operations and their cash flows for the period from August 1, 2002 to September 30, 2002, the period from October 1, 2001 to July 31, 2002, and each of the two years in the period ended September 30, 2001, in conformity with accounting principles generally accepted in the United States of America. /s/ KPMG LLP Chicago, IL January 14, 2003 COMDISCO HOLDING COMPANY, INC. CONSOLIDATED STATEMENTS OF EARNINGS (LOSS) (in millions except per share data)
SUCCESSOR | PREDECESSOR Two months | Ten months ended | ended Years ended September 30, | July 31, September 30, ------------- | ----------- ------------------ 2002 | 2002 2001 2000 ------------- | ----------- ------------------ Revenue | Leasing | Operating $ 79 | $ 704 $ 1,334 $ 1,499 Direct financing 14 | 88 165 173 Sales-type 5 | 38 131 381 ------------- | ----------- ------- -------- Total leasing 98 | 830 1,630 2,053 | Sales 50 | 297 280 390 Technology services 10 | 70 128 119 Other 12 | 48 453 530 ------------- | ----------- ------- -------- Total revenue 170 | 1,245 2,491 3,092 ------------- | ----------- ------- -------- | Costs and expenses | Leasing | Operating 75 | 559 1,058 1,194 Sales-type 2 | 34 97 285 ------------- | ----------- ------- -------- Total leasing 77 | 593 1,155 1,479 | Sales 31 | 289 237 308 Technology services 10 | 39 123 119 Selling, general and administrative 34 | 170 312 362 Write-down of equity securities 3 | 70 129 7 Bad debt expense 4 | 149 489 141 Interest (total Predecessor contractual interest 2002 - $260; 2001 - $391) 15 | 47 341 340 Reorganization items - | 439 34 - Fresh-start accounting adjustments - | 369 - - ------------- | ----------- ------- -------- Total costs and expenses 174 | 2,165 2,820 2,756 ------------- | ----------- ------- -------- | Earnings (loss) from continuing operations before income | taxes (benefit), extraordinary items and cumulative | effect of change in accounting principle (4) | (920) (329) 336 Income taxes (benefit) 4 | 45 (132) 120 ------------- | ----------- ------- -------- Earnings (loss) from continuing operations before | extraordinary items and cumulative effect of change | in accounting principle (8) | (965) (197) 216 Earnings (loss) from discontinued operations, net of tax (9) | 271 (77) (283) ------------- | ----------- ------- -------- Earnings (loss) before extraordinary items and cumulative | effect of change in accounting principle (17) | (694) (274) (67) Extraordinary gain - debt discharge, net of tax - | 153 - - Extraordinary gain - recognition of excess of fair value | net assets over reorganization value, net of tax 241 | - - - ------------- | ----------- ------- -------- Earnings (loss) before cumulative effect of change in | accounting principle 224 | (541) (274) (67) Cumulative effect of change in accounting principle, net of tax - | - 2 - ------------- | ----------- ------- -------- Net earnings (loss) $ 224 | $ (541) $ (272) $ (67) ============= | =========== ======= ======== | Basic earnings (loss) per common share: | Earnings (loss) from continuing operations $ (1.81) | $ (6.41) $ (1.31) $ 1.42 Earnings (loss) from discontinued operations (2.20) | 1.80 (0.50) (1.86) Earnings (loss) from extraordinary items 57.38 | 1.02 - - Cumulative effect of change in accounting principle - | - 0.01 - ------------- | ----------- -------- -------- Net earnings (loss) $ 53.37 | $ (3.59) $ (1.80) $ (0.44) ============= | =========== ======== ======== Diluted earnings (loss) per common share: | Earnings (loss) from continuing operations $ (1.81) | $ (6.41) $ (1.31) $ 1.34 Earnings (loss) from discontinued operations (2.20) | 1.80 (0.50) (1.75) Earnings (loss) from extraordinary items 57.38 | 1.02 - - Cumulative effect of change in accounting principle - | - 0.01 - ------------- | ----------- -------- -------- Net earnings (loss) $ 53.37 | $ (3.59) $ (1.80) $ (0.41) ============= | =========== ======== ======== See accompanying notes to consolidated financial statements.
COMDISCO HOLDING COMPANY, INC. CONSOLIDATED BALANCE SHEETS (in millions except number of shares and per share data)
SUCCESSOR | PREDECESSOR September 30, | September 30, 2002 | 2001 ----------------- | ------------------ ASSETS | Cash and cash equivalents $ 575 | $ 546 Cash - legally restricted 18 | 54 Receivables, net 127 | 592 Inventory of equipment 24 | 84 Leased assets: | Direct financing and sales-type 1,016 | 1,850 Operating (net of accumulated depreciation) 296 | 1,919 ----------------- | ------------------ Net leased assets 1,312 | 3,769 Property, plant and equipment, net - | 59 Equity securities 36 | 138 Assets of discontinued operations 155 | 747 Other assets 94 | 213 ----------------- | ------------------ $ 2,341 | $ 6,202 ================= | ================== | LIABILITIES AND STOCKHOLDERS' EQUITY | Liabilities not subject to compromise | Term notes payable $ 35 | $ 360 Discounted lease rentals 262 | 964 Notes payable 1,050 | 179 Accounts payable 36 | 105 Income taxes: | Current 2 | 10 Deferred 80 | 25 Liabilities related to assets of discontinued operations 29 | 93 Deferred income 34 | 153 Other liabilities 172 | 175 ----------------- | ------------------ 1,700 | 2,064 | Liabilities subject to compromise | Notes payable - | 917 Senior notes - | 2,639 Accounts payable - | 22 Other liabilities - | 113 ----------------- | ------------------ - | 3,691 ----------------- | ------------------ Stockholders' equity: | Old Preferred stock $.10 par value. | Authorized 100,000,000 shares (none issued); Series C and Series D - | - Old Common stock $.10 par value. Authorized 750,000,000 shares; | issued 225,555,293 at September 30, 2001 - | 23 New Comdisco stock $.01 par value. Authorized 10,000,000 shares; | issued 4,200,000 shares. - | - Old Comdisco Ventures group stock $.10 par value. | Authorized 750,000,000 shares (none issued) - | - Additional paid-in capital 413 | 365 Accumulated other comprehensive income (loss) 4 | (93) Retained earnings 224 | 772 ----------------- | ------------------ 641 | 1,067 Old Common stock held in treasury, at cost; | (74,996,351 in 2001) - | (620) | ------------------ ----------------- | Total stockholders' equity 641 | 447 ----------------- | ------------------ $ 2,341 | $ 6,202 ================= | ================== See accompanying notes to consolidated financial statements.
COMDISCO HOLDING COMPANY, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in millions except per share data)
PREDECESSOR Accumulated Additional other Common Common paid-in comprehensive Retained stock in stock capital income earnings treasury Total --------- ----------- ------------- ---------- ---------- -------- Balance at September 30, 1999 $ 22 $ 302 $ 58 $ 1,134 $ (456) $ 1,060 Net loss (67) (67) Translation adjustment (64) (64) Change in unrealized gain 323 323 ------- Total comprehensive income 192 Cash dividends-Old Common stock ($.10 (16) (16) per share) Stock options exercised 1 26 10 37 Purchase of Old Common stock (91) (91) Income tax benefits resulting from the exercise of non-qualified stock options 32 32 --------- ----------- ------------- ---------- ---------- -------- Balance at September 30, 2000 23 360 317 1,051 (537) 1,214 Net loss (272) (272) Translation adjustment 1 1 Change in unrealized gain (411) (411) ------- Total comprehensive income (loss) (682) Cash dividends-Old Common stock ($.05 per share) (7) (7) Stock options exercised 3 1 4 Purchase of Old Common stock (84) (84) Income tax benefits resulting from the exercise of non-qualified stock options 2 2 --------- ----------- ------------- ---------- ---------- -------- Balance at September 30, 2001 23 365 (93) 772 (620) 447 Net loss for the ten months ended (541) (541) July 31, 2002 Translation adjustment 24 24 Change in unrealized gain (1) (1) ------- Total comprehensive income (loss) (518) Extinguishment of stockholders' equity in connection with reorganization (23) (365) 70 (231) 620 71 --------- ----------- ------------- ---------- ---------- -------- Balance at July 31, 2002 $ - $ - $ - $ - $ - $ - ========= =========== ============= ========== ========== ======== See accompanying notes to consolidated financial statements.
COMDISCO HOLDING COMPANY, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (in millions)
SUCCESSOR Additional Accumulated Common paid-in other compre- Retained stock capital hensive income earnings Total ------------------------------------------------------------------------ Balance at July 31, 2002 $ - $ - $ - $ - $ - Issuance of New Common stock - 384 384 Tax effect of fresh-start accounting - 29 - - 29 Net earnings for the two months ended September 30, 2002 224 224 Translation adjustment 4 4 Change in unrealized gain - - ------- Total comprehensive income 228 --------------------------------------------------------------------- Balance at September 30, 2002 $ - $ 413 $ 4 $ 224 $ 641 ===================================================================== See accompanying notes to consolidated financial statements.
COMDISCO HOLDING COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions)
SUCCESSOR | PREDECESSOR Two months | Ten months ended | ended Years ended September 30, | July 31, September 30, ------------- | ----------- --------------------------- 2002 | 2002 2001 2000 ------------- | ----------- --------------------------- | Cash flows from operating activities: | Operating lease and other leasing receipts $ 176 | $ 1,543 $ 2,534 $ 2,657 Leasing costs, primarily rentals paid - | (8) (15) (10) Sale of portfolios 22 | 348 - - Sales of equipment 61 | 266 265 438 Sales costs (1) | (8) (45) (115) Technology services receipts 4 | 44 155 110 Technology services costs (1) | (18) (111) (110) Notes receivable receipts 33 | 201 323 272 Warrant proceeds - | 29 456 470 Other revenue 13 | 43 51 11 Selling, general and administrative expenses (40) | (131) (318) (364) Interest (2) | (54) (294) (339) Income taxes (6) | 32 (1) (56) ------------- | ----------- ------------- ------------ Net cash provided by continuing operations 259 | 2,287 3,000 2,964 Net cash provided by discontinued operations 29 | 1,008 281 254 ------------- | ----------- ------------- ------------ Net cash provided by operating activities | before reorganization items 288 | 3,295 3,281 3,218 ------------- | ----------- ------------- ------------ Operating cash flows from reorganization items: | Interest received on cash accumulated because | of Chapter 11 proceeding - | 26 3 - Professional fees paid for services rendered | in connection with Chapter 11 | proceeding - | (42) (33) - ------------- | ----------- ------------- ------------ Net cash used by reorganization items - | (16) (30) - ------------- | ----------- ------------- ------------ Net cash provided by operating activities 288 | 3,279 3,251 3,218 ------------- | ----------- ------------- ------------ Cash flows from investing activities: | Equipment purchased for leasing (46) | (254) (1,204) (2,306) Investment in service facilities - | - 3 (32) Notes receivable - | (18) (232) (626) Equity investments - | (1) (56) (176) Capital expenditures on discontinued operations (14) | (56) (285) (685) Other (3) | 1 42 (25) ------------- | ----------- ------------- ------------ Net cash used in investing activities (63) | (328) (1,732) (3,850) ------------- | ----------- ------------- ------------ Cash flows from financing activities: | Discounted lease proceeds - | 10 589 619 Net increase (decrease) in notes and term | notes payable (33) | (462) (489) 683 Issuance of senior notes - | - - 802 Initial cash distribution to creditors - | (1,983) - - Cash portion of disputed claims reserve - | (248) - - Maturities and repurchases of senior notes - | - (813) (1,036) Principal payments on secured debt (42) | (378) (419) (339) Old Common stock purchased and placed in | treasury - | - (84) (91) Dividends paid on Old Common stock - | - (7) (16) Issuance of Prism Communication Services | common stock - | - - 11 Decrease (increase) in legally restricted cash 40 | (5) - (8) Cash used to finance discontinued operations (6) | (9) (64) (47) Other (13) | (18) (1) 8 ------------- | ----------- ------------- ---------- Net cash provided by (used in) financing | activities (54) | (3,093) (1,288) 586 ------------- | ----------- ------------- ---------- Net increase (decrease) in cash and cash | equivalents 171 | (142) 231 (46) Cash and cash equivalents at beginning of period 404 | 546 315 361 ------------- | ----------- ----------- ---------- Cash and cash equivalents at end of period $ 575 | $ 404 $ 546 $ 315 ============= | =========== =========== ========== See accompanying notes to consolidated financial statements.
COMDISCO HOLDING COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions)
SUCCESSOR | PREDECESSOR | Two months | Ten months ended | ended Years ended September 30, | July 31, September 30, 2002 | 2002 2001 2000 -------------- | -------------- ---------- ---------- Reconciliation of earnings (losses) from continuing | operations to net cash provided by operating activities: | | Earnings (losses) from continuing operations $ (8) | $ (965) $ (197) $ 216 | Adjustments to reconcile earnings (losses) from continuing | operations to net cash provided by operating activities | | Leasing costs, primarily | depreciation and amortization 77 | 585 1,140 1,470 Leasing revenue, primarily principal portion of | direct financing and sales-type lease rentals 78 | 713 905 603 Cost of sales 30 | 281 192 193 Technology services costs, primarily | depreciation and amortization 9 | 21 12 9 Interest 13 | (7) 47 1 Income taxes (2) | 77 (133) 64 Principal portion of notes receivable 23 | 175 248 205 Selling, general, and administrative expenses 1 | 258 612 146 Warrant proceeds in excess of income - | 13 103 22 Income tax benefit resulting from the exercise of | non-qualified stock options - | 2 32 Fresh-start accounting adjustments - | 369 - - Reorganization items - | 771 4 - Lease portfolio sales 22 | - - - Other, net 16 | (20) 35 3 -------------- | -------------- ----------- ---------- Net cash provided by continuing operations 259 | 2,271 2,970 2,964 Net cash provided by discontinued operations 29 | 1,008 281 254 -------------- | -------------- ----------- ---------- Net cash provided by operating activities $ 288 | $ 3,279 $ 3,251 $ 3,218 ============== | ============== =========== ========== | Supplemental Schedule of Non-cash Financing Activities: | Reduction of discounted lease rentals in lease portfolio sales $ - | $ 292 $ - $ - ============== | ============== =========== ========== See accompanying notes to consolidated financial statements.
COMDISCO HOLDING COMPANY, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS September 30, 2002 and 2001 Note 1 - Reorganization On July 30, 2002, the First Amended Joint Plan of Reorganization was confirmed by the bankruptcy court (the "Plan") and, on August 12, 2002 (the "Effective Date"), the Company emerged from Chapter 11. For financial reporting purposes, the effective date for implementation of fresh-start reporting is July 31, 2002. Implementation of the Plan resulted in the reorganization of Comdisco, Inc. and its domestic and foreign subsidiaries into Comdisco Holding Company, Inc. and three new primary subsidiaries: (i) Comdisco Global Holding Company, Inc. (a direct wholly-owned subsidiary of Comdisco Holding Company, Inc.), which manages the sale and run-off of the Company's reorganized European IT Leasing operations and assets; (ii) Comdisco, Inc. (a direct wholly-owned subsidiary of Comdisco Holding Company, Inc.), which manages the sale and run-off of the Company's reorganized US Leasing operations and assets; and (iii) Comdisco Ventures, Inc. (a direct wholly-owned subsidiary of Comdisco, Inc.), which manages the sale and run-off of the Company's venture financing operations and assets ("Ventures"). The Company's Corporate Asset Management, or CAM group is responsible for the sale and run-off certain assets held by Comdisco Global Holding Company, Inc., Comdisco, Inc. and their subsidiaries that remained after certain pre-emergence bankruptcy asset sales. The CAM group's operations are managed through Comdisco, Inc. Implementation of the Plan also resulted in the reorganization of Prism Communication Services, Inc. and its subsidiaries ("Prism"); as a consequence, Prism is now a direct wholly-owned subsidiary of Comdisco Domestic Holding Company, Inc., which is itself a direct wholly-owned subsidiary of Comdisco, Inc. Comdisco Holding Company, Inc. (Successor) was formed on August 8, 2002 for the purpose of selling, collecting or otherwise reducing to money in a orderly manner the remaining assets of the Company and all of its direct and indirect subsidiaries, including Comdisco, Inc. (Predecessor). As more fully described in the Plan, the Company's business purpose is limited to the orderly sale or run-off of all its remaining assets. Pursuant to the Plan and restrictions contained in its certificate of incorporation, the Company is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. Consummation of the Plan resulted in (i) the distribution of cash totaling $2.2 billion; (ii) the issuance of variable rate senior secured notes due 2004 in the principal amount of $400 million; (iii) the issuance of 11 percent subordinated secured notes due 2005 in the principal amount of $650 million; (iv) the issuance of 4.2 million shares of New Common stock; (v) the issuance of Contingent Distribution Rights to holders of the Company's Old Common stock; and (vi) the cancellation of the Company's Old Senior Notes, Old Notes Payable, Old Common stock and Old Stock Options. Consummation of the Plan resulted in the election of a new Board of Directors for the Company (the "Board"). As of the Effective Date, the Board is comprised of five members. The management director is Ronald C. Mishler, Chief Executive Officer. The four additional members of the Board are: Jeffrey A. Brodsky, Robert M. Chefitz, William A. McIntosh and Randolph I. Thornton. All references to the "the Company" throughout these notes to consolidated financial statements for disclosures related to periods prior to and including July 31, 2002 refer to Comdisco, Inc., the Predecessor, and disclosures related to periods subsequent to July 31, 2002 refer to Comdisco Holding Company, Inc., the Successor. Note 2 - Summary of Significant Accounting Policies Basis of Presentation Due to the reorganization and implementation of fresh-start reporting, the consolidated financial statements for the Successor Company (period starting July 31, 2002) are not comparable to those of the Predecessor Company. For financial reporting purposes, the effective date of the emergence from bankruptcy is considered to be the close of business on July 31, 2002. Nature of Operations Comdisco Holding Company, Inc. was formed on August 8, 2002 for the purpose of selling, collecting or otherwise reducing to money in an orderly manner the remaining assets of the Company and all of its direct and indirect subsidiaries, including Comdisco, Inc. Prior to the bankruptcy, Comdisco, Inc. provided technology services worldwide to help its customers maximize technology functionality, predictability, and availability, while freeing them from the complexity of managing their technology. Comdisco, Inc. offered leasing to key vertical industries, including semiconductor manufacturing and electronic assembly, healthcare, telecommunications, pharmaceutical, biotechnology and manufacturing. Through its Comdisco Ventures group, Comdisco, Inc. provided equipment leasing and other financing and services to venture capital-backed companies. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated. Translation Adjustments All assets and liabilities denominated in foreign currencies are translated at the exchange rate on the balance sheet date. Revenues, costs and expenses are translated at average rates of exchange prevailing during the period. Translation adjustments are deferred as a separate component of stockholders' equity. Gains and losses resulting from foreign currency transactions are included in the consolidated statements of earnings (loss). Income Taxes The Company uses the asset and liability method to account for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits of which future realization is not more likely than not. Lease Accounting See Notes 7, 8, and 9 of Notes to Consolidated Financial Statements for a description of lease accounting policies, lease revenue recognition and related costs. Technology Services Revenue from Availability Solutions' contracts is recognized monthly as subscription fees become due. Revenue from Availability Solutions continuity contracts is recognized over the terms of the related contracts or as the service is provided. Revenue from continuity contracts is reported in discontinued operations. Cash and Cash Equivalents Cash and cash equivalents are comprised of highly liquid debt instruments with original maturities of 90 days or less. Allowance for Credit Losses See Note 13 of Notes to Consolidated Financial Statements for a description of the policy for reserving for credit losses. Cash--Legally Restricted Legally restricted cash represents cash and cash equivalents that are restricted solely for use as collateral in secured borrowings, cash and cash equivalents received by the Company from non-owned lease portfolios serviced by the Company and cash and cash equivalents held in escrow or in similar accounts as a result of the various proposed or completed assets sales. Legally restricted cash is comprised of the following at September 30, 2002 and September 30, 2001 (in millions): SUCCESSOR | PREDECESSOR 2002 | 2001 --------- | ----------- SunGard escrow $ 2 | $ - Professional fee escrow 7 | - Letters of credit 3 | 26 Cash received on non-owned leases 6 | 28 --------- | ----------- $ 18 | $ 54 ========= | =========== Inventory of Equipment Inventory of equipment is stated at the lower of cost or market by categories of similar equipment. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation of property, plant and equipment is calculated on the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset. The carrying value of property, plant and equipment is assessed annually and/or when factors indicating an impairment are present. If an impairment is present, the assets are reported at the lower cost of carrying value or fair value. As result of fresh-start accounting adjustments, $27 million of excess fair value of net assets over reorganization value was allocated as a reduction to property, plant and equipment in accordance with AICPA Statement of Position ("SOP") 90-7 and Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations." Accordingly, the net book value of property, plant and equipment as of September 30, 2002 was zero. See Note 3 of Notes to Consolidated Financial Statements. Investment in Equity Securities The Company determines the appropriate classification of marketable securities at the time of acquisition and reevaluates such designation at each balance sheet date. Marketable securities classified as available-for-sale are carried at fair value, based on quoted market prices, net of estimated commission expenses, with unrealized gains and losses excluded from earnings (loss) and reported in accumulated other comprehensive income (loss). Equity investments for which there is no readily determinable fair value are carried at the lower of cost or estimated fair market value. Warrants The Company's investments in warrants (received in connection with its lease or other financings) are initially recorded at zero cost and carried in the consolidated financial statements as follows: o Warrants that meet the criteria for classification as available-for-sale are carried at fair value based on quoted market prices with unrealized gains excluded from earnings (loss) and reported in accumulated other comprehensive income (loss). o Warrants that do not meet the criteria for classification as available-for-sale are carried at zero value. The proceeds received from the sale or liquidation are recorded as income on the trade date. Earnings (Loss) Per Common Share Earnings (loss) per common share-basic are computed by dividing the net earnings (loss) to common stockholders by the weighted average number of common shares outstanding for the period. Earnings (loss) per common share-diluted reflect the maximum dilution that would have resulted from the exercise of stock options. Earnings (loss) per common share-diluted are computed by dividing the net earnings (loss) to common stockholders by the weighted average number of common shares outstanding and all dilutive stock options (dilutive stock options are based on the treasury stock method). Stock-Based Compensation The Company applies the intrinsic value-based method of accounting prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations including FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation" issued in March 2000, to account for its fixed plan stock options. Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price. SFAS No. 123, "Accounting for Stock-Based Compensation," established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, the Company has elected to continue to apply the intrinsic value-based method of accounting described above, and has adopted the disclosure requirements of SFAS No. 123. As result of the confirmation of the Plan and the emergence from bankruptcy, all stock option plans were terminated and all outstanding stock options were cancelled. Reclassifications Certain reclassifications have been made in the 2000 and 2001 consolidated financial statements to conform to the 2002 presentation. Cumulative Effect of Change in Accounting Principle Comdisco, Inc. adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," on October 1, 2000. In accordance with the transition provisions of SFAS No. 133, Comdisco, Inc. recorded a net-of-tax cumulative-effect adjustment of $2 million in current earnings to recognize at fair value all derivatives that were designated as cash-flow hedging instruments. For the year ended September 30, 2000, prior to the adoption of SFAS No. 133, Comdisco, Inc. entered into interest rate swap agreements to reduce its exposure to market risks from changing interest rates. For interest rate swaps, the differential to be paid or received was accrued and recognized in interest expense. Neither the Company, nor Comdisco, Inc. use derivatives for trading purposes. The Company's derivative financial instruments at September 30, 2002 are recorded at fair value. Note 3 - Fresh-Start Reporting The Company adopted fresh start reporting because, as a result of implementation of the Plan, holders of the Company's existing common stock immediately before filing and confirmation of the Plan retained less than 50% of the common stock of the emerging entity and the Company's reorganization value at emergence was less than its' post-petition liabilities and allowed claims. Under Fresh Start Reporting, the reorganization value of the Company is allocated to estimated fair value of the emerging Company's net assets. The Company's reorganization value was based on the consideration of many factors and various valuation methodologies, primarily discounted cash flows, believed by the Company's management and its financial advisors to be representative of the Company's business and industry. The allocation of the Company's reorganization value to the estimated fair value of the net assets of the emerging company was determined in a manner similar to the accounting provisions applied for business combinations under Statement of Financial Accounting Standards No. 141 (SFAS 141) which consisted primarily of discounted cash flows for leased assets, amounts to be paid discounted at current rates for liabilities and recording of deferred taxes in accordance with generally accepted accounting principles. The Company's reorganization value was less than the fair value of the emerging Company's net assets as estimated by the Company. In accordance with SFAS 141, the excess of the fair value of the net assets over the reorganization value was used to reduce the value of certain assets (primarily long-lived non-financial assets) to zero. The remaining excess was held as a contra asset on the balance sheet of the Company as of July 31, 2002 (see adjustment (h) below). The Company recognized an extraordinary gain of $241 million, net of tax, in the Successor consolidated financial statements to recognize the excess which remained after reducing property, plant and equipment to zero. The excess of the estimated fair value of the net assets of the emerging Company over the reorganization value primarily relates to three factors: (1) the Company's European IT Leasing business performing better than expected; (2) the strengthening of the Euro from the time of estimation of the reorganization value as disclosed in the Plan; and (3) the reorganization value considered future operating expenses, whereas the estimated fair value of the net assets of the emerging company did not. All future operating expenses will be expensed as incurred in accordance with generally accepted accounting principles. The reorganization value and the related allocation to the estimated fair value of the net assets of the emerging Company is based upon a variety of estimates and assumptions about future circumstances and events. Such estimates and assumptions are inherently subject to significant uncertainties. The reorganization and the adoption of fresh-start reporting resulted in the following adjustments to the Predecessor's consolidated balance sheet for the period ended July 31, 2002:
ASSETS Reorganization and | PREDECESSOR Fresh-Start Adjustments | SUCCESSOR July 31, 2002 Debit Credit | July 31, 2002 --------------------------------------------------------| ---------------- ASSETS | Cash and equivalents $ 2,635 $ $ 1,983 (a) | $ 404 248 (a) Cash, legally restricted 59 | 59 Receivables, net 237 2 (e) | 239 Inventory 50 10 (e) | 40 Leased assets: | Direct financing and sales-type 967 55 (e) | 1,022 Operating, net of | accumulated depreciation 476 39 (e) | 437 --------------- | ------------ Net leased assets 1,443 | 1,459 Property, plant and equipment, net 39 12 (e) | - 27 (h) | Equity securities 58 16 (e) | 42 Assets of discontinued operations 191 3 (h) | 188 Other 137 1 (c) | 101 35 (e) | Excess fair value of net assets | over reorganization value 241 (h) | (241) --------------- | ------------ | $ 4,849 | $ 2,291 =============== | ============ | | LIABILITIES AND STOCKHOLDERS' EQUITY | Notes payable $ 916 916 (b) 1,050 (a) | $ 1,050 Term notes payable 67 | 67 Senior notes 2,640 2,640 (b) | - Accounts payable 116 20 (b) | 96 Income taxes 137 29 (f) | 108 Liabilities related to | assets of discontinued operations 31 | 31 Deferred income 94 | 94 Other liabilities 361 160 (b) 10 (e) | 128 83 (b) | | - | Discounted lease rentals 304 | 304 --------------- | ------------ 4,666 | 1,878 --------------- | ------------ | Stockholders' equity: | Common stock 22 22 (d) - (a) | - Additional paid-in capital 365 365 (d) 384 (a) | 413 29 (d) | Accumulated other comprehensive income (70) 70 (d) | - Retained earnings 486 332 (d) 29 (f) | - 271 (h) | 65 (e) 153 (g) | --------------- | ------------ 803 | 413 Common stock held in treasury, at cost (620) 620 (d) | - --------------- | ------------ Total Stockholders' Equity 183 | 413 --------------- | ------------ $ 4,849 $ 4,960 $ 4,960 | $ 2,291 =============== ================= ================| ============ | Explanations of adjustment columns of the balance sheet are as follows: (a) To record initial distribution under the Plan, including distribution for Disputed Claims Reserve. Distribution included cash, the issuance of New Debt and New Common Stock (4.2 million shares, par value $.01). (b) To reflect the cancellation of the old debt, including related accrued interest, and cancellation of other prepetition obligations subject to compromise. (c) To write-off the remaining debt issuance costs. (d) To reflect the cancellation of stockholders' equity of the Predecessor. (e) To adjust assets to fair value and accrue a liability related to the Contingent Distribution Rights. (f) Tax effect of adjusting assets to fair value. (g) To reflect the extraordinary gain resulting from discharge of indebtedness. The extraordinary credit is calculated as follows (in thousands): Historical carrying value of old debt securities $ 3,556 Historical value of related accrued interest 83 Unamortized portion of deferred debt issuance costs (1) Prepetition accounts payable and estimated liability related to disputed claims 180 Plan New Debt (1,050) Plan Cash Distribution (1,983) Plan New Common Stock (384) Disputed Claims Reserve (cash) (248) ---------------- 153 Tax provision - ---------------- Gain on extinguishment of debt $ 153 ================ Reconciliation of reorganization value: Reorganization value per Plan $ 384 Tax effect of fresh start accounting 29 ---------------- Reorganization value per financials $ 413 ================ (h) Record excess fair value of net assets over Plan reorganization value and adjust long-lived assets in accordance with SOP 90-7 and SFAS No. 141.
Note 4 - Discontinued Operations Network Services During the second quarter of fiscal 2001, the network consulting business of the Company was discontinued. The network management services segment of the business was transferred to a new provider during the third quarter of fiscal 2001. Network customers purchased bundled consulting, network management and leasing. Even though the consulting and network management services have been discontinued, the leasing element was not discontinued. Prism Communication Services, Inc. The Company acquired Prism Communication Services, Inc. ("Prism"), a provider of dedicated high-speed connectivity, on February 28, 1999, for a cash purchase of approximately $53 million, of which approximately $45 million was paid in fiscal 1999. From the date of acquisition through September 30, 2001, the Company provided Prism with cash totaling $531 million for the expansion of its network and for its operating costs and wind-down costs. On October 2, 2000, the Company ceased funding ongoing operations of Prism. As a result of this decision, Prism ceased operations and pursued the immediate sale of its assets. Availability Solutions The Company's technology services business was offered for sale in the third quarter of fiscal 2001 with the sale completed in the first quarter of fiscal 2002 (see Note 5 of Notes to Consolidated Financial Statements). The estimated loss on disposal for the Availability Solutions business includes wind-down costs and asset write downs associated with the Company's German and Spanish subsidiaries which were excluded from the sale to SunGard discussed in Note 5, as well as wind-down costs and asset write downs associated with the Company's Web-Availability Solutions business. International Leasing On April 9, 2002, the Company announced that it had agreed to sell substantially all of its information technology ("IT") leasing assets in Australia and New Zealand to Allco, an Australian Company specializing in equipment and infrastructure finance and leasing. Results of operations for all periods are included in the statements of earnings (loss) as discontinued operations. On October 18, 2002, the Company announced that it had entered into an agreement for the sale of its French operations, Comdisco France SA and Promodata SNC, to Belgium-based computer services provider, Econocom Group. The Company received approximately $70 million from the sale of its French operations on December 23, 2002. In accordance with SFAS No. 144, "Accounting for the Impairment of Long Lived Assets or Disposal of Long-Lived Assets,", during July 2002, the Company recorded a pre-tax charge of $35 million to reduce cost in excess of fair value to reflect the difference between carrying value and estimated proceeds from the sale. For financial reporting purposes, the assets of the French operations are included in the balance sheet as assets of discontinued operations and in the statement of earnings (loss) as discontinued operations. On October 18, 2002, the Company announced that it had sold its Swiss and Austrian-based operations. These transactions closed on October 10, 2002 and August 14, 2002, respectively. During July 2002, the Company recorded a $1 million pre-tax loss on the sale of its Swiss and Austrian-based operations. Results of operations for its Swiss and Austrian-based operations for all periods are included in the statement of earnings (loss) as discontinued operations. Each of the transactions resulted from an extensive offering and competitive bidding process run by the Company's independent investment banking firm. As a result of the discontinuance of Network Services and Prism and the sale of Availability Solutions, and the sale of the Company's French, Switzerland, Austrian, Australian and New Zealand-based operations (collectively referred to as "International Leasing" in the following table) amounts in the consolidated financial statements and related notes for all periods shown have been restated to account for these operations as discontinued. Following is summary financial information for the Company's discontinued operations. In addition to the businesses sold to SunGard, the Availability Solutions information included below also includes the results from the Company's Availability Solutions businesses in Germany and Spain (in millions):
SUCCESSOR Two months ended September 30, 2002 International Leasing ---------------------------- Revenue $ 22 ============ Loss from discontinued operations: Before income taxes $ (8) Income taxes 1 ------------ Net loss $ (9) ============ PREDECESSOR Ten months ended July 31, 2002 Availability Network International Solutions Services Leasing Prism Total --------------- ------------- ------------- ------------ -------------- Revenue $ 67 $ - $ 133 $ - $ 200 =========== ========= ========== ========= =========== ---------- --------- --------- ---------- ------------ Gain on sale $ 326 $ - - - $ 326 =========== ========= ========== ========= =========== Income from discontinued operations: Before income taxes $ 339 $ - $ - $ (3) $ 336 Income taxes 26 - 2 - 28 --------------- ------------- ------------- ------------ -------------- Net earnings (loss) 313 - (2) (3) 308 Estimated loss on disposal Before income tax benefit - - (37) - (37) Income tax benefit - - - - - --------------- ------------- ------------- ------------ -------------- Net loss - - (37) - (37) --------------- ------------- ------------- ------------ -------------- Total $ 313 $ - $ (39) $ (3) $ 271 =============== ============= ============= ============ ============== Fiscal year ended September 30, 2001 Availability Network International Solutions Services Leasing Prism Total --------------- ------------- ------------- ------------ -------------- Revenue $ 487 $ 9 $ 215 $ - $ 711 ============= ========= ========= ======= =========== Income (loss) from discontinued operations: Before income taxes (benefit) $ 27 $ (14) $ (16) $ - $ (3) Income taxes (benefit) 13 (5) (2) - 6 ----------------------------------------------------------------------- Net earnings (loss) 14 (9) (14) - (9) Estimated loss on disposal Before income tax benefit (38) (38) - (30) (106) Income tax benefit (11) (15) - (12) (38) ------------------------------------------------------------------------ Net loss (27) (23) - (18) (68) ------------------------------------------------------------------------ Total $ (13) $ (32) $ (14) $ (18) $ (77) ======================================================================== Fiscal year ended September 30, 2000 Availability Network International Solutions Services Leasing Prism Total --------------- ------------- ------------- ------------ -------------- Revenue $ 480 $ 31 $ 264 $ 4 $ 779 ============= =========== =========== =========== ========== Income (loss) from discontinued operations: Before income taxes (benefit) $ 75 $ (14) $ 1 $ (196) $ (134) Income taxes (benefit) 27 (5) 1 (76) (53) ----------------------------------------------------------------------- Net earnings (loss) 48 (9) - (120) (81) Estimated loss on disposal Before income tax benefit - - - (331) (331) Income tax benefit - - - (129) (129) ----------------------------------------------------------------------- Net loss - - - (202) (202) ----------------------------------------------------------------------- Total $ 48 $ (9) $ - $ (322) $ (283) =======================================================================
Interest expense charged to the discontinued operations of Prism was $29 million in 2000. Interest expense for the period subsequent to the measurement date included in the 2000 estimated loss on disposal of $9 million was calculated based on debt attributed to the Prism operations. The estimated loss on disposal before income taxes of the discontinued operations includes the following (in millions):
PREDECESSOR Ten months ended July 31, 2002 International Leasing ---------------------- Carrying value of net assets in excess of anticipated proceeds $ 37 Expenses of asset disposal and anticipated operating loss from the discontinued date through the date of disposal - Loss on disposal before income taxes $ 37 PREDECESSOR Fiscal year ended September 30, 2001 Availability Network Solutions Services Prism Total --------------- ------------- ------------ ------------- Carrying value of net assets in excess of $ 33 $ 25 $ 30 $ 88 anticipated proceeds Expenses of asset disposal and anticipated operating loss from the discontinued date through the date of disposal 5 13 - 18 ------------- ----------- ---------- ---------- Loss on disposal before income taxes $ 38 $ 38 $ 30 $ 106 ============ ========== ========== =========== Fiscal year ended September 30, 2000 Availability Network Solutions Services Prism Total --------------- ------------- ------------ ------------- Carrying value of net assets in excess of $ - $ - $ 256 $ 256 anticipated proceeds Expenses of asset disposal and anticipated operating loss from the discontinued date through the date of disposal - - 75 75 ------------- ----------- --------- ----------- Loss on disposal before income taxes $ - $ - $ 331 $ 331 ============ =========== ========= ==========
Goodwill related to Prism written off in fiscal 2000, included in the estimated loss on disposal, totaled $52 million. Expenses of asset disposal and anticipated operating losses represent the Company's estimate of operational losses to be incurred and the expected losses from disposition of the operations. Actual losses could differ from those estimates and will be reflected as adjustments in future financial statements. No assurances can be given that the recorded losses will be sufficient to cover the actual operational losses and losses incurred upon asset disposition or winding down of the discontinued operations. Note 5 - Sale of Assets Sale of Assets Leasing ------- On April 18, 2002, the court approved the sale of the Company's Healthcare leasing assets to GE Capital Corporation. In accordance with the Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of ("SFAS No. 121"), the Company recorded a pre-tax charge of $15 million in the second quarter of fiscal 2002 to reduce cost in excess of fair value (primarily related to the write-down of deferred assets) to reflect the difference between carrying value and estimated proceeds from the sale. On May 31, 2002, the Company and GE Capital completed a first closing on the sale of the Healthcare assets. The Company received approximately $117 million for the sale of these assets, including the assumption of approximately $46 million of related secured debt and other liabilities. On June 30, 2002, the Company and GE Capital completed a second closing on the sale of Healthcare assets for which the Company received an additional $20 million, including the assumption of approximately $5 million of related secured debt and other liabilities. The purchase price for both closings is subject to adjustment based upon the completion of a post-closing review of the purchase price calculations. A portion of the purchase price was held back at each closing pending the resolution of that review. Certain Healthcare assets were not purchased by GE Capital due to documentation, credit, or other issues. The Company, through its CAM group, continues to manage the sale or run-off of these assets. On February 5, 2002 the Company announced the completion of the bankruptcy court supervised sales evaluation process for its leasing businesses. During the Court-supervised bidding process concluded in early January 2002, the Company received bids for all of its leasing business units (North American Information Technology ("IT") Leasing, Telecommunications, Healthcare, Electronics and Laboratory and Scientific). At the conclusion of the bankruptcy court approved bidding process, the Board of Directors determined to accept no bids for its North American IT Leasing, Telecommunications and Healthcare businesses. Accordingly, on February 5, 2002, the Company announced that it intended to retain the remaining leasing businesses (North American IT, Telecommunications and Healthcare). Subsequent to that date, the Company announced that it had agreed to sell certain of its Healthcare leasing assets in the United States to GE Capital's Healthcare Financial Services unit. On January 24, 2002, the bankruptcy court approved the sale of the Company's Electronics and Laboratory and Scientific equipment leasing businesses to General Electric Capital's Commercial Equipment Financing unit (the "Buyer"). In accordance with SFAS 121, the Company recorded a pre-tax charge of $250 million in the first quarter of fiscal 2002 to reduce cost in excess of fair value to reflect the difference between carrying value and estimated proceeds from the sale. On April 24, 2002, the Company and the Buyer completed a first closing on the sale of approximately $794 million of assets, or approximately 81 percent of the Company's Electronics and Laboratory and Scientific net leased assets at March 31, 2002. The Company received approximately $548 million for the sale of these assets, which included the assumption of approximately $258 million of related secured debt and other obligations. On May 31, 2002, the Company and the Buyer completed a second closing on the sale of Electronics and Laboratory and Scientific assets, for which the Company received an additional approximately $24 million, including the assumption of approximately $5 million of related secured debt and other obligations. The purchase price for both closings is subject to adjustment based upon the completion of a post-closing review of the purchase price calculation. A portion of the purchase price was held back at each closing pending the resolution of that review. Certain assets were not purchased by GE Capital due to documentation, credit or other issues. The Company, through its CAM group, continues to manage the sale or run-off of these assets. International Leasing --------------------- On October 18, 2002, the Company announced that it, along with Comdisco Global Holdings Company, Inc., had entered into an agreement for the sale of the stock of the Company's French leasing subsidiaries, Comdisco France SA and Promodata SNC, to Econocom Group SA/NV. Comdisco France S.A. was a wholly-owned subsidiary of Comdisco Global Holding Company, Inc. and Promodata SNC was a wholly-owned subsidiary of Comdisco France S.A. The sale of the leasing assets closed on December 23, 2002 and proceeds in the amount of approximately (euro) 69 million were received. These proceeds were converted into $70 million and repatriated by the Company. In accordance with SFAS No. 121, the Company recorded a pre-tax charge of $35 million in the fourth quarter of fiscal 2002 to reduce cost in excess of fair value to reflect the difference between carrying value and estimated proceeds from the sale. For financial reporting purposes, the assets of the French operations are included in the balance sheet as assets of discontinued operations and in the statement of earnings as discontinued operations. On October 18, 2002, the Company announced that it had sold its Swiss and Austrian-based operations. These transactions closed on October 10, 2002 and August 14, 2002, respectively. During the quarter ended September 30, 2002, the Company recorded a $1 million pre-tax loss on the sale of its Swiss and Austrian-based operations. For financial reporting purposes, the assets of the Swiss and Austrian-based operations are included in the balance sheet as assets of discontinued operations and in the statement of earnings (loss) as discontinued operations. On April 9, 2002, Comdisco, Inc. announced that it had agreed to sell substantially all of its information technology (IT) leasing assets in Australia and New Zealand to Allco, an Australian company specializing in equipment and infrastructure finance and leasing. The bankruptcy court approved the sale on April 18, 2002. Under the terms of the sale agreement, Allco agreed to hire all of the Comdisco Australia and New Zealand employees and purchase most of its assets in Australia and New Zealand in a series of closings. On June 28, 2002, the Company and Allco completed the first closing on the sale of leased assets in Australia and New Zealand. Comdisco, Inc. received approximately $8 million for the sale of these assets. Comdisco, Inc. has received $24 million for the assets sold through November 2002 and the final closing is expected to occur during the second fiscal quarter of 2003. In accordance with SFAS 121, the Company recorded pre-tax charges of $6 million in the third quarter of fiscal 2002 and $2 million in the one month ended July 31, 2002 to reduce cost in excess of fair value to reflect the difference between carrying value and estimated proceeds from the sale. For financial reporting purposes, the assets of the Australia operations are included in the balance sheet as assets of discontinued operations and in the statement of earnings (loss) as discontinued operations. Each of the transactions resulted from an extensive offering and competitive bidding process run by the Company's independent investment banking firm. Services -------- The Company announced on February 5, 2002 that it had executed an agreement for the sale of substantially all of its North American IT CAP Services contracts to T-Systems Inc. for approximately $7 million, plus consideration for future business with those accounts. The sale was approved by the bankruptcy court on February 14, 2002 and closed on February 28, 2002. During the second quarter of fiscal 2002, the Company recorded a $3 million pre-tax loss on the sale to T-Systems. On November 15, 2001, the Company completed the sale of its Availability Solutions business to SunGard Data Systems Inc. ("SunGard") for $825 million in cash (plus approximately $25 million in cash for estimated working capital received in excess of agreed-upon levels). At closing, $45 million of the purchase price was put into escrow to satisfy any post-closing indemnity claims and $15 million was put into escrow to satisfy any closing date working capital shortfalls. Of the $45 million put into escrow, approximately $2 million continues to be held in escrow pending resolution of disputed matters. During the second quarter of fiscal 2002, the Company returned the entire $15 million working capital escrow to SunGard to settle all outstanding working capital adjustment issues. The terms of the sale were arrived at pursuant to the auction process approved by the bankruptcy court. The sale included the purchase of assets of the U.S. operations of the Availability Solutions business and the stock of its subsidiaries in the United Kingdom, France and Canada. The sale excluded the purchase of the stock of subsidiaries in Germany and Spain, as well as other identified assets, including Network Services and IT CAP services business. The Company has exited the Availability Solutions businesses in Germany and Spain. Note 6 - Reorganization Items, Restructuring Costs and Fresh-Start Accounting Adjustments Reorganization Items In accordance with SOP 90-7, expenses and income of the Predecessor Company directly incurred or realized as a result of the Chapter 11 Cases have been segregated from the normal operations and are disclosed separately. The major components for the ten months ended July 31, 2002 and for the year ended September 30, 2001 are as follows (in millions): PREDECESSOR 2002 2001 ------------- ------------- Estimated loss on sale of leased assets $ 263 $ - Loss on IT CAP sale 3 - DIP financing fee 8 - Disputed Claims 127 - Other asset write-downs 22 - Professional fees 42 37 Interest income (26) (3) ------------- ------------- $ 439 $ 34 ============= ============= In accordance with SOP 90-7 and SFAS No. 5 "Accounting for Contingencies," in addition to liabilities previously accrued, Comdisco, Inc., the Predecessor Company, recorded in its statement of earnings (loss) for the ten months ended July 31, 2002, an additional liability of $127 million related to the Disputed Claims. Professional fees relates to legal, investment advisory and other professional services. Interest income includes interest earned on the Company's unrestricted cash balance that would not have been earned if the Company had not filed for Chapter 11 protection. Restructuring costs As a result of work-force reductions, the Company initially incurred a charge of $8 million in the fiscal third quarter ending June 30, 2001. The Company incurred additional charges of $15 million and $3 million in the three months ended March 31, 2002 and June 30, 2002, respectively. Approximately $26 million has been paid and charged against the accrued liability through September 30, 2002. Cost and expenses associated with the restructuring cost are included in selling, general and administrative expenses. Fresh-Start Accounting Adjustments The major components of fresh-start accounting adjustments for the ten months ended July 31, 2002 are as follows (in millions): PREDECESSOR 2002 -------------- Fair value adjustment to assets $ 65 Excess fair value of net assets over reorganization value 271 Recognition of accumulated other comprehensive loss 70 -------------- 406 Charges related to assets in discontinued operations (37) -------------- Total fresh-start accounting adjustments $ 369 ============== Leasing Note 7 - Lease Accounting Policies SFAS No. 13, "Accounting for Leases," requires that a lessor account for each lease by either the direct financing, sales-type or operating method. Leased Assets Direct financing and sales-type leased assets consist of the present value of the future minimum lease payments plus the present value of the residual (collectively referred to as the net investment). Residual is the estimated fair market value of the equipment on lease at lease termination. In estimating the equipment's fair value at lease termination, the Company relies on historical experience by equipment type and manufacturer and, where available, valuations by independent appraisers, adjusted for known trends. The Company's estimates are reviewed continuously to ensure reasonableness; however, the amounts the Company will ultimately realize could differ from the estimated amounts. Operating leased assets consist of the equipment cost, less the amount depreciated to date. Revenue, Costs and Expenses o Direct financing leases: Revenue consists of interest earned on the present value of the lease payments and residual. Revenue is recognized periodically over the lease term as a constant percentage return on the net investment. There are no costs and expenses related to direct financing leases since leasing revenue is recorded on a net basis. o Sales-type leases: Revenue consists of the present value of the total contractual lease payments which is recognized at lease inception. Costs and expenses consist of the equipment's net book value at lease inception, less the present value of the residual. Interest earned on the present value of the lease payments and residual, which is recognized periodically over the lease term as a constant percentage return on the net investment, is included in direct financing lease revenue in the statement of earnings (loss). o Operating leases: Revenue consists of the contractual lease payments and is recognized on a straight-line basis over the lease term. Costs and expenses are principally depreciation of the equipment. Depreciation is recognized on a straight-line basis over the lease term to the Company's estimate of the equipment's fair market value at lease termination, also commonly referred to as "residual" value. In estimating the equipment's fair value at lease termination, the Company relies on historical experience by equipment type and manufacturer and, where available, valuations by independent appraisers, adjusted for known trends. The Company's estimates are reviewed continuously to ensure reasonableness, however the amounts the Company will ultimately realize could differ from the amounts assumed in determining depreciation on the equipment in the operating lease portfolio at September 30, 2002. Initial direct costs related to operating and direct financing leases, including salespersons' commissions, are capitalized and amortized over the lease term into leasing costs and expenses. As a result of fresh-start accounting adjustment, all indirect costs have been recognized in the statement of earnings (loss). Note 8 - Leased Assets The components of the net investment in direct financing and sales-type leases as of September 30 are as follows (in millions): SUCCESSOR | PREDECESSOR 2002 | 2001 ------------- | ------------- Minimum lease payments receivable $ 1,072 | $ 1,941 Estimated residual values 102 | 171 Less: unearned revenue (158) | (262) ------------- | ------------ Net investment in direct financing | and sales-type leases $ 1,016 | $ 1,850 ============= | ============= Unearned revenue is recorded as leasing revenue over the lease terms. Operating leased assets include the following as of September 30 (in millions): SUCCESSOR | PREDECESSOR 2002 | 2001 ------------- | ------------- Operating leased assets $ 836 | $ 3,541 Less: accumulated depreciation | and amortization (540) | (1,622) ------------- | ------------ Net operating leased assets $ 296 | $ 1,919 ============= | ============ Note 9 - Lease Portfolio Information The size of the Company's lease portfolio can be measured by the cost of leased assets at the date of lease inception. Cost at lease inception represents either the equipment's original cost or its net book value at termination of a prior lease. The following table summarizes by year of projected lease termination, the cost at lease inception for all leased assets recorded at September 30, 2002 (in millions): SUCCESSOR Total cost at Projected year of lease termination lease 2003 2004 2005 2006 2007 + inception --------------------------------------------------------------------- $ 1,389 $ 1,048 $ 495 $ 157 $ 162 $ 3,251 The following table summarizes the estimated net book value at lease termination, or the residual value, for all leased assets recorded at September 30, 2002. (in millions): SUCCESSOR Total net book value at Projected year of lease termination lease 2003 2004 2005 2006 2007 + termination --------------------------------------------------------------------- $ 129 $ 61 $ 16 $ 1 $ 3 $ 210 Note 10 - Future Contractual Cash Flows The summary presents cash in-flows due in accordance with the contractual terms in existence as of September 30, 2002 (in millions): SUCCESSOR
Years ending September 30, 2003 2004 2005 2006 2007+ Total --------------------------------------------------------------------------------- Contractual cash in-flows: Leases-US Leasing, Europe, and CAM $ 631 $ 383 $ 252 $ 52 $ 34 $ 1,352 Leases-Ventures 138 53 7 - - 198 Notes receivable-Ventures 101 29 6 - - 136 Leases-discontinued operations 60 33 15 4 - 112 --------------------------------------------------------------------------------- Total $ 930 $ 498 $ 280 $ 56 $ 34 $ 1,798 =================================================================================
Note 11 - Interest-Bearing Liabilities On April 3, 2001, Comdisco, Inc. drew down approximately $880 million of committed loan facilities for general corporate purposes, including the retirement of commercial paper obligations as they became due. The committed facilities involved in the transaction include the $550 million global credit facility and the $525 million multi-option facility. In connection with the Filing, Comdisco, Inc. obtained a two-year, $450 million senior secured Debtor-In-Possession financing facility ("DIP facility"). During the second quarter of fiscal 2002, the Company terminated the DIP facility, without ever drawing down upon it. In connection with the DIP facility, Comdisco, Inc. paid an arrangement and structuring fee of $9 million or 2 percent of the credit line. The Company was also required to pay a fifty basis point annual unused line fee and annual administration and collateral monitoring fees, as defined in the agreement. The unamortized fee balance as of September 30, 2001 was expensed in the first quarter of fiscal 2002 (see Note 6 of Notes to Consolidated Financial Statements). As a result of the bankruptcy filing, principal and interest payments on outstanding unsecured debt obligations of the Debtors were suspended, which nonpayment, in turn, resulted in a default under its credit lines. Non-debtor subsidiaries continued to make principal and interest payments on their debt obligations under these facilities and the Non-debtor obligations under these facilities were retired during July 2002. Upon emergence, the Company's general unsecured creditors received, and the Disputed Claims Reserve was funded with, their pro-rata share of an initial cash distribution of approximately $2.2 billion. In addition, general unsecured claim holders received, and the Disputed Claims Reserve was funded with, their pro-rata share of two separate note issuances: variable rate senior secured notes due 2004 (the "Senior Notes") in the face amount of $400 million with an interest rate of three month LIBOR plus 3 percent and subordinated secured notes due 2005 (the "Subordinated Notes") in the face amount of $650 million with an interest rate of 11 percent. General unsecured claimholders also received, and the Disputed Claims Reserve also was funded with, their pro rata share of 100 percent of the New Common stock of the reorganized Company. Interest rates noted below for fiscal year 2001 were calculated based upon contractual interest owed. Interest rates noted below for fiscal year 2002 were calculated based upon debt outstanding subsequent to the emergence date. Interest-bearing liabilities include the following (in millions):
SUCCESSOR At September 30, 2002 Average ------------------------------ ------------------------ Balance Rate Balance Rate ------- ---- ------- ---- Notes payable $ 1,050 8.62% $ 1,050 8.62% Term notes 35 2.19% 52 2.08% Discounted lease rentals 262 6.36% 283 5.97% --------- --------- --------- -------- $ 1,347 8.01% $ 1,385 7.83% ========= ========= ========= ======== PREDECESSOR At September 30, 2001 Average ------------------------------ ------------------------ Balance Rate Balance Rate ------- ---- ------- ---- Notes payable: Credit lines and loan participation contracts $ 1,068 5.78% $ 797 5.95% Commercial paper 28 5.01% 454 6.17% Term notes 360 3.82% 585 6.03% Senior notes 2,639 7.00% 2,924 7.21% Discounted lease rentals 964 6.86% 991 7.58% --------- --------- --------- -------- $ 5,059 6.48% $ 5,751 7.06% ========= ========= ========= ========
The changes in financing activities were as follows (notes payable changes are shown net; in millions):
SUCCESSOR 2002 Maturities Outstanding Outstanding and end July 31, 2002 Issuances repurchases of year ------------- ------------- ------------- ------------ Notes payable $ - $ 1,050 $ - $ 1,050 Term notes 68 - (33) 35 Discounted lease rentals 304 - (42) 262 ------------- ------------- ------------- ------------ $ 372 $ 1,050 $ (75) $ 1,347 ============= ============== ============= ============
PREDECESSOR 2002 Outstanding Maturities Outstanding beginning and Discharge of end of year Issuances repurchases Other indebtedness July 31, 2002 ----------- --------- ----------- ----- -------------- ------------- Notes payable: Credit lines and loan participation contracts $ 1,068 $ - $ (179) $ - $ (889) $ - Commercial paper 28 - - - (28) - Term notes 360 - (292) - - 68 Senior notes 2,639 - - - (2,639) - Discounted lease rentals 964 10 (378) (292) - 304 -------- -------- ----------- -------- ----------- -------- $ 5,059 $ 10 $ (849) $ (292) $ (3,556) $ 372 ======== ======== ============ ======== =========== ======== 2001 Outstanding Maturities Outstanding beginning and end of year Issuances repurchases of year ------- --------- ----------- ------- Notes payable: Credit lines and loan participation contracts $ 729 $ 339 $ - $ 1,068 Commercial paper 585 - (557) 28 Term notes 695 - (335) 360 Senior notes 3,452 - (813) 2,639 Discounted lease rentals 794 589 (419) 964 ------- --------- ----------- --------- $ 6,255 $ 928 $ (2,124) $ 5,059 ======= ========= ---------- =========
The annual maturities of all interest-bearing liabilities at September 30, 2002 are shown in the table below (amounts in millions):
SUCCESSOR 2003 2004 2005 2006 2007 Total ------ ------ ------ ------ ------ ------ Notes payable $ - $ 400 $ 650 $ - $ - $ 1,050 Term notes 35 - - - - 35 Discounted lease rentals 199 56 5 1 1 262 ------ ------ ------ ------ ------ ------ $ 234 $ 456 $ 655 $ 1 $ 1 $ 1,347 ====== ====== ====== ====== ====== ======
On October 21, 2002, the Company redeemed the entire $400 million outstanding principal amount of its Senior Notes. The Senior Notes were redeemed at 100 percent of their principal amount plus accrued and unpaid interest from August 12, 2002 to the redemption date. Following the redemption of the Senior Notes, the Company will make cash interest payments on the Subordinated Notes. The terms of the Subordinated Notes provided for the interest to be paid-in-kind through the issuance of additional Subordinated Notes while the Senior Notes were outstanding. The initial interest payment date for the Subordinated Notes was December 31, 2002 and, because the Senior Notes were no longer outstanding, the interest payment was in cash on such date to registered holders of the Subordinated Notes at the close of business on December 15, 2002. On November 14, 2002, pursuant to its mandatory redemption obligations under the Subordinated Notes, the Company made a partial redemption of $65 million of the outstanding principal amount of its Subordinated Notes. On December 23, 2002, the Company made an optional partial redemption of $200 million principal amount of its Subordinated Notes. On January 9, 2003, the Company made an optional partial redemption of $100 million principal amount of its Subordinated Notes. The total outstanding principal amount of the Subordinated Notes subsequent to the January 9, 2003 redemption is $285 million. Each of these payoffs of the Subordinated Notes were redeemed at a price equal to 100 percent of their principal amount plus accrued and unpaid interest to the redemption date. Notes Payable -Predecessor As a result of the bankruptcy filing, principal and interest payments on outstanding unsecured debt obligations of the Debtors were stayed, which nonpayment, in turn, resulted in a default under its credit lines. Non-debtor subsidiaries continued to make principal and interest payments on their debt obligations under these facilities. The Predecessor had the following unsecured bank lines outstanding in the United States and foreign countries at September 30, 2001 (amounts in millions): PREDECESSOR 2001 ----------- Total credit lines: Committed 1,071 Uncommitted 8 ----------- 1,079 Utilized at September 30: Committed 1,071 Uncommitted 8 ----------- Total credit lines 1,079 ----------- Loan participation contracts and other bank borrowings 17 ----------- Total notes payable 1,096 =========== Credit lines available at September 30 - =========== Maximum amount outstanding at any month end 1,288 =========== Committed Lines: There were no compensating balance requirements on any of the committed lines. The multi-option revolving credit agreements and the global revolving credit agreements (collectively, the "Facilities") permitted the Predecessor Company to borrow in U.S. dollars or in other currencies, on a revolving credit basis. Interest rates on debt outstanding under the Facilities were determined at the time of the borrowings. The Facilities called for the Predecessor Company to pay a weighted average annual fee of ten basis points per annum on the total committed amount. Uncommitted Lines and Loan Participation Contracts: In addition to the committed lines, the Predecessor maintained various domestic and international lines of credit for short-term debt with banks under which the Predecessor could borrow on an unsecured basis on such terms as the Company and banks may mutually agreed. The majority of these arrangements did not have maturity dates, and could be withdrawn at the banks' option. There were no fees or compensating balances associated with either the uncommitted lines or the loan participation contracts. Term Notes At September 30, 2002, the Company had $35 million of floating rate receivable-backed debt obligations. Discounted Lease Rentals The Company utilizes its lease rentals receivable and underlying equipment in leasing transactions as collateral to borrow from financial institutions at fixed rates on a nonrecourse basis. In return for this secured interest, the Company receives a discounted cash payment. In the event of a default by a lessee, the financial institution has a first lien on the underlying leased equipment, with no further recourse against the Company. Proceeds from discounting are recorded on the balance sheet as discounted lease rentals; as lessees make payments, lease revenue (i.e., interest income on direct financing and sales-type leases and rental revenue on operating leases) and interest expense are recorded. Discounted lease rentals are accounted for using the interest method. Future minimum lease payments and interest expense on leases that have been discounted as of September 30, 2002 are as follows (in millions): SUCCESSOR Discounted Years ending Rentals to lease Interest September 30, be received rentals expense ------------- ----------- ---------- --------- 2003 $ 209 $ 199 $ 10 2004 58 56 2 2005 6 5 1 2006 1 1 - 2007 1 1 - ----------- ---------- --------- $ 275 $ 262 $ 13 Interest expense on discounted lease rentals was $3 million and $39 million for the two months ended September 30, 2002 and ten months ended July 31, 2002, respectively. During fiscal year 2001 and 2000, interest expense on discounted lease rentals was $75 million and $32 million, respectively. Interest Rate Swap Agreements and Other Derivative Financial Instruments The Company entered into interest rate and cross-currency interest rate swap agreements and other financial instruments in order to limit its exposure to adverse fluctuations in foreign currency exchange and interest rates. Interest rate swap contracts generally represent the contractual exchange of fixed and floating rate payments of a single currency. Cross-currency interest rate swap contracts generally involve the exchange of payments which are based on the interest reference rates available at the inception of the contract on two different currency notional balances that are exchanged. The principal balances are re-exchanged at an agreed upon rate at a specified future date. Credit and market risk exist with respect to these instruments. The following table presents the contract or notional (face) amounts outstanding and the fair value of the contracts based generally on their termination values at September 30 (amounts in millions): SUCCESSOR | PREDECESSOR 2002 | 2001 Notional Fair | Notional Fair amount Value | amount value ------ ----- | ------ ----- Interest rate swap | agreements $ 68 $ 2 | $ 97 $ - Forwards - - | 8 2 The impact of these contracts for the two months ended September 30, 2002 was a decrease of $1 million to interest expense. The impact of these contracts for the ten months ended July 31, 2002 was a decrease of $4 million to interest expense and an increase of $4 million to foreign currency losses. The $4 million foreign currency loss is included within selling, general and administrative expenses. For fiscal 2001, the impact was a decrease of $9 million to interest expense. The impact of these contracts on interest expense for fiscal year 2000 was immaterial. The average notional amount outstanding of the floating rate to fixed rate contracts in fiscal 2002 was $27 million, with an average pay rate of 5.32 percent and an average receive rate of 3.61 percent. The average notional amount outstanding of the fixed rate to floating rate contracts in fiscal 2001 was $56 million, with an average pay rate of 6.55 percent and an average receive rate of 6.10 percent. The Company is exposed to credit loss in the event of non-performance by the other parties to the interest rate swap agreements. Although contract or notional amounts provide one measure of the volume of these transactions, they do not represent the amount of the Company's exposure to credit risk. The amounts subject to credit risk (arising from the possible inability of the counterparties to meet the terms of their contracts) are generally limited to the amounts, if any, by which the counterparties' obligation(s) exceed the obligation(s) of the Company. The Company attempts to limit credit risk through credit approvals, limits and monitoring procedures. Note 19 of Notes to Consolidated Financial Statements below provides details about the fair value of the Company's financial instruments. The Company has issued letters of credit totaling $3 million at September 30, 2002 to the landlords of the Company's customers, principally Comdisco Ventures group, for the guarantee of their leases. The letters of credit are collateralized by restricted cash. Note 12 - Liabilities Subject to Compromise The principal categories of liabilities classified as subject to compromise under reorganization proceedings as of September 30, 2001 are listed below (in millions): PREDECESSOR 2001 ------------ Notes payable $ 917 Senior notes 2,639 Accounts payable 22 Other liabilities Accrued interest 83 Other accrued expenses 30 ------------ $ 3,691 ============ Notes Payable Notes payable subject to compromise included $28 million of commercial paper, $880 million of committed loan facilities which the Company drew down on April 3, 2001 and $9 million of other bank borrowings. Senior Notes Senior notes subject to compromise included the following at September 30, 2001 (amounts in millions): PREDECESSOR 2001 ----------- Medium term notes (6.20% to 9.50%) $ 505 6.130% Senior Notes due 2001 267 6.375% Senior Notes due 2002 250 6.000% senior Notes due 2002 345 5.950% Senior Notes due 2002 345 7.250% Senior Notes due 2002 257 6.125% Senior Notes due 2003 194 9.500% Senior Notes due 2003 476 ----------- Total senior notes $ 2,639 =========== During fiscal 2001, Comdisco, Inc.'s $275 million of Mandatory Par Put Remarketed Securities-type senior debentures ("MOPPRS") were called. The call was stayed as a result of the Filing. Included in accrued interest subject to compromise is a $10 million obligation to the remarketing agent associated with the call. As a result of the reorganization proceedings, no principal or interest payments were made on unsecured pre-petition debt. Therefore, interest on the Predecessor Company's pre-petition unsecured debt was not accrued after the Petition Date. Contractual interest not recorded on unsecured pre-petition debt totaled $198 million for the ten months ended July 31, 2002 and $50 million for the year ended September 30, 2001. Other Financial Information Note 13 - Receivables Receivables include the following as of September 30 (in millions): SUCCESSOR | PREDECESSOR 2002 | 2001 ------------- | -------------- Notes $ 118 | $ 463 Accounts 140 | 290 Income taxes - | 36 Other 83 | 105 ------------- | -------------- Total receivables 341 | 894 Allowance for credit losses (214) | (302) ------------- | -------------- Total $ 127 | $ 592 ============= | ============== Notes The Company provided loans to privately held venture capital-backed companies in networking, optical networking, software, communications, Internet-based and other industries. The Company's loans were generally structured as equipment loans or subordinated loans. Substantially all of the loans were made by Comdisco Ventures Group. At September 30, 2002 and 2001, Comdisco Ventures group had notes receivable of approximately $117 million and $432 million, respectively. As part of a Ventures note transaction, the Company received warrants to purchase an equity interest in its customer, or a conversion option, in each case at a stated exercise price based on the price paid by other venture capitalists. Loans provide current income from interest and fees. Contractual maturities, including interest, of total note receivables as of September 30, 2002, were as follows: 2003--$101 million; 2004--$29 million; 2005--$6 million. Actual cash flows will vary from contractual maturities due to prepayments and charge-offs. Allowance The allowance for credit losses includes management's estimate of the amounts expected to be lost on specific accounts and for losses on other as of yet unidentified accounts included in receivables at September 30, 2002, including estimated losses on future non-cancelable lease rentals, net of estimated recoveries from remarketing of related leased equipment. In estimating the reserve component for unidentified losses within the receivables and lease portfolio, management relies on historical experience, adjusted for any known trends, including industry trends, in the portfolio. Changes in the allowance for credit losses (combined notes and accounts receivable) for the year ended September 30 were as follows (in millions): SUCCESSOR Comdisco Consolidated Ventures Group 2002 2002 ------------ -------------- Balance July 31, 2002 $ 266 $ 128 Provision for credit losses 4 3 Net credit losses (56) (21) ------------ -------------- Balance at end of year $ 214 $ 110 ============ ============== PREDECESSOR
Consolidated Comdisco Ventures Group ---------------------------------- ---------------------------------- 2002 2001 2000 2002 2001 2000 --------- --------- ---------- ---------- --------- ---------- Balance at beginning of year $ 302 $ 119 $ 38 $ 202 $ 95 $ 17 Provision for credit losses 149 489 141 118 365 105 Fresh-start adjustment (15) - - (15) - - Net credit losses (170) (306) (60) (177) (258) (27) --------- --------- ---------- ---------- --------- ---------- Balance at end of year (July 31, 2002 for current year) $ 266 $ 302 $ 119 $ 128 $ 202 $ 95 ========= ========= ========== ========= ========= ==========
Note 14 - Income Taxes The geographical sources of earnings (loss) from continuing operations before income taxes were as follows (in millions):
SUCCESSOR | PREDECESSOR Two | Ten months | months ended | ended Year ended September 30, 2002 | July 31, 2002 2001 2000 ------------------- | --------------- ----------- --------- United States $ (11) | (857) (354) 268 Outside United States 7 | (63) 25 68 ------------------- | --------------- ----------- --------- $ (4) | (920) (329) 336 =================== | =============== ============ =========
No income taxes have been provided for the Company's unremitted foreign earnings as management believes that available tax planning strategies will allow it to dispose of these subsidiaries in a manner in which income taxes will not be imposed. Unremitted foreign earnings of the Company were $94 million as of September 30, 2002. Income taxes (benefit) included in the consolidated statements of earnings (loss) were as follows (in millions):
SUCCESSOR | PREDECESSOR Two | Ten months | months ended | ended Year ended September 30, 2002 | July 31, 2002 2001 2000 ------------------- | --------------- ----------- --------- Continuing operations $ 4 | $ 45 $ (132) $ 120 Discontinued operations 1 | 28 (32) (182) ------------------- | --------------- ----------- --------- $ 5 | $ 73 $ (164) $ (62) =================== | =============== ============ =========
The components of the income tax provision (benefit) charged (credited) to continuing operations were as follows (in millions):
SUCCESSOR | PREDECESSOR Two | Ten months | months ended | ended Year ended September 30, 2002 | July 31, 2002 2001 2000 ------------------- | --------------- ----------- --------- Current: | Inside United States $ - | $ 2 $ (25) $ 87 Outside United States 4 | 7 18 5 ------------------- | --------------- ----------- --------- 4 | 9 (7) 92 Deferred: | Inside United States - | 36 (115) 11 Outside United States - | - (10) 17 ------------------- | --------------- ----------- --------- - | 36 (125) 28 ------------------- | --------------- ----------- --------- $ 4 | $ 45 $ (132) $ 120 =================== | =============== ============ =========
The reasons for the difference between the U.S. federal income tax rate and the effective income tax rate for earnings (loss) were as follows:
SUCCESSOR | PREDECESSOR Two | Ten months | months ended | ended Year ended September 30, 2002 | July 31, 2002 2001 2000 ------------------- | --------------- ----------- --------- | U.S. federal income | tax rate - tax (benefit) (35.0)% | (35.0)% (35.0)% 35.0% Increase (reduction) resulting from: | State income taxes, net | of U.S. federal tax benefit - | 0.1 (4.0) 3.2 Foreign income tax rate | differential 92.0 | 3.2 1.4 0.9 Non-deductible goodwill - | 9.2 - - Non-deductible legal fees 50.0 | 0.8 - - Tax effect of foreign | losses utilized - | - (0.6) (1.1) Change in valuation allowance - | 24.2 - - Other, net (7.0) | 2.4 (0.7) (2.0) ------------------- | --------------- ----------- --------- 100.0% | 4.9% (38.9)% 36.0% -================== | =============== =========== ==========
Deferred tax assets and liabilities at September 30, 2002 and 2001 were as follows (in millions): SUCCESSOR | PREDECESSOR 2002 | 2001 ---------------| ----------------- Deferred tax assets (liabilities): | | Foreign loss carryforwards $ 5 | $ 12 U.S. net operating loss | carryforwards 511 | 228 AMT credit carryforwards 74 | 113 Deferred income 24 | 50 Deferred expenses 96 | 141 Other, net 36 | 66 Lease accounting (545) | (577) Other comprehensive income - | (2) Foreign (47) | (33) --------- | --------- Gross deferred tax assets | (liabilities) 154 | (2) Less: valuation allowance (234) | (23) ---------- | --------- Net deferred tax liabilities $ (80) | (25) ========== | ========= In connection with fresh-start accounting, Comdisco, Inc.'s assets and liabilities were recorded at their respective fair market values. Deferred tax assets and liabilities were recognized for the tax effects of the differences between the fair values and the tax bases of the Company's assets and liabilities. In addition, deferred tax assets were recognized for future use of the company's net operating losses and other tax credits. To the extent that management believes the pre-emergence net deferred tax asset will more likely than not be realized, a reduction in the valuation allowance established in fresh-start accounting will be recorded. The reduction in this valuation allowance (if any) will increase additional paid-in capital. At September 30, 2002, the Company had not made such a determination. In connection with the reorganization, the Company realized a gain from the extinguishment of certain indebtedness. This gain will not be taxable since the gain resulted from the reorganization under the Bankruptcy Code. However, the Company will be required, as of the beginning of its 2003 taxable year, to reduce certain of its tax attributes. Management believes that net operating loss carryforwards will be the only tax attribute which must be reduced. The reorganization of the Company on the Effective Date constituted an ownership change under section 382 of the Internal Revenue Code and the use of any of the Company's NOLs and tax credits generated prior to the ownership change, that are not reduced pursuant to the provisions discussed above, will be subject to an overall annual limitation of approximately $18 million. For financial reporting purposes, the Company has approximately $15 million of foreign net operating loss carryforwards, most of which have no expiration date. The Company has recognized a valuation allowance of $5 million to offset this deferred tax asset. At September 30, 2002, the Company has available for U.S. federal income tax purposes, the following carryforwards (in millions): SUCCESSOR Year scheduled to expire Net operating loss ------------------------ ------------------ 2006 $ 2 2013 47 2014 22 2020 21 2021 410 2022 247 ---------- $ 749 ========== For U.S. federal income tax purposes, the Company has approximately $74 million of alternative minimum tax ("AMT") credit carryforwards available to reduce regular taxes in future years. AMT credit carryforwards do not have an expiration date. The use of the Company's alternative minimum tax credits will be subject to the section 382 limitation discussed above. The Company is currently undergoing a routine audit by the Internal Revenue Service (the "Service") for fiscal years 1996 through 2000. The Company also undergoes audits by foreign, state and local tax jurisdictions. As of September 30, 2002, no material assessments have been made by these tax authorities. Note 15 - Equity Securities Comdisco, Inc. provided financing to privately held companies, in networking, optical networking, software, communications, Internet-based and other industries through the purchase of equity securities. Substantially all of these investments were made by Comdisco Ventures group. For equity investments which are non-quoted investments, the Company's policy is to regularly review the assumptions underlying the operating performance and cash flow forecasts in assessing the carrying values. The Company identifies and records impairment losses on equity securities when events and circumstances indicate that such assets might be impaired. Included in the fresh-start accounting adjustment (see Note 3 of Notes to Consolidated Financial Statements) is $16 million related to the write-down of equity securities to fair value. For the two months ended September 30, 2002 and for the ten months ended July 31, 2002, impairments in equity securities totaled $3 million and $70 million, respectively. Impairments in equity securities totaled $129 million and $7 million during fiscal 2001 and fiscal 2000, respectively. During fiscal year 2002, certain of these investments in privately held companies became available-for-sale securities when the issuers completed initial public offerings. Ventures publicly-traded security holdings were as follows (in millions): Gross Gross unrealized unrealized Market Cost gains losses value ------- ---------- ---------- -------- SUCCESSOR September 30, 2002 $ 1 $ - $ - $ 1 - ------------------------------------------------------------------------------- PREDECESSOR September 30, 2001 $ 1 $ 1 $ - $ 2 Realized gains or losses are recorded on the trade date based upon the difference between the proceeds and the cost basis determined using the specific identification method. Changes in the valuation of available-for-sale securities are included as changes in the unrealized holding gains in accumulated other comprehensive income (loss). For the two months ended September 30, 2002, net realized gains from the sale of equity investments were immaterial. For the ten months ended July 31, 2002, net realized gains from the sale of equity investments were $2 million. Net realized gains from the sale of equity investments were $99 million and $233 million in fiscal 2001 and 2000, respectively. For the two months ended September 30, 2002, gross realized gains from the sale of equity investments were immaterial. For the ten months ended July 31, 2002, gross realized gains from the sale of equity investments were $5 million. Gross realized gains from the sale of equity securities were $101 million and $252 million in fiscal years 2001 and 2000, respectively. Net realized gains are included in other revenue in the consolidated statements of earnings (loss). The Company records the proceeds received from the sale or liquidation of warrants received in conjunction with its lease or other financings as income on the trade date. For the two months ended September 30, 2002 these gains were immaterial. For the ten months ended July 31, 2002, these gains totaled $14 million. These gains were $254 million and $215 million in fiscal 2001 and 2000, respectively. These amounts are included in other revenue in the consolidated statements of earnings (loss). Note 16 - Preferred Stock At a special meeting of stockholders on April 20, 2000, the Company's stockholders authorized the Company to amend and restate its current certificate of incorporation. The Amended and Restated Certificate of Incorporation designated 200,000 shares of the authorized and unissued shares of preferred stock as Series C Junior Participating Preferred Stock and an additional 200,000 shares of the authorized and unissued shares of preferred stock as Series D Junior Participating Preferred Stock. Both of these series were cancelled as part of the reorganization. See Note 17 for further detail of the special meeting of stockholders on April 20, 2000. As part of the Company's emergence from bankruptcy, the preferred stock was cancelled. Prior to the emergence, there were 100,000,000 authorized shares of preferred stock at $.10 par value, of which none were outstanding. Note 17 - Common Stock and Other Comprehensive Income Comdisco's Old Common Stock was cancelled on August 12, 2002. Former common shareholders are entitled to distributions of Contingent Distribution Rights under the Plan. In order to be eligible to receive any distribution of Contingent Distribution Rights, former common shareholders must properly complete a transmittal form and surrender all shares of Old Common stock to Mellon Investors Services LLC prior to August 12, 2003. Any payments to Contingent Distribution Right holders are based upon the Present Value of Distributions to Creditors as a percentage of Class C-4 Claims in accordance with the Comdisco Contingent Equity Distribution Agreement. The Company has estimated the liability for Contingent Distribution Rights to be $10 million at September 30, 2002. The accrual of this liability is recorded as an operating expense in the consolidated statement of earnings (loss). On May 2, 2001, the Board of Directors voted to suspend the payment of quarterly dividends on the Company's Old Common stock. At a special meeting of stockholders on April 20, 2000, the Old Common stockholders approved the tracking stock proposal, which authorized Comdisco, Inc. to amend and restate its current certificate of incorporation to increase the total authorized shares of common stock from 750,000,000 to 1,800,000,000 shares; authorized the Board of Directors to issue common stock in multiple series, with the initial two series of common stock being Comdisco stock and Comdisco Ventures group stock; and reclassified each outstanding share of existing common stock as one share of Comdisco stock. Both of these series were cancelled as part of the reorganization. No Comdisco Ventures stock was issued. The Company's stock share amounts for basic and diluted earnings (loss) per share calculations were as follows (in thousands):
SUCCESSOR | PREDECESSOR Two | Ten months | months Years ended ended | ended September 30, September 30, 2002 | July 31, 2002 2001 2000 ------------------- | --------------- ----------- --------- | Average common shares issued $ 4,200 | 225,555 225,366 224,259 | Average common shares held in treasury - | (74,996) (74,120) (72,374) ---------- | ---------- --------- --------- Basic common shares outstanding 4,200 | 150,559 151,246 151,885 | Stock options - | - - 9,897 ---------- | ---------- --------- --------- | Diluted common shares outstanding 4,200 | 150,559 51,246 161,782 ========== | ========== ========= =========
For the ten months ended July 31, 2002 and for the fiscal year ended 2001, options on 18,179,186 and 15,256,845 shares, respectively, were not included in the calculation of the diluted shares outstanding because their effects would be antidilutive. There are no adjustments to net earnings to common stockholders for basic and diluted earnings per share calculations for either the two months ended September 30, 2002, the ten months ended July 31, 2002 or the years ended September 30, 2001 and 2000. During fiscal 2001 and 2000, Comdisco, Inc. entered into a series of forward purchase transactions on its Old Common stock. These transactions were settled by paying cash for the forward purchase amount and receiving the underlying shares of stock. Information on these forward transactions is as follows (in millions except per share data):
SUCCESSOR | PREDECESSOR 2002 | 2001 ---- | ---- Average | forward | Average price | forward price Amount Shares per share | Amount Shares per share ------ ------ --------- | ------ ------ --------- Transaction in place at $ - - $ - | $ - - $ - September 30 | | Settlements during the fiscal - - - | 84 3 29.89 year |
Components of other comprehensive earnings (loss) consists of the following (in millions):
SUCCESSOR | PREDECESSOR | Two Ten months | months ended ended | Years Ended September 30, July 31, | September 30, | -------------------------- 2002 2002 | 2001 2000 ------------ ------------ | -------- --------- Foreign currency translation adjustments $ 4 $ 24 | $ 1 $ (64) | Unrealized gains (losses) on derivative | instruments - (2) | 4 - | Unrealized gains (losses) on securities: | | Unrealized holding gains (losses) | arising during the period - 18 | (295) 945 | Reclassification adjustment for gains | included in earnings before income taxes | (benefit) - (16) | (353) (448) ------------ ------------ | -------- --------- Net unrealized gains (losses) on securities, before | income taxes (benefit) - 2 | (648) 497 | Income taxes (benefit) - 1 | (233) 174 ------------ ------------ | -------- --------- | Net unrealized gains (losses) on securities - 1 | (415) 323 ------------ ------------ | -------- --------- | Other comprehensive income (loss) 4 23 | (410) 259 | Net earnings (loss) 224 (541) | (272) (67) ------------ ------------ | -------- --------- | Total comprehensive income (loss) $ 228 $ (518) | $ (682) $ 192 ============ ============ | ======== =========
Accumulated other comprehensive income (loss) presented below and in the accompanying balance sheets consists of the following (in millions):
Unrealized Unrealized Accumulated Foreign currency gain on gain on other translation available-for-sale derivative comprehensive SUCCESSOR adjustment securities instruments income (loss) ------------ ---------- ----------- ------------- Balance at July 31, 2002 $ - $ - $ - $ - Pretax amount 4 - - 4 Income taxes - - - - ------------ ---------- ----------- ------------- Balance at September 30, 2002 $ 4 - - 4 ============ ========== =========== ============= PREDECESSOR Balance at September 30, 1999 $ (34) $ 92 $ - $ 58 Pretax amount (64) 497 - 433 Income taxes (benefit) - 174 - 174 ------------ ---------- ----------- ------------- Balance at September 30, 2000 (98) 415 - 317 Pretax amount 1 (648) 6 (641) Income taxes (benefit) - (233) 2 (231) ------------ ---------- ----------- ------------- Balance at September 30, 2001 $ (97) $ - $ 4 $ (93) Pretax amount 24 2 (3) 23 Income taxes (benefit) - 1 (1) - Extinguishment of stockholders' equity in connection with reorganization 73 (1) (2) 70 ------------ ---------- ----------- ------------- Balance at July 31, 2002 $ - $ - $ - $ - ============ ========== =========== ============== In February 1998, the SIP Participants purchased over six million shares of Comdisco, Inc.'s common stock for approximately $109 million. Under the SIP, the SIP Participants took out full recourse, personal loans to purchase the shares. Comdisco, Inc. provided a Guaranty to the SIP Lenders. The SIP Lenders filed a proof of claim in the amount of $133 million ("SIP Guaranty Claim"). On July 29, 2002, Comdisco, Inc. filed an objection to the SIP Guaranty Claim. By this objection, Comdisco, Inc. sought an entry of an Order pursuant to U.S.C. ss.ss. 102(1), 105(a), and 502(b) and Rule 3007 of the Federal Rules of Bankruptcy Procedure, disallowing the SIP Guaranty Claim filed by the SIP Lenders and expunging the claims therein. The SIP Guaranty Claim is a Disputed Claim, which solely for Disputed Claim Reserve purposes was estimated at its face amount. Based on Federal Reserve Board interpretations and case law, the Company believes that the underlying SIP obligation of the SIP Participants to the SIP Lenders, as well as the related Guaranty violates Regulations U and X of the Federal Reserve Board and, therefore, are not enforceable. If the Company receives a favorable ruling from the bankruptcy court, the SIP Guaranty Claim will not be allowed and no obligation under the Guaranty will be borne by the bankruptcy estate of Comdisco, Inc.. The Company based on its own analysis and advice from its legal counsel, believes that it has strong arguments in support of its position. On July 30, 2002, at the Confirmation Hearing for the Plan of Reorganization, the bankruptcy court made the following finding: "Disputed Claims Reserve. The Debtors are required, pursuant to Section 10.4 of the Plan to estimate all Disputed General Unsecured Claims prior to making any distribution to the holders of such claims under the Plan in a manner to insure that an adequate reserve would be available should each Disputed Claim become an Allowed Claim. Certain claims, including the SIP claim, are not estimatable based on the information available to the Debtors and the testimony of witnesses available at the hearing and, therefore, may be reserved in their full face amount. Such reserve may not be relied upon to show that any Disputed Claim, including the SIP Lender's Claim (to which the Debtors intend to object) is either probable or estimable for any other purpose." In accordance with the Plan and as directed by the bankruptcy court, a Disputed Claims Reserve was funded with a distribution of cash, notes and stock at the time of the initial distribution to Allowed Claims. In accordance with the Plan, to the extent any Disputed Claim becomes an Allowed Claim, it will receive the same recovery as the other Allowed Claims. Comdisco Holding, as the Successor, has no liability for Disputed Claims beyond the Disputed Claims Reserve.
Note 18 - Employee Benefit Plans All stock option plans, the Employee Stock Ownership Plan, the Non-Employee Directors' stock option plan and the 1996 Deferred Fee Option Plan were cancelled effective July 31, 2002. The Company had a profit sharing plan which, together with the Employee Stock Ownership Plan (the "Plans"), covered substantially all domestic employees. Company contributions to the Plans were based on a percentage of employees' compensation. Benefits were accumulated on an individual employee basis. Comdisco, Inc.'s stock option plans provided for the granting of incentive stock options and/or nonqualified options to employees and agents to purchase shares of common stock. Additionally, under the 1999 Non-Employee Directors' Stock Option Plan, each October 1, each individual who was a Non-Employee Director during the fiscal year was automatically granted an option for 9,450 shares of the Old Common stock at the then fair market value. None were granted during fiscal year 2002. Under the 1996 Deferred Fee Option Plan, each Non-Employee Director received options for 2,898 shares of Old Common stock on October 1, 2000 at an option price of $1.00. Comdisco, Inc. applies APB Opinion No. 25 and related Interpretations in accounting for its plans. Had compensation cost for Comdisco, Inc.'s stock option plans been determined consistent with SFAS No. 123, Comdisco, Inc.'s net earnings (loss) available to common stockholders and earnings (loss) per common and common equivalent share would have been reduced to the pro forma amounts indicated below (in millions except per share data): PREDECESSOR Ten months Year ended ended September 30, July 31, ---------------- 2002 2001 2000 -------- ------- -------- Net earnings (loss) to common stockholders As reported $ (541) $ (272) $ (67) Pro Forma (546) (280) (76) Earnings (loss) per Common share: As reported-basic $ (3.59) (1.80) (.44) Pro forma-basic (3.63) (1.85) (.50) As reported-diluted (3.59) (1.80) (.41) Pro forma-diluted (3.63) (1.85) (.47) Generally, under the stock option plans, the exercise price of each option equaled the market price of the Old Common stock on the date of grant. For purposes of calculating the compensation cost consistent with SFAS 123, the fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants in fiscal 2001 and 2000, respectively: dividend yield of 1.0 percent and 1.0 percent; expected volatility of 49 percent and 40 percent; risk free interest rates of 5.51 percent and 5.26 percent; and expected lives of five years. As a result of the reorganization of the Company, all outstanding stock options were canceled effective July 31, 2002. Additional information on common shares subject to options is as follows (in thousands except weighted-average exercise price):
PREDECESSOR 2002 2001 2000 ------------------------- ------------------------- ------------------------- Weighted- Weighted- Weighted- average average average Number exercise Number exercise Number exercise of shares price of shares price of shares price ----------- --------- ---------- --------- --------- --------- Outstanding at beginning of year 18,524 $13 15,618 $12 16,977 $10 Granted - - 7,675 16 3,839 18 Exercised - - (838) 6 (4,254) 8 Forfeited (18,524) 13 (3,931) 15 (944) 10 ----------- --------- ---------- --------- --------- --------- Outstanding at the end of the year - $ - 18,524 $13 15,618 $12 =========== ========= ========== ========= ========== ========= (July 31, 2002 for current period) Options exercisable at year-end - $ - 12,478 $12 11,207 $10 =========== ========= ========== ========= ========== ========= Weighted-average fair value of options granted during the year $- $13.22 $8.35 =========== ========= ========== ========= ========== =========
Note 19 - Fair Value of Financial Instruments The estimated fair value of the Company's financial instruments are as follows (in millions):
SUCCESSOR | PREDECESSOR 2002 | 2001 ---- | ---- Assets: Carrying Fair | Carrying Fair amount value | amount value ------ ----- | ------ ----- Cash and cash equivalents $ 575 $ 575 | $ 546 $ 546 Equity securities 36 36 | 138 138 Notes receivable 118 118 | 463 463 | Liabilities not subject to compromise: | Notes payable 1,050 1,050 | 179 179 Terms notes, senior notes and discounted lease 297 297 | 1,324 1,350 rentals | | Liabilities subject to compromise: | Notes payable - - | 917 N/A Senior notes - - | 2,639 N/A | Derivative Financial instruments: | Forwards 2 2 | 2 2
Fair values were determined as follows: The carrying amounts of cash and cash equivalents, and notes payable, not subject to compromise, approximates fair value because of the short-term maturity of these instruments. Equity instruments are based on quoted market prices for available-for-sale securities, and, for non-quoted equity instruments, based on the lower of management's estimates of fair value or cost. The Company's investment in warrants of public companies were valued at the bid quotation. Notes receivable are estimated by discounting future cash flows using the current rates at which similar loans would be made to borrowers with similar business profiles. The fair value of term notes, senior notes and discounted lease rentals, not subject to compromise, was estimated based generally on quoted market prices for the same or similar instruments or on current rates offered the Company for similar debt of the same maturity. For liabilities subject to compromise, it was not practicable to estimate the fair value due to the bankruptcy filing. The fair value of financial derivative instruments was estimated by obtaining quotes from brokers. Note 20 - Quarterly Financial Data (Unaudited) Summarized quarterly financial data for the fiscal years ended September 30, 2002 and 2001, are as follows (in millions except per share data): PREDECESSOR
Quarter ended One month ---------------------------------------------------------------------------------- ended December 31, March 31, June 30, September 30, July 31, 2001 2000 2002 2001 2002 2001 2001 2002 ---------- -------- ---------- --------- --------- --------- -------------- --------- Total revenue $ 454 $ 735 $ 404 $ 774 $ 288 $ 529 $ 453 $ 99 Earnings (loss) from continuing $ (218) $ 87 $ (96) $ (12) $ (89) $ (166) $ (106) $ (562) Earnings (loss) from discontinued operations 206 (1) 2 (42) (8) 2 (36) 71 Extraordinary gain - - - - - - - 153 Cumulative effect of change in accounting principle - 2 - - - - - - ----------- -------- ---------- ---------- ---------- ---------- ------------------------- Net earnings (loss) to common stockholders $ (12) $ 88 $ (94) $ (54) $ (97) $ (164) $ (142) $ (338) =========== ======== ========== ========== ========== ========== ========================= Earnings (loss) from continuing operations- diluted $ (1.45) $ 0.55 $ (0.64) $ (0.08) $ (0.59) $ (1.09) $ (0.70) $(3.73) Earnings (loss) from discontinued operations 1.37 - 0.02 (0.27) (0.05) 0.01 (0.24) 0.46 Extraordinary gain - - - - - - - 1.02 Cumulative effect of change in accounting principle - 0.01 - - - - - - ----------- -------- ---------- ---------- ---------- ---------- ------------------------- Net earnings (loss) per common share-diluted $ (0.08) $ 0.56 $ (0.62) $ (0.35) $ (0.64) $ (1.08) $ (0.94) $(2.25) =========== ======== ========== ========== ========== ========== =========================
SUCCESSOR Two months ended September 30, 2002 ------------ Total revenue $ 170 Loss from continuing operations $ (8) Loss from discontinued operations (9) Extraordinary gain 241 ------------ Net earnings to common stockholders $ 224 ============ Loss from continuing operations--diluted $ (1.81) Loss from discontinued operations (2.20) Extraordinary gain 57.38 ------------ Net income per common share--diluted $ 53.37 ============ Note 21 - Industry Segment and Operations by Geographic Areas Following Comdisco, Inc.'s emergence from bankruptcy on August 12, 2002, the Company's operations were reorganized into four reportable business groups. These business groups are: (i) US Leasing, which includes leasing operations in the US and Canada and is managed by Comdisco, Inc.; (ii) European IT Leasing, which is managed by Comdisco Global Holdings Company, Inc.; (iii) Ventures, which is managed by Comdisco Ventures, Inc.; and (iv) the Corporate Asset Management, or CAM, group. For business segment reporting purposes, the CAM group includes various corporate assets and liabilities managed by corporate staff. The Company evaluates the performance of its operating segments based on earnings (loss) before income taxes. Intersegment sales are not significant. The information for 2001 and 2000 has been restated from the prior year's presentation in order to conform to the 2002 presentation. Summarized financial information (excluding the gain (loss) from discontinued operations, the extraordinary gain and the cumulative effect of change in accounting principle) (in millions):
SUCCESSOR Two months ended September 30, 2002 US Leasing IT Europe CAM Ventures Total - ----------------------------------- ------------ ------------ ---------- ----------- ------------ Revenues $ 79 $ 37 $ 15 $ 39 $ 170 Segment profit (loss) 21 12 ( 26) (11) (4) PREDECESSOR Ten months ended July 31, 2002 US Leasing IT Europe CAM Ventures Total - ------------------------------ -------------- ------------ ------------ ------------- ------------ Revenues $ 346 $ 200 $ 455 $ 244 $ 1,245 Segment profit (loss) (49) 25 (728) (168) (920) PREDECESSOR 2001 US Leasing IT Europe CAM Ventures Total - ---- -------------- ------------ ------------ ------------- ------------ Revenues $ 746 $ 226 $ 795 $ 724 $ 2,491 Segment profit (loss) 8 9 (196) (150) (329) PREDECESSOR 2000 US Leasing IT Europe CAM Ventures Total - ---- -------------- ------------ ------------ ------------- ------------ Revenues $ 1,465 $ 271 $ 683 $ 673 $ 3,092 Segment profit 115 12 (37) 246 336
The following table presents revenue by geographic location based on the location of the Company's local office (in millions):
SUCCESSOR | PREDECESSOR Two months ended | Ten months ended Years ended September 30, 2002 | July 31, 2002 2001 2000 ------------------- | -------------- ---- ---- | North America $ 118 | $ 851 $ 2,053 $ 2,612 Europe 43 | 274 282 345 Pacific Rim 9 | 120 156 135 ------------ | ---------- ---------- ------------ Total: $ 170 | $ 1,245 $ 2,491 $ 3,092 ============ | ========== ========== =============
The following table presents total assets by geographic location based on the location of the asset at September 30 (in millions): SUCCESSOR | PREDECESSOR 2002 | 2001 ----------- | --------- | North America $ 1,265 | 4,377 Europe 1,022 | 1,314 Pacific Rim 54 | 511 ----------- | --------- Total 2,341 | 6,202 =========== | ========= The following table presents total assets for each of the Company's reportable segments at September 30 (in millions): SUCCESSOR | PREDECESSOR 2002 | 2001 ----------- | ----------- | US Leasing $ 549 | $ 1,543 | IT Europe 797 | 792 | CAM 599 | 2,220 | Ventures 241 | 900 Assets of discontinued | operations 155 | 747 ----------- | --------- | Total $ 2,341 | $ 6,202 =========== | ========= ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III -------- ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Directors Ronald C. Mishler (Age 42 - Director since August 2002) Mr. Mishler was appointed Chairman, Chief Executive Officer and President of Comdisco, Inc. in August 2002 and, pursuant to the Plan, now holds those same positions with the Company. He had been serving as senior vice president and chief financial officer since September 2001. Mr. Mishler joined Comdisco, Inc. in July 2001 as senior vice president and treasurer. Prior to working for Comdisco, Inc. he served as senior vice president and treasurer of Old Kent Financial Corporation from 1998 to 2001. From 1996 to 1998 he was vice president and treasurer of USF&G Corporation. From 1984 to 1996, he held various financial analysis and management positions at Heller International Corporation. Jeffrey A. Brodsky (Age 44 - Director since August 2002) Mr. Brodsky is a Managing Director of Quest Turnaround Advisors, L.L.C. and Chairman and CEO of NTL Europe, Inc. Prior to Quest, Mr. Brodsky provided his services as an independent crisis management consultant and worked with Jay Alix & Associates and Alvarez & Marsal, Inc. Previously, Mr. Brodsky was a member of Senior Management of Integrated Resources, Inc., responsible for Integrated's equipment leasing business, leverage buyout business and was actively involved in all aspects of Integrated's reorganization under Chapter 11. Robert M. Chefitz (Age 43 - Director since August 2002) Mr. Chefitz has been a General Partner with NJTC Venture Fund since 2002. Previously Mr. Chefitz was General Partner of Apax Partners, Managing Director at Patricof and Co. Ventures and Senior Associate at Golder Thoma Cressey and Company. Mr. Chefitz is a Director of World Links, a philanthropic, non-governmental agency and President of New York Venture Capital Forum. William A. McIntosh (Age 63 - Director since August 2002) Mr. McIntosh is an adjunct faculty member at Howard University in Washington, DC and a consultant to financial institutions. Previously Mr. McIntosh was a General Partner and a member of the Executive Committee of Salomon Brothers. He held various positions during this 34-year career with the firm including US Fixed Income Division Head and National Sales Manager. He is a member of the Board of Directors of MGIC Investment Corp., The Mason Street Mutual Funds, Fairfield University, the Archdiocesan Finance Council of Chicago and the Big Shoulders Fund in Chicago. Randolph I. Thornton (Age 57 - Director since August 2002) Mr. Thornton is a Managing Director and Senior Credit Officer of Citigroup where he has managed corporate reorganizations and has held various positions for over thirty years. Mr. Thornton has served as a past member of the Board of Directors of Mohasco Corporation and Edison Brothers Stores. Executive Officers The following table sets forth certain information with respect to the executive officers of the Company:
Name Age Position - ---- --- -------- Ronald C. Mishler 42 Chairman, Chief Executive Officer and President; Chief Executive Officer and President of Comdisco Domestic Holding Company, Inc., a direct wholly-owned subsidiary of Comdisco, Inc. Robert E. T. Lackey 54 Executive Vice President, Chief Legal Officer and Secretary; Chief Executive Officer and President of Comdisco Ventures, Inc., a direct wholly-owned subsidiary of Comdisco, Inc. Nazneen Razi 49 Executive Vice President and Chief Administrative Officer Gregory D. Sabatello 42 Executive Vice President and Chief Information Officer Francis J. Cirone 44 Executive Vice President; Chief Executive Officer and President of Comdisco, Inc., a direct wholly-owned subsidiary of Comdisco Holding John R. McNally, Jr. 42 Executive Vice President Robert E. Koe 57 Executive Vice President; Chief Executive Officer and President of Comdisco Global Holding Company, Inc., a direct wholly-owned subsidiary of Comdisco Holding David S. Reynolds 49 Senior Vice President and Controller Caroline Walters 42 Senior Vice President and Treasurer Lloyd Cochran 33 Senior Vice President, Financial Planning and Analysis
Mr. Mishler also is a director of the Company. Please refer to the "Directors" section immediately above for his biographical information. Robert E. T. Lackey Robert E. T. Lackey was named Executive Vice President, Chief Legal Officer and Secretary of the Company in August 2002. In August 2002, he was named Executive Vice President of Comdisco, Inc. He joined Comdisco in June 2001 as senior vice president, chief legal officer and secretary. Mr. Lackey served as vice president, secretary and general counsel of Burns International Services Corporation, since 1997. From 1991 to 1995, he was the vice president, secretary and general counsel for Transamerica Commercial Finance Corporation and, from 1985 to 1991, he worked in various legal and management positions for Heller Financial, Inc. Mr. Lackey also serves as the Chief Executive Officer and President of Comdisco Ventures, Inc., a direct wholly-owned subsidiary of Comdisco, Inc. Nazneen Razi Nazneen Razi was promoted to Executive Vice President and Chief Administrative Officer of the Company in April 2002. She joined Comdisco, Inc. as Senior Vice President, Human Resources in November 2000. She previously held various positions within CNA Insurance Companies, including senior vice president and senior human resources officer for CNA Risk Management. Gregory D. Sabatello Gregory D. Sabatello was promoted to Executive Vice President of the Company and retained his position of Chief Information officer in April 2002. He had been Senior Vice President since October 1998 and Chief Information Officer since October 1997. He was Vice President of Comdisco from July 1994 through November 1998 and Comdisco's Business Systems Manager from October 1993 through July 1994. Francis J. Cirone Francis J. Cirone was named Executive Vice President of the Company in August 2002. He holds the position of Chief Executive Officer and President of Comdisco, Inc. since August 2002 and is responsible for leading the US Leasing business. Prior to this assignment, Mr. Cirone was CEO and President of Comdisco's Ventures Division. Mr. Cirone joined Comdisco, Inc. in 1984, performing various corporate finance management roles for the Company's US, European and Pacific Rim operations. Subsequently, he served as Senior Vice President of IT Leasing and Market Development and as Group President of Comdisco's Telecommunications and Laboratory and Scientific business groups. Before joining Comdisco, Inc., he worked in public accounting for Arthur Young & Co. John R. McNally, Jr. John R. McNally was named Executive Vice President of the Company in August 2002. He has held the position of Senior Vice President and President of the CAM group of Comdisco, Inc. since April 2002. Mr. McNally has also been an Executive Vice President of Comdisco Global Holding Company, Inc., a wholly-owned subsidiary of the Company, and of Comdisco Domestic Holding Company, Inc. and Comdisco Ventures, Inc., both wholly-owned subsidiaries of Comdisco, Inc., since August 2002. Mr. McNally joined Comdisco in 1988 and has held various positions in Comdisco's Tax Department and Leasing Operations. Before coming to Comdisco, he worked at Amoco Corporation from 1983 to 1988. Robert E. Koe Robert E. Koe has served as the Executive Vice President of the Company since August 2002. In March 2002, he became the President and Chief Executive Officer, Comdisco Europe for Comdisco, Inc. Before joining Comdisco, Mr. Koe served as Managing Director, International Operations, for Ocwen Financial Corporation, where he had previously served as Managing Director from July 1996 to May 1998. He has been a Director of Ocwen Federal Bank FSB since January 1994. From 1990 to 1996, Mr. Koe was Chairman, President and Chief Executive Officer of United States Leather, Inc. ("USL"). Prior to joining USL, Mr. Koe was Vice Chairman of Heller Financial, Inc. and had served as a member of the board of its parent company, Heller International Corp., as well as Heller Overseas Corp. Mr. Koe also serves as the Chief Executive Officer and President of Comdisco Global Holding Company, Inc., a direct wholly-owned subsidiary of the Company. David S. Reynolds David S. Reynolds was appointed Senior Vice President and Controller of the Company in August 2002. He also holds the position of Controller for Comdisco Global Holding Company, Inc., a wholly-owned subsidiary of Comdisco Holding Company, Inc. and for Comdisco Domestic Holding Company, Inc., a wholly-owned subsidiary of Comdisco, Inc. Mr. Reynolds also serves as the Senior Vice President and Controller of Comdisco, Inc. Caroline Walters Caroline Walters was appointed Senior Vice President and Treasurer of the Company in August 2002. She has also served in that position with Comdisco, Inc. and as Treasurer of Comdisco Global Holding Company Inc. since August 2002; both are wholly-owned subsidiaries of the Company. She is also the Treasurer of Comdisco Ventures, Inc., a wholly-owned subsidiary of Comdisco, Inc. Caroline Walters joined the Company in 1986 and was involved in the development of the Treasury department. Prior to joining Comdisco, she was Director of Communications for Rayan Inc. and a high school teacher. Lloyd Cochran Lloyd Cochran was named Senior Vice President of the Company in August 2002 and has led the Financial Planning and Analysis department since January 2002. He also holds that position with Comdisco, Inc., a wholly-owned subsidiary of the Company. Mr. Cochran joined Comdisco in September 1999 as Vice President of Finance for Comdisco Healthcare Group. Prior to working for Comdisco, he worked in public accounting from 1991 to 1999, most recently for KPMG from 1994 to 1999 where he served in various positions, including senior manager from 1997 to 1999. Directors, Executive Officers, and Greater-than-10 percent Stockholders Compliance with Section 16(a) Beneficial Ownership Reporting in Fiscal 2002 Section 16(a) of the Securities and Exchange Act of 1934 requires our directors, certain officers and greater-than-10 percent stockholders to file reports of their initial ownership of our Common Stock and any changes in that ownership with the SEC. Based solely on our review of copies of the reports filed with the SEC and on written representations of our directors and officers, we believe all persons subject to Section 16(a) reporting filed the required reports on time in fiscal year 2002. ITEM 11. EXECUTIVE COMPENSATION Summary Compensation Table This table shows the compensation paid to (i) Ronald C. Mishler, our Chairman, Chief Executive Officer and President, (ii) our four other most highly compensated executive officers serving as of September 30, 2002, (iii) Norman P. Blake, Jr., who served as Chairman and Chief Executive Officer from February 2001 through August 2002, (iv) Michael A. Fazio, who served as President, Chief Operating Officer and Chief Executive Officer Europe from September 2001 through February 2002 and (v) Michael F. Herman, who served as Senior Vice President from January 1996 through February 2002. The persons named in this table and in this section are referred to as the "named executive officers."
Annual Compensation Long-Term Compensation ------------------------------------- ------------------------- Awards Payouts ------------ ------------ Securities Other Underlying Long-term Name and Principal Annual Options Incentive All Other Position Year Salary Bonus Compensation (shares) Payouts Compensation - -------------------- ------ ---------- ---------- ------------ ---------- --------- ------------ Ronald C. Mishler 2002 343,750 545,000 (1) 5,500 (3) - 1,635 (7) Chairman, Chief 2001 58,814 192,500 1,323 (3) - - - Executive Officer, 2000 - - - - - - President Francis J. Cirone 2002 309,583 363,750 (2) 3,400 (3) - 211,846 (8) Executive Vice 2001 239,583 386,250 4,800 (3) - - 233,910 (9) President 2000 176,875 275,000 1,400 (3) - - 6,289 (7) Robert E. T. Lackey 2002 288,542 410,000 (1) - - 635 (7) Executive Vice 2001 67,868 160,000 - - - - President, Chief 2000 - - - - - - Legal Officer and Secretary Gregory D. Sabatello 2002 236,458 505,625 (2) - - 271,847 (10) Executive Vice 2001 224,375 228,750 - 25,000 - 201,660 (11) President and Chief 2000 209,167 110,000 - 23,809 - 6,289 (7) Information Officer John R. McNally, Jr. 2002 215,048 335,000 (1) - - 106,847 (12) Executive Vice 2001 131,250 65,000 267 (4) - - 116,410 (13) President 2000 120,000 105,000 3,816 (4) - - 6,289 (7) Norman P. Blake, Jr. 2002 695,063 3,054,314 297,538 (5) - - 4,200,776 (14) Chairman and Chief 2001 384,551 2,000,000 116,081 (6) - - 34 (7) Executive Officer 2000 - - - - - - Michael A. Fazio 2002 246,914 248,265 - - - 1,000,000 (15) President, Chief 2001 96,794 250,000 - - - 500,000 Operating Officer 2000 - - - - - - and Chief Executive Officer Europe Michael F. Herman 2002 191,537 - 1,892 (3) - - 880,000 (16) Senior Vice 2001 342,375 366,000 4,800 (3) 150,000 - 699,410 (17) President 2000 217,333 385,150 4,800 (3) 47,833 53,150 6,289 (7)
(1) Includes quarterly amounts under the annual incentive plans, commission plans and the chairman's discretionary fund plans which were in place prior to April 1, 2002. Also includes amounts under the Semiannual Bonus Plan component of the Management Incentive Plan (as described below in the section entitled Bankruptcy Court-Approved Compensation Plans) for the period April 1, 2002 through September 30, 2002. Under the terms and conditions of the Semiannual Bonus Plan, participants were paid half their earned amount for the period and half was deferred until job elimination. Deferred payments will be forfeited if the participant voluntarily resigns or is terminated for cause. (2) Includes quarterly amounts under the annual incentive plans, commission plans and the chairman's discretionary fund plans which were in place prior to April 1, 2002. Also includes amounts under the Semiannual Bonus Plan component of the Management Incentive Plan (as described below in the section entitled Bankruptcy Court-Approved Compensation Plans) for the period April 1, 2002 through September 30, 2002. As approved by the bankruptcy court and described in the terms and conditions of the SIP Relief program described in Item 1, above, participants were paid half their earned amount for the period. The remaining half will be deferred until job elimination and applied to the balance of their SIP payment obligation. Deferred amounts will be forfeited and not applied to the balance of SIP payment obligation if the participant voluntarily resigns or is terminated for cause. (3) Amounts reflect car allowance payments. (4) Amounts include taxable income from Employee Stock Purchase Plan. (5) Amount reflects payments made per employment contract for personal use of aviation services paid for by the Company for fiscal 2001 and fiscal 2002. The amounts also reflect tax gross-up payments with respect to provision of such aviation/transportation services. (6) Amount reflects a one-time payment for the reimbursement of relocation costs. (7) Amounts include contributions by the Company to the 401(k) Retirement Plan for the benefit of the named executive officer. (8) Includes $210,000 in payments made under the Special Management Incentive Plan and Key Performance Award Plan, which were cash bonus plans designed to aid the company in achieving specifically identified business objectives for the period from May 2001 through April 2002 and $1,846 in contributions made by the Company to Mr. Cirone's 401(k) Retirement Plan. (9) Includes $222,500 in payments made under the Special Management Incentive Plan and Key Performance Award Plan, which were cash bonus plans designed to aid the company in achieving specifically identified business objectives for the period from May 2001 through April 2002 and $1,410 in contributions made by the Company to Mr. Cirone's 401(k) Retirement Plan. (10) Includes $270,000 in payments made under the Special Management Incentive Plan and Key Performance Award Plan, which were cash bonus plans designed to aid the company in achieving specifically identified business objectives for the period from May 2001 through April 2002 and $1,847 in contributions made by the Company to Mr. Sabatello's 401(k) Retirement Plan. (11) Includes $200,250 in payments made under the Special Management Incentive Plan and Key Performance Award Plan, which were cash bonus plans designed to aid the company in achieving specifically identified business objectives for the period from May 2001 through April 2002 and $1,410 in contributions made by the Company to Mr. Sabatello's 401(k) Retirement Plan. (12) Includes $105,000 in payments made under the Special Management Incentive Plan and Key Performance Award Plan, which were cash bonus plans designed to aid the company in achieving specifically identified business objectives for the period from May 2001 through April 2002 and $1,847 in contributions made by the Company to Mr. McNally's 401(k) Retirement Plan. (13) Includes $115,000 in payments made under the Special Management Incentive Plan and Key Performance Award Plan, which were cash bonus plans designed to aid the company in achieving specifically identified business objectives for the period from May 2001 through April 2002 and $1,410 in contributions made by the Company to Mr. McNally's 401(k) Retirement Plan. (14) Includes $4,200,000 paid as a one time severance payment. See information on Employment Contracts. Also includes $776 in contributions made by the Company to Mr. Blake's 401(k) Retirement Plan. (15) Amount includes a one time severance payment. See information on Employment Contracts. (16) Amount reflects a one time severance payment made upon job elimination according to the bankruptcy court approved Executive Severance Plan. (17) Includes $698,000 in payments made under the Special Management Incentive Plan and Key Performance Award Plan, which were cash bonus plans designed to aid the company in achieving specifically identified business objectives for the period from May 2001 through April 2002 and $1,410 in contributions made by the Company to Mr. Herman's 401(k) Retirement Plan. Option/SAR Grants/Exercises in the Last Fiscal Year No stock options or stock appreciation rights ("SARs") were outstanding nor were any granted to or exercised by the named executive officers in fiscal 2002. The Company does not plan to issue any options or SARs in the foreseeable future. Aggregated Option/SAR Exercise and Fiscal Year-End Options/SAR Values No stock options or SARs were outstanding as of September 30, 2002. The Company does not plan to issue any options or SARs in the foreseeable future. Bankruptcy Court-Approved Compensation Plans: Management Incentive and Stay Bonus Plans In order to maximize recoveries under the Plan, it is essential that critical employees be retained and remain motivated to execute the Company's post-emergence run-off strategies. Specifically, management and the Board of Directors of Comdisco, Inc. (in conjunction with the statutory committees) believed that value can be maximized in connection with the run-off or sale of various segments of the business by leveraging the long-standing relationships that Comdisco's current employees have in the marketplace. Thus, prior to emergence from bankruptcy, Comdisco developed a comprehensive compensation program that includes the Management Incentive Plan (the "MIP"), which is designed to retain key employees and give them incentive to maximize the value of the assets; and the Stay Bonus Plan, which is designed to retain essential support and professional staff. These compensation plans were heavily negotiated with the Creditors' Committee and approved by the bankruptcy court on June 18, 2002, with a retroactive effective date of April 1, 2002. (The MIP and Stay Bonus plans comprise the "Compensation Plans," which are more fully described in Exhibits 10.1, 10.2 and 10.3, filed herewith.) For fiscal 2002, participants in the MIP earned $6.5 million in non-base earnings, and participants in the Stay Bonus Plan earned $5.0 million in non-base earnings. These plans are described below. The Company's MIP covers key managers and employees directly responsible for the overall direction of a particular business unit and the results achieved within that business unit. Additionally, the MIP covers key corporate employees whose services are required to facilitate business operations and to administer claims and related bankruptcy matters. The MIP replaces any prior bonus/incentive/commission compensation programs for which such employees may have been eligible. Employees who voluntarily terminate their employment prior to their respective payment dates under the MIP or who are terminated for cause are not eligible for any payments from these plans that have not already been paid, with the exception of any payments with respect to previously approved retention programs and payments from the previously approved chairman's discretionary fund. The MIP is tailored to provide appropriate levels of compensation to key employees in each of the Company's business units - US Leasing, European IT Leasing, Ventures and CAM - as well as at the corporate level. While the award opportunities differ for each of these units, the MIP as a whole is intended to provide adequate compensation for retention of key employees within a unit as that unit moves toward its post-emergence business targets and to provide additional performance-based reward opportunities if those targets are exceeded. The MIP establishes varying levels of incentive compensation depending upon whether a given business unit reaches its "threshold target" or "business plan target." A threshold target and a higher business plan target have been established for each of the business units. For purposes of measuring achievement relative to threshold or plan, cash flows will be discounted using rates specified for each business unit. Each of the business unit's management teams participate in the MIP. The MIP includes two components: Semiannual Performance Bonuses ("SAB") and Upside Sharing opportunities for specified employees. For US Leasing, there are 32 participants in the SAB component with a total maximum cost of approximately $9.0 million; and there are 22 participants in the Upside Sharing component with a $10.7 million incentive sharing pool upon reaching plan target recoveries. For Ventures, there are 25 participants in the SAB component with a total maximum cost of approximately $4.0 million; and there are 25 participants in the Upside Sharing component with a $5.2 million incentive sharing pool upon reaching plan target recoveries. For CAM group, there are 5 participants in the SAB component with a total maximum cost of approximately $1.4 million; there are 5 participants in the Upside Sharing component with a $1.2 million incentive sharing pool upon reaching plan target recoveries. For Consolidated Corporate, there are 17 participants in the SAB component with a total maximum cost of approximately $9.9 million; 2 participants in the Upside Sharing component with a $1.6 million incentive sharing pool upon reaching plan target recoveries; and 8 participants in a $0.6 million Upside Sharing component based on reducing off-balance sheet claims and tax claims below a certain threshold. The MIP for European IT Leasing has three components: SAB, core country (Germany and France) portfolio sale/liquidation bonuses and non-core country portfolio sale/liquidation bonuses. There are 2 participants in the MIP plans for European IT Leasing with a total maximum cost of approximately $1.7 million. The Stay Bonus Plan is a retention program which covered approximately 382 U.S. employees and is designed to retain essential support and professional personnel who assist managers and key employees most directly responsible for the success of the Plan. Eligible participants under this compensation plan will accrue one week's salary for each two weeks of work after April 1, 2002. One-half of such accrued benefits will be paid in semiannual installments to be paid each year on or about May 15 and November 15 (with the first such payment made on November 15, 2002). The remaining one-half will be paid upon job termination other than for cause or voluntary resignation. The total cost of the Stay Bonus Plan is expected to be approximately $18.5 million. Employees eligible for the Stay Bonus Plan are not eligible to participate in the MIP. The Stay Bonus Plan for U.S. employees replaces any prior bonus/incentive/commission compensation programs for which such employees may have been eligible, with the exception of any payments with respect to previously approved retention programs and payments from previously approved and made from the chairman's discretionary fund. Long-Term Incentive Plans The table below contains information on the Upside Sharing plan for the named executive officers:
Performance Estimated Future Payouts Under Number Of or Other Non-Stock Price-Based Plans (1) Shares, Units Period Until ------------------------------------------------------- or Other Maturation 10% Above Name Rights Or Payout Threshold Target Target Maximum ---- ------------ ---------- --------- ------ ---------- ------- Ronald C. Mishler - - - $900,000 $2,100,000 - Francis J. Cirone - - - 845,000 1,885,000 - Robert E. T. Lackey - - - 418,663 1,217,811 - Gregory D. Sabatello - - - - - - John R. McNally, Jr. - - - 261,192 602,592 - Norman P. Blake, Jr. - - - - - - Michael A. Fazio - - - - - - Michael F. Herman - - - - - -
(1) There are no maximum payouts under the Upside Sharing plan component of the MIP (as more fully described in Exhibits 10.1, 10.2 and 10.3 "Compensation Plans" filed herewith). The Upside Sharing plan includes pre-established present value recovery Threshold and Targets, each defined in the Compensation Plans, for each business unit and on a consolidated corporate basis. No payments are made in the Upside Sharing plan until the applicable Threshold is exceeded. Amounts reflected are net of any applicable severance payment amount as described in the Compensation Plans. Directors' Compensation Employee directors receive no additional compensation for serving on the board of directors or its committees. Non-employee directors are paid a quarterly retainer of $6,000, a board meeting fee of $2,000 plus expenses, and a committee meeting fee of $1,000 plus expenses if the committee meeting is not held on the same day as a board of directors meeting. Directors are reimbursed for customary and usual travel expenses. In fiscal 2002 the Board of Directors of Comdisco, Inc. met thirty-four times and the Board of Directors of Comdisco Holding Company, Inc. met five times. Employment Contracts and Termination of Employment and Change-In-Control Arrangements Norman P. Blake, Jr. On February 27, 2001, Comdisco, Inc. entered into an agreement to employ Mr. Blake as the Company's Chairman of the Board of Directors, President and Chief Executive Officer for a period of three years with automatic one-year extensions unless either party gives notice of non-renewal. The agreement provided for an annual base salary of $700,000 with annual reviews by the Board of Directors to determine if increases were appropriate; annual bonuses of up to a maximum of 200 percent of base salary based on performance goals established by the Board of Directors, and the grant of stock options for 1,006,500 shares on the commencement of employment and for 500,000 shares on the first and second anniversaries of Mr. Blake's employment with the Company. Mr. Blake's employment agreement provided for the use of aviation services for commuting to his residence in Carmel, Indiana. The agreement also provided Mr. Blake reimbursement of relocation costs associated with his move from his prior residence in Colorado Springs, Colorado to his residence in Carmel, Indiana. Mr. Blake's employment agreement was amended on April 13, 2001 and again on June 4, 2001. Under the amended agreement, in lieu of an annual bonus for 2001, Mr. Blake received a lump sum cash payment of $2 million that he was required to repay to the Company if he voluntarily terminated employment with the Company without good reason or if his employment with the Company was terminated for cause, in either case before the earlier of July 31, 2001 or the occurrence of one of a number of specific strategic transactions. The April 13, 2001 amendment also provided for the immediate grant of the stock options that were scheduled to have been granted on the first and second anniversaries of employment under the original agreement. However, the June 4, 2001 amendment provided that, in exchange for the cancellation of all stock options granted to Mr. Blake prior to June 4, 2001, and any stock options to be awarded to him by virtue of the original terms of his employment agreement, the Company would make certain contributions to foundations and charities that Mr. Blake specified. The amount of the contributions was to be based on the degree to which Mr. Blake achieved specified and objective financial goals relating to the sale of the assets of the Company's Services and US Leasing and European IT Leasing operations and was not to exceed a total of $9.6 million. In addition, Mr. Blake was to receive an equity incentive equal in value to 2 percent of the equity value remaining or created for the Company's current stockholders upon the Company's emergence from bankruptcy under Chapter 11 of the U.S. Bankruptcy Code or liquidation, whichever occurred first. The value of the equity incentive was to be based upon the value of any assets allocated or remaining to the current shareholders in connection with a plan of reorganization or liquidation, as determined by the bankruptcy court. This equity incentive was to be paid to Mr. Blake either in cash or in kind, at the Company's election. Finally, the June 4, 2001 amendment required the Company to issue a $5 million letter of credit to secure Mr. Blake's rights to payments under his employment agreement. Notwithstanding the express provisions of Mr. Blake's employment agreement, pursuant to a March 14, 2002 order of the United States District Court for the Northern District of Illinois (Eastern Division), docket number 01-C-7255, the total maximum compensation that Mr. Blake was permitted to receive under both the incentive and severance provisions of his employment agreement was capped at $7.25 million in the aggregate. In the event that Mr. Blake was deemed to be discharged without cause or terminated employment with good reason (as defined in his employment agreement), he was entitled to receive a lump sum payment equal to his salary and certain specified annual bonus payments that he would be deemed to have received if he had remained employed by the Company until the later of the third anniversary of his commencement of employment or the second anniversary of the date his employment was terminated. However, if Mr. Blake was deemed to be discharged without cause in anticipation of a change in control, or discharged without cause, or constructively discharged, within two years following a change in control, he was entitled to a lump sum payment equal to the salary and specified annual bonus payments that he would be deemed to have received for the three years following his date of termination. In addition, to the extent that any payments made in connection with a change in control of the Company would be subject to certain excise taxes, the Company was to make an additional payment to Mr. Blake to offset the effect of those excise taxes. In order to receive these post-termination benefits, Mr. Blake signed a release of claims against the Company. Mr. Blake also agreed to certain confidentiality, non-disclosure, non-competition and non-solicitation provisions. Michael Fazio On July 5, 2001, Comdisco, Inc. entered into an agreement to employ Mr. Fazio in the position of Executive Vice President and Chief Financial Officer, or a more senior position, for a period of two years. Under the terms of the agreement, Mr. Fazio also served on Comdisco, Inc.'s Board of Directors. The employment agreement provided for an annual base salary of at least $500,000 and a signing bonus of $500,000. The agreement also provided that Mr. Fazio was eligible for an annual bonus of up to 100 percent of his annual salary based on performance goals established by the Comdisco, Inc.'s Board of Directors. However, for his first year of employment, he was entitled to a guaranteed bonus of 100 percent of his base salary, which would have offset any annual bonus payments for the 2001 and 2002 fiscal years and which would have been payable in quarterly installments beginning on September 30, 2001 provided he was employed on the installment payment dates. Mr. Fazio was eligible for a special bonus of $1 million if Comdisco, Inc.'s Chapter 11 plan of reorganization provided for the emergence and reorganization of at least one of the principal businesses in which Comdisco, Inc. was engaged on the date of his employment agreement and Mr. Fazio remained in the employ of the Company and met reasonable performance criteria established by the Chief Executive Officer and Comdisco Inc.'s Board of Directors. In the event that Mr. Fazio was discharged without cause or terminated employment with good reason (as defined in his employment agreement), he was entitled to receive a lump sum payment equal to the salary and certain specified annual bonus payments that he would be deemed to have received if he had remained employed by Comdisco, Inc. until the one year anniversary of his date of termination. In order to receive these post-termination benefits, Mr. Fazio signed a release of claims against Comdisco, Inc. Mr. Fazio also agreed to certain confidentiality, non-disclosure, non-competition, and non-solicitation provisions. Gregory D. Sabatello The Company's Management Incentive Plan provides for an employment agreement with Mr. Gregory D. Sabatello. In addition to being eligible for the Management Incentive Plan beginning April 1, 2002, Mr. Sabatello's employment agreement includes, without limitation, the following: (a) participation in the semiannual bonus plan component of the MIP (at three times his base salary each year or $750,000 annually); (b) a guaranteed two-year term; and (c) if terminated prior to April 1, 2004, receipt of semiannual bonus and base salary payment for the period between the termination date and April 1, 2004. Mr. Sabatello's employment agreement was executed upon his acceptance of the SIP Relief program described in Item 1. Additional Information with Respect to Compensation Committee Interlocks and Insider Participation in Compensation Decisions Mr. McIntosh, Mr. Chefitz, and Mr. Thornton are the three members of the Compensation Committee of the board. Mr. McIntosh is the Chairperson of the Compensation Committee. No member of the Compensation Committee was at any time an officer or employee of the Company or its subsidiaries. There is no director or executive officer who is, or during the last fiscal year was, a member of any other company, partnership or other entity's compensation committee or similar committee or otherwise was involved in making decisions regarding compensation of other entities' executives. Randolph I. Thornton, who has been a member of the Company's Board of Directors since August 2002, also is a Managing Director within the Institutional Recovery Management Department within Citigroup, Inc. ("Citigroup"). Citigroup was a creditor of Comdisco, Inc. and Mr. Thornton was a co-chair of the Creditors' Committee. On September 30, 2002, as part of the initial distribution to holders of allowed Class C-4 Claims conducted in accordance with the Plan, Citigroup received $35.3 million in cash, $6.3 million and $10.3 million of Senior Notes and Subordinated Notes, respectively, and approximately 66,521 shares of the Company's Common Stock. Since that time, Citigroup has adopted certain procedures to govern disclosure by Mr. Thornton of the Company's confidential information. The Compensation Committee has met twice, on November 11, 2002 and December 12, 2002, since the Board of Directors of the Company was formed in August 2002. The purpose of the Compensation Committee is to ensure that the senior executives, the management and employees of the Company and its wholly-owned subsidiaries are compensated effectively in a manner consistent with the stated compensation strategy of the Company in furtherance of its Plan of Reorganization and requirements of the appropriate regulatory bodies. The committee's charter states that the Compensation Committee shall be composed of at least three independent directors. The members are designated annually by the Board of Directors upon the recommendations of the Chairman of the Board. The duties and responsibilities of the committee include (but are not limited to): (a) reviewing the Company's compensation strategy, (b) reviewing and determining the individual elements of total compensation for the CEO, (c) reviewing and approving appropriate discretionary bonus recommendations by the CEO for managers and officers, (d) reviewing and approving disposition of forfeited monies as a result of voluntary resignation or for-cause termination for the Management Incentive and Stay Bonus Plans, and (e) reviewing employee benefit plans of the Company. The Compensation Committee approved the compensation plan for the Chief Executive Officer. As Chief Executive Officer, Ronald C. Mishler had a compensation package for fiscal 2002 which was negotiated with the Creditors' Committee and approved by the bankruptcy court. Mr. Mishler's compensation package provided for an annual base salary of $400,000. Mr. Mishler is also eligible for the MIP. The semiannual bonus component of the MIP is 0.75 times his base salary (or $600,000 annually); one-half of the semiannual bonus is paid every 6 months, and one-half is paid upon job termination other than for cause or voluntary resignation. In fiscal 2002, Mr. Mishler received one payment of $150,000 under this component of the MIP; $150,000 was deferred until job termination under the terms and conditions of the plan. The other MIP component in which Mr. Mishler participates is a consolidated corporate Upside Sharing plan. Upon achievement of plan target, Mr. Mishler is eligible to receive a payment of $1.1 million, less any applicable severance payment amount as described in the Compensation Plans (Exhibits 10.1, 10.2 and 10.3 filed herewith). The Board of Directors engaged independent legal counsel to assist the Board in determining that the Compensation Plans complied with the Creditors' Committee approval and the bankruptcy court approval. All open issues identified in this summary were discussed with and satisfactorily resolved by management, the Compensation Committee and the Board of Directors. The Board of Directors also engaged KPMG to assist the Company in evaluating the amounts accrued, paid and deferred by Comdisco in accordance with the provisions of the MIP and the Stay Bonus Plan for each semiannual period. KPMG will apply agreed-upon procedures performed in accordance with standards established by the American Institute of Certified Public Accountants in their evaluations. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Common Stock Owned by Certain Beneficial Owners The following table reflects the number of shares of Common Stock beneficially owned on January 6, 2003 by all persons whom we know to be beneficial owners of 5 percent or more of our Common Stock, based on a review of public filings. Stockholders Owning at Least 5 percent of the Company's Common Stock Shares Beneficially Percent of Name Owned Class Berkshire Hathaway, Inc. (1) 1,452,548 34.58% 1440 Kiewit Plaza Omaha, Nebraska 68131 Angelo, Gordon & Co., LP (2) 257,968 6.14% 245 Park Avenue New York, New York 10167 Davidson Kemper Partners (3) 377,594 9.00% 883 Third Avenue, Suite 3300 New York, New York 1002 (1) The information with respect to 1,452,548 shares of Common Stock beneficially owned by Berkshire Hathaway, Inc. is based on a Report on Schedule 13D dated October 1, 2002 and filed with the SEC on October 11, 2002, as amended by a Report on Schedule 13D dated October 1, 2002 and filed with the SEC on October 21, 2002. (2) The information with respect to 257,968 shares of Common Stock beneficially owned by Angelo, Gordon & Co., LP is based on a Report on Schedule 13G dated October 1, 2002 and filed with the SEC on November 19, 2002. (3) The information with respect to 377,594 shares of Common Stock beneficially owned by Davidson Kempner Partners is based on a Report on Schedule 13G dated October 1, 2002 and filed with the SEC on October 11, 2002. Common Stock Owned by Directors and Executive Officers The following table reflects the number of shares of Common Stock beneficially owned on January 6, 2003 by (i) each director of the Company, (ii) each of the executive officers as set forth above in the Summary Compensation Table, (iii) all directors and executive officers as set forth above in the Summary Compensation Table as a group and (iv) all directors and current executive officers as a group. The address of each director and executive officer is c/o Comdisco Holding Company, Inc., 6111 North River Road, Rosemont, Illinois 60018.
Common Stock Owned by Directors and Executive Officers Shares Beneficially Owned on Name January 6, 2003 Percent of Class Ronald C. Mishler 0 * Jeffrey A. Brodsky 0 * Robert M. Chefitz 0 * William A. McIntosh 0 * Randolph I. Thornton 0 * Francis J. Cirone 0 (1) * Robert E. T. Lackey 0 (2) * Gregory J. Sabatello 0 (3) * John R. McNally 0 (4) * Norman P. Blake, Jr. 0 * Michael A. Fazio 0 * Michael F. Herman 0 (5) * All Directors and Current Named 0 (6) * Executive Officers as a Group: All Directors and Current 0 (7) * Executive Officers as a Group: -------------------- * Indicates holdings of less than one percent
(1) Does not include 41,368 Contingent Distribution Rights beneficially owned by Mr. Cirone. (2) Does not include 500 Contingent Distribution Rights beneficially owned by Mr. Lackey. (3) Does not include 155,282 Contingent Distribution Rights beneficially owned by Mr. Sabatello. (4) Does not include 1,066 Contingent Distribution Rights beneficially owned by Mr. McNally. (5) Does not include 59,988 Contingent Distribution Rights beneficially owned by Mr. Herman. (6) Does not include 258,204 Contingent Distribution Rights beneficially owned by all directors and current named executive officers as a group. (7) Does not include 198,660 Contingent Distribution Rights beneficially owned by all directors and current executive officers as a group. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Randolph I. Thornton, who has been a member of the Company's Board of Directors since August 2002, also is a Managing Director within the Institutional Recovery Management Department within Citigroup. Citigroup was a creditor of Comdisco, Inc. and Mr. Thornton was a co-chair of the Creditors' Committee. On September 30, 2002, as part of the initial distribution to holders of allowed Class C-4 Claims conducted in accordance with the Plan, Citigroup received approximately $35.3 million in cash, $6.3 million and $10.3 million of Senior Notes and Subordinated Notes, respectively, and 66,521 shares of the Company's Common Stock. Since that time, Citigroup has adopted certain procedures to govern disclosure by Mr. Thornton of the Company's confidential information. ITEM 14. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures The disclosure controls and procedures of the Company are designed to ensure that information required to be disclosed by the Company in the reports that it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within required time periods. In addition, the Company has formed a Disclosure Control Committee. Our chief executive officer, our principal financial officer and the Disclosure Control Committee have evaluated the effectiveness of the Company's disclosure controls and procedures as of a date within ninety days prior to the filing date of this report. Based on that evaluation, our chief executive officer and our principal financial officer have concluded that the Company's controls and procedures were effective as of a date within ninety days prior to the filing date of this report at ensuring that required information will be disclosed on a timely basis in our reports filed under the Exchange Act. Change in Internal Controls We maintain a system of internal accounting controls that is designed to provide reasonable assurance that our books and records accurately reflect our transactions and that our established policies and procedures are carefully followed. For the fiscal year ended September 30, 2002 and to support our emergence from bankruptcy, our internal controls were further enhanced by the implementation of a Disclosure Control Committee, an Asset Divestiture and Credit Committee, a Related Party Transaction Policy and a Conflict of Interest Questionnaire which was completed by 102 managers of the Company. Otherwise, there were no significant changes to our internal controls, or in other factors that could significantly affect our internal controls, and we have not identified any significant deficiencies or material weaknesses in our internal controls. ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K Financial Statements See Index to Financial Statements contained in Item 8, Financial Statements and Supplementary Data, above. Financial Statement Schedules All Financial Statement Schedules have been omitted because (i) the required information is not present in amounts sufficient to require submission of the schedule, (ii) the information required is included in the Financial Statements or the Notes thereto or (iii) the information required in the schedules is not applicable to the Company. Exhibits The following exhibits are filed herewith or are incorporated by reference to exhibits previously filed with the Commission: Exhibit No. Description of Exhibit - ----------- ---------------------- 2.1 Joint Plan of Reorganization of Comdisco, Inc. and its Affiliated Debtors and Debtors in Possession (Incorporated by reference to Exhibit 99.3 filed with Comdisco, Inc.'s Current Report on Form 8-K dated April 26, 2002, as filed with the Commission on May 10, 2002, File No. 1-7725). 2.2 First Amended Joint Plan of Reorganization of Comdisco, Inc. and its Affiliated Debtors and Debtors in Possession (Incorporated by reference to Exhibit 2.2 filed with Comdisco, Inc.'s Current Report on Form 8-K dated July 30, 2002, as filed with the Commission on August 9, 2002, File No. 1-7725). 2.3 Findings of Fact, Conclusions of Law, and Order Under 11 U.S.C.ss.ss.1129(a) and (b) and Fed. R. Bankr. P. 3020 Confirming the First Amendment Plan of Reorganization of Comdisco, Inc. and its Affiliated Debtors and Debtors in Possession (Incorporated by reference to Exhibit 2.1 filed with Comdisco, Inc.'s Current Report on Form 8-K dated July 30, 2002, as filed with the Commission on August 9, 2002, File No. 1-7725). 3.1 Certificate of Incorporation of Registrant, dated August 8, 2002 (Filed herewith). 3.2 By-Laws of Registrant, adopted as of August 9, 2002 (Filed herewith). 4.1 Indenture Agreement between Registrant, Comdisco, Inc. and Wells Fargo Bank Minnesota, N.A., as Trustee, dated as of August 12, 2002 (said Indenture defines certain rights of Senior Note holders)(Filed herewith). 4.2 First Supplemental Indenture Agreement between Registrant, Comdisco, Inc. and Wells Fargo Bank Minnesota, N.A., as Trustee, dated as of October 7, 2002 (said Indenture defines certain rights of Senior Note holders)(Filed herewith). 4.3 Indenture Agreement between Registrant, Comdisco, Inc. and Wells Fargo Bank Minnesota, N.A., as Trustee, dated as of August 12, 2002 (said Indenture defines certain rights of Subordinated Note holders)(Filed herewith). 4.4 First Supplemental Indenture Agreement between Registrant, Comdisco, Inc. and Wells Fargo Bank Minnesota, N.A., as Trustee, dated as of October 7, 2002 (said Indenture defines certain rights of Subordinated Note holders)(Filed herewith). 4.5 Rights Agent Agreement between Registrant and Mellon Investor Services, L.L.C., as Rights Agent, dated as of August 12, 2002 (Filed herewith). 4.6 Pledge Agreement between Registrant, Comdisco, Inc. and Well Fargo Bank Minnesota, N.A., as Trustee, dated as of August 12, 2002 (Filed herewith). 10.1 Motion, dated May 24, 2002, and Order, dated as of June 18, 2002, Pursuant to 11 U.S.C. ss.ss. 105(a) and 363(b)(1) Approving and Authorizing the Debtors' Stay Bonus Plan and Management Incentive Plan, dated June 18, 2002 (Filed herewith). 10.2 First Letter from Ronald C. Mishler to the Official Committee of Unsecured Creditors of Comdisco, Inc., dated May 29, 2002 (Filed herewith). 10.3 Second Letter from Ronald C. Mishler to the Official Committee of Unsecured Creditors of Comdisco, Inc., dated July 3, 2002 (Filed herewith). 10.4 Employment Agreement of Norman P. Blake, Jr., dated February 27, 2001, as amended on April 13, 2001 and as amended and restated June 4, 2001 (Incorporated by reference to Exhibits 10.10 and 10.20 filed with Comdisco, Inc.'s Quarterly Report on Form 10-Q for the Quarterly Period ended March 31, 2001 and Exhibit 10.10 filed with Comdisco, Inc.'s Quarterly Report on Form 10-Q for the Quarterly Period ended June 30, 2001, File No. 1-7725). 10.5 Agreed Motion for Dismissal With Prejudice, dated March 7, 2002, and Agreed Order for Dismissal with Prejudice dated March 14, 2002 (Filed herewith). 10.6 Employment Agreement of Michael Fazio, dated as of July 5, 2001 (Filed herewith). 10.7 Employment Agreement of Gregory D. Sabatello, dated as of September 9, 2002 (Filed herewith). 10.8 Acquisition Agreement, dated effective July 15, 2001, and executed as of October 12, 2001, between Comdisco, Inc. and SunGard Data Systems, Inc. (Incorporated by reference to Exhibit 99.1 filed with Comdisco, Inc.'s Current Report on Form 8-K dated November 15, 2001, as filed with the Commission on December 3, 2001). 10.9 Amended and Restated Asset Purchase Agreement (Electronics), dated as of April 10, 2002 but effective as of January 23, 2002, between Comdisco, Inc. and General Electric Capital Corporation (Incorporated by reference to Exhibit 99.1 filed with Comdisco, Inc.'s Current Report on Form 8-K dated April 24, 2002, as filed with the Commission on May 9, 2002, File No. 1-7725). 10.10 First Amendment to the Amended and Restated Asset Purchase Agreement (Electronics), dated as of April 24, 2002, by and between Comdisco, Inc. and General Electric Capital Corporation (Incorporated by reference to Exhibit 99.2 filed with Comdisco, Inc.'s Current Report on Form 8-K dated April 24, 2002, as filed with the Commission on May 9, 2002, File No. 1-7725). 10.11 Amended and Restated Asset Purchase Agreement (Lab and Scientific), dated as of April 10, 2002 but effective as of January 23, 2002, between Comdisco, Inc. and General Electric Capital Corporation (Incorporated by reference to Exhibit 99.3 filed with Comdisco, Inc.'s Current Report on Form 8-K dated April 24, 2002, as filed with the Commission on May 9, 2002, File No. 1-7725). 10.12 First Amendment to the Amended and Restated Asset Purchase Agreement (Lab and Scientific), dated as of April 24, 2002, by and between Comdisco, Inc. and General Electric Capital Corporation (Incorporated by reference to Exhibit 99.4 filed with Comdisco, Inc.'s Current Report on Form 8-K dated April 24, 2002, as filed with the Commission on May 9, 2002, File No. 1-7725). 10.13 Asset Acquisition Agreement, dated as of January 31, 2002, between Comdisco, Inc. and T-Systems Inc. (Filed herewith). 10.14 Amendment to Asset Acquisition Agreement, dated as of February 13, 2002, between Comdisco, Inc. and T-Systems Inc. (Filed herewith). 10.15 Second Amendment to Asset Acquisition Agreement, dated as of February 27, 2002, between Comdisco, Inc. and T-Systems Inc. (Filed herewith). 10.16 Asset Purchase Agreement (Healthcare), dated as of April 2, 2002, between General Electric Capital Corporation, Comdisco, Inc. and Comdisco Healthcare Group, Inc. (Filed herewith). 10.17 Asset Sale Agreement, dated as of April 8, 2002, between Comdisco Australia Pty Limited, Comdisco New Zealand, Nadlo Pty Limited, Codis Limited and Rellim Pty Limited (Filed herewith). 10.18 Share Purchase Agreement, dated as of August 14, 2002, between Comdisco, Inc. and PH Holding GmbH (Filed herewith). 10.19 Share Purchase Agreement, dated as of October 10, 2002, between Comdisco Global Holding Company, Inc. and Comprendium Investment S.A. (Filed herewith). 10.20 Share Purchase Agreement relating to the Acquisition of Comdisco France SA and Promodata SNC, dated October 1, 2002, between Econocom Group SA/NV, Comdisco Global Holding Company, Inc. and Comdisco Holding Company, Inc. (Filed herewith). 11.1 Statement re computation of per share earnings. 21.1 Subsidiaries of the registrant. 99.1 Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith). 99.2 Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Filed herewith). Reports on Form 8-K Since the beginning of the fourth quarter of fiscal 2002, the Company filed the following current reports on Form 8-K which have not been previously reported: On August 19, 2002, the Company filed a Current Report on Form 8-K, dated August 19, 2002. Pursuant to Item 7, the Report added two exhibits entitled Statement Under Oath of Principal Executive Officer and Statement Under Oath of Principal Financial Officer. On August 20, 2002, the Company filed a Current Report on Form 8-K, dated August 19, 2002. Pursuant to Item 7, the Report added exhibits entitled Statement Under Oath of Principal Executive Officer and Statement Under Oath of Principal Financial Officer that had been omitted from the Report filed on August 19, 2002. On August 21, 2002, the Company filed a Current Report on Form 8-K, dated August 12, 2002. Pursuant to Item 5 of its Report, the Company disclosed that it would issue Contingent Distribution Rights to the former holders of Comdisco, Inc. common stock. On August 12, 2002, the Company filed a Registration Statement on Form 8-A describing the terms and conditions of the Contingent Distribution Rights. On October 17, 2002, the Company filed a Current Report on Form 8-K, dated September 30, 2002. Pursuant to Item 5 of its Report, the Company reported that it issued a press release on October 1, 2002 announcing that the initial distribution to holders of allowed claims commenced on September 30, 2002. The Company also issued a press release on October 9, 2002 announcing the redemption of the entire $400 million outstanding principal amount of the Variable Rate Senior Secured Notes due 2004. Prism Communication Services, Inc. issued a press release on October 10, 2002 announcing that it had commenced its initial distribution to holders of allowed claims. Finally, the Report added the press releases as exhibits pursuant to Item 7. On October 18, 2002, the Company filed a Current Report on Form 8-K, dated October 18, 2002. Pursuant to Item 5 of its Report, the Company reported that it issued a press release on October 18, 2002 announcing that it had entered into an agreement for the sale of its French operations to Econocom Group SA/NV. In addition, it announced that it had sold its Swiss and Austrian-based operations. The Report added the press release as an exhibit pursuant to Item 7. On October 28, 2002, the Company filed a Current Report on Form 8-K, dated October 21, 2002. Pursuant to Item 5 of its Report, the Company reported that it issued a press release on October 12, 2002 announcing that it had redeemed the entire $400 million outstanding principal amount of its Variable Rate Senior Secured Notes due 2004. The Report added the press release as an exhibit pursuant to Item 7. On October 30, 2002, the Company filed a Current Report on Form 8-K, dated October 29, 2002. Pursuant to Item 5 of its Report, the Company reported that it issued a press release on October 29, 2002 announcing the mandatory partial redemption of $65 million of the outstanding principal amount of its 11 percent Subordinated Secured Notes due 2005. The Report added the press release as an exhibit pursuant to Item 7. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. COMDISCO HOLDING COMPANY, INC. Dated: January 14, 2003 By: /s/ Ronald C. Mishler --------------------- Name: Ronald C. Mishler Title: Chairman, Chief Executive Officer and President (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities indicated on January 14, 2003. SIGNATURE DATE /s/ David S. Reynolds January 14, 2003 - ---------------------------- Name: David S. Reynolds Title: Senior Vice President and Controller (Principal Financial and Accounting Officer) /s/ Jeffrey A. Brodsky January 14, 2003 - ---------------------------- Name: Jeffrey A. Brodsky Title: Director /s/ Robert M. Chefitz January 14, 2003 - ---------------------------- Name: Robert M. Chefitz Title: Director /s/ William A. McIntosh January 14, 2003 - ---------------------------- Name: William A. McIntosh Title: Director /s/ Randolph I. Thornton January 14, 2003 - ---------------------------- Name: Randolph I. Thornton Title: Director CERTIFICATION ------------- Certification of Principal Executive Officer I, Ronald C. Mishler, Chairman, Chief Executive Officer and President, certify that: 1. I have reviewed this annual report on Form 10-K of Comdisco Holding Company, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: (a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and (c) Presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: January 14, 2003 By: /s/ Ronald C. Mishler ------------------------ Name: Ronald C. Mishler Title: Chairman, Chief Executive Officer and President CERTIFICATION ------------- Certification of Principal Financial Officer I, David S. Reynolds, Senior Vice President and Controller, certify that: 1. I have reviewed this annual report on Form 10-K of Comdisco Holding Company, Inc.; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and (c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Dated: January 14, 2003 By: /s/ David S. Reynolds --------------------- Name: David S. Reynolds Title: Senior Vice President and Controller EX-3 3 ch338336.txt EXHIBIT 3.1 - CERT. OF INCORPORATION Exhibit 3.1 CERTIFICATE OF INCORPORATION OF COMDISCO HOLDING COMPANY, INC. FIRST: The name of the Corporation is Comdisco Holding Company, Inc. (the "Corporation"). SECOND: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of New Castle. The name of its registered agent at that address is The Corporation Trust Company. THIRD: The business purpose of the Corporation is to sell, collect or otherwise reduce to money the assets of the Corporation in the ordinary course in an orderly manner, pay and discharge the Corporation's liabilities and distribute any excess to the Corporation's shareholders in the form of dividends or other distributions. The Corporation shall not be permitted to engage in any activities inconsistent with the foregoing purpose. The Corporation may engage in any lawful transaction of any or all lawful purposes for which corporations may be incorporated under the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the "GCL") to accomplish that business purpose. FOURTH: The total number of shares of stock which the Corporation shall have authority to issue is 10,000,000 shares of Common Stock, each having a par value of one cent ($0.01). Notwithstanding any other provisions contained herein to the contrary, the Corporation shall not issue nonvoting equity securities. This prohibition on the issuance of nonvoting equity securities is included in this Certificate of Incorporation in compliance with Section 1123(a)(6) of the Bankruptcy Code (11 U.S.C. ss. 1123(a)(6)). The holders of Common Stock shall not have cumulative voting rights. The holders of Common Stock shall not be entitled to preemptive or subscription rights. FIFTH: The following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition, limitation and regulation of the powers of the Corporation and of its directors and stockholders: (1) The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors and, in so managing the business and affairs of the Corporation with the business purpose to sell, collect or otherwise reduce to money the assets of the Corporation in the ordinary course and in an orderly manner, pay and discharge the Corporation's liabilities and distribute any excess to the Corporation's shareholders in the form of dividends or other distributions, the Board of Directors shall have no duty or obligation whatsoever to consider re-commencing ordinary operations. (2) The Board of Directors shall consist of five (5) members. Members of the Board of Directors shall be elected for a two (2) year term. (3) A director shall hold office until the annual meeting for the year in which his or her term expires and until his or her successor shall be elected and shall qualify, subject, however to prior death, resignation, retirement, disqualification or removal from office. (4) Until the first annual meeting of shareholders of the Corporation at which directors are to be elected, any vacancy occurring on the Board of Directors (i) with respect to a member originally selected to serve on the Board of Directors by the Creditors' Committee pursuant to the First Amended Joint Plan of Reorganization of Comdisco, Inc. and its Affiliated Debtors and Debtors in Possession, dated as of June 13, 2002 (the "Plan"), shall be filled by a person designated by the remaining directors selected by the Creditors' Committee, even if less than a quorum, as a replacement to serve out the remainder of the applicable term and (ii) with respect to the member initially serving as the Chief Executive Officer pursuant to the Plan shall be filled by a person designated by a majority of the Board of Directors then in office, even if less than a quorum, to serve out the remainder of the applicable term. (5) Any vacancy occurring on the Board of Directors after the first annual meeting of shareholders at which directors are to be elected may be filled by a majority of the Board of Directors then in office, even if less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy shall have the same remaining term as that of his predecessor. (6) The directors shall have concurrent power with the stockholders to make, alter, amend, change, add to or repeal the By-Laws of the Corporation. (7) No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the GCL as the same exists or may hereafter be amended. If the GCL is amended hereafter to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent authorized by the GCL, as so amended. Any repeal or modification of this Article Fifth shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with respect to acts or omissions occurring prior to such repeal or modification. SIXTH: The Corporation shall indemnify its directors and officers to the fullest extent authorized or permitted by applicable law, as now or hereafter in effect, and such right to indemnification shall continue as to a person who has ceased to be a director or officer of the Corporation and shall inure to the benefit of his or her heirs, executors and personal and legal representatives; provided, however, that, except for proceedings to enforce rights to indemnification, the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or legal representatives) in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors. The right to indemnification conferred by this Article Sixth shall include the right to be paid by the Corporation the expenses incurred in defending or otherwise participating in any proceeding in advance of its final disposition upon receipt by the Corporation of an undertaking by or on behalf of the director or officer receiving advancement to repay the amount advanced if it shall ultimately be determined that such person is not entitled to be indemnified by the Corporation under this Article Sixth. The Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Corporation similar to those conferred in this Article Sixth to directors and officers of the Corporation. The rights to indemnification and to the advance of expenses conferred in this Article Sixth shall not be exclusive of any other right which any person may have or hereafter acquire under this Certificate of Incorporation, the By-Laws of the Corporation, any statute, agreement, vote of stockholders or disinterested directors or otherwise. Any repeal or modification of this Article Sixth by the stockholders of the Corporation shall not adversely affect any rights to indemnification and to the advancement of expenses of a director or officer of the Corporation existing at the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification. SEVENTH: Meetings of stockholders may be held within or without the State of Delaware, as the By-Laws may provide. The books of the Corporation may be kept (subject to any provision contained in the GCL) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation. EIGHTH: In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, the Board of Directors shall have the power to adopt, amend, alter or repeal the Corporation's By-Laws. The affirmative vote of at least a majority of the entire Board of Directors shall be required to adopt, amend, alter or repeal the Corporation's By-Laws. The Corporation's By-Laws also may be adopted, amended, altered or repealed by the affirmative vote of the holders of at least eighty percent (80%) of the voting power of the shares entitled to vote at an election of directors. NINTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation, provided that, notwithstanding Section 242(b)(1) of the GCL, any amendment shall be approved by the affirmative vote of the holders of at least eighty percent (80%) of the voting power of the shares entitled to vote thereon. TENTH: The name and mailing address of the Sole Incorporator is as follows: Deborah M. Reusch, P.O. Box 636, Wilmington, Delaware 19899. [The remainder of this page intentionally blank.] I, THE UNDERSIGNED, being the Sole Incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the GCL, do make this Certificate, hereby declaring and certifying that this is my act and deed and the facts herein stated are true, and accordingly have hereunto set my hand this 8th day of August, 2002. /s/ Deborah M. Reusch --------------------- Deborah M. Reusch Sole Incorporator EX-3 4 ch338337.txt EXHIBIT 3.2 - BY-LAWS Exhibit 3.2 BY-LAWS OF COMDISCO HOLDING COMPANY, INC. A Delaware Corporation Effective August 9, 2002
TABLE OF CONTENTS Page ARTICLE I OFFICES.........................................................................................1 Section 1. Registered Office....................................................................1 Section 2. Other Offices........................................................................1 ARTICLE II MEETINGS OF STOCKHOLDERS.......................................................................1 Section 1. Place of Meetings....................................................................1 Section 2. Annual Meetings......................................................................2 Section 3. Special Meetings.....................................................................2 Section 4. Notice...............................................................................2 Section 5. Adjournments.........................................................................3 Section 6. Quorum...............................................................................3 Section 7. Voting...............................................................................4 Section 8. Proxies..............................................................................4 Section 9. Consent of Stockholders in Lieu of Meeting...........................................5 Section 10. List of Stockholders Entitled to Vote................................................8 Section 11. Record Date..........................................................................8 Section 12. Stock Ledger........................................................................10 Section 13. Conduct of Meetings.................................................................10 Section 14. Inspectors of Election..............................................................11 ARTICLE III DIRECTORS....................................................................................12 Section 1. Number and Election of Directors....................................................12 Section 2. Vacancies...........................................................................12 Section 3. Duties and Powers...................................................................12 Section 4. Meetings............................................................................13 Section 5. Organization........................................................................13 Section 6. Resignations of Directors...........................................................13 Section 7. Quorum..............................................................................14 Section 8. Actions of the Board by Written Consent.............................................14 Section 9. Meetings by Means of Conference Telephone...........................................14 Section 10. Committees..........................................................................15 Section 11. Compensation........................................................................15 Section 12. Interested Directors................................................................16 ARTICLE IV OFFICERS......................................................................................17 Section 1. Officers............................................................................17 Section 2. Powers and Duties of the Chairman of the Board......................................18 Section 3. Powers and Duties of the Chief Executive Officer....................................18 Section 4. Powers and Duties of the Chief Operating Officer....................................19 Section 5. Powers and Duties of the President..................................................20 Section 6. Powers and Duties of the Executive Vice Presidents, Senior Vice Presidents and Vice Presidents..............................................................20 Section 7. Powers and Duties of the Controller.................................................20 Section 8. Powers and Duties of the Treasurer..................................................21 Section 9. Powers and Duties of the Secretary..................................................21 Section 10. Powers and Duties of Additional Officers............................................22 ARTICLE V STOCK..........................................................................................22 Section 1. Form of Certificates................................................................22 Section 2. Signatures..........................................................................22 Section 3. Lost Certificates...................................................................23 Section 4. Transfers...........................................................................23 Section 5. Dividend Record Date................................................................24 Section 6. Record Owners.......................................................................24 Section 7. Transfer and Registry Agents........................................................24 ARTICLE VI NOTICES.......................................................................................25 Section 1. Notices.............................................................................25 Section 2. Waivers of Notice...................................................................26 ARTICLE VII GENERAL PROVISIONS...........................................................................26 Section 1. Dividends...........................................................................26 Section 2. Disbursements.......................................................................27 Section 3. Fiscal Year.........................................................................27 Section 4. Corporate Seal......................................................................27 ARTICLE VIII AMENDMENTS..................................................................................28 Section 1. Amendments..........................................................................28 Section 2. Entire Board of Directors...........................................................28
BY-LAWS OF COMDISCO HOLDING COMPANY, INC. (hereinafter called the "Corporation") ARTICLE I OFFICES ------- Section 1. Registered Office. The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, in the City of Wilmington, County of Newcastle. The name of its registered agent at that address is CT Corporation. Section 2. Other Offices. The Corporation also may have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine. ARTICLE II MEETINGS OF STOCKHOLDERS ------------------------ Section 1. Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors. The Board of Directors may, in its sole discretion, determine that a meeting of the stockholders shall not be held at any place, but may instead be held solely by means of remote communication in the manner authorized by the General Corporation Law of the State of Delaware (the "DGCL"). Section 2. Annual Meetings. The Annual Meeting of Stockholders shall be held on such date and at such time as shall be designated from time to time by the Board of Directors. Any proper business may be transacted at the Annual Meeting of Stockholders. Section 3. Special Meetings. Unless otherwise required by law or by the certificate of incorporation of the Corporation, as amended and restated from time to time (the "Certificate of Incorporation"), Special Meetings of Stockholders, for any purpose or purposes, may be called by either: (i) the Chairman, the Chief Executive Officer, the President or the Secretary; (ii) any such officer at the request in writing of the Board of Directors or a committee of the Board of Directors that has been duly designated by the Board of Directors and whose powers and authority include the power to call such meetings; or (iii) stockholders owning a majority of the capital stock of the Corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. At a Special Meeting of Stockholders, only such business shall be conducted as shall be specified in the notice of meeting (or any supplement thereto). Section 4. Notice. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such meeting, and, in the case of a Special Meeting, the purpose or purposes for which the meeting is called. Unless otherwise required by law, written notice of any meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to notice of and to vote at such meeting. Section 5. Adjournments. Any meeting of the stockholders may be adjourned from time to time to reconvene at the same or some other place, and notice need not be given of any such adjourned meeting if the time and place, if any, thereof and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting in accordance with the requirements of Section 4 hereof shall be given to each stockholder of record entitled to notice of and to vote at the meeting. Section 6. Quorum. Unless otherwise required by applicable law or the Certificate of Incorporation, the holders of a majority of the Corporation's capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. A quorum, once established, shall not be broken by the withdrawal of enough votes to leave less than a quorum. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, in the manner provided in Section 5 hereof, until a quorum shall be present or represented. Section 7. Voting. Unless otherwise required by law, the Certificate of Incorporation or these By-Laws, any question brought before any meeting of the stockholders, other than the election of directors, shall be decided by the vote of the holders of a majority of the total number of votes of the Corporation's capital stock represented and entitled to vote thereat, voting as a single class. Unless otherwise provided in the Certificate of Incorporation, and subject to Section 5 of Article V hereof, each stockholder represented at a meeting of the stockholders shall be entitled to cast one (1) vote for each share of the capital stock entitled to vote thereat held by such stockholder. Such votes may be cast in person or by proxy as provided in Section 8 hereof. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of the stockholders, in such officer's discretion, may require that any votes cast at such meeting shall be cast by written ballot. Section 8. Proxies. Each stockholder entitled to vote at a meeting of the stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize another person or persons to act for such stockholder as proxy, but no such proxy shall be voted upon after three (3) years from its date, unless such proxy provides for a longer period. Without limiting the manner in which a stockholder may authorize another person or persons to act for such stockholder as proxy, the following shall constitute a valid means by which a stockholder may grant such authority: (i) A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished by the stockholder or such stockholder's authorized officer, director, employee or agent signing such writing or causing such person's signature to be affixed to such writing by any reasonable means, including, but not limited to, by facsimile signature. (ii) A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such transmission, provided that any such telegram, cablegram or other means of electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram, cablegram or other electronic transmission was authorized by the stockholder. If it is determined that such telegrams, cablegrams or other electronic transmissions are valid, the inspectors or, if there are no inspectors, such other persons making that determination shall specify the information on which they relied. Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission authorizing another person or persons to act as proxy for a stockholder may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used; provided, however, that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. Section 9. Consent of Stockholders in Lieu of Meeting. Unless otherwise provided in the Certificate of Incorporation, any action required or permitted to be taken at any Annual or Special Meeting of Stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of the stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the earliest dated consent delivered in the manner required by this Section 9 to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of the stockholders are recorded. A telegram, cablegram or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed and dated for the purposes of this Section 9, provided that any such telegram, cablegram or other electronic transmission sets forth or is delivered with information from which the Corporation can determine (i) that the telegram, cablegram or other electronic transmission was transmitted by the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder and (ii) the date on which such stockholder or proxyholder or authorized person or persons transmitted such telegram, cablegram or electronic transmission. The date on which such telegram, cablegram or electronic transmission is transmitted shall be deemed to be the date on which such consent was signed. No consent given by telegram, cablegram or other electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and until such paper form shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of the stockholders are recorded. Delivery made to the Corporation's registered office shall be made by hand or by certified or registered mail, return receipt requested. Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Corporation as provided above in this Section 9. Section 10. List of Stockholders Entitled to Vote. The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of the stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Section 11. Record Date. (a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of the stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of the stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of the stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. (b) In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of the stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by applicable law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action. Section 12. Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 10 of this Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of the stockholders. Section 13. Conduct of Meetings. The Board of Directors of the Corporation may adopt by resolution such rules and regulations for the conduct of any meeting of the stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the chairman of any meeting of the stockholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) the determination of when the polls shall open and close for any given matter to be voted on at the meeting; (iii) rules and procedures for maintaining order at the meeting and the safety of those present; (iv) limitations on attendance at or participation in the meeting to stockholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (v) restrictions on entry to the meeting after the time fixed for the commencement thereof; and (vi) limitations on the time allotted to questions or comments by participants. Section 14. Inspectors of Election. In advance of any meeting of the stockholders, the Board of Directors, by resolution, the Chairman, the Chief Executive Officer or the President shall appoint one or more inspectors to act at the meeting and make a written report thereof. One or more other persons may be designated as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of the stockholders, the chairman of the meeting shall appoint one or more inspectors to act at the meeting. Unless otherwise required by applicable law, inspectors may be officers, employees or agents of the Corporation. Each inspector, before entering upon the discharge of the duties of inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector's ability. The inspector shall have the duties prescribed by law and shall take charge of the polls and, when the vote is completed, shall make a certificate of the result of the vote taken and of such other facts as may be required by applicable law. ARTICLE III DIRECTORS --------- Section 1. Number and Election of Directors. The number of the members of the Board of Directors shall be as set forth in the Certificate of Incorporation. Members of the Board of Directors shall be elected for a two (2) year term. Except as provided in Section 2 of this Article III, each director shall be elected by a plurality of the votes cast at the Annual Meeting of Stockholders for the year in which his or her two-year term expires and each such director so elected shall hold office until such director's successor is duly elected and qualified in accordance with the Certificate of Incorporation or until such director's earlier death, resignation or removal. Directors need not be stockholders. Section 2. Vacancies. Vacancies on the Board of Directors shall be filled as set forth in the Certificate of Incorporation. Section 3. Duties and Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such power and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or these By-Laws required to be exercised or done by the stockholders. In so managing the business and affairs of the Corporation with the business purpose to sell, collect or otherwise reduce to money the assets of the Corporation in the ordinary course and in an orderly manner, pay and discharge the Corporation's liabilities and distribute any excess to the Corporation's shareholders in the form of dividends or other distributions, the Board of Directors shall have no duty or obligation whatsoever to consider re-commencing ordinary operations. Section 4. Meetings. The Board of Directors may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the Chairman, the Chief Executive Officer, the President, or by any director. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone, telegram or electronic means on twenty-four (24) hours' notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Section 5. Organization. At each meeting of the Board of Directors, the Chairman of the Board of Directors, or, in his or her absence, a director chosen by a majority of the directors present, shall act as chairman. The Secretary of the Corporation shall act as secretary at each meeting of the Board of Directors. In case the Secretary shall be absent from any meeting of the Board of Directors, an Assistant Secretary shall perform the duties of secretary at such meeting; and in the absence from any such meeting of the Secretary and all the Assistant Secretaries, the chairman of the meeting may appoint any person to act as secretary of the meeting. Section 6. Resignations of Directors. Any director of the Corporation may resign at any time, by giving notice in writing or by electronic transmission to the Chairman of the Board of Directors, the President or the Secretary of the Corporation. Such resignation shall take effect at the time therein specified or, if no time is specified, immediately; and, unless otherwise specified in such notice, the acceptance of such resignation shall not be necessary to make it effective. Section 7. Quorum. Except as otherwise required by law or the Certificate of Incorporation, at all meetings of the Board of Directors, a majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting, until a quorum shall be present. Section 8. Actions of the Board by Written Consent. Unless otherwise provided in the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Section 9. Meetings by Means of Conference Telephone. Unless otherwise provided in the Certificate of Incorporation or these By-Laws, members of the Board of Directors of the Corporation, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 9 shall constitute presence in person at such meeting. Section 10. Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent permitted by law and provided in the resolution establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. Each committee shall keep regular minutes and report to the Board of Directors when required. Section 11. Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary for service as director, payable in cash or securities. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for service as committee members. Section 12. Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because any such director's or officer's vote is counted for such purpose if: (i) the material facts as to the director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; (ii) the material facts as to the director's or officer's relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. ARTICLE IV OFFICERS -------- Section 1. Officers. The officers of the Corporation shall be a Chairman of the Board of Directors, a Chief Executive Officer, a Chief Operating Officer, a President, one or more Executive Vice Presidents, one or more Senior Vice Presidents, one or more Vice Presidents, a Controller, a Treasurer, one or more Assistant Treasurers, a Secretary, and one or more Assistant Secretaries. Any number of offices may be held by the same person. All such officers shall be elected by the Board of Directors at the meeting of the Board of Directors held on the date of each Annual Meeting of the stockholders (or action by written consent of stockholders in lieu of the Annual Meeting of Stockholders). The Board of Directors may elect such additional officers as they deem necessary, who shall have such authority and shall perform such duties as the Board of Directors from time to time prescribe. In its discretion, the Board of Directors may leave any office unfilled. Officers of the Corporation shall hold their offices for such terms as shall be determined by the Board of Directors; and each officer of the Corporation shall hold office until such officer's successor is elected and qualified, or until such officer's earlier death, resignation or removal. Any officer elected by the Board of Directors may be removed at any time by vote of the Board of Directors. The President or Chief Operating Officer may also appoint officers of the Corporation's divisions or business units, but such individuals will not be deemed to be officers of the Corporation. Section 2. Powers and Duties of the Chairman of the Board. The Chairman of the Board of Directors shall preside at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board of Directors shall be the Chief Executive Officer of the Corporation. Except where by law the signature of the President is required, the Chairman of the Board of Directors shall possess the same power as the President to sign all contracts, certificates and other instruments of the Corporation which may be authorized by the Board of Directors. He shall from time to time secure information concerning the business and affairs of the Corporation and shall promptly lay such information before the Board of Directors. He shall communicate to the Board of Directors all matters presented by any officer of the Corporation for its consideration, and shall from time to time communicate to the officers such action of the Board of Directors as may in his judgment affect the performance of their official duties. During the absence or disability of the President, the Chairman of the Board of Directors shall exercise all the powers and discharge all the duties of the President. The Chairman of the Board of Directors also shall perform such other duties and may exercise such other powers as may from time to time be assigned by these By-Laws or by the Board of Directors. Section 3. Powers and Duties of the Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation and, subject to the supervision, direction and control of the Board of Directors and Chairman of the Board of Directors, shall have the general supervision, direction and control of the business and officers of the Corporation with all such powers as may be reasonably incident to such responsibilities. The Chief Executive Officer shall implement the general directives, plans and policies formulated by the Board of Directors and shall further have such duties, responsibilities and authorities as may be assigned to him by the Board of Directors. The Chief Executive Officer shall have the general powers and duties of management usually vested in the chief executive officer of a corporation. During the time of any vacancy in the office of the Chairman of the Board of Directors or in the event of the absence of the Chairman of the Board of Directors, the Chief Executive Officer shall have the duties and powers of the Chairman of the Board of Directors unless otherwise determined by the Board of Directors. In the absence of the Chairman of the Board of Directors, the Chief Executive Officer shall preside at meetings of the Stockholders and Board of Directors. During any time of any vacancy in the office of Chief Operating Officer or in the event of the absence or disability of the Chief Operating Officer, the Chief Executive Officer shall have the duties and powers of the Chief Operating Officer unless otherwise determined by the Board of Directors. Section 4. Powers and Duties of the Chief Operating Officer. The Chief Operating Officer shall be the chief operating officer of the Corporation and, subject to the supervision, direction and control of the Chief Executive Officer and the Board of Directors, shall manage day-to-day operations of the Corporation. He shall have the general powers and duties of management usually vested in the chief operating officer of a corporation and such other powers and duties as may be assigned to him by the Board of Directors, the Chief Executive Officer or these By-Laws. In the absence of the Chief Operating Officer, his duties shall be performed and his authority may be exercised by the Chief Executive Officer or an Executive Vice President of the Corporation as may have been designated by the Chief Operating Officer with the right reserved to the Board of Directors to designate or supersede any designation so made. During the time of any vacancy in the offices of the Chairman of the Board of Directors and Chief Executive Officer or in the event of the absence or disability of the Chairman of the Board of Directors and the Chief Executive Officer, the Chief Operating Officer shall have the duties and powers of the Chief Executive Officer unless otherwise determined by the Board of Directors. Section 5. Powers and Duties of the President. The President shall have such powers and perform such duties as may from time to time be assigned to him by these By-Laws, the Board of Directors, the Chairman of the Board of Directors or the Chief Executive Officer. Section 6. Powers and Duties of the Executive Vice Presidents, Senior Vice Presidents and Vice Presidents. Each Executive Vice President, each Senior Vice President and each Vice President shall have such powers and perform such duties as may from time to time be assigned to him by these By-Laws, the Board of Directors, the Chairman of the Board of Directors, the Chief Executive Officer or the President. Section 7. Powers and Duties of the Controller. The Controller shall be the principal officer in charge of the accounts of the Corporation, and shall perform such duties as from time to time may be assigned to him by the Board of Directors, the Chairman of the Board of Directors, the Chief Executive Officer or the President. Section 8. Powers and Duties of the Treasurer. The Treasurer shall have custody of all the funds and securities of the Corporation which may have come into his hands; when necessary or proper, he may endorse or cause to be endorsed on behalf of the Corporation for collection, checks, notes and other obligations and shall deposit the same to the credit of the Corporation in such bank or banks or depository or depositories as may have been designated by the Board of Directors or by any officer authorized by the Board of Directors to make such designation; whenever required by the Board of Directors he shall render a statement of the funds and securities of the Corporation in his custody; and he shall perform all acts incident to the position of Treasurer, subject to the control of the Board of Directors. Section 9. Powers and Duties of the Secretary. The Secretary shall keep the minutes of all meetings of the Board of Directors and the minutes of all meetings of the stockholders in books provided for that purpose; he shall attend to the giving or serving of all notices of the Corporation; he may sign with the Chairman of the Board of Directors, the President, any Executive Vice President, any Senior Vice President or any Vice President, in the name of the Corporation, all contracts authorized by the Board of Directors or by any committee of the Corporation having the requisite authority and, when so ordered by the Board of Directors or such committee, he shall affix the seal of the Corporation thereto; he shall have charge of the stock certificate books, transfer books and stock ledgers and such other books and papers as the Board of Directors shall direct, all of which shall at all reasonable times be open to the examination of any Director, upon application at the office of the Corporation during business hours; and he shall in general perform all the duties incident to the office of Secretary, subject to the control of the Board of Directors. Section 10. Powers and Duties of Additional Officers. The Board of Directors may from time to time by resolution delegate to any Assistant Vice President or Vice Presidents, Assistant Controller or Controllers, any Assistant Treasurer or Treasurers and/or any Assistant Secretary or Secretaries, elected by the Board of Directors, any of the powers or duties herein assigned to the Vice President, Controller, the Treasurer or the Secretary, respectively. ARTICLE V STOCK ----- Section 1. Form of Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation (i) by the Chairman of the Board of Directors, Chief Executive Officer, the President or a Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by such stockholder in the Corporation. Section 2. Signatures. Any or all of the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. Section 3. Lost Certificates. The Board of Directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or such owner's legal representative, to advertise the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate or the issuance of such new certificate. Section 4. Transfers. Stock of the Corporation shall be transferable in the manner prescribed by applicable law and in these By-Laws. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by such person's attorney lawfully constituted in writing and upon the surrender of the certificate therefor, properly endorsed for transfer and payment of all necessary transfer taxes; provided, however, that such surrender and endorsement or payment of taxes shall not be required in any case in which the officers of the Corporation shall determine to waive such requirement. Every certificate exchanged, returned or surrendered to the Corporation shall be marked "Cancelled", with the date of cancellation, by the Secretary or Assistant Secretary of the Corporation or the transfer agent thereof. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred. Section 5. Dividend Record Date. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. Section 6. Record Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law. Section 7. Transfer and Registry Agents. The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors. ARTICLE VI NOTICES ------- Section 1. Notices. Whenever written notice is required by law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, such notice may be given by mail, addressed to such director, member of a committee or stockholder, at such person's address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under applicable law, the Certificate of Incorporation or these By-Laws shall be effective if given by a form of electronic transmission if consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed to be revoked if (i) the Corporation is unable to deliver by electronic transmission two (2) consecutive notices by the Corporation in accordance with such consent and (ii) such inability becomes known to the Secretary or Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, that the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given by electronic transmission, as described above, shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network, together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and (iv) if by any other form of electronic transmission, when directed to the stockholder. Notice to directors or committee members may be given personally or by telegram, telex, cable or by means of electronic transmission. Section 2. Waivers of Notice. Whenever any notice is required by applicable law, the Certificate of Incorporation or these By-Laws, to be given to any director, member of a committee or stockholder, a waiver thereof in writing, signed by the person or persons entitled to notice, or a waiver by electronic transmission by the person or persons entitled to notice, whether before or after the time stated therein, shall be deemed equivalent thereto. Attendance of a person at a meeting, present in person or represented by proxy, shall constitute a waiver of notice of such meeting, except where the person attends the meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any Annual or Special Meeting of Stockholders or any regular or special meeting of the directors or members of a committee of directors need be specified in any written waiver of notice unless so required by law, the Certificate of Incorporation or these By-Laws. ARTICLE VII GENERAL PROVISIONS ------------------ Section 1. Dividends. Dividends upon the capital stock of the Corporation, subject to the requirements of the DGCL and the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting of the Board of Directors (or any action by written consent in lieu thereof in accordance with Section 8 of Article III hereof), and may be paid in cash, in property, or in shares of the Corporation's capital stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for purchasing any of the shares of capital stock, warrants, rights, options, bonds, debentures, notes, scrip or other securities or evidences of indebtedness of the Corporation, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve. Section 2. Disbursements. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 3. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. Section 4. Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE VIII AMENDMENTS ---------- Section 1. Amendments. These By-Laws may be altered, amended or repealed, in whole or in part, or new By-Laws may be adopted by the stockholders or by the Board of Directors; provided, however, that notice of such alteration, amendment, repeal or adoption of new By-Laws be contained in the notice of such meeting of the stockholders or Board of Directors, as the case may be. All such amendments must be approved by the affirmative vote of the holders of at least eighty percent (80%) of the voting power of the shares entitled to vote at an election of directors or by affirmative vote of at least a majority of the entire Board of Directors. Section 2. Entire Board of Directors. As used in this Article VIII and in these By-Laws generally, the term "entire Board of Directors" means the total number of directors which the Corporation would have if there were no vacancies. * * * Adopted as of August 9, 2002 EX-4 5 ch338756.txt EXHIBIT 4.1 EXHIBIT 4.1 ================================================================================ COMDISCO HOLDING COMPANY, INC. AND COMDISCO, INC. VARIABLE RATE SENIOR SECURED NOTES DUE 2004 _______________________ INDENTURE Dated as of August 12, 2002 WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION Trustee _______________________ ================================================================================ CROSS-REFERENCE TABLE* Trust Indenture Act Section Indenture Section 310(a)(1).................................................... 7.10 (a)(2).................................................. 7.10 (a)(3).................................................. N.A. (a)(4).................................................. N.A. (a)(5).................................................. 7.10 (b)..................................................... 7.10 (c)..................................................... N.A. 311(a)....................................................... 7.11 (b)..................................................... 7.11 (c)..................................................... N.A. 312(a)....................................................... 2.05 (b)..................................................... 11.03 (c)..................................................... 11.03 313(a)....................................................... 7.06 (b)(1).................................................. 9.03 (b)(2).................................................. 7.06, 7.07 (c)..................................................... 7.06, 11.02 (d)..................................................... 7.06 314(a)....................................................... 4.03, 11.05 (b)..................................................... 9.02 (c)(1).................................................. 11.04 (c)(2).................................................. 11.04 (c)(3).................................................. N.A. (d)..................................................... 9.03, 9.04, 9.05 (e)..................................................... 11.05 (f)..................................................... N.A. 315(a)....................................................... 7.01 (b)..................................................... 7.05, 11.02 (c)..................................................... 7.01 (d)..................................................... 7.01 (e)..................................................... 6.11 316(a) (last sentence)....................................... 2.09 (a)(1)(A)............................................... 6.05 (a)(1)(B)............................................... 6.04 (a)(2).................................................. N.A. (b)..................................................... 6.07 (c)..................................................... 2.12, 8.04 317(a)(1).................................................... 6.08 (a)(2).................................................. 6.09 (b)..................................................... 2.04 318(a)....................................................... 11.01 (b)..................................................... N.A. (c)..................................................... 11.01 N.A. means not applicable. * This Cross Reference Table is not part of the Indenture. TABLE OF CONTENTS
Page ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions.................................................................................1 Section 1.02. Other Definitions..........................................................................14 Section 1.03. Incorporation by Reference of Trust Indenture Act..........................................14 Section 1.04. Rules of Construction......................................................................15 ARTICLE 2. THE NOTES Section 2.01. Form and Dating............................................................................15 Section 2.02. Execution and Authentication...............................................................16 Section 2.03. Registrar and Paying Agent.................................................................16 Section 2.04. Paying Agent to Hold Money in Trust........................................................17 Section 2.05. Holder Lists...............................................................................17 Section 2.06. Transfer and Exchange......................................................................17 Section 2.07. Replacement Notes..........................................................................19 Section 2.08. Outstanding Notes..........................................................................20 Section 2.09. Treasury Notes.............................................................................20 Section 2.10. Temporary Notes............................................................................20 Section 2.11. Cancellation...............................................................................21 Section 2.12. Defaulted Interest.........................................................................21 ARTICLE 3. REDEMPTION AND PREPAYMENT Section 3.01. Notices to Trustee.........................................................................21 Section 3.02. Selection of Notes to Be Redeemed or Repurchased...........................................21 Section 3.03. Notice of Redemption.......................................................................22 Section 3.04. Effect of Notice of Redemption.............................................................22 Section 3.05. Deposit of Redemption Price................................................................22 Section 3.06. Notes Redeemed in Part.....................................................................23 Section 3.07. Optional Redemption........................................................................23 Section 3.08. Mandatory Redemption.......................................................................23 Section 3.09. Offers to Repurchase by the Issuers........................................................24 ARTICLE 4. COVENANTS Section 4.01. Payment of Notes...........................................................................25 Section 4.02. Maintenance of Office or Agency............................................................25 Section 4.03. Reports....................................................................................26 Section 4.04. Compliance Certificate.....................................................................26 Section 4.05. Taxes......................................................................................27 Section 4.06. Stay, Extension and Usury Laws.............................................................27 Section 4.07. Restricted Payments........................................................................27 Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.............................28 Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.................................29 Section 4.10. Transactions with Affiliates...............................................................30 Section 4.11. Liens......................................................................................31 Section 4.12. Line of Business...........................................................................32 Section 4.13. Corporate Existence; Certificate of Incorporation..........................................32 Section 4.14. Offers to Repurchase by the Company........................................................32 Section 4.15. Insurance..................................................................................33 Section 4.16. Maintenance of Property....................................................................33 Section 4.17. Limitation on Sale and Leaseback Transactions..............................................33 Section 4.18. Limitation on Issuances and Sales of Equity Interests in Subsidiaries......................33 Section 4.19. No Amendment to Certain Provisions of the Subordinated Note Indenture......................34 Section 4.20. Equity Interests of the Company............................................................34 Section 4.21. Assets of the Company......................................................................34 Section 4.22. Management Incentive Plan..................................................................34 Section 4.23. Additional Note Collateral.................................................................34 Section 4.24. Consummation of Plan.......................................................................35 Section 4.25. Distributions from Subsidiaries............................................................35 ARTICLE 5. SUCCESSORS Section 5.01. Merger, Consolidation or the Transfer of All or Substantially All of the Assets of the Company..........................................................................35 Section 5.02. Merger, Consolidation or the Transfer of All or Substantially All of the Assets of NLC.....36 Section 5.03. Successor Corporation Substituted..........................................................37 ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01. Events of Default..........................................................................38 Section 6.02. Acceleration...............................................................................39 Section 6.03. Other Remedies.............................................................................39 Section 6.04. Waiver of Past Defaults....................................................................39 Section 6.05. Control by Majority........................................................................40 Section 6.06. Limitation on Suits........................................................................40 Section 6.07. Rights of Holders of Notes to Receive Payment..............................................40 Section 6.08. Collection Suit by Trustee.................................................................41 Section 6.09. Trustee May File Proofs of Claim...........................................................41 Section 6.10. Priorities.................................................................................41 Section 6.11. Undertaking for Costs......................................................................42 ARTICLE 7. TRUSTEE Section 7.01. Duties of Trustee..........................................................................42 Section 7.02. Rights of Trustee..........................................................................43 Section 7.03. Individual Rights of Trustee...............................................................44 Section 7.04. Trustee's Disclaimer.......................................................................44 Section 7.05. Notice of Defaults.........................................................................44 Section 7.06. Reports by Trustee to Holders of the Notes.................................................44 Section 7.07. Compensation and Indemnity.................................................................44 Section 7.08. Replacement of Trustee.....................................................................45 Section 7.09. Successor Trustee by Merger, etc...........................................................46 Section 7.10. Eligibility; Disqualification..............................................................46 Section 7.11. Preferential Collection of Claims Against Issuers..........................................46 ARTICLE 8. AMENDMENT, SUPPLEMENT AND WAIVER Section 8.01. Without Consent of Holders of Notes........................................................47 Section 8.02. With Consent of Holders of Notes...........................................................47 Section 8.03. Compliance with Trust Indenture Act........................................................48 Section 8.04. Revocation and Effect of Consents..........................................................49 Section 8.05. Notation on or Exchange of Notes...........................................................49 Section 8.06. Trustee to Sign Amendments, etc............................................................49 ARTICLE 9. COLLATERAL AND SECURITY Section 9.01. Collateral Documents.......................................................................49 Section 9.02. Recording and Opinions.....................................................................50 Section 9.03. Release of Note Collateral.................................................................50 Section 9.04. Certificates of the Issuers................................................................51 Section 9.05. Certificates of the Trustee................................................................51 Section 9.06. Authorization of Actions to Be Taken by the Trustee Under the Collateral Documents.........51 Section 9.07. Authorization of Receipt of Funds by the Trustee Under the Collateral Documents............52 Section 9.08. Termination of Security Interest...........................................................52 ARTICLE 10. SATISFACTION AND DISCHARGE Section 10.01. Satisfaction and Discharge.................................................................52 Section 10.02. Application of Trust Money.................................................................53 ARTICLE 11. MISCELLANEOUS Section 11.01. Trust Indenture Act Controls...............................................................53 Section 11.02. Notices....................................................................................53 Section 11.03. Communication by Holders of Notes with Other Holders of Notes..............................55 Section 11.04. Certificate and Opinion as to Conditions Precedent.........................................55 Section 11.05. Statements Required in Certificate or Opinion..............................................55 Section 11.06. Rules by Trustee and Agents................................................................55 Section 11.07. No Personal Liability of Directors, Officers, Employees, Stockholders and Agents...........56 Section 11.08. Governing Law..............................................................................56 Section 11.09. No Adverse Interpretation of Other Agreements..............................................56 Section 11.10. Successors.................................................................................56 Section 11.11. Severability...............................................................................56 Section 11.12. Counterpart Originals......................................................................56 Section 11.13. Table of Contents, Headings, etc...........................................................56
SCHEDULES Schedule A SCHEDULED CASH RESERVE AMOUNT EXHIBITS Exhibit A FORM OF NOTE Exhibit B LIST OF COLLATERAL DOCUMENTS INDENTURE dated as of August 12, 2002 between Comdisco Holding Company, Inc., a Delaware corporation (the "Company"), Comdisco, Inc., a Delaware corporation ("NLC" and, together with the Company, the "Issuers"), and Wells Fargo Bank Minnesota, National Association, a national banking association, as trustee (the "Trustee"). The Company, NLC and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the Variable Rate Senior Secured Notes due 2004 (the "Notes"): ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions. "Acquired Debt" means, with respect to any specified Person: (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial ownership of 10% or more of the Voting Stock of a Person will be deemed to be control. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary that apply to such transfer or exchange. "Bankruptcy Law" means Title 11, U.S. Code or any applicable federal or state or other applicable bankruptcy, insolvency, reorganization or other similar law for the relief of debtors. "Board of Directors" means: (a) with respect to a corporation, the board of directors of the corporation; (b) with respect to a partnership, the board of directors of the general partner of the partnership; and (c) with respect to any other Person, the board or committee of such Person serving a similar function. "Business Day" means any day other than a Legal Holiday. "Capital Lease Obligation" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means any and all shares or other equivalents (however designated) of capital stock, including all common stock and all preferred stock, in the case of a corporation, or partnership interests or other equivalents (however designated) in the case of a partnership or common shares of beneficial interest or other equivalents (however designated) in the case of a trust. "Cash Equivalents" means: (a) United States dollars; (b) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government having maturities of not more than one year from the date of acquisition; (c) certificates of deposit and Eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of "B" or better; (d) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (b) and (c) above entered into with any financial institution meeting the qualifications specified in clause (c) above; (e) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Rating Services and in each case maturing within 271 days after the date of acquisition; (f) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (e) of this definition; and (g) the following money market funds (including any successor fund or equivalent thereto): (i) Goldman Sachs Financial Square Money Market Fund; (ii) Goldman Sachs Financial Square Prime Obligations Fund; (iii) Goldman Sachs Financial Square Treasury Obligations Fund; (iv) Goldman Sachs Financial Square Federal Fund; and (v) money market funds that primarily invest in the types of investments that are invested in by one or more of the funds identified in subclauses (i) through (iv) of this clause (g). "Change in Control" means the occurrence of any of the following: (a) the sale of all or substantially all of the assets of the Issuers and their Subsidiaries taken as a whole, to any Person or related group of Persons; (b) the consummation of any consolidation or merger of either of the Issuers: (i) in which the applicable Issuer is not the continuing or surviving corporation, other than a consolidation or merger: (1) with a wholly-owned Subsidiary of the applicable Issuer in which all of the common stock of the applicable Issuer outstanding immediately prior to the effectiveness thereof is changed into or exchanged for the same consideration, or (2) in which the stockholders of the applicable Issuer immediately prior to the consummation of such consolidation or merger own greater than 50% of the total voting power of all classes of capital shares of the continuing or surviving corporation immediately following the consummation of such consolidation or merger; or (ii) pursuant to which the shares of common stock of the applicable Issuer are converted into cash, securities, or other property, unless the stockholders of the applicable Issuer immediately prior to the consummation of such consolidation or merger own greater than 50% of the total voting power of all classes of capital shares of the continuing or surviving corporation immediately following the consummation of such consolidation or merger, (c) the acquisition by any Person individually or any Persons (in each case other than an Excluded Person or Excluded Persons) acting together that would constitute a "group" for purposes of Section 13(d) of the Exchange Act, together with any affiliates thereof, of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of greater than 50% of the total voting power of all classes of capital shares of either of the Issuers entitled to vote generally in the election of directors of the applicable Issuer; or (d) the first day on which a majority of members of the Board of Directors of the Company are not Continuing Directors. Notwithstanding clause (a) of the definition of "Change in Control", a Change in Control will not be deemed to have occurred as a result of a transaction in which either: (a) the holders of the shares of common stock of the applicable Issuer immediately prior to the sale of all or substantially all of the applicable Issuer's assets have, directly or indirectly, at least a majority of the shares of common stock of the corporation to which such assets were sold immediately after such asset sale; or (b) the holders of the shares of common stock of the Issuers immediately prior to the consolidation or merger have, directly or indirectly, at least a majority of the shares of common stock of the continuing or surviving corporation immediately after such consolidation or merger. Notwithstanding clause (c) of the definition of "Change in Control", a Change in Control will not be deemed to have occurred solely by virtue of any of the following Persons filing or becoming obligated to file a report under or in response to Schedule 13D or Schedule 14D-1 (or any successor schedule, form, or report) under the Exchange Act disclosing beneficial ownership by it of shares or securities of the applicable Issuer, of greater than 50% of the total voting power referred to in clause (c) of the foregoing definition or otherwise: (a) the other Issuer; (b) any Subsidiary; (c) any employee share purchase plan, share option plan, or other share incentive plan or program; (d) retirement plan or automatic dividend reinvestment plan; or (e) any substantially similar plan of the Issuers or any Subsidiary or any Person holding securities of the Issuers for or pursuant to the terms of any such employee benefit plan. "Collateral Agent" means the party named as such in the Collateral Documents until a successor replaces it in accordance with the provisions of the Collateral Documents and thereafter means the successor serving thereunder. "Collateral Documents" means all agreements, instruments, documents, pledges or filings listed on Exhibit B hereto that evidence, perfect, set forth or limit the security interest of the Collateral Agent in the Note Collateral. "Company" means Comdisco Holding Company, Inc., and any and all successors thereto. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who: (a) was a member of such Board of Directors on the date of this Indenture or elected to or otherwise named to the Board of Directors pursuant to the Plan; or (b) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 11.02 hereof or such other address as to which the Trustee may give notice to the Issuers and the Holders. "Custodian" means the Trustee, as custodian with respect to the Notes, or any successor entity thereto. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "Disclosure Statement" means the Disclosure Statement with respect to the Plan. "Disputed Claims Reserve" has the meaning given to that term in the Plan. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change in control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07. "Domestic Subsidiary" means any Subsidiary of the Issuers that was formed under the laws of the United States or any state of the United States or the District of Columbia. "Effective Date" means August 12, 2002. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Excess Cash" means Unrestricted Cash minus the sum of (i) an amount of cash or cash equivalents necessary to fund the Issuers' operating reserve for the fiscal quarter immediately following the fiscal quarter as to which any determination is being made, such operating reserves not to exceed the aggregate Scheduled Cash Reserve Amount and (ii) the amount of Notes optionally redeemed or to be optionally redeemed by the Issuers (unless the Issuers subsequently fail to redeem such Notes on the applicable redemption date) in accordance with Section 3.07 hereof following the last day of the fiscal quarter and prior to any mandatory redemption date in accordance with Section 3.08 hereof; provided, that amounts of Excess Cash determined by the foregoing shall be rounded down to the nearest whole multiple of $1,000. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Excluded Person" means any Person who is a holder of more than 5% of all classes of capital shares of the Issuers as of the Effective Date. "Existing Indebtedness" means up to $610.0 million in aggregate principal amount of Indebtedness of the Issuers and their Subsidiaries (excluding Indebtedness under this Indenture and the Subordinated Note Indenture) in existence on the date of the Indenture, until such amounts are repaid. "Foreign Subsidiary" of a Person means any Subsidiary of the referent Person that is not a Domestic Subsidiary. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time. "Global Notes" means each of the global Notes issued in accordance with Section 2.01 and substantially in the form of Exhibit A attached hereto that, except as otherwise provided in Section 2.01(b) hereof, bear the Global Note Legend and that have the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that are deposited with or on behalf of and registered in the name of the Depositary. "Global Note Legend" means the legend set forth in Section 2.06(f), which is required to be placed on all Global Notes issued under this Indenture. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. "Guarantee" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any specified Person, the obligations of such Person under: (a) swap agreements, cap agreements and collar agreements designed to protect such Person against fluctuations on interest or currency exchange rates; and (b) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. "Holder" means a Person in whose name a Note is registered. "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent: (a) in respect of borrowed money; (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (c) in respect of banker's acceptances; (d) representing Capital Lease Obligations; (e) representing the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; or (f) representing any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date will be: (a) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; (b) the principal amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due, in the case of any other Indebtedness; (c) in the case of a Guarantee of Indebtedness, the maximum amount of the outstanding Indebtedness guaranteed under such Guarantee; and (d) in the case of Indebtedness of others secured by a Lien on any asset of the specified Person, the fair market value of the asset(s) subject to such Lien. "Indenture" means this Indenture, as amended, modified or supplemented from time to time. "Initial Notes" means the Notes issued under this Indenture on the date hereof. "Investments" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Issuers or any Subsidiary of the Issuers sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Issuers such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Issuers, the Issuers will be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of Section 4.07. The acquisition by the Company or any Subsidiary of the Company of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company or such Subsidiary in such third Person in an amount equal to the fair market value of the Investment held by the acquired Person in such third Person. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York, the City of Chicago or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period. "Letter of Credit Facility" means the Credit and Security Agreement, dated as of June 18, 2002, between the Company and Fifth Third Bank (Chicago), and the other "Loan Documents" (as defined therein), each as amended, supplemented, refinanced, replaced, extended, defeased, increased, refunded, renewed, restated, revised or otherwise modified from time to time in the aggregate amount of outstanding letters of credit not to exceed $12,000,000.00 at any time. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction. "Management Incentive Plan" has the meaning given to that term in the Plan. "New Europe" means Comdisco Global Holding Company, Inc., and any and all successors thereto. "New Ventures" means Comdisco Ventures, Inc., and any and all successors thereto. "NLC" means Comdisco, Inc., and any and all successors thereto. "Non-Recourse Debt" means Indebtedness incurred in connection with discounted lease receivables programs substantially similar to the discounted lease receivables programs utilized in the ordinary course of business of the Issuers and/or their Subsidiaries prior to the date hereof as to which no default with respect to such Indebtedness (including any rights that the holders of the Indebtedness may have to take enforcement action against a Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Notes or the Senior Notes) of the Issuers or any of their Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its stated maturity. "Note Collateral" means all property, now owned or hereafter acquired, of the Issuers that, pursuant to the Collateral Documents, is subject to a security interest in favor of the Collateral Agent. "Notes" has the meaning assigned to it in the preamble to this Indenture. The Initial Notes shall be treated as a single class for all purposes under this Indenture. "Obligations" means any principal, interest, premium, if any, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Secretary, any Assistant Secretary, the Chief Operating Officer, the Chief Financial Officer, the Controller, the Treasurer or any Assistant Treasurer of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company or NLC, as the case may be, by two Officers of the Company or NLC, as the case may be, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company or NLC, as the case may be, that meets the requirements of Section 11.05 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 11.05 hereof. The counsel may be an employee of or counsel to the Issuers, any Subsidiary of the Issuers or the Trustee. "Participant" means, with respect to the Depositary, a Person who has an account with the Depositary. "Permitted Business" means: (a) the sale, collection or other liquidation of the assets of the Issuers and their Subsidiaries, the repayment of the Indebtedness of the Issuers and thereafter the payment of dividends or other distributions to the owners of the Capital Stock of the Company, as contemplated by the Plan and the Disclosure Statement; and (b) any business that is ancillary to the foregoing. "Permitted Investments" means: (a) any Investment (i) in the Issuers, (ii) in a Domestic Subsidiary of the Issuers or (iii) in a Foreign Subsidiary of the Issuers; provided, however, that the Issuers or a Domestic Subsidiary of the Issuers cannot make Investments in Foreign Subsidiaries pursuant to this subclause (iii) in an amount exceeding the aggregate distributions received by the Issuers or their Domestic Subsidiaries from Foreign Subsidiaries since April 1, 2002; provided, further, that any intercompany Indebtedness owed to the Issuers or any Domestic Subsidiary of the Issuers by any Foreign Subsidiary may be converted into equity of, or contributed to the capital of, a Foreign Subsidiary in order to maintain the solvency of any Foreign Subsidiary or in connection with a sale or other disposition of such Foreign Subsidiary; (b) any Investment in cash or Cash Equivalents; (c) any Investments made or received (i) in exchange for, or in compromise of, other Investments of the Issuers or any of their Subsidiaries existing as of the date hereof, (ii) in exchange for, or in compromise of, assets or other rights received by the Issuers or any of their Subsidiaries in exchange for, or in compromise of, Investments of the Issuers or any of their Subsidiaries, which assets, rights or Investments were in existence as of the date hereof or (iii) to extend, refinance, renew or replace any other Investments of the Issuers or any of their Subsidiaries existing as of the date hereof; (d) any Investments received in compromise of obligations of Persons incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; (e) Hedging Obligations; (f) Investments represented by accounts receivable created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (g) Investments, or Investments resulting from commitments to make Investments, existing as of the date of this Indenture; (h) Investments, or commitments to make Investments, in the form of (x) a lease of or rental agreement, (y) a sale contract (including an installment sale contract or conditional sale agreement), or (z) a secured financing, including any schedule or amendment thereto or assignment, assumption, renewal or novation thereof (and delivery, acceptance or installation certificates, landlord or mortgagee waivers, intercreditor or subordination agreements, incumbency certificates, purchase orders, purchase order assignments, and sale and leaseback agreements, each relating thereto), and in each case, which with respect thereto: (A) the Company, NLC or one of their Subsidiaries is the lessor, seller, secured party or obligee (whether initially or as an assignee), or (B) is between an obligor, on the one hand, and a lessor, seller, obligee, secured party or assignee of any of the foregoing, on the other hand, and (1) which would be a Permitted Investment if the Company, NLC or one of their Subsidiaries were the lessor, seller, obligee, secured party or assignee of any of the foregoing thereunder and (2) with respect to which the Company, NLC or one of their Subsidiaries is an assignee of the revenues or claims with respect thereto; (i) Investments in prepaid expenses, negotiable instruments held for collection, and lease, utility and worker's compensation, performance and other similar deposits in the ordinary course of business consistent with past practices; and (j) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (j) that are at the time outstanding not to exceed (1) $1.0 million in respect of Investments in any Person by New Ventures and (2) $1.0 million in respect of Investments in any Person by the Issuers or their Subsidiaries including New Ventures; provided, however, that any Investment by New Ventures with respect to this clause (j) shall be attributed, without duplication, to either subclause (1) hereof or subclause (2) hereof. "Permitted Liens" means: (a) Liens created, or intended to be created, under the Collateral Documents; (b) Liens on assets of any of the Issuers or their Subsidiaries securing Indebtedness that are permitted by clauses (c), (f) or (i) of the second paragraph of Section 4.09; (c) Liens in favor of any of the Issuers or their Subsidiaries; (d) Liens on property of a Person existing at the time such Person becomes a Subsidiary of the Issuers or New Ventures; provided, however, that such Liens were in existence prior to the contemplation of such Person becoming a Subsidiary of the Issuers or New Ventures and do not extend to any assets other than those of the Person that becomes a Subsidiary of the Issuers or New Ventures; provided, further, that such Person becomes a Subsidiary of the Issuers or New Ventures as a result of a Permitted Investment pursuant to clause (c) of the definition thereof; (e) Liens on property existing at the time of acquisition of such property by any of the Issuers or their Subsidiaries, provided, however, that such Liens were in existence prior to the contemplation of such acquisition and such property was acquired in exchange for, or in compromise of, Investments existing as of the date hereof or Investments resulting from commitments to make Investments existing as of the date hereof; (f) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (g) Liens on assets or rights which are not Note Collateral and which secure Indebtedness permitted under any clause of Section 4.09 so long as the Notes are repaid in full with the proceeds of, and concurrently with the incurrence of, such Indebtedness; (h) Liens existing on the date of this Indenture; (i) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings or negotiations promptly instituted and diligently concluded, provided, however, that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor; (j) Liens incurred in the ordinary course of business of the Issuers or any Subsidiary of the Issuers with respect to obligations that are not Indebtedness that do not exceed $1.0 million at any one time outstanding; (k) Liens on assets of NLC or any Subsidiaries of the Issuers that secure Non-Recourse Debt of NLC or such Subsidiaries; (l) statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other like Liens arising in the ordinary course of business and with respect to amounts not yet delinquent for a period of more than 90 days or which are being contested in good faith; provided, however, that a reserve or other appropriate provision as shall be required by GAAP shall have been made therefor; (m) easements, rights-of-way, restrictions, zoning, minor defects or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the business or assets of the Issuers or their Subsidiaries, taken as a whole, incurred in the ordinary course of business; (n) Liens arising by reason of any judgment not constituting an Event of Default under this Indenture; provided, however, that: (i) such Liens are being contested in good faith by appropriate proceedings or negotiations, and (ii) such Liens are adequately bonded or adequate reserves have been established on the books of the Issuers in accordance with GAAP; (o) Uniform Commercial Code financing statements filed for precautionary purposes in connection with any true lease of property leased by any of the Issuers or their Subsidiaries; provided, however, that any such financing statement does not cover any property other than the property subject to such lease and the proceeds thereof; and (p) renewals or refundings of Indebtedness expressly permitted by the Indenture secured by any Liens referred to in clauses (a), (b), (d), (e), (g), (h) and (k) above; provided, however, that: (i) such new Liens will be limited to all or part of the same property that secured the original Liens (plus improvements to or on such property); and (ii) the principal amount of the Indebtedness secured by such Liens at such time is not increased to any amount greater than the sum of (1) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (a), (b), (d), (e), (g), (h) and (k) above immediately prior to such renewal or refunding, and (2) an amount necessary to pay any fees and expenses, including premiums, related to such renewals or refundings. "Permitted Refinancing Indebtedness" means any Indebtedness of any of the Issuers or their Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of any of the Issuers or their Subsidiaries (other than intercompany Indebtedness); provided, however, that: (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith); (b) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (c) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of the Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (d) such Permitted Refinancing Indebtedness is incurred either by the Issuers or by the Subsidiary which is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (e) the covenants contained in the documentation governing such Permitted Refinancing Indebtedness are no more restrictive than the covenants contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (f) if more than 30 days remain until the maturity date of the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded, the interest rate of such Permitted Refinancing Indebtedness does not exceed the interest rate of the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government (or any agency, instrumentality or political subdivision thereof). "Plan" means the First Amended Joint Plan of Reorganization of Comdisco, Inc. and its Affiliated Debtors and Debtors In Possession dated as of June 13, 2002, as amended, modified or otherwise supplemented through the Effective Date. "Pledge Agreement" means the Pledge Agreement, dated as of the Effective Date, among the Issuers and the Trustee, as amended, modified or supplemented from time to time. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the Effective Date, by and among the Issuers and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time. "Responsible Officer," when used with respect to the Trustee, means any officer within the corporate trust department of the Trustee located at the Corporate Trust Office of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Investment" means an Investment other than a Permitted Investment. "Scheduled Cash Reserve Amount" means the respective amount set forth on Schedule A hereto allocated among the Subsidiaries of the Company as the Company's Board of Directors deems appropriate. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Stay Bonus Plan" has the meaning given to that term in the Disclosure Statement. "Subordinated Note Indenture" means the indenture, dated as of the date of this Indenture, to be executed by the Issuers and the Subordinated Note Trustee, pursuant to which the Subordinated Notes will be issued. "Subordinated Note Trustee" means Wells Fargo Bank Minnesota, National Association in its capacity as trustee under the Subordinated Note Indenture and any successor trustee, if any, under the Subordinated Note Indenture. "Subordinated Notes" means the 11% Subordinated Secured Notes due 2005 issued pursuant to the Subordinated Note Indenture. "Subsidiary" means, with respect to any specified Person: (a) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (b) any partnership (i) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (ii) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). "Supplemental Distribution Account" has the meaning given to that term in the Plan. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb), as amended, as in effect on the date hereof until such time as this Indenture is qualified under the TIA and thereafter as in effect on the date on which this Indenture is qualified under the TIA. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Unrestricted Cash" means cash or cash equivalents as set forth on the balance sheets of the Issuers and their Subsidiaries prepared in accordance with GAAP as of 5:00 p.m. on the last day of the applicable fiscal quarter minus, without duplication, the sum of cash or cash equivalents (i) held in non-domestic accounts in the ordinary operation of the business, (ii) required to be shown as restricted cash or cash equivalents in accordance with GAAP on such balance sheet (or the notes thereto) or otherwise unavailable to Issuers and their Subsidiaries for general use as a result of the Plan, applicable law or agreement with a third party, (iii) held or maintained in the Disputed Claims Reserve, (iv) held or maintained in the Supplemental Distribution Account, (v) held or maintained in the cash account pledged to the issuers of letters of credit under the Letter of Credit Facility and (vi) held or required to be held in an escrow account or otherwise legally segregated from the funds of the Issuers and their Subsidiaries pursuant to the Stay Bonus Plan and/or the Management Incentive Plan. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness. Section 1.02. Other Definitions. Defined in Term Section ---- ------- "Affiliate Transaction"......................................... 4.10 "Authentication Order" ......................................... 2.02 "Change in Control Offer"....................................... 4.14 "Change in Control Repurchase Date"............................. 4.14 "Change in Control Repurchase Price"............................ 4.14 "DTC"........................................................... 2.03 "Event of Default".............................................. 6.01 "incur"......................................................... 4.09 "Offer"......................................................... 3.09 "Offer Period".................................................. 3.09 "Paying Agent".................................................. 2.03 "Permitted Debt"................................................ 4.09 "Registrar"..................................................... 2.03 "Restricted Payments"........................................... 4.07 Section 1.03 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC; "indenture securities" means the Notes; "indenture security holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Notes means the Company and NLC and any successor obligor upon the Notes. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. Section 1.04. Rules of Construction. Unless the context otherwise requires: (a) a term has the meaning assigned to it; (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (c) "or" is not exclusive; (d) words in the singular include the plural, and in the plural include the singular; (e) provisions apply to successive events and transactions; and (f) references to sections of or rules under the Securities Act and the Exchange Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE 2. THE NOTES Section 2.01. Form and Dating. (a) General. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage, as applicable. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof; provided, however, that the Notes may be in denominations (rounded to the nearest whole dollar) of less than $1,000 (but in no event less than $1.00) to make redemptions of Notes pursuant to Section 3.07 and 3.08 hereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture, and the Issuers and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (b) Global Notes. Except as expressly required by the terms of this Indenture, Notes shall be issued in global form substantially in the form of Exhibit A attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes otherwise issued in definitive form shall be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, redemptions and transfers of interests therein in accordance with this Indenture. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. Section 2.02. Execution and Authentication. Two (2) Officers of both the Company and NLC shall sign the Notes for the Company and NLC, respectively. The signatures of any of those Officers on the Notes may be either a manual or a facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of an authorized signatory of the Trustee on the certificate of authentication of the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Issuers signed by two (2) Officers of both the Company and NLC specifying the date on which the Notes are to be authenticated and whether the Notes are Definitive Notes or Global Notes (an "Authentication Order"), authenticate Notes for original issue up to the aggregate principal amount stated in the Notes. The aggregate principal amount of Notes outstanding at any time may not exceed such amount except as provided in Section 2.07 hereof. The Trustee may appoint an authenticating agent acceptable to the Issuers to authenticate Notes. The Issuers shall pay all reasonable fees payable to the authenticating agent. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. Section 2.03. Registrar and Paying Agent. The Issuers shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Issuers may change any Paying Agent or Registrar upon prior written notice to the Trustee without notice to any Holder. The Issuers shall notify the Trustee in writing of the name and address and any change in the name or address of any Agent not a party to this Indenture. If the Issuers fail to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Issuers or any of their Subsidiaries may act as Paying Agent or Registrar. The Issuers shall enter into an appropriate agency agreement with any agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent and shall, if required, incorporate the provisions of the TIA. The Issuers initially appoint The Depository Trust Company ("DTC") to act as Depositary with respect to the Notes. The Issuers initially appoint the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Notes. Section 2.04. Paying Agent to Hold Money in Trust. The Issuers shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal or premium, if any, or interest on the Notes, and will notify the Trustee of any default by the Issuers in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Issuers at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Issuers or a Subsidiary of the Issuers) shall have no further liability for the money delivered to the Trustee. If either the Company or NLC, or a Subsidiary of the Company or NLC, acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Issuers, the Trustee shall serve as Paying Agent for the Notes. Section 2.05. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Issuers shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes, including the aggregate principal amount held by each Holder, and the Issuers shall otherwise comply with TIA ss. 312(a). Section 2.06. Transfer and Exchange. (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if (i) the Issuers delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Issuers within 90 days after the date of such notice from the Depositary or (ii) following the occurrence and during the continuation of a Default or Event of Default, any Person holding a beneficial interest in a Global Note requests that the Global Notes should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Sections 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); provided, however, that beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers of beneficial interests in a Global Note. (c) Transfer or Exchange of Beneficial Interests in Global Notes for Definitive Notes. If any holder of a beneficial interest in a Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. (d) Transfer and Exchange of Definitive Notes for Beneficial Interests in Global Notes. A Holder of a Definitive Note may exchange such Note for a beneficial interest in a Global Note or transfer such Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Global Notes. (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. A Holder of Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of a Definitive Note. (f) Legends. The following legends shall appear on the face of all Global Notes issued under this Indenture in substantially the following form unless specifically stated otherwise in the applicable provisions of this Indenture. "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 8.05 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE OR IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF COMDISCO HOLDING COMPANY, INC. AND COMDISCO, INC." (g) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (h) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Issuers shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Issuers' order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Trustee or the Issuers may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.14 and 8.05 hereof). (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Issuers, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Issuers shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuers may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuers shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications and certificates required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. Section 2.07. Replacement Notes. If any mutilated Note is surrendered to the Trustee or the Issuers and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Issuers shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Issuers, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Issuers to protect the Issuers, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Issuers may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Issuers and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. Section 2.08. Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or NLC, or an Affiliate of the Company or NLC, holds the Note. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Issuers, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. Section 2.09. Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuers or any of its Affiliates or held or maintained in the Disputed Claims Reserve, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee has actual knowledge are so owned shall be so disregarded. Section 2.10. Temporary Notes. Until certificates representing Notes are ready for delivery, the Issuers may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Issuers considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Issuers shall prepare and the Trustee shall authenticate Definitive Notes in exchange for temporary Notes. After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon surrender of the temporary Notes at the office or agency maintained by the Issuers for such purpose pursuant to Section 4.02 hereof, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Issuers shall execute, and the Trustee shall authenticate and make available for delivery, in exchange thereof the same aggregate principal amount of Definitive Notes of authorized denominations. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. Section 2.11. Cancellation. The Issuers at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy canceled Notes in accordance with its normal practice and applicable law. Certification of the destruction of all canceled Notes shall be delivered to the Issuers. The Issuers may not issue new Notes to replace Notes that it has redeemed or repurchased or paid or that have been delivered to the Trustee for cancellation. Section 2.12. Defaulted Interest. If the Issuers default in a payment of interest on the Notes, the Issuers shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Issuers shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Issuers shall, with the consent of the Trustee, fix or cause to be fixed each such special record date and payment date, provided, however, that each such special record date shall be at the earliest practicable date but in all events shall not be less than five Business Days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Issuers (or, upon the written request of the Issuers, the Trustee in the name and at the expense of the Issuers) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. ARTICLE 3. REDEMPTION AND PREPAYMENT Section 3.01. Notices to Trustee. If the Issuers elect to redeem Notes pursuant to the optional redemption provisions of Section 3.07 or are required to redeem Notes pursuant to Section 3.08, the Issuers shall furnish to the Trustee, at least 10 days but not more than 60 days before an optional redemption date pursuant to Section 3.07 or at least 10 days but not more than 30 days before a mandatory redemption date pursuant to Section 3.08, an Officers' Certificate setting forth (i) that the redemption is an optional redemption pursuant to Section 3.07 or an mandatory redemption pursuant to Section 3.08, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. Section 3.02. Selection of Notes to Be Redeemed or Repurchased. If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Notes to be redeemed or purchased among the Holders of the Notes pro rata in accordance with the outstanding principal amount of the Notes outstanding immediately prior to such redemption or purchase. The Trustee shall promptly notify the Issuers, the Registrar and the Paying Agent in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected to be redeemed may be in whole dollar amounts of less than $1,000. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. Section 3.03. Notice of Redemption. Subject to the provisions of Sections 3.08 and 3.09 hereof, at least 10 days but not more than 60 days before an optional redemption date pursuant to Section 3.07 or at least 10 days but not more than 30 days before a mandatory redemption date pursuant to Section 3.08, the Issuers shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the Notes to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (d) the name and address of the Paying Agent to which the Notes are to be surrendered for redemption; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Issuers default in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Issuers' request, the Trustee shall give the notice of redemption in the Issuers' name and at the Issuers' expense; provided, however, that the Issuers shall have delivered to the Trustee, at least 5 Business Days prior to the date on which any notice of redemption pursuant to this Article 3 is requested to be mailed by the Trustee, Officers' Certificates requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. Section 3.04. Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder. Section 3.05. Deposit of Redemption Price. Prior to 11:00 a.m., Chicago time, not less than one Business Day prior to the redemption date, the Issuers shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date) on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Issuers any money deposited with the Trustee or the Paying Agent by the Issuers in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed. If the Issuers comply with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Issuers to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. Section 3.06. Notes Redeemed in Part. Upon surrender of a Note that is redeemed in part, the Issuers shall issue and, upon the Issuers' written request, the Trustee shall authenticate for the Holder at the expense of the Issuers a new Note equal in principal amount to the unredeemed portion of the Note surrendered. Section 3.07. Optional Redemption. (a) The Issuers may, at its option at any time after the Effective Date, redeem the Notes, in whole or in part, on at least 10 days' but not more than 60 days' notice to each Holder of Notes to be redeemed in cash at its registered address, at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon to the redemption date. (b) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. Section 3.08. Mandatory Redemption. (a) The Issuers shall be required to make mandatory redemptions of the Notes on or before the 45th day after the end of each fiscal quarter ending on September 30, December 31, March 31 and June 30 of each year pursuant to which the Issuers will redeem a principal amount of Notes equal to Excess Cash as of the end of the immediately preceding fiscal quarter; provided, however, that the Issuers shall not be obligated to make any redemption pursuant to this Section 3.08 of less than $1.0 million principal amount of Notes unless the principal amount of Notes then outstanding is less than or equal to the principal amount of Notes otherwise required to be redeemed pursuant to this Section 3.08 without giving effect to this proviso. Any such mandatory redemption shall be made on at least 10 days' but not more than 30 days' notice to each Holder of the Notes to be redeemed in cash at its registered address, at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon to the redemption date. (b) Any redemption pursuant to this Section 3.08 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. Section 3.09. Offers to Repurchase by the Issuers. In the event that, pursuant to Section 4.14 hereof, the Issuers shall be required to commence an offer to all Holders to purchase Notes (an "Offer"), it shall follow the procedures specified below. The Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the "Offer Period"). No later than the applicable Change in Control Repurchase Date, the Issuers shall purchase all Notes tendered in response to the Offer. If the applicable Change in Control Repurchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Offer; provided, however, that if the Issuers, the Depositary or the Paying Agent, as the case may be, fail to mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Issuers for purchase pursuant to this Section 3.09, interest shall be paid by the Issuers on the unpaid principal from such interest record date until such principal is paid and to the extent lawful on any interest not paid on such interest, in each case at the rate provided in the Notes. Upon the commencement of an Offer, the Issuers shall send, by first class mail, a written notice to the Trustee and each of the Holders, with a copy to the Trustee. Such notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Offer. The Offer shall be made to all Holders. The notice, which shall govern the terms of the Offer, shall state: (a) that the Offer is being made pursuant to this Section 3.09 and Section 4.14 hereof and the length of time the Offer shall remain open; (b) the Change in Control Repurchase Price and the Change in Control Repurchase Date; (c) that any Note not tendered or accepted for payment shall continue to accrue interest; (d) that, unless the Issuers default in making such payment, any Note accepted for payment pursuant to the Offer shall cease to accrue interest after the Change in Control Repurchase Date; (e) that Holders electing to have a Note purchased pursuant to an Offer may elect to have Notes purchased in whole or in part; (f) that Holders electing to have a Note purchased pursuant to any Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Issuers, a depositary, if appointed by the Issuers, or a Paying Agent at the address specified in the notice at least ten days before the Change in Control Repurchase Date; (g) that Holders shall be entitled to withdraw their election if the Issuers, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; and (h) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). On or before the Change in Control Repurchase Date, the Issuers shall, to the extent lawful, accept for payment, all Notes tendered, and shall deliver to the Trustee Officers' Certificates stating that such Notes or portions thereof were accepted for payment by the Issuers in accordance with the terms of this Section 3.09. The Issuers, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Change in Control Repurchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Issuers for purchase, and the Issuers shall promptly issue a new Note, and the Trustee, upon written request from the Issuers shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Issuers to the Holder thereof. The Issuers shall publicly announce the results of the Offer on or as soon as reasonably practicable following the Change in Control Repurchase Date. Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. ARTICLE 4. COVENANTS Section 4.01. Payment of Notes. The Issuers shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Issuers or a Subsidiary of the Issuers, holds as of 12:00 noon Eastern Time on the due date, money deposited by the Issuers in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. Section 4.02. Maintenance of Office or Agency. The Issuers shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuers in respect of the Notes and this Indenture may be served. The Issuers shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuers shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Issuers hereby appoint the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Issuers may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Issuers of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Issuers shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Issuers hereby designate the corporate trust office of the Trustee's Agent located at c/o the Depository Trust Company, 1st Floor, TADS Department, 55 Water Street, New York, New York 10041, as one such office or agency of the Issuers in accordance with Section 2.03. Section 4.03. Reports. Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company shall furnish to the Trustee and the Holders of Notes within the time periods specified in the SEC's rules and regulations (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K (or any successor forms) if the Company was required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report on the annual financial statements by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the SEC on Form 8-K (or any successor forms) if the Company were required to file such reports. In addition, whether or not required by the rules and regulations of the SEC, the Company shall file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. The Company shall at all times comply with TIA ss. 314(a). Section 4.04. Compliance Certificate. (a) The Issuers shall deliver to the Trustee, within 120 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Issuers and their Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether each of the Issuers and their Subsidiaries has kept, observed, performed and fulfilled their obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge each of the Issuers has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action each of the Issuers, as the case may be, is taking or propose to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event, its nature and status and what action each of the Issuers, as the case may be, is taking or propose to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03 above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Issuers shall, so long as any of the Notes are outstanding, deliver to the Trustee, within 10 days after any executive officer of either of the Issuers becomes aware of any Event of Default, an Officers' Certificate specifying such Event of Default, the period of existence thereof and what action each of the Issuers, as the case may be, is taking or proposes to take with respect thereto. (d) In the event that the Subordinated Notes are declared due and payable before the Stated Maturity of such Indebtedness because of the occurrence of an event of default thereunder, the Issuers shall give prompt notice in writing of such happening to the Trustee. Section 4.05. Taxes. The Issuers shall, and shall cause each of their Subsidiaries to, pay or discharge, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or negotiations or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. Section 4.06. Stay, Extension and Usury Laws. The Issuers covenant (to the extent that it may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law that would prohibit or forgive the Issuers from paying all or any portion of the principal of, premium, if any, or interest on the Notes in accordance with this Indenture, wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture, and the Issuers (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. Section 4.07. Restricted Payments. The Issuers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly: (a) declare or pay any dividend or make any other payment or distribution on account of the Issuers' or any of their Subsidiaries Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Issuers or any of their Subsidiaries) or to the direct or indirect holders of the Issuers' or any of their Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Issuers or any Subsidiary of the Issuers or payable to the Issuers or a Subsidiary of the Issuers); (b) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Issuers) any Equity Interests of the Issuers or any of their Subsidiaries held by any Person (other than the Issuers or any of its Subsidiaries); (c) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes, except a payment of interest or principal and premium, if any, at the Stated Maturity thereof; or (d) make any Restricted Investment (all such payments and other actions set forth in these clauses (a) through (d) being collectively referred to as "Restricted Payments"). So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions shall not prohibit: (a) the redemption, repurchase, retirement, defeasance or other acquisition of any Subordinated Notes in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Issuers) of, Equity Interests of the Issuers (other than Disqualified Stock); (b) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of any of the Issuers or their Subsidiaries with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (c) the payment of any dividend by NLC or a Subsidiary of the Issuers to the holders of its Equity Interests on a pro rata basis; and (d) the making of a Change in Control offer to repurchase the Subordinated Notes after a Change in Control. Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries. The Issuers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary to: (a) pay dividends or make any other distributions on its Capital Stock to the Issuers or any Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to the Issuers or any of their Subsidiaries; (b) make loans or advances to the Issuers or any of their Subsidiaries; or (c) transfer any of its properties or assets to the Issuers or any of their Subsidiaries. However, the preceding restrictions shall not apply to encumbrances or restrictions existing under or by reason of: (a) agreements governing Existing Indebtedness as in effect on the date of this Indenture and any amendments, supplements, refinancings, replacement, extensions, defeasance, refundings, renewals, restatements, revisions or other modifications to those agreements; provided, however, that the amendments, supplements, refinancings, replacement, extensions, defeasance, refundings, renewals, restatements, revisions or other modifications are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the date of this Indenture and do not increase the amount of the Indebtedness; (b) this Indenture and the Notes; (c) the Subordinated Note Indenture and the Subordinated Notes; (d) applicable law; (e) customary non-assignment provisions in any contract or licensing agreement entered into in the ordinary course of business and consistent with past practices; (f) purchase money obligations permitted to be incurred pursuant to clause (c) of the second paragraph of Section 4.09 that impose restrictions on that property of the nature described in clause (c) of the preceding paragraph of this Section 4.08; (g) any agreement for the sale or other disposition of NLC or a Subsidiary that restricts distributions by NLC or that Subsidiary pending its sale or other disposition; (h) Permitted Refinancing Indebtedness, provided, however, that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (i) Liens securing Indebtedness otherwise permitted to be incurred under the provisions of Section 4.11 that limit the right of the debtor to dispose of the assets subject to such Liens; (j) provisions with respect to the disposition or distribution of assets or property in joint venture agreements, assets sale agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business; and (k) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock. The Issuers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt), and the Issuers shall not issue any Disqualified Stock and shall not permit any of their Subsidiaries to issue any shares of preferred stock. The first paragraph of this Section 4.09 shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (a) the incurrence by the Issuers and their Subsidiaries of the Existing Indebtedness; (b) the incurrence by the Issuers of Indebtedness represented by the Notes and the Subordinated Notes; (c) with respect to lease or rental commitments to lessees (i) existing as of the date hereof or (ii) permitted to be incurred by Foreign Subsidiaries after the date hereof in accordance with Section 4.12, the incurrence by the Issuers or any of their Subsidiaries of Indebtedness represented by purchase money obligations incurred for the purpose of financing all or any part of the purchase price or cost of equipment leased or sold to, or otherwise financed for, a customer of the business of the Issuers or such Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (c), not to exceed $10.0 million at any time outstanding; (d) the incurrence by (i) the Issuers or any of their Subsidiaries or (ii) with respect to clause (b) of this Section 4.09, the Issuers, of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under clauses (a), (b), (c), (d), (g), (i) or (k) of this paragraph; (e) the incurrence by the Issuers or any of their Subsidiaries of intercompany Indebtedness between or among the Issuers and any of their Subsidiaries; provided, however, that: (i) if either the Company or NLC is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes; and (ii) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Issuers or a Subsidiary of the Issuers and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company, NLC or a Subsidiary of the Issuers shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Issuers or such Subsidiary, as the case may be, that was not permitted by this clause (e); (f) the incurrence by the Issuers or any of their Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding or for the purpose of fixing or hedging currency risk; (g) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; (h) Indebtedness of the Issuers or any Subsidiary to the extent that the net proceeds thereof are promptly: (i) used to purchase Notes tendered in an offer to purchase made as a result of a Change in Control; or (ii) used to redeem Notes pursuant to Section 3.08 hereof. (i) the incurrence by the Issuers or any of their Subsidiaries of additional Indebtedness (including Acquired Debt) in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (i), not to exceed $5.0 million; (j) the incurrence of Non-Recourse Debt; provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt, such event shall be deemed to constitute an incurrence of Indebtedness by a Subsidiary of the Issuers that was not permitted by this clause (j); and (k) obligations in respect of letters of credit, performance and surety bonds and completion guarantees provided by the Issuers or any Subsidiary of the Issuers in the ordinary course of business, including pursuant to the Letter of Credit Facility. The Issuers shall not incur any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Issuers (other than the Notes or the Subordinated Notes) unless such Indebtedness is also contractually subordinated in right of payment to the Notes on substantially identical terms; provided, however, that no Indebtedness of the Issuers shall be deemed to be contractually subordinated in right of payment to any other Indebtedness of the Issuers solely by virtue of being unsecured. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (a) through (k) above, the Company shall be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Section 4.10. Transactions with Affiliates. The Issuers shall not, and shall not permit any of their Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each, an "Affiliate Transaction"), unless: (a) the Affiliate Transaction is on terms that are no less favorable to the Issuers or the relevant Subsidiary than those that would have been obtained in a comparable transaction by the Issuers or such Subsidiary with an unrelated Person; and (b) the Issuers delivers to the Trustee: (i) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $500,000, resolutions of the Board of Directors of the Issuers, as the case may be, set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Company; and (ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $2.5 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. The following items shall not be deemed to be Affiliate Transactions and, therefore, shall not be subject to the provisions of the prior paragraph: (a) any employment agreement that is in effect on the date of this Indenture or that is entered into by the Issuers or any of their Subsidiaries with approval by a majority of the disinterested members of the Board of Directors of the Company; (b) transactions between or among one or more of the Company and/or NLC and/or their respective Subsidiaries; (c) payment of reasonable directors fees to Persons who are not otherwise Affiliates of the Issuers; (d) Restricted Payments that are permitted by Section 4.07; (e) advances to Officers of any of the Issuers or their Subsidiaries in the ordinary course of business to provide for the payment of reasonable expenses incurred by such Persons in the performance of their responsibilities to the Issuers or such Subsidiary or in connection with any relocation; (f) reasonable fees and compensation (including, without limitation, bonuses, retirement plans and securities, equity options and equity ownership plans, and payments, bonuses or other incentives offered pursuant to the Management Incentive Plan) paid or issued to and indemnities provided on behalf of, Officers, directors, employees or consultants of the Issuers or any Subsidiary in the ordinary course of business; and (g) any other transactions expressly authorized by the Court pursuant to the Plan or any order entered by the Court in respect thereof. Section 4.11. Liens. The Issuers shall not, and shall not permit any of its Subsidiaries to, directly or indirectly (a) create, incur, assume or suffer to exist any Lien of any kind securing Indebtedness or trade payables on any asset of the Issuers or any of its Subsidiaries now owned or hereafter acquired or on any income or profits therefrom, or (b) assign or convey any right to receive income therefrom, securing Indebtedness, except in each case for Permitted Liens. Section 4.12. Line of Business. Subject to, and without limitation to the provisions restricting the business operations of the Company contained in the articles of incorporation, certificate of incorporation or similar organizational document of the Company, the Issuers shall not, and shall not permit any Subsidiary to, engage in any business other than the Permitted Business except (i) to such extent as would not be material to the financial condition of the Issuers and their Subsidiaries taken as a whole and as may arise in connection with, or as a result of, the enforcement of the Issuers' and/or their Subsidiaries' legal rights against any third parties in implementing the Permitted Business with respect to New Ventures or (ii) with respect to Permitted Investments, or commitments to make Permitted Investments, permitted by clause (h) of the definition thereof, made by Foreign Subsidiaries within six months of the date hereof; provided, that the aggregate amount of such Permitted Investments is less than $50.0 million at any time within such six month period. Section 4.13. Corporate Existence; Certificate of Incorporation. Subject to the provisions of Section 5.1 and Section 5.2 hereof, the Issuers shall do or cause to be done all things necessary to preserve and keep in full force and effect: (a) its corporate existence, and the corporate, partnership or other existence of each of their Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Issuers or any such Subsidiary, and (b) the rights (charter and statutory), licenses and franchises of the Issuers and their Subsidiaries; provided, however, that the Issuers shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of their Subsidiaries, if the Board of Directors of the Issuers, as the case may be, shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Issuers, as the case may be, and their Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes. Notwithstanding anything to the contrary contained in this Section 4.13, the Company shall not amend, modify or alter its certificate of incorporation, articles of incorporation or similar organizational document in any manner that would materially expand or enlarge or fundamentally alter the business operations to be conducted by the Company pursuant to such certificate of incorporation, articles of incorporation or similar organizational document. Section 4.14. Offers to Repurchase by the Company. Upon the occurrence of a Change in Control of the Company occurring after the date of issuance of the Notes and on or prior to maturity, the Issuers shall make an offer to each Holder (a "Change in Control Offer") to repurchase all or any part of each Holder's Notes on the date, which must be a Business Day (the "Change in Control Repurchase Date"), that is selected by the Issuers (subject to compliance with the minimum Offer Period specified in Section 3.09) that is not more than 75 days after the date the Issuers give notice of the Change in Control at a price (the "Change in Control Repurchase Price") equal to 101.0% of the principal amount thereof, together with accrued and unpaid interest to the Change in Control Repurchase Date. Not less than one Business Day prior to the Change in Control Repurchase Date, the Issuers shall be required to deposit with the Trustee or a Paying Agent an amount of money sufficient to pay the Change in Control Repurchase Price of the Notes that are to be repaid on the Change in Control Repurchase Date. On or before the 15th day after the occurrence of a Change in Control, the Issuers shall mail to all Holders the information and documentation required to be provided pursuant to Section 3.09. The Issuers shall comply with any applicable requirements of Rules 13e-4 and 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes in connection with a Change in Control and shall be deemed not to have breached its obligations under this Section 4.14 as a result of such compliance. Notwithstanding anything to the contrary in this Section 4.14, the Issuers shall not be required to make a Change in Control Offer upon a Change in Control if a third party makes the Change in Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.14 and Section 3.09 hereof and all other provisions of this Indenture applicable to a Change in Control Offer made by the Issuers and purchases all Notes validly tendered and not withdrawn under such Change in Control Offer. Section 4.15. Insurance. The Issuers shall, and shall cause their Subsidiaries to, maintain insurance with responsible carriers against such risks and in such amounts as is customarily carried by similar businesses with such deductibles, retentions, self insured amounts and coinsurance provisions as are customarily carried by similar businesses of similar size, and shall furnish to the Trustee, upon reasonable written request, full information as to the insurance carried. Section 4.16. Maintenance of Property. The Issuers shall, and shall cause their Subsidiaries to keep all property and systems useful and necessary in its business or the business of any of their Subsidiaries in good working order and condition, ordinary wear and tear excepted, and supplied with all necessary equipment. Section 4.17. Limitation on Sale and Leaseback Transactions. The Issuers shall not, and shall not permit any of their Subsidiaries to, enter into any sale and leaseback transaction; provided, however, that so long as no Default has occurred and is continuing or would be caused thereby, the preceding sentence shall not prohibit: (a) any sale and leaseback transaction involving or in respect of the Company's corporate headquarters and/or all tangible property related thereto; and (b) sale and leaseback transactions to the extent the aggregate present value (discounted at the rate of interest implicit in such transaction, determined in accordance with GAAP) of the obligations of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction (including any period for which such lease has been or may, at the option of the lessor, be extended) of such sale and leaseback transactions do not exceed $5.0 million at the time of determination. Section 4.18. Limitation on Issuances and Sales of Equity Interests in Subsidiaries. (a) The Issuers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Subsidiary of the Issuers to any Person (other than the Issuers or a Subsidiary of the Issuers), unless such transfer, conveyance, sale, lease or other disposition is of all the Equity Interests in such Subsidiary. In addition, the Issuers shall not permit any Subsidiary of the Issuers to issue any Equity Interests (other than, if necessary, shares of its Capital Stock constituting directors' qualifying shares) to any Person other than to the Issuers or a Subsidiary of the Issuers. Section 4.19. No Amendment to Certain Provisions of the Subordinated Note Indenture. The Company shall not amend, modify or alter the Subordinated Note Indenture in any way to: (a) increase the rate of, change the time for or change the manner of payment of interest on any Subordinated Notes; (b) increase the principal or premium, if any, of, or advance the final maturity date of, any Subordinated Notes; (c) alter the redemption provisions or the price or terms at which the Company is required to offer to purchase any Subordinated Notes; or (d) amend Article 9 of the Subordinated Note Indenture. Section 4.20. Equity Interests of the Company. The Company shall not issue any Equity Interests except pursuant to the Plan; provided, however, that the Company may issue Equity Interests upon the exercise of any warrants or rights or pursuant to any rights issued in accordance with the Plan and may issue options to officers, employees and directors of the Company and its Subsidiaries to acquire Capital Stock of the Company and may issue Capital Stock upon exercise of such options. Section 4.21. Assets of the Company. The Company shall contribute, transfer or assign all of its material, tangible assets, other than its right, title and interest in the Note Collateral, to NLC or any other Subsidiary as soon as reasonably practicable after the Company has the legal right to contribute, transfer or assign such material, tangible assets, whether such assets are owned on the date hereof or subsequently become owned by the Company; provided, however, that nothing contained in this Section 4.21 shall require the Company to contribute, transfer or assign its right, title and interest in cash and/or cash equivalents to NLC or any other Subsidiary. Section 4.22. Management Incentive Plan. The Issuers shall not amend, modify or restate the Management Incentive Plan after the Effective Date in any way that would increase the aggregate maximum amount of incentive payments payable thereunder at any time to an amount greater than 105% of the aggregate maximum amount otherwise payable under the Management Incentive Plan with respect to the achievement of a certain performance target or incentive level. Section 4.23. Additional Note Collateral. In the event that the Company or NLC or any of their Subsidiaries acquires or creates another Domestic Subsidiary after the Effective Date which is directly owned by the Company or NLC, or if any of the Issuers' Foreign Subsidiaries becomes a Domestic Subsidiary after the Effective Date which is directly owned by the Company or NLC, the Issuers covenant and agree that the Equity Interests of such newly acquired or created Domestic Subsidiary shall be pledged and otherwise constitute additional Note Collateral hereunder and pursuant to the Collateral Documents. The Issuers shall execute and deliver to the Trustee any additional instruments and do any further acts as may be reasonably necessary or proper to carry out the purposes of this Section 4.23. Section 4.24. Consummation of Plan. Notwithstanding anything to the contrary herein, no provision or Section of this Indenture shall prevent, restrict or otherwise hinder the Issuers from consummating the Plan and the transactions contemplated thereby. Section 4.25. Distributions from Subsidiaries. Except with respect to any Scheduled Cash Reserve Amount, the Issuers will take reasonable actions to cause their Domestic Subsidiaries to distribute all cash to their respective parent companies until such cash is in the accounts of the Company. In addition, the Issuers will take reasonable actions to cause their Foreign Subsidiaries, to the extent such distribution would not violate applicable law or trigger either an additional foreign tax or United States tax, to distribute all cash not required for their continued normal operations to their respective parent companies until such cash is in the accounts of the Company. ARTICLE 5. SUCCESSORS Section 5.01. Merger, Consolidation or the Transfer of All or Substantially All of the Assets of the Company. The Company may not, in a single transaction or through a series of related transactions, consolidate with or merge into, or transfer all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to, another Person in any transaction in which the Company is not the continuing or surviving entity, unless: (a) the resulting, surviving or transferee Person is a corporation which assumes by supplemental indenture, in form satisfactory to the Trustee, all the obligations of the Company under the Notes, this Indenture and the Registration Rights Agreement or is a reorganization within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code, and this Indenture remains in full force and effect; (b) such corporation is organized and existing under the laws of the United States, a State thereof or the District of Columbia, although it in turn may be owned by a foreign entity; (c) immediately after giving effect to such transaction no Default or Event of Default shall have occurred and be continuing and the Officers' Certificate referred to in clause (e) of this Section 5.01 reflects that such Officers are not aware of any such Default or Event of Default that shall have occurred and be continuing; (d) each Subsidiary of the Company immediately prior to the transaction shall be a Subsidiary of the resulting, surviving or transferee Person immediately following the transaction, and the transaction shall not indirectly effect any change, transfer, borrowing or Lien that would have been prohibited by this Indenture if done by the Company or any Subsidiary independent of such transaction or would have caused a Default under this Indenture if done independent of such transaction; and (e) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each to the effect that all conditions precedent provided for in this Indenture relating to such consolidation, merger or transfer have been complied with. Upon any consolidation or merger, or any transfer of all or substantially all of the assets of the Company in accordance with the preceding paragraph: (a) the successor corporation formed by such consolidation or into which the Company is merged or to which such transfer is made shall succeed to, and shall be substituted for, and may exercise every right and power of, the Company under this Indenture and the Registration Rights Agreement with the same effect as if such successor corporation has been named as the Company in this Indenture and the Registration Rights Agreement; (b) the Company shall thereupon be relieved of any further obligation or liability hereunder or upon the Notes; and (c) the Company as the predecessor corporation may thereupon or at any time thereafter be dissolved, wound up or liquidated. Such successor corporation thereupon may cause to be signed, and may issue either in its own name or in the name of Reorganized Comdisco, Inc., any or all of the Notes issuable under this Indenture which theretofore shall not have been signed by the Company and delivered to the Trustee. Upon the order of such successor corporation, instead of the Company, and subject to all the terms, conditions and limitations in this Indenture, the Trustee shall authenticate and shall deliver any Notes which previously shall have been signed and delivered by Officers of the Company to the Trustee for authentication, and any Notes which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all such Notes had been issued at the date of execution of this Indenture. Section 5.02. Merger, Consolidation or the Transfer of All or Substantially All of the Assets of NLC. NLC may not, in a single transaction or through a series of related transactions, consolidate with or merge into, or transfer all or substantially all of the assets of NLC and its Subsidiaries, taken as a whole, to, another Person in any transaction in which NLC is not the continuing or surviving entity, unless: (a) the resulting, surviving or transferee Person is a corporation which assumes by supplemental indenture, in form satisfactory to the Trustee, all the obligations of NLC under the Notes, this Indenture and the Registration Rights Agreement or is a reorganization within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code, and this Indenture remains in full force and effect; (b) such corporation is organized and existing under the laws of the United States, a State thereof or the District of Columbia, although it in turn may be owned by a foreign entity; (c) immediately after giving effect to such transaction no Default or Event of Default shall have occurred and be continuing and the Officers' Certificate referred to in clause (e) of this Section 5.02 reflects that such Officers are not aware of any such Default or Event of Default that shall have occurred and be continuing; (d) each Subsidiary of NLC immediately prior to the transaction shall be a Subsidiary of the resulting, surviving or transferee Person immediately following the transaction, and the transaction shall not indirectly effect any change, transfer, borrowing or Lien that would have been prohibited by this Indenture if done by NLC or any Subsidiary independent of such transaction or would have caused a Default under this Indenture if done independent of such transaction; and (e) NLC shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each to the effect that all conditions precedent provided for in this Indenture relating to such consolidation, merger or transfer have been complied with. Upon any consolidation or merger, or any transfer of all or substantially all of the assets of NLC in accordance with the preceding paragraph: (a) the successor corporation formed by such consolidation or into which NLC is merged or to which such transfer is made shall succeed to, and shall be substituted for, and may exercise every right and power of, NLC under this Indenture and the Registration Rights Agreement with the same effect as if such successor corporation has been named as NLC in this Indenture and the Registration Rights Agreement; (b) NLC shall thereupon be relieved of any further obligation or liability hereunder or upon the Notes; and (c) NLC as the predecessor corporation may thereupon or at any time thereafter be dissolved, wound up or liquidated. Such successor corporation thereupon may cause to be signed, and may issue either in its own name or in the name of New Leasing Co., Inc., any or all of the Notes issuable under this Indenture which theretofore shall not have been signed by NLC and delivered to the Trustee. Upon the order of such successor corporation, instead of NLC, and subject to all the terms, conditions and limitations in this Indenture, the Trustee shall authenticate and shall deliver any Notes which previously shall have been signed and delivered by Officers of NLC to the Trustee for authentication, and any Notes which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all such Notes had been issued at the date of execution of this Indenture. Notwithstanding the foregoing, NLC may merge with, or transfer all of its assets to, the Company. Section 5.03. Successor Corporation Substituted. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company or NLC, as applicable, in accordance with Section 5.01 or Section 5.02, the successor corporation formed by such consolidation or into or with which the Company or NLC, as applicable, is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" or "NLC" shall refer instead to the successor corporation and not to the Company or NLC, as applicable), and may exercise every right and power of the Company or NLC, as applicable, under this Indenture with the same effect as if such successor Person had been named as the Company or NLC, as applicable, herein; provided, however, that the predecessor of the Company or NLC, as applicable, shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale, assignment, transfer, conveyance or other disposition of all of the Company's or NLC's, as applicable, assets that meets the requirements of Section 5.01 or Section 5.02. ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01. Events of Default. An "Event of Default" occurs if: (a) the Issuers default in the payment when due of interest on the Notes and such default continues for a period of 30 days; (b) the Issuers default in the payment when due of principal of or premium, if any, on the Notes whether at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (c) the Company or any of its Subsidiaries fail to comply with any of the provisions of Sections 4.13, 5.01 or 5.02 hereof; (d) the Issuers fail to observe or perform any other covenant, representation, warranty or other agreement under the Indenture or the Notes for 60 days after written notice to (i) the Issuers by the Trustee or (ii) the Issuers and the Trustee by the holders of at least 25% in aggregate principal amount of the Notes then outstanding; (e) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Issuers (but not including any indebtedness or obligation for which recourse is limited to the property purchased), whether such Indebtedness or guarantee now exists, or is created after the date of this Indenture, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness the maturity of which has been so accelerated, aggregates $25.0 million or more and such Indebtedness is not paid or such acceleration is not annulled within 10 days after written notice to the Issuers of such acceleration; (f) the rendering of a final judgment or final judgments for the payment of money is/are entered by a court or courts of competent jurisdiction against either the Company or NLC and such judgment or judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate of all such undischarged judgments (to the extent not covered by insurance) exceeds $10.0 million; (g) the Company or NLC pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a custodian of it or for all or substantially all of its property, or (iv) makes a general assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as the same becomes due; or (vi) generally is not paying its debts as they become due; or (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or NLC in an involuntary case; (ii) appoints a custodian of the Company or NLC or for all or substantially all of the property of the Company or NLC; or (iii) orders the liquidation of the Company or NLC other than as contemplated by the Plan; and the order or decree remains unstayed and in effect for 60 consecutive days. Section 6.02. Acceleration. If any Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 hereof with respect to the Company or NLC) occurs and is continuing, then and in every such case the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may, by notice in writing to the Issuers, declare all the Notes to be due and payable immediately. Upon any such declaration, the Notes will become due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (g) or (h) of Section 6.01 hereof occurs with respect to the Company or NLC, all outstanding Notes shall be due and payable immediately without further action or notice. At any time after such a declaration of acceleration has been made, the Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Issuers and the Trustee may, on behalf of all of the Holders, rescind and annul such declaration of acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium, if any, that has become due solely because of the acceleration) have been cured or waived. Section 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy (under this Indenture or otherwise) to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. Section 6.04. Waiver of Past Defaults. Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Issuers and the Trustee may, on behalf of the Holders of all of the Notes, waive an existing Default or Event of Default and its consequences hereunder, except (i) a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on, the Notes (including in connection with an offer to purchase) or (ii) with respect to any covenant or provision of this Indenture which cannot be modified or amended without the consent of the Holders of each outstanding Note affected; provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; provided, however, that no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Section 6.05. Control by Majority. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. Section 6.06. Limitation on Suits. A Holder of a Note may pursue a remedy with respect to this Indenture, the Notes or the Collateral Documents only if: (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity reasonably satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. Section 6.07. Rights of Holders of Notes to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder; provided, however, that a Holder shall not have the right to institute any such suit for the enforcement of payment if and to the extent that the institution or prosecution thereof or the entry of judgment therein would, under applicable law, result in the surrender, impairment, waiver or loss of the Lien of this Indenture upon any property subject to such Lien. Section 6.08. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Issuers for the whole amount of principal of, premium, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the compensation to the Trustee and its agents for all services rendered by them hereunder as shall have been agreed upon in writing from time to time among the Trustee or such agents, as the case may be, and the Issuers and the costs and expenses of collection, including the reasonable expenses, disbursements and advances of the Trustee (including the reasonable compensation and the reasonable expenses and disbursements of its agents and counsel). Section 6.09. Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable expenses, disbursements and advances of the Trustee (including reasonable compensation and the reasonable expenses and disbursements of its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Issuers, their creditors or their property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable expenses, disbursements and advances of the Trustee (including reasonable compensation and the reasonable expenses and disbursements of its agents and counsel), and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.10. Priorities. If the Trustee collects any money pursuant to this Article, it shall pay out the money in accordance with the requirements of the Pledge Agreement and to the extent received in accordance therewith for distribution hereunder in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including, to the extent permitted thereunder, payment of all compensation, reasonable expenses and disbursements incurred, and all advances made, by the Trustee and the reasonable costs and expenses of collection; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; Third: without duplication, to Holders of Notes for any other Obligations (other than contingent reimbursement, indemnification or contribution Obligations) then owing to the Holders of the Notes under the Notes or this Indenture; and Fourth: to the Issuers or to such party as a court of competent jurisdiction shall direct. Notwithstanding the preceding paragraph, in the event of a conflict between the provisions of the Pledge Agreement and the mandatory provisions of the TIA, upon qualification of this Indenture under the TIA, the TIA shall control, and distributions shall be made in the order, and to the Persons specified under, the TIA. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. Section 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE 7. TRUSTEE Section 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture, the Pledge Agreement and the Collateral Documents, and the Trustee need perform only those duties that are specifically set forth in this Indenture, the Pledge Agreement and the Collateral Documents and no others, and no implied covenants or obligations shall be read into this Indenture, the Pledge Agreement and the Collateral Documents against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture, the Pledge Agreement and the Collateral Documents. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture, the Pledge Agreement and the Collateral Documents. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section 7.01; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01. (e) No provision of this Indenture, the Pledge Agreement or the Collateral Documents shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture, the Pledge Agreement or the Collateral Documents at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity reasonably satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 7.02. Rights of Trustee. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, the Pledge Agreement or the Collateral Documents, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company or NLC, as the case may be, on behalf of the Company or NLC, respectively. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture, the Pledge Agreement or the Collateral Documents at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. Section 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuers or any Affiliate of the Issuers with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. Section 7.04. Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuers' use of the proceeds from the Notes or any money paid to the Issuers or upon the Issuers' direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. Section 7.05. Notice of Defaults. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90 days after the occurrence of such Default or Event of Default. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. Section 7.06. Reports by Trustee to Holders of the Notes. Within 60 days after each October 15 beginning with the October 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA ss. 313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Issuers and filed with the SEC and each stock exchange on which the Notes are listed, if any, in accordance with TIA ss. 313(d). The Issuers shall promptly notify the Trustee when the Notes are listed on any stock exchange. Section 7.07. Compensation and Indemnity. The Issuers shall pay to the Trustee from time to time such compensation as the Issuers and the Trustee shall from time to time agree in writing for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuers shall reimburse the Trustee promptly upon request for all reasonable expenses, disbursements and advances of the Trustee (including the reasonable compensation and the reasonable expenses and disbursements of its agents and counsel). The Issuers shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Issuers (including this Section 7.07) and defending itself against any claim (whether asserted by the Issuers or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its gross negligence, bad faith or willful misconduct. The Trustee shall notify the Issuers promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Issuers shall not relieve the Issuers of its obligations hereunder. The Issuers shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Issuers shall pay the reasonable fees and expenses of such counsel. The Issuers need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Issuers under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. To secure the Issuers' payment obligations in this Section, the Issuers hereby grant to the Trustee a security interest on all money or property held or collected by the Trustee, except that held in trust to pay principal, interest and premium, if any, on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture; provided, however, that such Lien shall be automatically released upon the payment in full of all amounts payable to the Trustee pursuant to the first paragraph of this Section 7.07 and of all other amounts then due and payable pursuant to the second paragraph of this Section 7.07. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(e) or (f) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the extent applicable. Section 7.08. Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Issuers. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Issuers in writing. The Issuers may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuers shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuers. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, or the Holders of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuers. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided, however, all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Issuers' obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee, and the Issuers shall pay to any such replaced or removed Trustee all amounts owed to such replaced or removed Trustee under Section 7.07 upon such replacement or removal. Section 7.09. Successor Trustee by Merger, etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another bank or corporation, the successor bank or corporation without any further act shall be the successor Trustee. Section 7.10. Eligibility; Disqualification. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof or of the District of Columbia that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state or the District of Columbia authorities and that has a combined capital and surplus of at least $150.0 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b). Section 7.11. Preferential Collection of Claims Against Issuers. The Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein. The provisions of TIA ss. 311 shall apply to the Company as obligor on the Notes. ARTICLE 8. AMENDMENT, SUPPLEMENT AND WAIVER Section 8.01. Without Consent of Holders of Notes. Notwithstanding Section 8.02 of this Indenture, the Issuers and the Trustee may amend or supplement this Indenture, the Notes or the Collateral Documents without the consent of any Holder of a Note: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder; (c) to provide for the assumption of the Issuers' obligations to the Holders of the Notes by a successor to the Issuers pursuant to Article 5 hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Notes; or (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA. Upon the request of the Issuers accompanied by a resolution of their respective Board of Directors, as the case may be, authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 8.06 hereof, the Trustee shall join with the Issuers in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise. Section 8.02. With Consent of Holders of Notes. Except as provided below in this Section 8.02, the Issuers and the Trustee may amend or supplement this Indenture (including Section 3.08 hereof), the Notes and the Collateral Documents with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Notes or the Collateral Documents may be waived with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes). Section 2.08 hereof shall determine which Notes are considered to be "outstanding" for purposes of this Section 8.02. Upon the request of the Issuers accompanied by a resolution of their Board of Directors, as the case may be, authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02(b) hereof, the Trustee shall join with the Issuers in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture, by its express terms, directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. It shall not be necessary for the consent of the Holders of Notes under this Section 8.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section 8.02 becomes effective, the Issuers shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Issuers to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding may waive compliance in a particular instance by the Issuers with any provision of this Indenture, the Notes or the Collateral Documents. However, without the consent of each Holder affected, an amendment, waiver or supplement under this Section 8.02 may not (with respect to any Notes held by a non-consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes except as provided above with respect to Sections 3.08 hereof; (c) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment Default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Notes; (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes; (g) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions; or (h) waive a redemption payment required to be made, or offered to be made, by the Company pursuant to Section 3.09 or Section 4.14. Section 8.03. Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. Section 8.04. Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. The Company may fix a record date for determining which Holders must consent to such supplemental indenture, amendment or waiver. If the Company fixes a record date, the record date shall be fixed at (i) the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation pursuant to Section 2.05, or (ii) such other date as the Company shall designate. Section 8.05. Notation on or Exchange of Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Issuers in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. Section 8.06. Trustee to Sign Amendments, etc. The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article 8 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Issuers may not sign an amendment or supplemental Indenture until their Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 11.04 hereof, an Officers' Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. ARTICLE 9. COLLATERAL AND SECURITY Section 9.01. Collateral Documents. The due and punctual payment of the principal of and interest and premium, if any, on the Notes when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of and interest and premium (to the extent permitted by law), if any, on the Notes and performance of all other obligations of the Issuers to the Holders of Notes or the Trustee under this Indenture and the Notes, according to the terms hereunder or thereunder, shall be secured as provided in the Collateral Documents which the Issuers have entered into simultaneously with the execution of this Indenture and which are listed on Exhibit B hereto. Each Holder of Notes, by its acceptance thereof, consents and agrees to the terms of the Collateral Documents (including, without limitation, the provisions providing for foreclosure and release of Note Collateral) as the same may be in effect or may be amended from time to time in accordance with the terms of the Collateral Documents and authorizes and directs the Collateral Agent to enter into the Collateral Documents and to perform its obligations and exercise its rights thereunder in accordance therewith. The Issuers shall deliver to the Trustee copies of all documents delivered to the Collateral Agent pursuant to the Collateral Documents, and shall do or cause to be done all such acts and things as may be necessary or proper, or as may be required by the provisions of the Collateral Documents or as may be reasonably requested in writing by the Trustee, to assure and confirm to the Trustee and the Collateral Agent the security interest in the Note Collateral contemplated hereby and by the Collateral Documents or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and the Notes secured by the Collateral Documents, according to the intent and purposes therein expressed. The Issuers shall take, or shall cause their Subsidiaries that are party to one or more Collateral Documents to take, upon request of the Trustee, any and all actions reasonably required to cause the Collateral Documents to create and maintain, as security for the Obligations of the Issuers hereunder, a valid and enforceable perfected Lien in and on all the Note Collateral, in favor of the Collateral Agent for the benefit of the Holders of Notes with the priority required under the Collateral Documents, subject to Permitted Liens. Section 9.02. Recording and Opinions. (a) The Issuers shall furnish to the Trustee simultaneously with the execution and delivery of this Indenture an Opinion of Counsel either (i) stating that in the opinion of such counsel all action has been taken with respect to the recording, registering and filing of this Indenture, financing statements or other instruments necessary to make effective the Lien intended to be created by the Collateral Documents and reciting with respect to the security interests in the Collateral, the details of such action, or (ii) stating that, in the opinion of such counsel, no such action is necessary to make such Lien effective. (b) The Issuers shall furnish to the Trustee and the Collateral Agent within 30 days following April 30 of each year beginning with April 30, 2003, an Opinion of Counsel, dated as of the date such opinion is furnished, either (i) stating that, in the opinion of such counsel, all action has been taken with respect to the recording, registering, filing, re-recording, re-registering and refiling of all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the Lien of the Collateral Documents and reciting with respect to the security interests in the Collateral the details of such action or referring to prior Opinions of Counsel in which such details are given, or (ii) stating that, in the opinion of such counsel, no such action is necessary to maintain such Lien. (c) The Issuers shall otherwise comply with the provisions of TIA ss. 314(b). Section 9.03. Release of Note Collateral. (a) Subject to subsections (b), (c) and (d) of this Section 9.03, upon a sale of any Note Collateral and application of the net proceeds of such sale to repay the Notes to the extent required in accordance with the terms of Section 3.08, the Collateral Agent shall release the security interests in favor of the Collateral Agent in the Note Collateral sold; provided, however, that such net proceeds have been or shall be applied in accordance with this Indenture; provided further that, prior to the application of such net proceeds, such net proceeds shall be deposited in an interest bearing cash collateral account held by the Paying Agent and pledged for the benefit of the Holders of Notes and the holders of Subordinated Notes. (b) No Note Collateral shall be released from the Lien and security interest created by the Collateral Documents pursuant to the provisions of the Collateral Documents unless there shall have been delivered to the Collateral Agent the certificates required by this Section 9.03 and by Sections 9.04 and 9.05 hereof. (c) At any time when a Default or Event of Default shall have occurred and be continuing and the maturity of the Notes shall have been accelerated (whether by declaration or otherwise) and the Trustee shall have delivered a notice of acceleration to the Collateral Agent, no release of Note Collateral pursuant to the provisions of the Collateral Documents shall be effective as against the Holders of Notes or the Trustee except in connection with foreclosure sales. (d) The release of any Note Collateral from the terms of this Indenture and the Collateral Documents or the release of, in whole or in part, the liens created by the Collateral Documents, or the termination of the Collateral Documents, shall not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Note Collateral is released pursuant to the terms of the Collateral Documents and this Indenture. The Trustee and each of the Holders acknowledge that a release of any Note Collateral or a lien strictly in accordance with the terms of the Collateral Documents will not be deemed for any purpose to be an impairment of the lien on the Note Collateral in contravention of the terms of this Indenture. To the extent applicable, the Issuers shall cause TIA ss. 313(b), relating to reports, and TIA ss. 314(d), relating to the release of property or securities from the Lien and security interest of the Collateral Documents and this Indenture and relating to the substitution therefor of any property or securities to be subjected to the Lien and security interest of the Collateral Documents and this Indenture, to be complied with. Any certificate or opinion required by TIA ss. 314(d) may be made by an Officer of the Issuers except in cases where TIA ss. 314(d) requires that such certificate or opinion be made by an independent Person, which Person shall be an independent engineer, appraiser, accountant or other expert selected or approved by the Trustee and the Collateral Agent in the exercise of reasonable care. Section 9.04. Certificates of the Issuers. The Issuers shall furnish to the Trustee and the Collateral Agent, prior to each proposed release of Note Collateral pursuant to the Collateral Documents (i) all documents required by TIA ss.314(d) and the Collateral Documents and (ii) an Opinion of Counsel, which may be rendered by internal counsel of the Issuers, to the effect that such accompanying documents constitute all documents required by TIA ss.314(d). The Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof, accept as conclusive evidence of compliance with the foregoing provisions the appropriate statements contained in such documents. Section 9.05. Certificates of the Trustee. In the event that the Issuers wish to release Note Collateral in accordance with the Collateral Documents and have delivered the certificates and documents required by the Collateral Documents and Sections 9.03 and 9.04 hereof, once the Trustee has received all documentation required by TIA ss. 314(d) in connection with such release and the Opinion of Counsel delivered pursuant to Section 9.04(ii), the Trustee shall deliver a certificate to the Collateral Agent confirming receipt of such documentation and Opinion of Counsel; provided, however, that so long as the Trustee is the Collateral Agent the requirement that the Trustee deliver a certificate to the Collateral Agent shall not be applicable. Section 9.06. Authorization of Actions to Be Taken by the Trustee Under the Collateral Documents. Subject to the provisions of Section 7.01 and 7.02 hereof and the provisions of the Collateral Documents, the Trustee may in the case of an ongoing Event of Default, in its sole discretion and without the consent of the Holders of Notes subject to Section 6.05, direct, on behalf of the Holders of Notes, the Collateral Agent to, take all actions it deems necessary or appropriate in order to (a) enforce any of the terms of the Collateral Documents and (b) collect and receive any and all amounts payable in respect of the Obligations of the Issuers hereunder. The Trustee shall have power to institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Note Collateral by any acts that may be unlawful or in violation of the Collateral Documents or this Indenture, and such suits and proceedings as the Trustee may deem expedient to preserve or protect its interests and the interests of the Holders of Notes in the Note Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of the Holders of Notes or of the Trustee). Section 9.07. Authorization of Receipt of Funds by the Trustee Under the Collateral Documents. The Trustee is authorized and required to receive any funds for the benefit of the Holders of Notes distributed under the Collateral Documents, and to make further distributions of such funds to the Holders of Notes according to the provisions of this Indenture and the Collateral Documents. Section 9.08. Termination of Security Interest. Upon the payment in full of all Obligations (other than contingent reimbursement, indemnification and contribution Obligations) of the Issuers under this Indenture and the Notes, the Trustee shall, at the request of the Issuers, deliver a certificate to the Collateral Agent stating that such Obligations have been paid in full, and instruct the Collateral Agent to release the Liens pursuant to this Indenture and the Collateral Documents to the extent such Liens secure the Obligations of the Issuers under this Indenture. ARTICLE 10. SATISFACTION AND DISCHARGE Section 10.01. Satisfaction and Discharge. This Indenture will be discharged and will cease to be of further effect as to all Notes issued hereunder, when: (1) either: (a) all Notes that have been authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Issuers) have been delivered to the Trustee for cancellation; or (b) all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year and the Issuers have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption; (2) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which either of the Issuers is a party or by which either of the Issuers is bound; (3) the Issuers have paid or caused to be paid all sums payable by it under this Indenture; and (4) the Issuers have delivered irrevocable written instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be. In addition, the Issuers shall each deliver an Officers' Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. Notwithstanding the satisfaction and discharge of this Indenture, if money shall have been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section, the provisions of Section 10.02 shall survive. Section 10.02. Application of Trust Money. All money deposited with the Trustee pursuant to Section 10.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuers acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law. If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 10.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuers' obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 10.01; provided, however, that if the Issuers have made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Issuers shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent. ARTICLE 11. MISCELLANEOUS Section 11.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA ss.318(c), the imposed duties shall control. Section 11.02. Notices. Any notice or communication by the Issuers or the Trustee to the others is duly given if in writing and delivered in person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address: If to the Issuers: Comdisco Holding Company, Inc. Comdisco, Inc. 6111 North River Road Rosemont, Illinois 60018 Attention: General Counsel Facsimile: (847) 518-5440 With a copy to: Skadden, Arps, Slate, Meagher & Flom (Illinois) 333 West Wacker, Suite 2100 Chicago, Illinois 60606 Facsimile: (312) 407-0411 Attention: John Wm. Butler, Jr., Esq. Attention: Charles W. Mulaney, Jr., Esq. If to the Trustee: Wells Fargo Bank Minnesota, National Association Corporate Trust Sixth and Marquette MAC N9303-120 Minneapolis, Minnesota 55479 Facsimile: (612) 667-9825 Attention: Comdisco Administrator with a copy (which shall not constitute notice to the Trustee) to: Jones, Day, Reavis & Pogue 222 East 41st Street New York, NY 10017-6702 Facsimile: (212) 755-7306 Attention: Donald F. Devine The Issuers or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed (provided, however, the Trustee shall not be deemed to have received such mail until it is received at its address set forth above); when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA ss. 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it (except as set forth above). If the Issuers mail a notice or communication to Holders, they shall mail a copy to the Trustee and each Agent at the same time. Section 11.03. Communication by Holders of Notes with Other Holders of Notes. Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Issuers, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). Section 11.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Issuers to the Trustee to take any action under this Indenture, the Issuers shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. Section 11.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss. 314(e) and shall include: (c) a statement that the Person making such certificate or opinion has read such covenant or condition; (d) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (e) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (f) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. Section 11.06. Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. Section 11.07. No Personal Liability of Directors, Officers, Employees, Stockholders and Agents. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Issuers shall have any liability for any obligations of the Issuers under the Notes, this Indenture or the Collateral Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Section 11.08. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. Section 11.09. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuers or their Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 11.10. Successors. All agreements of the Issuers in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. Section 11.11. Severability. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 11.12. Counterpart Originals. The parties may sign any number of copies of this Indenture (including by facsimile). Each signed copy shall be an original, but all of them together represent the same agreement. Section 11.13. Table of Contents, Headings, etc. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following pages] SIGNATURES Dated as of August 12, 2002 COMDISCO HOLDING COMPANY, INC. By: /s/ Robert E.T. Lackey ------------------------------ Name: Robert E.T. Lackey Title: Executive Vice President, Secretary and Chief Legal Officer Attest: /s/ Carlotta A. Martini - ----------------------- Name: Carlotta A. Martini Title: Notary Republic COMDISCO, INC. By: /s/ Robert E.T. Lackey ------------------------------ Name: Robert E.T. Lackey Title: Executive Vice President, Secretary and Chief Legal Officer Attest: /s/ Carlotta A. Martini - ----------------------- Name: Carlotta A. Martini Title: Notary Republic WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION By: /s/ Jane Y. Schweiger ------------------------------ Name: Jane Y. Schweiger Title: Assistant Vice President Attest: /s/ Curtis D. Schwegman - ----------------------- Authorized Signatory: Curtis D. Schwegman Date: August 12, 2002 SCHEDULE A SCHEDULED CASH RESERVE AMOUNT Date Aggregate Cash Reserve Amount ---- ----------------------------- September 30, 2002 $57,000,000.00 December 31, 2002 $55,000,000.00 March 31, 2003 $53,000,000.00 June 30, 2003 $51,000,000.00 September 30, 2003 $49,000,000.00 December 31, 2003 $47,000,000.00 March 31, 2004 $45,000,000.00 June 30, 2004 $43,000,000.00 EXHIBIT A [Face of Note] - -------------------------------------------------------------------------------- CUSIP ____________ Variable Rate Senior Secured Notes due 2004 No. ___ $____________ COMDISCO HOLDING COMPANY, INC. and COMDISCO, INC. promise to pay to _____________________________________________________________ or registered assigns, the principal sum of $400,000,000.00 on _______ __, 2004. Interest Payment Dates: September 30, December 31, March 31 and June 30 Record Dates: September 15, December 15, March 15 and June 15 Dated: _____________, ____ COMDISCO HOLDING COMPANY, INC. COMDISCO, INC. By:________________________ By:________________________ Name: Name: Title: Title: By:________________________ By:________________________ Name: Name: Title: Title: This is one of the Notes referred to in the within-mentioned Indenture: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION as Trustee By: ___________________________ Authorized Signatory - ------------------------------------------------------------------------------- [Back of Note] Variable Rate Senior Secured Notes due 2004 [INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE, PURSUANT TO THE PROVISIONS OF THE INDENTURE.] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Comdisco Holding Company, Inc., a Delaware corporation (the "Company"), and Comdisco, Inc., a Delaware corporation ("NLC" and, together with the Company, the "Issuers"), jointly and severally, promise to pay interest on the principal amount of this Note the Applicable Rate (as defined below) per annum from August 12, 2002 until maturity. The Issuers will pay interest quarterly in arrears on September 30, December 31, March 31 and June 30 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided, however, that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be ______ ___, 2002. The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed at the Applicable Rate on the basis of the actual number of days elapsed over a year of 360 days. For purposes of this Note, the term "Applicable Rate" means the annual interest rate equal to the sum of (i) three-month U.S. Dollar LIBOR as quoted on Bloomberg Page BBAM 1 (British Bankers Association page) ("LIBOR") plus (ii) an additional 3.00% per annum. In the event that such rate does not appear on the Bloomberg Page BBAM 1 (or otherwise on the Bloomberg Page BBAM), the LIBOR component for purposes of this definition shall be determined by reference to such other comparable publicly available service for displaying the three-month U.S. Dollar LIBOR as may be selected by the Issuers. The LIBOR component of the Applicable Rate for each fiscal quarter or partial fiscal quarter shall be fixed two (2) business days prior to the commencement of the applicable fiscal quarter or partial fiscal quarter to which the interest payment relates. 2. METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on September 15, December 15, March 15 and June 15 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Issuers maintained for such purpose within the City and State of New York, or, at the option of the Issuers, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, if any, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Issuers or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, Wells Fargo Bank Minnesota, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar without notice to any Holder. The Issuers or any of their Subsidiaries may act in any such capacity. 4. INDENTURE AND COLLATERAL DOCUMENTS . The Issuers issued the Notes under an Indenture dated as of August 12, 2002 ("Indenture") among the Issuers and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.C. ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are secured obligations of the Issuers limited to $400,000,000 in aggregate principal amount. The Notes are secured by a grant of a security interest in the Note Collateral pursuant to the Collateral Documents referred to in the Indenture. 5. OPTIONAL REDEMPTION. The Issuers may, at their option at any time after the Effective Date, redeem the Notes, in whole or in part, on at least 10 days' but not more than 60 days' notice to each Holder of Notes to be redeemed in cash at its registered address, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the redemption date. 6. MANDATORY REDEMPTION. Pursuant to Section 3.08 of the Indenture, and except as provided thereon with respect to redemptions of less than $1.0 million principal amount of Notes, the Issuers shall be required to make mandatory redemptions of the principal amount of the Notes, plus accrued and unpaid interest thereon to the redemption date, in an amount equal to 100% of the Excess Cash. Mandatory redemptions, if any, shall be made for each fiscal quarter within 45 days after the end of such fiscal quarter. 7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change in Control, the Issuers shall be required to make an offer (a "Change in Control Offer") to repurchase all or any part of each Holder's Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase (the "Change in Control Repurchase Price"). Within 15 days following any Change in Control, the Issuers shall mail a notice to each Holder setting forth the procedures governing the Change in Control Offer as required by the Indenture. Holders of Notes that are subject to a Change in Control Offer will receive a Change in Control Offer from the Issuers prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes. (b) Notwithstanding anything to the contrary in the Indenture or this Section 7, the Issuers shall not be required to make a Change in Control Offer upon a Change in Control if a third party makes the Change in Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change in Control Offer made by the Issuers and purchases all Notes validly tendered and not withdrawn under the change in control offer required to be made under the Indenture and under the Change in Control Offer. 8. NOTICE OF REDEMPTION. Notice of optional redemption will be mailed at least 10 days but not more than 60 days before the redemption date and notice of a mandatory redemption will be mailed at least 10 days but no more than 30 days before the redemption date, in each case, to each Holder whose Notes are to be redeemed at its registered address. Notes may be redeemed in whole or in part, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons. The Notes are denominated in amounts of $1,000 and integral multiples thereof; provided, however, that the Notes may be in denominations (rounded to the nearest whole dollar) of less than $1,000 (but in no event less than $1.00) to make redemptions. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuers may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuers need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Issuers need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Notes and the Collateral Documents may be amended or supplemented with the consent of the Holders of not less than a majority in aggregate principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture, the Notes or the Collateral Documents may be waived with the consent of the Holders of not less than a majority in aggregate principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture, the Notes or the Collateral Documents may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Issuers' obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act in accordance with the limitations set forth in the Indenture. 12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest on the Notes; (ii) default in payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise, (iii) failure by the Issuers or any of their Subsidiaries to comply with Section 4.13, 5.01 or 5.02 of the Indenture; (iv) failure by the Issuers or any of their Subsidiaries for 60 days after notice to the Issuers by the Trustee or the Holders of at least 25% in principal amount of the Notes then outstanding to comply with certain other agreements in the Indenture or the Notes; (v) default under certain other agreements relating to Indebtedness (other than any Indebtedness for which recourse is limited to the property purchased) of the Issuers which default results in the acceleration of such Indebtedness prior to its express maturity, if the principal amount of any accelerated Indebtedness aggregates $25.0 million or more and such Indebtedness is not paid or such acceleration is not annulled within 10 days after written notice to the Issuers of such acceleration; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; or (vii) certain events of bankruptcy or insolvency with respect to the Issuers or any of their Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture, the Notes or the Collateral Documents, except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except (i) a continuing Default or Event of Default in the payment of interest on, or the principal of, or premium, if any, on the Notes; or (ii) an Event of Default with respect to any covenant or provision of the Indenture which cannot be waived without the consent of the Holders of each Note affected thereby. The Issuers are required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuers are required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. TRUSTEE DEALINGS WITH ISSUERS. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Issuers or their Affiliates, and may otherwise deal with the Issuers or their Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator or stockholder, of the Issuers shall have any liability for any obligations of the Issuers under the Notes, the Indenture or the Collateral Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Issuers will furnish to any Holder upon written request and without charge a copy of the Indenture, the Registration Rights Agreement and the Collateral Documents. Requests may be made to: Comdisco Holding Company, Inc. Comdisco, Inc. 6111 North River Road Rosemont, Illinois 60018 Attention: General Counsel 18. ADDITIONAL RIGHTS OF HOLDERS OF GLOBAL NOTES AND DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under the Indenture, certain Holders of Global Notes and Definitive Notes shall have all the rights set forth in the Registration Rights Agreement dated as of the Effective Date, among the Issuers and the parties named on the signature pages thereof (the "Registration Rights Agreement"). ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to:__________________________________ (Insert assignee's legal name) _______________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint _______________________________________________________ to transfer this Note on the books of the Issuers. The agent may substitute another to act for him. Date: _______________ Your Signature: ___________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee*: _________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have all of your Note(s) purchased by the Issuers pursuant to Section 4.14 of the Indenture, state the amount you elect to have purchased: $_______________ If you want to elect to have only part of the Note(s) purchased by the Issuers pursuant to Section 4.14 of the Indenture, state the amount you elect to have purchased: $_______________ Date: _______________ Your Signature: ___________________________ (Sign exactly as your name appears on the face of this Note) Tax Identification No.: ___________________ Signature Guarantee*: ___________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE* The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Principal Amount Amount of decrease Amount of increase in of this Global Note Signature of in Principal Amount Principal Amount following such authorized officer of of decrease of Trustee or Note Date of Exchange this Global Note this Global Note (or increase) Custodian - ---------------- ---------------- ---------------- ------------- ---------
* This schedule should be included only if the Note is issued in global form. EXHIBIT B LIST OF COLLATERAL DOCUMENTS Pledge Agreement encumbering all Note Collateral including: UCC-1 Financing Statements EX-4 6 ch338792.txt EXHIBIT 4.2 EXHIBIT 4.2 ============================================================================== COMDISCO HOLDING COMPANY, INC. AND COMDISCO, INC. VARIABLE RATE SENIOR SECURED NOTES DUE 2004 ______________________ FIRST SUPPLEMENTAL INDENTURE Dated as of October 7, 2002 to INDENTURE Dated as of August 12, 2002 ______________________ WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION Trustee ============================================================================== FIRST SUPPLEMENTAL INDENTURE, dated as of October 7, 2002 (the "First Supplemental Indenture"), between Comdisco Holding Company, Inc., a Delaware corporation (the "Company"), Comdisco, Inc., a Delaware corporation ("NLC" and, together with the Company, the "Issuers"), and Wells Fargo Bank Minnesota, National Association, a national banking association, as trustee (the "Trustee"). The Company, NLC and the Trustee mutually covenant and agree as follows for the benefit of each other and for the equal and ratable benefit of the holders (the "Holders") of the Variable Rate Senior Secured Notes due 2004 (the "Notes"): WITNESSETH WHEREAS, the parties to this First Supplemental Indenture entered into that certain Indenture, dated as of August 12, 2002 (the "Senior Note Indenture"), among such parties, providing, among other things, for the authentication, delivery and administration of the Notes; WHEREAS, the Issuers desire to amend the Senior Note Indenture in certain respects; WHEREAS, Section 8.01 of the Senior Note Indenture provides, among other things, that the Issuers and the Trustee may amend or supplement the Senior Note Indenture and the Notes without the consent of any Holder of a Note, subject to certain exceptions and conditions specified in Section 8.01 of the Senior Note Indenture; WHEREAS, in order to amend or supplement the Senior Note Indenture in certain respects, it is necessary for the Issuers and the Trustee to enter into this First Supplemental Indenture; WHEREAS, the Issuers have directed the Trustee to execute and deliver this First Supplemental Indenture in accordance with the terms of the Senior Note Indenture; and WHEREAS, all requirements and conditions prescribed by the Senior Note Indenture for the validity of this First Supplemental Indenture as a binding and legal instrument have been satisfied and fulfilled, and the execution and delivery of this First Supplemental Indenture has been duly authorized by all necessary corporate action on the part of the Issuers. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration the receipt of which is hereby acknowledged, the Issuers and the Trustee have entered into, executed and delivered this First Supplemental Indenture for the uses and purposes hereinafter expressed as follows: Section 1. Amendments to the Senior Note Indenture. The Senior Note Indenture is hereby amended as follows: (a) Section 2.01(a) of the Senior Note Indenture is amended in its entirety to read as follows: "(a) General. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage, as applicable. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1.00 and integral multiples thereof. The Notes shall be in denominations (rounded to the nearest whole dollar) of $1.00 (but in no event less than $1.00) and integral multiples thereof to make redemptions pursuant to Section 3.07 and 3.08 hereof. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture, and the Issuers and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling." (b) Exhibit A of the Senior Note Indenture is amended and restated in its entirety as set forth on Exhibit A hereto. Section 2. Definitions. Capitalized terms used herein and not defined herein shall have the meaning ascribed to such terms in the Senior Note Indenture. Section 3. Ratification of Senior Note Indenture. Except as expressly amended hereby, the Senior Note Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. Upon the execution and delivery of this First Supplemental Indenture by the Issuers and the Trustee, this First Supplemental Indenture shall form a part of the Senior Note Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. Any and all references to the Senior Note Indenture, whether within the Senior Note Indenture or in any notice, certificate or other instrument or document, shall be deemed to include a reference to this First Supplemental Indenture (whether or not made), unless the context shall otherwise require. Section 4. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS FIRST SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. Section 5. No Adverse Interpretation of Other Agreement. This First Supplemental Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuers or their Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this First Supplement Indenture. Section 6. Successors. All agreements of the Issuers in this First Supplemental Indenture shall bind its successors. All agreements of the Trustee in this First Supplemental Indenture shall bind its successors. Section 7. Severability. In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 8. Counterpart Originals. The parties hereto may sign any number of copies of this First Supplemental Indenture (including by facsimile). Each signed copy shall be an original, but all of them together represent the same agreement. Section 9. Headings. The headings of Sections of this First Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this First Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following pages] SIGNATURES Dated as of October 7, 2002 COMDISCO HOLDING COMPANY, INC. By: /s/ Robert E.T. Lackey --------------------------------- Name: Robert E.T. Lackey Title: Executive Vice President, Chief Legal Officer and Secretary Attest: /s/ Carlotta A. Martini - ----------------------- Name: Carlotta A. Martini Title: Notary Republic COMDISCO, INC. By: /s/ Robert E.T. Lackey --------------------------------- Name: Robert E.T. Lackey Title: Executive Vice President, Attest: /s/ Carlotta A. Martini - ----------------------- Name: Carlotta A. Martini Title: Notary Republic WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION By: /s/ Jane Y. Schweiger --------------------------------- Name: Jane Y. Schweiger Title: Vice President Attest: /s/ Roni Strassman - ------------------ Authorized Signatory: Roni Strassman Date: October 7, 2002 EXHIBIT A [Face of Note] - ------------------------------------------------------------------------------- CUSIP 200335 AA 5 Variable Rate Senior Secured Notes due 2004 No. ___ $____________ COMDISCO HOLDING COMPANY, INC. and COMDISCO, INC. , jointly and severally, promise to pay to __________________________________ or registered assigns, the principal sum of $400,000,000.00 on February 12, 2004. Interest Payment Dates: September 30, December 31, March 31 and June 30 Record Dates: September 15, December 15, March 15 and June 15 Dated: _______________, ____ COMDISCO HOLDING COMPANY, INC. COMDISCO, INC. By:_______________________ By:________________________ Name: Name: Title: Title: By:_______________________ By:________________________ Name: Name: Title: Title: This is one of the Notes referred to in the within-mentioned Indenture: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION as Trustee By: ___________________________ Authorized Signatory ============================================================================== [Back of Note] Variable Rate Senior Secured Notes due 2004 [INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE, PURSUANT TO THE PROVISIONS OF THE INDENTURE.] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Comdisco Holding Company, Inc., a Delaware corporation (the "Company"), and Comdisco, Inc., a Delaware corporation ("NLC" and, together with the Company, the "Issuers"), jointly and severally, promise to pay interest on the principal amount of this Note at the Applicable Rate (as defined below) per annum from August 12, 2002 until maturity. The Issuers will pay interest quarterly in arrears on September 30, December 31, March 31 and June 30 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided, however, that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be December 31, 2002. The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed at the Applicable Rate on the basis of the actual number of days elapsed over a year of 360 days. For purposes of this Note, the term "Applicable Rate" means the annual interest rate equal to the sum of (i) three-month U.S. Dollar LIBOR as quoted on Bloomberg Page BBAM 1 (British Bankers Association page) ("LIBOR") plus (ii) an additional 3.00% per annum. In the event that such rate does not appear on the Bloomberg Page BBAM 1 (or otherwise on the Bloomberg Page BBAM), the LIBOR component for purposes of this definition shall be determined by reference to such other comparable publicly available service for displaying the three-month U.S. Dollar LIBOR as may be selected by the Issuers. The LIBOR component of the Applicable Rate for each fiscal quarter or partial fiscal quarter shall be fixed two (2) business days prior to the commencement of the applicable fiscal quarter or partial fiscal quarter to which the interest payment relates. 2. METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on September 15, December 15, March 15 and June 15 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Issuers maintained for such purpose within the City and State of New York, or, at the option of the Issuers, payment of interest may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, if any, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Issuers or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, Wells Fargo Bank Minnesota, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar without notice to any Holder. The Issuers or any of their Subsidiaries may act in any such capacity. 4. INDENTURE AND COLLATERAL DOCUMENTS. The Issuers issued the Notes under an Indenture dated as of August 12, 2002 ("Indenture") among the Issuers and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.C. ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are secured obligations of the Issuers limited to $400,000,000 in aggregate principal amount. The Notes are secured by a grant of a security interest in the Note Collateral pursuant to the Collateral Documents referred to in the Indenture. 5. OPTIONAL REDEMPTION. The Issuers may, at their option at any time after the Effective Date, redeem the Notes, in whole or in part, on at least 10 days' but not more than 60 days' notice to each Holder of Notes to be redeemed in cash at its registered address, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the redemption date. 6. MANDATORY REDEMPTION. Pursuant to Section 3.08 of the Indenture, and except as provided thereon with respect to redemptions of less than $1.0 million principal amount of Notes, the Issuers shall be required to make mandatory redemptions of the principal amount of the Notes, plus accrued and unpaid interest thereon to the redemption date, in an amount equal to 100% of the Excess Cash. Mandatory redemptions, if any, shall be made for each fiscal quarter within 45 days after the end of such fiscal quarter. 7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change in Control, the Issuers shall be required to make an offer (a "Change in Control Offer") to repurchase all or any part of each Holder's Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase (the "Change in Control Repurchase Price"). Within 15 days following any Change in Control, the Issuers shall mail a notice to each Holder setting forth the procedures governing the Change in Control Offer as required by the Indenture. Holders of Notes that are subject to a Change in Control Offer will receive a Change in Control Offer from the Issuers prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes. (b) Notwithstanding anything to the contrary in the Indenture or this Section 7, the Issuers shall not be required to make a Change in Control Offer upon a Change in Control if a third party makes the Change in Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change in Control Offer made by the Issuers and purchases all Notes validly tendered and not withdrawn under the change in control offer required to be made under the Indenture and under the Change in Control Offer. 8. NOTICE OF REDEMPTION. Notice of optional redemption will be mailed at least 10 days but not more than 60 days before the redemption date and notice of a mandatory redemption will be mailed at least 10 days but no more than 30 days before the redemption date, in each case, to each Holder whose Notes are to be redeemed at its registered address. Notes may be redeemed in whole or in part, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons. The Notes shall be in denominations of $1.00 and integral multiples thereof. The Notes shall be in denominations (rounded to the nearest whole dollar) of $1.00 (but in no event less than $1.00) and integral multiples thereof to make redemptions. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuers may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuers need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Issuers need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Notes and the Collateral Documents may be amended or supplemented with the consent of the Holders of not less than a majority in aggregate principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture, the Notes or the Collateral Documents may be waived with the consent of the Holders of not less than a majority in aggregate principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture, the Notes or the Collateral Documents may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Issuers' obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act in accordance with the limitations set forth in the Indenture. 12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest on the Notes; (ii) default in payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise; (iii) failure by the Issuers or any of their Subsidiaries to comply with Section 4.13, 5.01 or 5.02 of the Indenture; (iv) failure by the Issuers or any of their Subsidiaries for 60 days after notice to the Issuers by the Trustee or the Holders of at least 25% in principal amount of the Notes then outstanding to comply with certain other agreements in the Indenture or the Notes; (v) default under certain other agreements relating to Indebtedness (other than any Indebtedness for which recourse is limited to the property purchased) of the Issuers which default results in the acceleration of such Indebtedness prior to its express maturity, if the principal amount of any accelerated Indebtedness aggregates $25.0 million or more and such Indebtedness is not paid or such acceleration is not annulled within 10 days after written notice to the Issuers of such acceleration; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; or (vii) certain events of bankruptcy or insolvency with respect to the Issuers or any of their Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture, the Notes or the Collateral Documents, except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except (i) a continuing Default or Event of Default in the payment of interest on, or the principal of, or premium, if any, on the Notes, or (ii) an Event of Default with respect to any covenant or provision of the Indenture which cannot be waived without the consent of the Holders of each Note affected thereby. The Issuers are required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuers are required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. TRUSTEE DEALINGS WITH ISSUERS. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Issuers or their Affiliates, and may otherwise deal with the Issuers or their Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator or stockholder, of the Issuers shall have any liability for any obligations of the Issuers under the Notes, the Indenture or the Collateral Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Issuers will furnish to any Holder upon written request and without charge a copy of the Indenture, the Registration Rights Agreement and the Collateral Documents. Requests may be made to: Comdisco Holding Company, Inc. Comdisco, Inc. 6111 North River Road Rosemont, Illinois 60018 Attention: General Counsel 18. ADDITIONAL RIGHTS OF HOLDERS OF GLOBAL NOTES AND DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under the Indenture, certain Holders of Global Notes and Definitive Notes shall have all the rights set forth in the Registration Rights Agreement dated as of the Effective Date, among the Issuers and the parties named on the signature pages thereof (the "Registration Rights Agreement"). ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to: _________________________________ (Insert assignee's legal name) _______________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint _______________________________________________________ to transfer this Note on the books of the Issuers. The agent may substitute another to act for him. Date: _______________ Your Signature: ________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee*: __________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have all of your Note(s) purchased by the Issuers pursuant to Section 4.14 of the Indenture, state the amount you elect to have purchased: $_______________ If you want to elect to have only part of the Note(s) purchased by the Issuers pursuant to Section 4.14 of the Indenture, state the amount you elect to have purchased: $_______________ Date: _______________ Your Signature: _______________________ (Sign exactly as your name appears on the face of this Note) Tax Identification No.:________________ Signature Guarantee*: ______________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE* The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Amount of decrease Amount of increase Principal Amount in Principal Amount in Principal Amount of this Global Note Signature of authorized of of following such decrease officer of Trustee or Date of Exchange this Global Note this Global Note (or increase) Note Custodian - ---------------- ---------------- ---------------- ---------------------- ----------------------
* This schedule should be included only if the Note is issued in global form. EX-4 7 ch338790.txt EXHIBIT 4.3 Exhibit 4.3 ============================================================================== COMDISCO HOLDING COMPANY, INC. AND COMDISCO, INC. 11% SUBORDINATED SECURED NOTES DUE 2005 ______________________ INDENTURE Dated as of August 12, 2002 ______________________ WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION Trustee ============================================================================== CROSS-REFERENCE TABLE* Trust Indenture Act Section Indenture Section 310(a)(1).................................................. 7.10 (a)(2)................................................ 7.10 (a)(3)................................................ N.A. (a)(4)................................................ N.A. (a)(5)................................................ 7.10 (b)................................................... 7.10 (c)................................................... N.A. 311(a)..................................................... 7.11 (b)................................................... 7.11 (c)................................................... N.A. 312(a)..................................................... 2.05 (b)................................................... 12.03 (c)................................................... 12.03 313(a)..................................................... 7.06 (b)(1)................................................ 10.03 (b)(2)................................................ 7.06, 7.07 (c)................................................... 7.06, 12.02 (d)................................................... 7.06 314(a)..................................................... 4.03, 12.05 (b)................................................... 10.02 (c)(1)................................................ 12.04 (c)(2)................................................ 12.04 (c)(3)................................................ N.A. (d)................................................... 10.03, 10.04, 10.05 (e)................................................... 12.05 (f)................................................... N.A. 315(a)..................................................... 7.01 (b)................................................... 7.05, 12.02 (c)................................................... 7.01 (d)................................................... 7.01 (e)................................................... 6.11 316(a) (last sentence)..................................... 2.09 (a)(1)(A)............................................. 6.05 (a)(1)(B)............................................. 6.04 (a)(2)................................................ N.A. (b)................................................... 6.07 (c)................................................... 2.12, 8.04 317(a)(1).................................................. 6.08 (a)(2)................................................ 6.09 (b)................................................... 2.04 318(a)..................................................... 12.01 (b)................................................... N.A. (c)................................................... 12.01 N.A. means not applicable. * This Cross Reference Table is not part of the Indenture. TABLE OF CONTENTS
Page ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions.................................................................................1 Section 1.02. Other Definitions..........................................................................15 Section 1.03. Incorporation by Reference of Trust Indenture Act..........................................15 Section 1.04. Rules of Construction......................................................................15 ARTICLE 2. THE NOTES Section 2.01. Form and Dating............................................................................16 Section 2.02. Execution and Authentication...............................................................16 Section 2.03. Registrar and Paying Agent.................................................................17 Section 2.04. Paying Agent to Hold Money in Trust........................................................17 Section 2.05. Holder Lists...............................................................................18 Section 2.06. Transfer and Exchange......................................................................18 Section 2.07. Replacement Notes..........................................................................20 Section 2.08. Outstanding Notes..........................................................................21 Section 2.09. Treasury Notes.............................................................................21 Section 2.10. Temporary Notes............................................................................21 Section 2.11. Cancellation...............................................................................22 Section 2.12. Defaulted Interest.........................................................................22 ARTICLE 3. REDEMPTION AND PREPAYMENT Section 3.01. Notices to Trustee.........................................................................22 Section 3.02. Selection of Notes to Be Redeemed or Repurchased...........................................22 Section 3.03. Notice of Redemption.......................................................................23 Section 3.04. Effect of Notice of Redemption.............................................................23 Section 3.05. Deposit of Redemption Price................................................................23 Section 3.06. Notes Redeemed in Part.....................................................................24 Section 3.07. Optional Redemption........................................................................24 Section 3.08. Mandatory Redemption.......................................................................24 Section 3.09. Offers to Repurchase by the Issuers........................................................25 ARTICLE 4. COVENANTS Section 4.01. Payment of Notes...........................................................................26 Section 4.02. Maintenance of Office or Agency............................................................26 Section 4.03. Reports....................................................................................27 Section 4.04. Compliance Certificate.....................................................................27 Section 4.05. Taxes......................................................................................28 Section 4.06. Stay, Extension and Usury Laws.............................................................28 Section 4.07. Restricted Payments........................................................................28 Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.............................29 Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.................................30 Section 4.10. Transactions with Affiliates...............................................................31 Section 4.11. Liens......................................................................................32 Section 4.12. Line of Business...........................................................................33 Section 4.13. Corporate Existence; Certificate of Incorporation..........................................33 Section 4.14. Offers to Repurchase by the Company........................................................33 Section 4.15. Insurance..................................................................................34 Section 4.16. Maintenance of Property....................................................................34 Section 4.17. Limitation on Sale and Leaseback Transactions..............................................34 Section 4.18. Limitation on Issuances and Sales of Equity Interests in Subsidiaries......................35 Section 4.19. No Senior Subordinated Debt................................................................35 Section 4.20. No Amendment to Certain Provisions of the Indenture........................................35 Section 4.21. Equity Interests of the Company............................................................35 Section 4.22. Assets of the Company......................................................................35 Section 4.23. Management Incentive Plan..................................................................35 Section 4.24. Additional Note Collateral.................................................................36 Section 4.25. Consummation of Plan.......................................................................36 Section 4.26. Distributions from Subsidiaries............................................................36 ARTICLE 5. SUCCESSORS Section 5.01. Merger, Consolidation or the Transfer of All or Substantially All of the Assets of the Company................................................................................36 Section 5.02. Merger, Consolidation or the Transfer of All or Substantially All of the Assets of NLC........................................................................................37 Section 5.03. Successor Corporation Substituted..........................................................39 ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01. Events of Default..........................................................................39 Section 6.02. Acceleration...............................................................................40 Section 6.03. Other Remedies.............................................................................40 Section 6.04. Waiver of Past Defaults....................................................................41 Section 6.05. Control by Majority........................................................................41 Section 6.06. Limitation on Suits........................................................................41 Section 6.07. Rights of Holders of Notes to Receive Payment..............................................42 Section 6.08. Collection Suit by Trustee.................................................................42 Section 6.09. Trustee May File Proofs of Claim...........................................................42 Section 6.10. Priorities.................................................................................43 Section 6.11. Undertaking for Costs......................................................................43 ARTICLE 7. TRUSTEE Section 7.01. Duties of Trustee..........................................................................43 Section 7.02. Rights of Trustee..........................................................................44 Section 7.03. Individual Rights of Trustee...............................................................45 Section 7.04. Trustee's Disclaimer.......................................................................45 Section 7.05. Notice of Defaults.........................................................................45 Section 7.06. Reports by Trustee to Holders of the Notes.................................................45 Section 7.07. Compensation and Indemnity.................................................................46 Section 7.08. Replacement of Trustee.....................................................................46 Section 7.09. Successor Trustee by Merger, etc...........................................................47 Section 7.10. Eligibility; Disqualification..............................................................47 Section 7.11. Preferential Collection of Claims Against Issuers..........................................48 ARTICLE 8. AMENDMENT, SUPPLEMENT AND WAIVER Section 8.01. Without Consent of Holders of Notes........................................................48 Section 8.02. With Consent of Holders of Notes...........................................................48 Section 8.03. Compliance with Trust Indenture Act........................................................50 Section 8.04. Revocation and Effect of Consents..........................................................50 Section 8.05. Notation on or Exchange of Notes...........................................................50 Section 8.06. Trustee to Sign Amendments, etc............................................................50 ARTICLE 9. SUBORDINATION Section 9.01. Agreement to Subordinate...................................................................51 Section 9.02. Liquidation; Dissolution; Bankruptcy.......................................................51 Section 9.03. Default on Senior Indebtedness.............................................................51 Section 9.04. Acceleration of Securities.................................................................52 Section 9.05. When Distribution Must Be Paid Over........................................................52 Section 9.06. Notice by Issuers..........................................................................52 Section 9.07. Subrogation................................................................................53 Section 9.08. Relative Rights............................................................................53 Section 9.09. Subordination May Not Be Impaired by the Issuers...........................................53 Section 9.10. Distribution or Notice to Representative...................................................53 Section 9.11. Rights of Trustee and Paying Agent.........................................................54 Section 9.12. Authorization to Effect Subordination......................................................54 Section 9.13. Amendments.................................................................................54 ARTICLE 10. COLLATERAL AND SECURITY Section 10.01. Collateral Documents.......................................................................54 Section 10.02. Recording and Opinions.....................................................................55 Section 10.03. Release of Note Collateral.................................................................55 Section 10.04. Certificates of the Issuers................................................................56 Section 10.05. Certificates of the Trustee................................................................56 Section 10.06. Authorization of Actions to Be Taken by the Trustee Under the Collateral Documents.........56 Section 10.07. Authorization of Receipt of Funds by the Trustee Under the Collateral Documents............57 Section 10.08. Termination of Security Interest...........................................................57 ARTICLE 11. satisfaction and discharge Section 11.01. Satisfaction and Discharge.................................................................57 Section 11.02. Application of Trust Money.................................................................58 ARTICLE 12. MISCELLANEOUS Section 12.01. Trust Indenture Act Controls...............................................................58 Section 12.02. Notices....................................................................................58 Section 12.03. Communication by Holders of Notes with Other Holders of Notes..............................60 Section 12.04. Certificate and Opinion as to Conditions Precedent.........................................60 Section 12.05. Statements Required in Certificate or Opinion..............................................60 Section 12.06. Rules by Trustee and Agents................................................................60 Section 12.07. No Personal Liability of Directors, Officers, Employees, Stockholders and Agents...........60 Section 12.08. Governing Law..............................................................................61 Section 12.09. No Adverse Interpretation of Other Agreements..............................................61 Section 12.10. Successors.................................................................................61 Section 12.11. Severability...............................................................................61 Section 12.12. Counterpart Originals......................................................................61 Section 12.13. Table of Contents, Headings, etc...........................................................61
SCHEDULES Schedule A Scheduled Cash Reserve Amount EXHIBITS Exhibit A FORM OF NOTE Exhibit B LIST OF COLLATERAL DOCUMENTS INDENTURE dated as of August 12, 2002 between Comdisco Holding Company, Inc., a Delaware corporation (the "Company"), Comdisco, Inc., a Delaware corporation ("NLC" and, together with the Company, the "Issuers"), and Wells Fargo Bank Minnesota, National Association, a national banking association, as trustee (the "Trustee"). The Company, NLC and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the 11% Subordinated Secured Notes due 2005 (the "Notes"): ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE Section 1.01. Definitions. "Acquired Debt" means, with respect to any specified Person: (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Additional Notes" means additional Notes issued prior to the payment in full of all Senior Indebtedness in respect of regularly scheduled interest on the Notes equal in amount to the interest payment due on such interest payment date. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, however, that beneficial ownership of 10% or more of the Voting Stock of a Person will be deemed to be control. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "Agent" means any Registrar, Paying Agent or co-registrar. "Applicable Procedures" means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary that apply to such transfer or exchange. "Bankruptcy Law" means Title 11, U.S. Code or any applicable federal or state or other applicable bankruptcy, insolvency, reorganization or other similar law for the relief of debtors. "Board of Directors" means: (a) with respect to a corporation, the board of directors of the corporation; (b) with respect to a partnership, the board of directors of the general partner of the partnership; and (c) with respect to any other Person, the board or committee of such Person serving a similar function. "Business Day" means any day other than a Legal Holiday. "Capital Lease Obligation" means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet in accordance with GAAP. "Capital Stock" means any and all shares or other equivalents (however designated) of capital stock, including all common stock and all preferred stock, in the case of a corporation, or partnership interests or other equivalents (however designated) in the case of a partnership or common shares of beneficial interest or other equivalents (however designated) in the case of a trust. "Cash Equivalents" means: (a) United States dollars; (b) securities issued or directly and fully guaranteed or insured by the United States government or any agency or instrumentality of the United States government having maturities of not more than one year from the date of acquisition; (c) certificates of deposit and Eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers' acceptances with maturities not exceeding one year and overnight bank deposits, in each case, with any domestic commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of "B" or better; (d) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (b) and (c) above entered into with any financial institution meeting the qualifications specified in clause (c) above; (e) commercial paper having the highest rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's Rating Services and in each case maturing within 271 days after the date of acquisition; (f) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (e) of this definition; and (g) the following money market funds (including any successor fund or equivalent thereto): (i) Goldman Sachs Financial Square Money Market Fund; (ii) Goldman Sachs Financial Square Prime Obligations Fund; (iii) Goldman Sachs Financial Square Treasury Obligations Fund; (iv) Goldman Sachs Financial Square Federal Fund; and (v) money market funds that primarily invest in the types of investments that are invested in by one or more of the funds identified in subclauses (i) through (iv) of this clause (g). "Change in Control" means the occurrence of any of the following: (a) the sale of all or substantially all of the assets of the Issuers and their Subsidiaries taken as a whole, to any Person or related group of Persons; (b) the consummation of any consolidation or merger of either of the Issuers: (i) in which the applicable Issuer is not the continuing or surviving corporation, other than a consolidation or merger: (1) with a wholly-owned Subsidiary of the applicable Issuer in which all of the common stock of the applicable Issuer outstanding immediately prior to the effectiveness thereof is changed into or exchanged for the same consideration, or (2) in which the stockholders of the applicable Issuer immediately prior to the consummation of such consolidation or merger own greater than 50% of the total voting power of all classes of capital shares of the continuing or surviving corporation immediately following the consummation of such consolidation or merger; or (ii) pursuant to which the shares of common stock of the applicable Issuer are converted into cash, securities, or other property, unless the stockholders of the applicable Issuer immediately prior to the consummation of such consolidation or merger own greater than 50% of the total voting power of all classes of capital shares of the continuing or surviving corporation immediately following the consummation of such consolidation or merger, (c) the acquisition by any Person individually or any Persons (in each case other than an Excluded Person or Excluded Persons) acting together that would constitute a "group" for purposes of Section 13(d) of the Exchange Act, together with any affiliates thereof, of beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of greater than 50% of the total voting power of all classes of capital shares of either of the Issuers entitled to vote generally in the election of directors of the applicable Issuer; or (d) the first day on which a majority of members of the Board of Directors of the Company are not Continuing Directors. Notwithstanding clause (a) of the definition of "Change in Control", a Change in Control will not be deemed to have occurred as a result of a transaction in which either: (a) the holders of the shares of common stock of the applicable Issuer immediately prior to the sale of all or substantially all of the applicable Issuer's assets have, directly or indirectly, at least a majority of the shares of common stock of the corporation to which such assets were sold immediately after such asset sale; or (b) the holders of the shares of common stock of the Issuers immediately prior to the consolidation or merger have, directly or indirectly, at least a majority of the shares of common stock of the continuing or surviving corporation immediately after such consolidation or merger. Notwithstanding clause (c) of the definition of "Change in Control", a Change in Control will not be deemed to have occurred solely by virtue of any of the following Persons filing or becoming obligated to file a report under or in response to Schedule 13D or Schedule 14D-1 (or any successor schedule, form, or report) under the Exchange Act disclosing beneficial ownership by it of shares or securities of the applicable Issuer, of greater than 50% of the total voting power referred to in clause (c) of the foregoing definition or otherwise: (a) the other Issuer; (b) any Subsidiary; (c) any employee share purchase plan, share option plan, or other share incentive plan or program; (d) retirement plan or automatic dividend reinvestment plan; or (e) any substantially similar plan of the Issuers or any Subsidiary or any Person holding securities of the Issuers for or pursuant to the terms of any such employee benefit plan. "Collateral Agent" means the party named as such in the Collateral Documents until a successor replaces it in accordance with the provisions of the Collateral Documents and thereafter means the successor serving thereunder. "Collateral Documents" means all agreements, instruments, documents, pledges or filings listed on Exhibit B hereto that evidence, perfect, set forth or limit the security interest of the Collateral Agent in the Note Collateral. "Company" means Comdisco Holding Company, Inc., and any and all successors thereto. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who: (a) was a member of such Board of Directors on the date of this Indenture or elected to or otherwise named to the Board of Directors pursuant to the Plan; or (b) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board at the time of such nomination or election. "Corporate Trust Office of the Trustee" shall be at the address of the Trustee specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to the Issuers and the Holders. "Custodian" means the Trustee, as custodian with respect to the Notes, or any successor entity thereto. "Default" means any event that is or with the passage of time or the giving of notice or both would be an Event of Default. "Definitive Note" means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A hereto except that such Note shall not bear the Global Note Legend and shall not have the "Schedule of Exchanges of Interests in the Global Note" attached thereto. "Depositary" means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture. "Disclosure Statement" means the Disclosure Statement with respect to the Plan. "Disputed Claims Reserve" has the meaning given to that term in the Plan. "Disqualified Stock" means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change in control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07. "Domestic Subsidiary" means any Subsidiary of the Issuers that was formed under the laws of the United States or any state of the United States or the District of Columbia. "Effective Date" means August 12, 2002. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Excess Cash" means Unrestricted Cash minus the sum of (i) an amount of cash or cash equivalents necessary to fund the Issuers' operating reserve for the fiscal quarter immediately following the fiscal quarter as to which any determination is being made, such operating reserves not to exceed the aggregate Scheduled Cash Reserve Amount and (ii) the amount of Notes optionally redeemed or to be optionally redeemed by the Issuers (unless the Issuers subsequently fail to redeem such Notes on the applicable redemption date) in accordance with Section 3.07 hereof following the last day of the fiscal quarter and prior to any mandatory redemption date in accordance with Section 3.08 hereof; provided, that amounts of Excess Cash determined by the foregoing shall be rounded down to the nearest whole multiple of $1,000. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Excluded Person" means any Person who is a holder of more than 5% of all classes of capital shares of the Issuers as of the Effective Date. "Existing Indebtedness" means up to $610.0 million in aggregate principal amount of Indebtedness of the Issuers and their Subsidiaries (excluding Indebtedness under this Indenture and the Senior Note Indenture) in existence on the date of the Indenture, until such amounts are repaid. "Foreign Subsidiary" of a Person means any Subsidiary of the referent Person that is not a Domestic Subsidiary. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time. "Global Notes" means each of the global Notes issued in accordance with Section 2.01 and substantially in the form of Exhibit A attached hereto that, except as otherwise provided in Section 2.01(b) hereof, bear the Global Note Legend and that have the "Schedule of Exchanges of Interests in the Global Note" attached thereto, and that are deposited with or on behalf of and registered in the name of the Depositary. "Global Note Legend" means the legend set forth in Section 2.06(f), which is required to be placed on all Global Notes issued under this Indenture. "Government Securities" means direct obligations of, or obligations guaranteed by, the United States of America, and the payment for which the United States pledges its full faith and credit. "Guarantee" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including, without limitation, by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness. "Hedging Obligations" means, with respect to any specified Person, the obligations of such Person under: (a) swap agreements, cap agreements and collar agreements designed to protect such Person against fluctuations on interest or currency exchange rates; and (b) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. "Holder" means a Person in whose name a Note is registered. "Indebtedness" means, with respect to any specified Person, any indebtedness of such Person, whether or not contingent: (a) in respect of borrowed money; (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof); (c) in respect of banker's acceptances; (d) representing Capital Lease Obligations; (e) representing the balance deferred and unpaid of the purchase price of any property, except any such balance that constitutes an accrued expense or trade payable; or (f) representing any Hedging Obligations, if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date will be: (a) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; (b) the principal amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due, in the case of any other Indebtedness; (c) in the case of a Guarantee of Indebtedness, the maximum amount of the outstanding Indebtedness guaranteed under such Guarantee; and (d) in the case of Indebtedness of others secured by a Lien on any asset of the specified Person, the fair market value of the asset(s) subject to such Lien. "Indenture" means this Indenture, as amended, modified or supplemented from time to time. "Initial Notes" means the Notes issued under this Indenture on the date hereof. "Investments" means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Issuers or any Subsidiary of the Issuers sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Issuers such that, after giving effect to any such sale or disposition, such Person is no longer a Subsidiary of the Issuers, the Issuers will be deemed to have made an Investment on the date of any such sale or disposition equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in the final paragraph of Section 4.07. The acquisition by the Company or any Subsidiary of the Company of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company or such Subsidiary in such third Person in an amount equal to the fair market value of the Investment held by the acquired Person in such third Person. "Legal Holiday" means a Saturday, a Sunday or a day on which banking institutions in the City of New York, the City of Chicago or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period. "Letter of Credit Facility" means the Credit and Security Agreement, dated as of June 18, 2002, between the Company and Fifth Third Bank (Chicago), and the other "Loan Documents" (as defined therein), each as amended, supplemented, refinanced, replaced, extended, defeased, increased, refunded, renewed, restated, revised or otherwise modified from time to time in the aggregate amount of outstanding letters of credit not to exceed $12,000,000.00 at any time. "Lien" means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction. "Management Incentive Plan" has the meaning given to that term in the Plan. "New Europe" means Comdisco Global Holding Company, Inc., and any and all successors thereto. "New Ventures" means Comdisco Ventures, Inc., and any and all successors thereto. "NLC" means Comdisco, Inc., and any and all successors thereto. "Non-Recourse Debt" means Indebtedness incurred in connection with discounted lease receivables programs substantially similar to the discounted lease receivables programs utilized in the ordinary course of business of the Issuers and/or their Subsidiaries prior to the date hereof as to which no default with respect to such Indebtedness (including any rights that the holders of the Indebtedness may have to take enforcement action against a Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Notes or the Senior Notes) of the Issuers or any of their Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its stated maturity. "Note Collateral" means all property, now owned or hereafter acquired, of the Issuers that, pursuant to the Collateral Documents, is subject to a security interest in favor of the Collateral Agent. "Notes" has the meaning assigned to it in the preamble to this Indenture and includes the Additional Notes. The Initial Notes and the Additional Notes shall be treated as a single class for all purposes under this Indenture. "Obligations" means any principal, interest, premium, if any, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Officer" means, with respect to any Person, the Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Secretary, any Assistant Secretary, the Chief Operating Officer, the Chief Financial Officer, the Controller, the Treasurer or any Assistant Treasurer of such Person. "Officers' Certificate" means a certificate signed on behalf of the Company or NLC, as the case may be, by two Officers of the Company or NLC, as the case may be, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company or NLC, as the case may be, that meets the requirements of Section 12.05 hereof. "Opinion of Counsel" means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 12.05 hereof. The counsel may be an employee of or counsel to the Issuers, any Subsidiary of the Issuers or the Trustee. "Participant" means, with respect to the Depositary, a Person who has an account with the Depositary. "Payment Blockage Notice" means a notice of a default that has occurred and is continuing on Senior Indebtedness that permits holders to accelerate the maturity of the Senior Indebtedness. "Permitted Business" means: (a) the sale, collection or other liquidation of the assets of the Issuers and their Subsidiaries, the repayment of the Indebtedness of the Issuers and thereafter the payment of dividends or other distributions to the owners of the Capital Stock of the Company, as contemplated by the Plan and the Disclosure Statement; and (b) any business that is ancillary to the foregoing. "Permitted Investments" means: (a) any Investment (i) in the Issuers, (ii) in a Domestic Subsidiary of the Issuers or (iii) in a Foreign Subsidiary of the Issuers; provided, however, that the Issuers or a Domestic Subsidiary of the Issuers cannot make Investments in Foreign Subsidiaries pursuant to this subclause (iii) in an amount exceeding the aggregate distributions received by the Issuers or their Domestic Subsidiaries from Foreign Subsidiaries since April 1, 2002; provided, further, that any intercompany Indebtedness owed to the Issuers or any Domestic Subsidiary of the Issuers by any Foreign Subsidiary may be converted into equity of, or contributed to the capital of, a Foreign Subsidiary in order to maintain the solvency of any Foreign Subsidiary or in connection with a sale or other disposition of such Foreign Subsidiary; (b) any Investment in cash or Cash Equivalents; (c) any Investments made or received (i) in exchange for, or in compromise of, other Investments of the Issuers or any of their Subsidiaries existing as of the date hereof, (ii) in exchange for, or in compromise of, assets or other rights received by the Issuers or any of their Subsidiaries in exchange for, or in compromise of, Investments of the Issuers or any of their Subsidiaries, which assets, rights or Investments were in existence as of the date hereof or (iii) to extend, refinance, renew or replace any other Investments of the Issuers or any of their Subsidiaries existing as of the date hereof; (d) any Investments received in compromise of obligations of Persons incurred in the ordinary course of business, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; (e) Hedging Obligations; (f) Investments represented by accounts receivable created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; (g) Investments, or Investments resulting from commitments to make Investments, existing as of the date of this Indenture; (h) Investments, or commitments to make Investments, in the form of (x) a lease of or rental agreement, (y) a sale contract (including an installment sale contract or conditional sale agreement), or (z) a secured financing, including any schedule or amendment thereto or assignment, assumption, renewal or novation thereof (and delivery, acceptance or installation certificates, landlord or mortgagee waivers, intercreditor or subordination agreements, incumbency certificates, purchase orders, purchase order assignments, and sale and leaseback agreements, each relating thereto), and in each case, which with respect thereto: (A) the Company, NLC or one of their Subsidiaries is the lessor, seller, secured party or obligee (whether initially or as an assignee), or (B) is between an obligor, on the one hand, and a lessor, seller, obligee, secured party or assignee of any of the foregoing, on the other hand, and (1) which would be a Permitted Investment if the Company, NLC or one of their Subsidiaries were the lessor, seller, obligee, secured party or assignee of any of the foregoing thereunder and (2) with respect to which the Company, NLC or one of their Subsidiaries is an assignee of the revenues or claims with respect thereto; (i) Investments in prepaid expenses, negotiable instruments held for collection, and lease, utility and worker's compensation, performance and other similar deposits in the ordinary course of business consistent with past practices; and (j) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (j) that are at the time outstanding not to exceed (1) $1.0 million in respect of Investments in any Person by New Ventures and (2) $1.0 million in respect of Investments in any Person by the Issuers or their Subsidiaries including New Ventures; provided, however, that any Investment by New Ventures with respect to this clause (j) shall be attributed, without duplication, to either subclause (1) hereof or subclause (2) hereof. "Permitted Liens" means: (a) Liens created, or intended to be created, under the Collateral Documents; (b) Liens on assets of any of the Issuers or their Subsidiaries securing Indebtedness that are permitted by clauses (c), (f) or (i) of the second paragraph of Section 4.09; (c) Liens in favor of any of the Issuers or their Subsidiaries; (d) Liens on property of a Person existing at the time such Person becomes a Subsidiary of the Issuers or New Ventures; provided, however, that such Liens were in existence prior to the contemplation of such Person becoming a Subsidiary of the Issuers or New Ventures and do not extend to any assets other than those of the Person that becomes a Subsidiary of the Issuers or New Ventures; provided, further, that such Person becomes a Subsidiary of the Issuers or New Ventures as a result of a Permitted Investment pursuant to clause (c) of the definition thereof; (e) Liens on property existing at the time of acquisition of such property by any of the Issuers or their Subsidiaries, provided, however, that such Liens were in existence prior to the contemplation of such acquisition and such property was acquired in exchange for, or in compromise of, Investments existing as of the date hereof or Investments resulting from commitments to make Investments existing as of the date hereof; (f) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (g) Liens on assets or rights which are not Note Collateral and which secure Indebtedness permitted under any clause of Section 4.09 so long as the Notes are repaid in full with the proceeds of, and concurrently with the incurrence of, such Indebtedness; (h) Liens existing on the date of this Indenture; (i) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings or negotiations promptly instituted and diligently concluded, provided, however, that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor; (j) Liens incurred in the ordinary course of business of the Issuers or any Subsidiary of the Issuers with respect to obligations that are not Indebtedness that do not exceed $1.0 million at any one time outstanding; (k) Liens on assets of NLC or any Subsidiaries of the Issuers that secure Non-Recourse Debt of NLC or such Subsidiaries; (l) statutory Liens of landlords and carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other like Liens arising in the ordinary course of business and with respect to amounts not yet delinquent for a period of more than 90 days or which are being contested in good faith; provided, however, that a reserve or other appropriate provision as shall be required by GAAP shall have been made therefor; (m) easements, rights-of-way, restrictions, zoning, minor defects or irregularities in title and other similar charges or encumbrances not interfering in any material respect with the business or assets of the Issuers or their Subsidiaries, taken as a whole, incurred in the ordinary course of business; (n) Liens arising by reason of any judgment not constituting an Event of Default under this Indenture; provided, however, that: (i) such Liens are being contested in good faith by appropriate proceedings or negotiations, and (ii) such Liens are adequately bonded or adequate reserves have been established on the books of the Issuers in accordance with GAAP; (o) Uniform Commercial Code financing statements filed for precautionary purposes in connection with any true lease of property leased by any of the Issuers or their Subsidiaries; provided, however, that any such financing statement does not cover any property other than the property subject to such lease and the proceeds thereof; and (p) renewals or refundings of Indebtedness expressly permitted by the Indenture secured by any Liens referred to in clauses (a), (b), (d), (e), (g), (h) and (k) above; provided, however, that: (i) such new Liens will be limited to all or part of the same property that secured the original Liens (plus improvements to or on such property); and (ii) the principal amount of the Indebtedness secured by such Liens at such time is not increased to any amount greater than the sum of (1) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (a), (b), (d), (e), (g), (h) and (k) above immediately prior to such renewal or refunding, and (2) an amount necessary to pay any fees and expenses, including premiums, related to such renewals or refundings. "Permitted Refinancing Indebtedness" means any Indebtedness of any of the Issuers or their Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund other Indebtedness of any of the Issuers or their Subsidiaries (other than intercompany Indebtedness); provided, however, that: (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses and premiums incurred in connection therewith); (b) such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (c) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded is subordinated in right of payment to the Notes, such Permitted Refinancing Indebtedness has a final maturity date later than the final maturity date of, and is subordinated in right of payment to, the Notes on terms at least as favorable to the Holders of the Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (d) such Permitted Refinancing Indebtedness is incurred either by the Issuers or by the Subsidiary which is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; (e) the covenants contained in the documentation governing such Permitted Refinancing Indebtedness are no more restrictive than the covenants contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and (f) if more than 30 days remain until the maturity date of the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded, the interest rate of such Permitted Refinancing Indebtedness does not exceed the interest rate of the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded. "Permitted Subordinated Securities" means: (a) Equity Interests in the Issuers; or (b) debt securities that are subordinated to all Senior Indebtedness to substantially the same extent as, or to a greater extent than, the Notes are subordinated to Senior Indebtedness under this Indenture. "Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government (or any agency, instrumentality or political subdivision thereof). "Plan" means the First Amended Joint Plan of Reorganization of Comdisco, Inc. and its Affiliated Debtors and Debtors In Possession dated as of June 13, 2002, as amended, modified or otherwise supplemented through the Effective Date. "Pledge Agreement" means the Pledge Agreement, dated as of the Effective Date, among the Issuers and the Trustee, as amended, modified or supplemented from time to time. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the Effective Date, by and among the Issuers and the other parties named on the signature pages thereof, as such agreement may be amended, modified or supplemented from time to time. "Representative" means the Senior Note Trustee or other trustee, agent or representative for any Senior Indebtedness. "Responsible Officer," when used with respect to the Trustee, means any officer within the corporate trust department of the Trustee located at the Corporate Trust Office of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Restricted Investment" means an Investment other than a Permitted Investment. "Scheduled Cash Reserve Amount" means the respective amount set forth on Schedule A hereto allocated among the Subsidiaries of the Company as the Company's Board of Directors deems appropriate. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Senior Indebtedness" means: (a) the Senior Notes issued pursuant to the Senior Note Indenture; (b) Indebtedness issued in exchange for the items listed in the preceding clause (a) to the extent the consolidated Indebtedness of the Issuers is not increased thereby; and (d) all Obligations with respect to the items listed in the preceding clauses (a) and (b). Notwithstanding anything to the contrary in the preceding, Senior Indebtedness shall not include: (a) any liability for federal, state, local or other taxes owed or owing by the Issuers; (b) any intercompany Indebtedness of the Issuers or any of their Subsidiaries to the Issuers or any of their Affiliates; (c) any trade payables; or (d) the portion of any Indebtedness that is incurred in violation of this Indenture. "Senior Note Indenture" means the indenture, dated as of the date of this Indenture, to be executed by the Issuers and the Senior Note Trustee. "Senior Note Trustee" means Wells Fargo Bank Minnesota, National Association in its capacity as trustee under the Senior Note Indenture, and any successor trustee, if any, under the Senior Note Indenture. "Senior Notes" means the Variable Rate Senior Secured Notes due 2004 issued pursuant to the Senior Note Indenture. "Stated Maturity" means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the original documentation governing such Indebtedness, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Stay Bonus Plan" has the meaning given to that term in the Disclosure Statement. "Subsidiary" means, with respect to any specified Person: (a) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (b) any partnership (i) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (ii) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). "Supplemental Distribution Account" has the meaning given to that term in the Plan. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss. 77aaa-77bbbb), as amended, as in effect on the date hereof until such time as this Indenture is qualified under the TIA and thereafter as in effect on the date on which this Indenture is qualified under the TIA. "Trustee" means the party named as such above until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder. "Unrestricted Cash" means cash or cash equivalents as set forth on the balance sheets of the Issuers and their Subsidiaries prepared in accordance with GAAP as of 5:00 p.m. on the last day of the applicable fiscal quarter minus, without duplication, the sum of cash or cash equivalents (i) held in non-domestic accounts in the ordinary operation of the business, (ii) required to be shown as restricted cash or cash equivalents in accordance with GAAP on such balance sheet (or the notes thereto) or otherwise unavailable to Issuers and their Subsidiaries for general use as a result of the Plan, applicable law or agreement with a third party, (iii) held or maintained in the Disputed Claims Reserve, (iv) held or maintained in the Supplemental Distribution Account, (v) held or maintained in the cash account pledged to the issuers of letters of credit under the Letter of Credit Facility and (vi) held or required to be held in an escrow account or otherwise legally segregated from the funds of the Issuers and their Subsidiaries pursuant to the Stay Bonus Plan and/or the Management Incentive Plan. "Voting Stock" of any Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity" means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness. Section 1.02. Other Definitions. Defined in Term Section "Affiliate Transaction"....................................... 4.10 "Authentication Order" ....................................... 2.02 "Change in Control Offer"..................................... 4.14 "Change in Control Repurchase Date"........................... 4.14 "Change in Control Repurchase Price".......................... 4.14 "DTC"......................................................... 2.03 "Event of Default"............................................ 6.01 "incur"....................................................... 4.09 "Offer"....................................................... 3.09 "Offer Period"................................................ 3.09 "Paying Agent"................................................ 2.03 "Permitted Debt".............................................. 4.09 "Registrar"................................................... 2.03 "Restricted Payments"......................................... 4.07 Section 1.03 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the SEC; "indenture securities" means the Notes; "indenture security holder" means a Holder of a Note; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the Notes means the Company and NLC and any successor obligor upon the Notes. All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them. Section 1.04. Rules of Construction. Unless the context otherwise requires: (a) a term has the meaning assigned to it; (b) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (c) "or" is not exclusive; (d) words in the singular include the plural, and in the plural include the singular; (e) provisions apply to successive events and transactions; and (f) references to sections of or rules under the Securities Act and the Exchange Act shall be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time. ARTICLE 2. THE NOTES Section 2.01. Form and Dating. (a) General. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage, as applicable. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof; provided, however, that the Notes may be in denominations (rounded to the nearest whole dollar) of less than $1,000 (but in no event less than $1.00) to make redemptions of Notes pursuant to Section 3.07 and 3.08 hereof; provided, further, that the Additional Notes may be denominated in amounts (rounded to the nearest whole dollar) less than $1,000 (but in no event less than $1.00) or greater than $1,000 as necessary to make regularly scheduled interest payments on the Notes prior to the payment in full of all Senior Indebtedness. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture, and the Issuers and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling. (b) Global Notes. Except as expressly required by the terms of this Indenture, Notes shall be issued in global form substantially in the form of Exhibit A attached hereto (including the Global Note Legend thereon and the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Notes otherwise issued in definitive form shall be substantially in the form of Exhibit A attached hereto (but without the Global Note Legend thereon and without the "Schedule of Exchanges of Interests in the Global Note" attached thereto). Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges, redemptions and transfers of interests therein in accordance with this Indenture. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof. Section 2.02. Execution and Authentication. Two (2) Officers of both the Company and NLC shall sign the Notes for the Company and NLC, respectively. The signatures of any of those Officers on the Notes may be either a manual or a facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid. A Note shall not be valid until authenticated by the manual signature of an authorized signatory of the Trustee on the certificate of authentication of the Note. The signature shall be conclusive evidence that the Note has been authenticated under this Indenture. The Trustee shall, upon a written order of the Issuers signed by two (2) Officers of both the Company and NLC specifying the date on which the Notes are to be authenticated and whether the Notes are Definitive Notes or Global Notes (an "Authentication Order"), authenticate Notes for original issue up to the aggregate principal amount stated in the Notes. The aggregate principal amount of Notes outstanding at any time may not exceed such amount except as provided in Section 2.07 hereof. The Trustee may appoint an authenticating agent acceptable to the Issuers to authenticate Notes. The Issuers shall pay all reasonable fees payable to the authenticating agent. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company. Section 2.03. Registrar and Paying Agent. The Issuers shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange ("Registrar") and an office or agency where Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar and the term "Paying Agent" includes any additional paying agent. The Issuers may change any Paying Agent or Registrar upon prior written notice to the Trustee without notice to any Holder. The Issuers shall notify the Trustee in writing of the name and address and any change in the name or address of any Agent not a party to this Indenture. If the Issuers fail to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Issuers or any of their Subsidiaries may act as Paying Agent or Registrar. The Issuers shall enter into an appropriate agency agreement with any agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent and shall, if required, incorporate the provisions of the TIA. The Issuers initially appoint The Depository Trust Company ("DTC") to act as Depositary with respect to the Notes. The Issuers initially appoint the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Notes. Section 2.04. Paying Agent to Hold Money in Trust. The Issuers shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal or premium, if any, or interest on the Notes, and will notify the Trustee of any default by the Issuers in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Issuers at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Issuers or a Subsidiary of the Issuers) shall have no further liability for the money delivered to the Trustee. If either the Company or NLC, or a Subsidiary of the Company or NLC, acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Issuers, the Trustee shall serve as Paying Agent for the Notes. Section 2.05. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA ss. 312(a). If the Trustee is not the Registrar, the Issuers shall furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of Notes, including the aggregate principal amount held by each Holder, and the Issuers shall otherwise comply with TIA ss. 312(a). Section 2.06. Transfer and Exchange. (a) Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if (i) the Issuers delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Issuers within 90 days after the date of such notice from the Depositary or (ii) following the occurrence and during the continuation of a Default or Event of Default, any Person holding a beneficial interest in a Global Note requests that the Global Notes should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee. Upon the occurrence of either of the preceding events in (i) or (ii) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Sections 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); provided, however, that beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c) hereof. (b) Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers of beneficial interests in a Global Note. (c) Transfer or Exchange of Beneficial Interests in Global Notes for Definitive Notes. If any holder of a beneficial interest in a Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. (d) Transfer and Exchange of Definitive Notes for Beneficial Interests in Global Notes. A Holder of a Definitive Note may exchange such Note for a beneficial interest in a Global Note or transfer such Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee shall cancel the applicable Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Global Notes. (e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. A Holder of Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of a Definitive Note. (f) Legends. The following legends shall appear on the face of all Global Notes issued under this Indenture in substantially the following form unless specifically stated otherwise in the applicable provisions of this Indenture. "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 8.05 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE OR IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF COMDISCO HOLDING COMPANY, INC. AND COMDISCO, INC." (g) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase. (h) General Provisions Relating to Transfers and Exchanges. (i) To permit registrations of transfers and exchanges, the Issuers shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Issuers' order or at the Registrar's request. (ii) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Trustee or the Issuers may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.14 and 8.05 hereof). (iii) The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part. (iv) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Issuers, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange. (v) The Issuers shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection, (B) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date. (vi) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuers may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuers shall be affected by notice to the contrary. (vii) The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof. (viii) All certifications and certificates required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile. Section 2.07. Replacement Notes. If any mutilated Note is surrendered to the Trustee or the Issuers and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Issuers shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee's requirements are met. If required by the Trustee or the Issuers, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Issuers to protect the Issuers, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Issuers may charge for its expenses in replacing a Note. Every replacement Note is an additional obligation of the Issuers and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder. Section 2.08. Outstanding Notes. The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or NLC, or an Affiliate of the Company or NLC, holds the Note. If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a bona fide purchaser. If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue. If the Paying Agent (other than the Issuers, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest. Section 2.09. Treasury Notes. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuers or any of its Affiliates or held or maintained in the Disputed Claims Reserve, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that the Trustee has actual knowledge are so owned shall be so disregarded. Section 2.10. Temporary Notes. Until certificates representing Notes are ready for delivery, the Issuers may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of certificated Notes but may have variations that the Issuers considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Issuers shall prepare and the Trustee shall authenticate Definitive Notes in exchange for temporary Notes. After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon surrender of the temporary Notes at the office or agency maintained by the Issuers for such purpose pursuant to Section 4.02 hereof, without charge to the Holder. Upon surrender for cancellation of any one or more temporary Notes, the Issuers shall execute, and the Trustee shall authenticate and make available for delivery, in exchange thereof the same aggregate principal amount of Definitive Notes of authorized denominations. Holders of temporary Notes shall be entitled to all of the benefits of this Indenture. Section 2.11. Cancellation. The Issuers at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy canceled Notes in accordance with its normal practice and applicable law. Certification of the destruction of all canceled Notes shall be delivered to the Issuers. The Issuers may not issue new Notes to replace Notes that it has redeemed or repurchased or paid or that have been delivered to the Trustee for cancellation. Section 2.12. Defaulted Interest. If the Issuers default in a payment of interest on the Notes, the Issuers shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Issuers shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Issuers shall, with the consent of the Trustee, fix or cause to be fixed each such special record date and payment date, provided, however, that each such special record date shall be at the earliest practicable date but in all events shall not be less than five Business Days prior to the related payment date for such defaulted interest. At least 15 days before the special record date, the Issuers (or, upon the written request of the Issuers, the Trustee in the name and at the expense of the Issuers) shall mail or cause to be mailed to Holders a notice that states the special record date, the related payment date and the amount of such interest to be paid. ARTICLE 3. REDEMPTION AND PREPAYMENT Section 3.01. Notices to Trustee. If the Issuers elect to redeem Notes pursuant to the optional redemption provisions of Section 3.07 or are required to redeem Notes pursuant to Section 3.08, the Issuers shall furnish to the Trustee, at least 10 days but not more than 60 days before an optional redemption date pursuant to Section 3.07 or at least 10 days but not more than 30 days before a mandatory redemption date pursuant to Section 3.08, an Officers' Certificate setting forth (i) that the redemption is an optional redemption pursuant to Section 3.07 or an mandatory redemption pursuant to Section 3.08, (ii) the redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption price. Section 3.02. Selection of Notes to Be Redeemed or Repurchased. If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Notes to be redeemed or purchased among the Holders of the Notes pro rata in accordance with the outstanding principal amount of the Notes outstanding immediately prior to such redemption or purchase. The Trustee shall promptly notify the Issuers, the Registrar and the Paying Agent in writing of the Notes selected for redemption and, in the case of any Note selected for partial redemption, the principal amount thereof to be redeemed. Notes and portions of Notes selected to be redeemed may be in whole dollar amounts of less than $1,000. Provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption. Section 3.03. Notice of Redemption. Subject to the provisions of Sections 3.08 and 3.09 hereof, at least 10 days but not more than 60 days before an optional redemption date pursuant to Section 3.07 or at least 10 days but not more than 30 days before a mandatory redemption date pursuant to Section 3.08, the Issuers shall mail or cause to be mailed, by first class mail, a notice of redemption to each Holder whose Notes are to be redeemed at its registered address. The notice shall identify the Notes to be redeemed and shall state: (a) the redemption date; (b) the redemption price; (c) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion shall be issued upon cancellation of the original Note; (d) the name and address of the Paying Agent to which the Notes are to be surrendered for redemption; (e) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price; (f) that, unless the Issuers default in making such redemption payment, interest on Notes called for redemption ceases to accrue on and after the redemption date; (g) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and (h) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. At the Issuers' request, the Trustee shall give the notice of redemption in the Issuers' name and at the Issuers' expense; provided, however, that the Issuers shall have delivered to the Trustee, at least 5 Business Days prior to the date on which any notice of redemption pursuant to this Article 3 is requested to be mailed by the Trustee, Officers' Certificates requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. Section 3.04. Effect of Notice of Redemption. Once notice of redemption is mailed in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. A notice of redemption may not be conditional. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder. Section 3.05. Deposit of Redemption Price. Prior to 11:00 a.m., Chicago time, not less than one Business Day prior to the redemption date, the Issuers shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date) on all Notes to be redeemed on that date. The Trustee or the Paying Agent shall promptly return to the Issuers any money deposited with the Trustee or the Paying Agent by the Issuers in excess of the amounts necessary to pay the redemption price of, and accrued interest on, all Notes to be redeemed. If the Issuers comply with the provisions of the preceding paragraph, on and after the redemption date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption. If a Note is redeemed on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Issuers to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof. Section 3.06. Notes Redeemed in Part. Upon surrender of a Note that is redeemed in part, the Issuers shall issue and, upon the Issuers' written request, the Trustee shall authenticate for the Holder at the expense of the Issuers a new Note equal in principal amount to the unredeemed portion of the Note surrendered. Section 3.07. Optional Redemption. (a) The Issuers may, at its option at any time after the Effective Date, redeem the Notes, in whole or in part, on at least 10 days' but not more than 60 days' notice to each Holder of Notes to be redeemed in cash at its registered address, at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon to the redemption date; provided, however, that any such optional redemption pursuant to this Section 3.07 shall be permitted only if no Senior Notes remain outstanding or if, concurrently with the redemption of the Notes, the Issuers redeem all Senior Notes then outstanding. (b) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. Section 3.08. Mandatory Redemption. (a) The Issuers shall be required to make mandatory redemptions of the Notes on or before the 45th day after the end of each fiscal quarter ending on September 30, December 31, March 31 and June 30 of each year pursuant to which the Issuers will redeem a principal amount of Notes equal to Excess Cash as of the end of the immediately preceding fiscal quarter; provided, however, that the Issuers shall not be obligated to make any redemption pursuant to this Section 3.08 of less than $1.0 million principal amount of Notes unless the principal amount of Notes then outstanding is less than or equal to the principal amount of Notes otherwise required to be redeemed pursuant to this Section 3.08 without giving effect to this proviso. Any such mandatory redemption shall be made on at least 10 days' but not more than 30 days' notice to each Holder of the Notes to be redeemed in cash at its registered address, at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest thereon to the redemption date; provided, however, that any such mandatory redemption pursuant to this Section 3.08 shall be permitted only if no Senior Notes remain outstanding or if, concurrently with the redemption of the Notes, the Issuers redeem all Senior Notes then outstanding. (b) Any redemption pursuant to this Section 3.08 shall be made pursuant to the provisions of Section 3.01 through 3.06 hereof. Section 3.09. Offers to Repurchase by the Issuers. In the event that, pursuant to Section 4.14 hereof, the Issuers shall be required to commence an offer to all Holders to purchase Notes (an "Offer"), it shall follow the procedures specified below. The Offer shall remain open for a period of 20 Business Days following its commencement and no longer, except to the extent that a longer period is required by applicable law (the "Offer Period"). No later than the applicable Change in Control Repurchase Date, the Issuers shall purchase all Notes tendered in response to the Offer. If the applicable Change in Control Repurchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest shall be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest shall be payable to Holders who tender Notes pursuant to the Offer; provided, however, that if the Issuers, the Depositary or the Paying Agent, as the case may be, fail to mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Issuers for purchase pursuant to this Section 3.09, interest shall be paid by the Issuers on the unpaid principal from such interest record date until such principal is paid and to the extent lawful on any interest not paid on such interest, in each case at the rate provided in the Notes. Upon the commencement of an Offer, the Issuers shall send, by first class mail, a written notice to the Trustee and each of the Holders, with a copy to the Trustee. Such notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Offer. The Offer shall be made to all Holders. The notice, which shall govern the terms of the Offer, shall state: (a) that the Offer is being made pursuant to this Section 3.09 and Section 4.14 hereof and the length of time the Offer shall remain open; (b) the Change in Control Repurchase Price and the Change in Control Repurchase Date; (c) that any Note not tendered or accepted for payment shall continue to accrue interest; (d) that, unless the Issuers default in making such payment, any Note accepted for payment pursuant to the Offer shall cease to accrue interest after the Change in Control Repurchase Date; (e) that Holders electing to have a Note purchased pursuant to an Offer may elect to have Notes purchased in whole or in part; (f) that Holders electing to have a Note purchased pursuant to any Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note completed, or transfer by book-entry transfer, to the Issuers, a depositary, if appointed by the Issuers, or a Paying Agent at the address specified in the notice at least ten days before the Change in Control Repurchase Date; (g) that Holders shall be entitled to withdraw their election if the Issuers, the depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; and (h) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer). On or before the Change in Control Repurchase Date, the Issuers shall, to the extent lawful, accept for payment, all Notes tendered, and shall deliver to the Trustee Officers' Certificates stating that such Notes or portions thereof were accepted for payment by the Issuers in accordance with the terms of this Section 3.09. The Issuers, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Change in Control Repurchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Issuers for purchase, and the Issuers shall promptly issue a new Note, and the Trustee, upon written request from the Issuers shall authenticate and mail or deliver such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Issuers to the Holder thereof. The Issuers shall publicly announce the results of the Offer on or as soon as reasonably practicable following the Change in Control Repurchase Date. Other than as specifically provided in this Section 3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof. ARTICLE 4. COVENANTS Section 4.01. Payment of Notes. The Issuers shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than the Issuers or a Subsidiary of the Issuers, holds as of 12:00 noon Eastern Time on the due date, money deposited by the Issuers in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to 1% per annum in excess of the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful. Section 4.02. Maintenance of Office or Agency. The Issuers shall maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuers in respect of the Notes and this Indenture may be served. The Issuers shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuers shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Issuers hereby appoint the Trustee as its agent to receive all such presentations, surrenders, notices and demands. The Issuers may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Issuers of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Issuers shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Issuers hereby designate the corporate trust office of the Trustee's Agent located at c/o the Depository Trust Company, 1st Floor, TADS Department, 55 Water Street, New York, New York 10041, as one such office or agency of the Issuers in accordance with Section 2.03. Section 4.03. Reports. Whether or not required by the rules and regulations of the SEC, so long as any Notes are outstanding, the Company shall furnish to the Trustee and the Holders of Notes within the time periods specified in the SEC's rules and regulations (i) all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K (or any successor forms) if the Company was required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report on the annual financial statements by the Company's certified independent accountants and (ii) all current reports that would be required to be filed with the SEC on Form 8-K (or any successor forms) if the Company were required to file such reports. In addition, whether or not required by the rules and regulations of the SEC, the Company shall file a copy of all such information and reports with the SEC for public availability within the time periods specified in the SEC's rules and regulations (unless the SEC will not accept such a filing) and make such information available to securities analysts and prospective investors upon request. The Company shall at all times comply with TIA ss. 314(a). Section 4.04. Compliance Certificate. (a) The Issuers shall deliver to the Trustee, within 120 days after the end of each fiscal year, an Officers' Certificate stating that a review of the activities of the Issuers and their Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether each of the Issuers and their Subsidiaries has kept, observed, performed and fulfilled their obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge each of the Issuers has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default shall have occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action each of the Issuers, as the case may be, is taking or propose to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event, its nature and status and what action each of the Issuers, as the case may be, is taking or propose to take with respect thereto. (b) So long as not contrary to the then current recommendations of the American Institute of Certified Public Accountants, the year-end financial statements delivered pursuant to Section 4.03 above shall be accompanied by a written statement of the Company's independent public accountants (who shall be a firm of established national reputation) that in making the examination necessary for certification of such financial statements, nothing has come to their attention that would lead them to believe that the Company has violated any provisions of Article 4 or Article 5 hereof or, if any such violation has occurred, specifying the nature and period of existence thereof, it being understood that such accountants shall not be liable directly or indirectly to any Person for any failure to obtain knowledge of any such violation. (c) The Issuers shall, so long as any of the Notes are outstanding, deliver to the Trustee, within 10 days after any executive officer of either of the Issuers becomes aware of any Event of Default, an Officers' Certificate specifying such Event of Default, the period of existence thereof and what action each of the Issuers, as the case may be, is taking or proposes to take with respect thereto. Section 4.05. Taxes. The Issuers shall, and shall cause each of their Subsidiaries to, pay or discharge, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by appropriate proceedings or negotiations or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes. Section 4.06. Stay, Extension and Usury Laws. The Issuers covenant (to the extent that it may lawfully do so) that they shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law that would prohibit or forgive the Issuers from paying all or any portion of the principal of, premium, if any, or interest on the Notes in accordance with this Indenture, wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture, and the Issuers (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted. Section 4.07. Restricted Payments. The Issuers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly: (a) declare or pay any dividend or make any other payment or distribution on account of the Issuers' or any of their Subsidiaries Equity Interests (including, without limitation, any payment in connection with any merger or consolidation involving the Issuers or any of their Subsidiaries) or to the direct or indirect holders of the Issuers' or any of their Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Issuers or any Subsidiary of the Issuers or payable to the Issuers or a Subsidiary of the Issuers); (b) purchase, redeem or otherwise acquire or retire for value (including, without limitation, in connection with any merger or consolidation involving the Issuers) any Equity Interests of the Issuers or any of their Subsidiaries held by any Person (other than the Issuers or any of its Subsidiaries); (c) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness that is subordinated to the Notes, except a payment of interest or principal and premium, if any, at the Stated Maturity thereof; or (d) make any Restricted Investment (all such payments and other actions set forth in these clauses (a) through (d) being collectively referred to as "Restricted Payments"). So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions shall not prohibit: (a) the redemption, repurchase, retirement, defeasance or other acquisition of any Subordinated Notes in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Issuers) of, Equity Interests of the Issuers (other than Disqualified Stock); (b) the defeasance, redemption, repurchase or other acquisition of subordinated Indebtedness of any of the Issuers or their Subsidiaries with the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (c) the payment of any dividend by NLC or a Subsidiary of the Issuers to the holders of its Equity Interests on a pro rata basis; and (d) the making of a Change in Control offer to repurchase the Senior Notes after a Change in Control. Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries. The Issuers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary to: (a) pay dividends or make any other distributions on its Capital Stock to the Issuers or any Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to the Issuers or any of their Subsidiaries; (b) make loans or advances to the Issuers or any of their Subsidiaries; or (c) transfer any of its properties or assets to the Issuers or any of their Subsidiaries. However, the preceding restrictions shall not apply to encumbrances or restrictions existing under or by reason of: (a) agreements governing Existing Indebtedness as in effect on the date of this Indenture and any amendments, supplements, refinancings, replacement, extensions, defeasance, refundings, renewals, restatements, revisions or other modifications to those agreements; provided, however, that the amendments, supplements, refinancings, replacement, extensions, defeasance, refundings, renewals, restatements, revisions or other modifications are no more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the date of this Indenture and do not increase the amount of the Indebtedness; (b) this Indenture and the Notes; (c) the Subordinated Note Indenture and the Subordinated Notes; (d) applicable law; (e) customary non-assignment provisions in any contract or licensing agreement entered into in the ordinary course of business and consistent with past practices; (f) purchase money obligations permitted to be incurred pursuant to clause (c) of the second paragraph of Section 4.09 that impose restrictions on that property of the nature described in clause (c) of the preceding paragraph of this Section 4.08; (g) any agreement for the sale or other disposition of NLC or a Subsidiary that restricts distributions by NLC or that Subsidiary pending its sale or other disposition; (h) Permitted Refinancing Indebtedness, provided, however, that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (i) Liens securing Indebtedness otherwise permitted to be incurred under the provisions of Section 4.11 that limit the right of the debtor to dispose of the assets subject to such Liens; (j) provisions with respect to the disposition or distribution of assets or property in joint venture agreements, assets sale agreements, stock sale agreements and other similar agreements entered into in the ordinary course of business; and (k) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business. Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock. The Issuers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt), and the Issuers shall not issue any Disqualified Stock and shall not permit any of their Subsidiaries to issue any shares of preferred stock. The first paragraph of this Section 4.09 shall not prohibit the incurrence of any of the following items of Indebtedness (collectively, "Permitted Debt"): (a) the incurrence by the Issuers and their Subsidiaries of the Existing Indebtedness; (b) the incurrence by the Issuers of Indebtedness represented by the Notes and the Senior Notes; (c) with respect to lease or rental commitments to lessees (i) existing as of the date hereof or (ii) permitted to be incurred by Foreign Subsidiaries after the date hereof in accordance with Section 4.12, the incurrence by the Issuers or any of their Subsidiaries of Indebtedness represented by purchase money obligations incurred for the purpose of financing all or any part of the purchase price or cost of equipment leased or sold to, or otherwise financed for, a customer of the business of the Issuers or such Subsidiary, in an aggregate principal amount, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (c), not to exceed $10.0 million at any time outstanding; (d) the incurrence by (i) the Issuers or any of their Subsidiaries or (ii) with respect to clause (b) of this Section 4.09, the Issuers, of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to refund, refinance or replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under clauses (a), (b), (c), (d), (g), (i) or (k) of this paragraph; (e) the incurrence by the Issuers or any of their Subsidiaries of intercompany Indebtedness between or among the Issuers and any of their Subsidiaries; provided, however, that: (i) if either the Company or NLC is the obligor on such Indebtedness, such Indebtedness must be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes; and (ii) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Issuers or a Subsidiary of the Issuers and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company, NLC or a Subsidiary of the Issuers shall be deemed, in each case, to constitute an incurrence of such Indebtedness by the Issuers or such Subsidiary, as the case may be, that was not permitted by this clause (e); (f) the incurrence by the Issuers or any of their Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing or hedging interest rate risk with respect to any floating rate Indebtedness that is permitted by the terms of this Indenture to be outstanding or for the purpose of fixing or hedging currency risk; (g) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, and the payment of dividends on Disqualified Stock in the form of additional shares of the same class of Disqualified Stock shall not be deemed to be an incurrence of Indebtedness or an issuance of Disqualified Stock for purposes of this Section 4.09; (h) Indebtedness of the Issuers or any Subsidiary to the extent that the net proceeds thereof are promptly: (i) used to purchase Notes tendered in an offer to purchase made as a result of a Change in Control; or (ii) used to redeem Notes pursuant to Section 3.08 hereof. (i) the incurrence by the Issuers or any of their Subsidiaries of additional Indebtedness (including Acquired Debt) in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to refund, refinance or replace any Indebtedness incurred pursuant to this clause (i), not to exceed $5.0 million; (j) the incurrence of Non-Recourse Debt; provided, however, that if any such Indebtedness ceases to be Non-Recourse Debt, such event shall be deemed to constitute an incurrence of Indebtedness by a Subsidiary of the Issuers that was not permitted by this clause (j); and (k) obligations in respect of letters of credit, performance and surety bonds and completion guarantees provided by the Issuers or any Subsidiary of the Issuers in the ordinary course of business, including pursuant to the Letter of Credit Facility. For purposes of determining compliance with this Section 4.09, in the event that an item of proposed Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (a) through (k) above, the Company shall be permitted to classify such item of Indebtedness on the date of its incurrence, or later reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Section 4.10. Transactions with Affiliates. The Issuers shall not, and shall not permit any of their Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or Guarantee with, or for the benefit of, any Affiliate (each, an "Affiliate Transaction"), unless: (a) the Affiliate Transaction is on terms that are no less favorable to the Issuers or the relevant Subsidiary than those that would have been obtained in a comparable transaction by the Issuers or such Subsidiary with an unrelated Person; and ( (b) the Issuers delivers to the Trustee: (i) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $500,000, resolutions of the Board of Directors of the Issuers, as the case may be, set forth in an Officers' Certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Board of Directors of the Company; and (ii) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $2.5 million, an opinion as to the fairness to the Holders of such Affiliate Transaction from a financial point of view issued by an accounting, appraisal or investment banking firm of national standing. The following items shall not be deemed to be Affiliate Transactions and, therefore, shall not be subject to the provisions of the prior paragraph: (a) any employment agreement that is in effect on the date of this Indenture or that is entered into by the Issuers or any of their Subsidiaries with approval by a majority of the disinterested members of the Board of Directors of the Company; (b) transactions between or among one or more of the Company and/or NLC and/or their respective Subsidiaries; (c) payment of reasonable directors fees to Persons who are not otherwise Affiliates of the Issuers; (d) Restricted Payments that are permitted by Section 4.07; (e) advances to Officers of any of the Issuers or their Subsidiaries in the ordinary course of business to provide for the payment of reasonable expenses incurred by such Persons in the performance of their responsibilities to the Issuers or such Subsidiary or in connection with any relocation; (f) reasonable fees and compensation (including, without limitation, bonuses, retirement plans and securities, equity options and equity ownership plans, and payments, bonuses or other incentives offered pursuant to the Management Incentive Plan) paid or issued to and indemnities provided on behalf of, Officers, directors, employees or consultants of the Issuers or any Subsidiary in the ordinary course of business; and (g) any other transactions expressly authorized by the Court pursuant to the Plan or any order entered by the Court in respect thereof. Section 4.11. Liens. The Issuers shall not, and shall not permit any of its Subsidiaries to, directly or indirectly (a) create, incur, assume or suffer to exist any Lien of any kind securing Indebtedness or trade payables on any asset of the Issuers or any of its Subsidiaries now owned or hereafter acquired or on any income or profits therefrom, or (b) assign or convey any right to receive income therefrom, securing Indebtedness, except in each case for Permitted Liens. Section 4.12. Line of Business. Subject to, and without limitation to the provisions restricting the business operations of the Company contained in the articles of incorporation, certificate of incorporation or similar organizational document of the Company, the Issuers shall not, and shall not permit any Subsidiary to, engage in any business other than the Permitted Business except (i) to such extent as would not be material to the financial condition of the Issuers and their Subsidiaries taken as a whole and as may arise in connection with, or as a result of, the enforcement of the Issuers' and/or their Subsidiaries' legal rights against any third parties in implementing the Permitted Business with respect to New Ventures or (ii) with respect to Permitted Investments, or commitments to make Permitted Investments, permitted by clause (h) of the definition thereof, made by Foreign Subsidiaries within six months of the date hereof; provided, that the aggregate amount of such Permitted Investments is less than $50.0 million at any time within such six month period. Section 4.13. Corporate Existence; Certificate of Incorporation. Subject to the provisions of Section 5.1 and Section 5.2 hereof, the Issuers shall do or cause to be done all things necessary to preserve and keep in full force and effect: (a) its corporate existence, and the corporate, partnership or other existence of each of their Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Issuers or any such Subsidiary, and (b) the rights (charter and statutory), licenses and franchises of the Issuers and their Subsidiaries; provided, however, that the Issuers shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of their Subsidiaries, if the Board of Directors of the Issuers, as the case may be, shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Issuers, as the case may be, and their Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes. Notwithstanding anything to the contrary contained in this Section 4.13, the Company shall not amend, modify or alter its certificate of incorporation, articles of incorporation or similar organizational document in any manner that would materially expand or enlarge or fundamentally alter the business operations to be conducted by the Company pursuant to such certificate of incorporation, articles of incorporation or similar organizational document. Section 4.14. Offers to Repurchase by the Company. Upon the occurrence of a Change in Control of the Company occurring after the date of issuance of the Notes and on or prior to maturity, subject to the provisions of Article 9 hereof, the Issuers shall make an offer to each Holder (a "Change in Control Offer") to repurchase all or any part of each Holder's Notes on the date, which must be a Business Day (the "Change in Control Repurchase Date"), that is selected by the Issuers (subject to compliance with the minimum Offer Period specified in Section 3.09) that is not more than 75 days after the date the Issuers give notice of the Change in Control at a price (the "Change in Control Repurchase Price") equal to 101.0% of the principal amount thereof, together with accrued and unpaid interest to the Change in Control Repurchase Date. Not less than one Business Day prior to the Change in Control Repurchase Date, the Issuers shall be required to deposit with the Trustee or a Paying Agent an amount of money sufficient to pay the Change in Control Repurchase Price of the Notes that are to be repaid on the Change in Control Repurchase Date. On or before the 15th day after the last date on which, in accordance with the Senior Note Indenture, holders of Senior Notes are permitted to deliver written notice of exercise of their right to require the Issuers to repurchase the Senior Notes pursuant to Section 4.14 of the Senior Note Indenture upon a Change in Control, the Issuers shall mail to all Holders the information and documentation required to be provided pursuant to Section 3.09. The Issuers shall comply with any applicable requirements of Rules 13e-4 and 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of Notes in connection with a Change in Control and shall be deemed not to have breached its obligations under this Section 4.14 as a result of such compliance. Prior to complying or simultaneously with this Section 4.14, but in any event within 90 days following a Change in Control, the Issuers shall either (1) repay all outstanding Senior Indebtedness (other than the Senior Notes) and offer to repurchase all outstanding Senior Notes in accordance with the terms of the Senior Note Indenture or (2) obtain the requisite consents, if any, under all agreements governing outstanding Senior Indebtedness to permit the repurchase of the Notes required by this Section 4.14. Notwithstanding anything to the contrary in this Section 4.14, the Issuers shall not be required to make a Change in Control Offer upon a Change in Control if a third party makes the Change in Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.14 and Section 3.09 hereof and all other provisions of this Indenture applicable to a Change in Control Offer made by the Issuers and purchases all Senior Notes and all Notes validly tendered and not withdrawn under the change in control offer required to be made under the Senior Note Indenture and under such Change in Control Offer. Section 4.15. Insurance. The Issuers shall, and shall cause their Subsidiaries to, maintain insurance with responsible carriers against such risks and in such amounts as is customarily carried by similar businesses with such deductibles, retentions, self insured amounts and coinsurance provisions as are customarily carried by similar businesses of similar size, and shall furnish to the Trustee, upon reasonable written request, full information as to the insurance carried. Section 4.16. Maintenance of Property. The Issuers shall, and shall cause their Subsidiaries to keep all property and systems useful and necessary in its business or the business of any of their Subsidiaries in good working order and condition, ordinary wear and tear excepted, and supplied with all necessary equipment. Section 4.17. Limitation on Sale and Leaseback Transactions. The Issuers shall not, and shall not permit any of their Subsidiaries to, enter into any sale and leaseback transaction; provided, however, that so long as no Default has occurred and is continuing or would be caused thereby, the preceding sentence shall not prohibit: (a) any sale and leaseback transaction involving or in respect of the Company's corporate headquarters and/or all tangible property related thereto; and (b) sale and leaseback transactions to the extent the aggregate present value (discounted at the rate of interest implicit in such transaction, determined in accordance with GAAP) of the obligations of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction (including any period for which such lease has been or may, at the option of the lessor, be extended) of such sale and leaseback transactions do not exceed $5.0 million at the time of determination. Section 4.18. Limitation on Issuances and Sales of Equity Interests in Subsidiaries. (a) The Issuers shall not, and shall not permit any of their Subsidiaries to, directly or indirectly, transfer, convey, sell, lease or otherwise dispose of any Equity Interests in any Subsidiary of the Issuers to any Person (other than the Issuers or a Subsidiary of the Issuers), unless such transfer, conveyance, sale, lease or other disposition is of all the Equity Interests in such Subsidiary. In addition, the Issuers shall not permit any Subsidiary of the Issuers to issue any Equity Interests (other than, if necessary, shares of its Capital Stock constituting directors' qualifying shares) to any Person other than to the Issuers or a Subsidiary of the Issuers. Section 4.19. No Senior Subordinated Debt. The Issuers shall not incur, create, issue, assume, guarantee or otherwise become liable for any Indebtedness that is subordinate or junior in right of payment to any Senior Indebtedness of the Issuers and senior in any respect in right of payment to the Notes. Section 4.20. No Amendment to Certain Provisions of the Indenture. The Company shall not amend, modify or alter the Indenture in any way to: (a) increase the rate of , change the time for or change the manner of payment of interest on any Notes; (b) increase the principal or premium, if any, of, or advance the final maturity date of, any Notes; (c) alter the redemption provisions or the price or terms at which the Company is required to offer to purchase any Notes; or (d) amend Article 9 of this Indenture. Section 4.21. Equity Interests of the Company. The Company shall not issue any Equity Interests except pursuant to the Plan; provided, however, that the Company may issue Equity Interests upon the exercise of any warrants or rights or pursuant to any rights issued in accordance with the Plan and may issue options to officers, employees and directors of the Company and its Subsidiaries to acquire Capital Stock of the Company and may issue Capital Stock upon exercise of such options. Section 4.22. Assets of the Company. The Company shall contribute, transfer or assign all of its material, tangible assets, other than its right, title and interest in the Note Collateral, to NLC or any other Subsidiary as soon as reasonably practicable after the Company has the legal right to contribute, transfer or assign such material, tangible assets, whether such assets are owned on the date hereof or subsequently become owned by the Company; provided, however, that nothing contained in this Section 4.22 shall require the Company to contribute, transfer or assign its right, title and interest in cash and/or cash equivalents to NLC or any other Subsidiary. Section 4.23. Management Incentive Plan. The Issuers shall not amend, modify or restate the Management Incentive Plan after the Effective Date in any way that would increase the aggregate maximum amount of incentive payments payable thereunder at any time to an amount greater than 105% of the aggregate maximum amount otherwise payable under the Management Incentive Plan with respect to the achievement of a certain performance target or incentive level. Section 4.24. Additional Note Collateral. In the event that the Company or NLC or any of their Subsidiaries acquires or creates another Domestic Subsidiary after the Effective Date which is directly owned by the Company or NLC, or if any of the Issuers' Foreign Subsidiaries becomes a Domestic Subsidiary after the Effective Date which is directly owned by the Company or NLC, the Issuers covenant and agree that the Equity Interests of such newly acquired or created Domestic Subsidiary shall be pledged and otherwise constitute additional Note Collateral hereunder and pursuant to the Collateral Documents. The Issuers shall execute and deliver to the Trustee any additional instruments and do any further acts as may be reasonably necessary or proper to carry out the purposes of this Section 4.24. Section 4.25. Consummation of Plan. Notwithstanding anything to the contrary herein, no provision or Section of this Indenture shall prevent, restrict or otherwise hinder the Issuers from consummating the Plan and the transactions contemplated thereby. Section 4.26. Distributions from Subsidiaries. Except with respect to any Scheduled Cash Reserve Amount, the Issuers will take reasonable actions to cause their Domestic Subsidiaries to distribute all cash to their respective parent companies until such cash is in the accounts of the Company. In addition, the Issuers will take reasonable actions to cause their Foreign Subsidiaries, to the extent such distribution would not violate applicable law or trigger either an additional foreign tax or United States tax, to distribute all cash not required for their continued normal operations to their respective parent companies until such cash is in the accounts of the Company. ARTICLE 5. SUCCESSORS Section 5.01. Merger, Consolidation or the Transfer of All or Substantially All of the Assets of the Company. The Company may not, in a single transaction or through a series of related transactions, consolidate with or merge into, or transfer all or substantially all of the assets of the Company and its Subsidiaries, taken as a whole, to, another Person in any transaction in which the Company is not the continuing or surviving entity, unless: (a) the resulting, surviving or transferee Person is a corporation which assumes by supplemental indenture, in form satisfactory to the Trustee, all the obligations of the Company under the Notes, this Indenture and the Registration Rights Agreement or is a reorganization within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code, and this Indenture remains in full force and effect; (b) such corporation is organized and existing under the laws of the United States, a State thereof or the District of Columbia, although it in turn may be owned by a foreign entity; (c) immediately after giving effect to such transaction no Default or Event of Default shall have occurred and be continuing and the Officers' Certificate referred to in clause (e) of this Section 5.01 reflects that such Officers are not aware of any such Default or Event of Default that shall have occurred and be continuing; (d) each Subsidiary of the Company immediately prior to the transaction shall be a Subsidiary of the resulting, surviving or transferee Person immediately following the transaction, and the transaction shall not indirectly effect any change, transfer, borrowing or Lien that would have been prohibited by this Indenture if done by the Company or any Subsidiary independent of such transaction or would have caused a Default under this Indenture if done independent of such transaction; and (e) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each to the effect that all conditions precedent provided for in this Indenture relating to such consolidation, merger or transfer have been complied with. Upon any consolidation or merger, or any transfer of all or substantially all of the assets of the Company in accordance with the preceding paragraph: (a) the successor corporation formed by such consolidation or into which the Company is merged or to which such transfer is made shall succeed to, and shall be substituted for, and may exercise every right and power of, the Company under this Indenture and the Registration Rights Agreement with the same effect as if such successor corporation has been named as the Company in this Indenture and the Registration Rights Agreement; (b) the Company shall thereupon be relieved of any further obligation or liability hereunder or upon the Notes; and (c) the Company as the predecessor corporation may thereupon or at any time thereafter be dissolved, wound up or liquidated. Such successor corporation thereupon may cause to be signed, and may issue either in its own name or in the name of Reorganized Comdisco, Inc., any or all of the Notes issuable under this Indenture which theretofore shall not have been signed by the Company and delivered to the Trustee. Upon the order of such successor corporation, instead of the Company, and subject to all the terms, conditions and limitations in this Indenture, the Trustee shall authenticate and shall deliver any Notes which previously shall have been signed and delivered by Officers of the Company to the Trustee for authentication, and any Notes which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all such Notes had been issued at the date of execution of this Indenture. Section 5.02. Merger, Consolidation or the Transfer of All or Substantially All of the Assets of NLC. NLC may not, in a single transaction or through a series of related transactions, consolidate with or merge into, or transfer all or substantially all of the assets of NLC and its Subsidiaries, taken as a whole, to, another Person in any transaction in which NLC is not the continuing or surviving entity, unless: (a) the resulting, surviving or transferee Person is a corporation which assumes by supplemental indenture, in form satisfactory to the Trustee, all the obligations of NLC under the Notes, this Indenture and the Registration Rights Agreement or is a reorganization within the meaning of Section 368(a)(1)(B) of the Internal Revenue Code, and this Indenture remains in full force and effect; (b) such corporation is organized and existing under the laws of the United States, a State thereof or the District of Columbia, although it in turn may be owned by a foreign entity; (c) immediately after giving effect to such transaction no Default or Event of Default shall have occurred and be continuing and the Officers' Certificate referred to in clause (e) of this Section 5.02 reflects that such Officers are not aware of any such Default or Event of Default that shall have occurred and be continuing; (d) each Subsidiary of NLC immediately prior to the transaction shall be a Subsidiary of the resulting, surviving or transferee Person immediately following the transaction, and the transaction shall not indirectly effect any change, transfer, borrowing or Lien that would have been prohibited by this Indenture if done by NLC or any Subsidiary independent of such transaction or would have caused a Default under this Indenture if done independent of such transaction; and (e) NLC shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each to the effect that all conditions precedent provided for in this Indenture relating to such consolidation, merger or transfer have been complied with. Upon any consolidation or merger, or any transfer of all or substantially all of the assets of NLC in accordance with the preceding paragraph: (a) the successor corporation formed by such consolidation or into which NLC is merged or to which such transfer is made shall succeed to, and shall be substituted for, and may exercise every right and power of, NLC under this Indenture and the Registration Rights Agreement with the same effect as if such successor corporation has been named as NLC in this Indenture and the Registration Rights Agreement; (b) NLC shall thereupon be relieved of any further obligation or liability hereunder or upon the Notes; and (c) NLC as the predecessor corporation may thereupon or at any time thereafter be dissolved, wound up or liquidated. Such successor corporation thereupon may cause to be signed, and may issue either in its own name or in the name of New Leasing Co., Inc., any or all of the Notes issuable under this Indenture which theretofore shall not have been signed by NLC and delivered to the Trustee. Upon the order of such successor corporation, instead of NLC, and subject to all the terms, conditions and limitations in this Indenture, the Trustee shall authenticate and shall deliver any Notes which previously shall have been signed and delivered by Officers of NLC to the Trustee for authentication, and any Notes which such successor corporation thereafter shall cause to be signed and delivered to the Trustee for that purpose. All the Notes so issued shall in all respects have the same legal rank and benefit under this Indenture as the Notes theretofore or thereafter issued in accordance with the terms of this Indenture as though all such Notes had been issued at the date of execution of this Indenture. Notwithstanding the foregoing, NLC may merge with, or transfer all of its assets to, the Company. Section 5.03. Successor Corporation Substituted. Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the assets of the Company or NLC, as applicable, in accordance with Section 5.01 or Section 5.02, the successor corporation formed by such consolidation or into or with which the Company or NLC, as applicable, is merged or to which such sale, assignment, transfer, lease, conveyance or other disposition is made shall succeed to, and be substituted for (so that from and after the date of such consolidation, merger, sale, lease, conveyance or other disposition, the provisions of this Indenture referring to the "Company" or "NLC" shall refer instead to the successor corporation and not to the Company or NLC, as applicable), and may exercise every right and power of the Company or NLC, as applicable, under this Indenture with the same effect as if such successor Person had been named as the Company or NLC, as applicable, herein; provided, however, that the predecessor of the Company or NLC, as applicable, shall not be relieved from the obligation to pay the principal of and interest on the Notes except in the case of a sale, assignment, transfer, conveyance or other disposition of all of the Company's or NLC's, as applicable, assets that meets the requirements of Section 5.01 or Section 5.02. ARTICLE 6. DEFAULTS AND REMEDIES Section 6.01. Events of Default. An "Event of Default" occurs if: (a) the Issuers default in the payment when due of interest on the Notes and such default continues for a period of 30 days whether or not prohibited by Article 9 hereof; (b) the Issuers default in the payment when due of principal of or premium, if any, on the Notes whether at maturity, upon redemption (including in connection with an offer to purchase) or otherwise whether or not prohibited by Article 9 hereof; (c) the Company or any of its Subsidiaries fail to comply with any of the provisions of Sections 4.13, 5.01 or 5.02 hereof; (d) the Issuers fail to observe or perform any other covenant, representation, warranty or other agreement under the Indenture or the Notes for 60 days after written notice to (i) the Issuers by the Trustee or (ii) the Issuers and the Trustee by the holders of at least 25% in aggregate principal amount of the Notes then outstanding; (e) a default occurs under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Issuers (but not including any indebtedness or obligation for which recourse is limited to the property purchased), whether such Indebtedness or guarantee now exists, or is created after the date of this Indenture, which default results in the acceleration of such Indebtedness prior to its express maturity and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness the maturity of which has been so accelerated, aggregates $25.0 million or more and such Indebtedness is not paid or such acceleration is not annulled within 10 days after written notice to the Issuers of such acceleration; (f) the rendering of a final judgment or final judgments for the payment of money is/are entered by a court or courts of competent jurisdiction against either the Company or NLC and such judgment or judgments remain undischarged for a period (during which execution shall not be effectively stayed) of 60 days, provided that the aggregate of all such undischarged judgments (to the extent not covered by insurance) exceeds $10.0 million; (g) the Company or NLC pursuant to or within the meaning of Bankruptcy Law: (i) commences a voluntary case, (ii) consents to the entry of an order for relief against it in an involuntary case, (iii) consents to the appointment of a custodian of it or for all or substantially all of its property, or (iv) makes a general assignment for the benefit of its creditors; or (v) admits in writing its inability to pay its debts as the same becomes due; or (vi) generally is not paying its debts as they become due; or (h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (i) is for relief against the Company or NLC in an involuntary case; (ii) appoints a custodian of the Company or NLC or for all or substantially all of the property of the Company or NLC; or (iii) orders the liquidation of the Company or NLC other than as contemplated by the Plan; and the order or decree remains unstayed and in effect for 60 consecutive days. Section 6.02. Acceleration. If any Event of Default (other than an Event of Default specified in clause (g) or (h) of Section 6.01 hereof with respect to the Company or NLC) occurs and is continuing, then and in every such case the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may, by notice in writing to the Issuers, declare all the Notes to be due and payable immediately. Upon any such declaration, the Notes will become due and payable immediately. Notwithstanding the foregoing, if an Event of Default specified in clause (g) or (h) of Section 6.01 hereof occurs with respect to the Company or NLC, all outstanding Notes shall be due and payable immediately without further action or notice. At any time after such a declaration of acceleration has been made, the Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Issuers and the Trustee may, on behalf of all of the Holders, rescind and annul such declaration of acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal, interest or premium, if any, that has become due solely because of the acceleration) have been cured or waived. Section 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy (under this Indenture or otherwise) to collect the payment of principal, premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law. Section 6.04. Waiver of Past Defaults. Holders of not less than a majority in aggregate principal amount of the then outstanding Notes by notice to the Issuers and the Trustee may, on behalf of the Holders of all of the Notes, waive an existing Default or Event of Default and its consequences hereunder, except (i) a continuing Default or Event of Default in the payment of the principal of, premium, if any, or interest on, the Notes (including in connection with an offer to purchase) or (ii) with respect to any covenant or provision of this Indenture which cannot be modified or amended without the consent of the Holders of each outstanding Note affected; provided, however, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; provided, however, that no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. Section 6.05. Control by Majority. Holders of a majority in principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability. Section 6.06. Limitation on Suits. A Holder of a Note may pursue a remedy with respect to this Indenture, the Notes or the Collateral Documents only if: (a) the Holder of a Note gives to the Trustee written notice of a continuing Event of Default; (b) the Holders of at least 25% in principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy; (c) such Holder of a Note or Holders of Notes offer and, if requested, provide to the Trustee indemnity reasonably satisfactory to the Trustee against any loss, liability or expense; (d) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and, if requested, the provision of indemnity; and (e) during such 60-day period the Holders of a majority in principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with the request. A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note. Section 6.07. Rights of Holders of Notes to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal, premium, if any, and interest on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder; provided, however, that a Holder shall not have the right to institute any such suit for the enforcement of payment if and to the extent that the institution or prosecution thereof or the entry of judgment therein would, under applicable law, result in the surrender, impairment, waiver or loss of the Lien of this Indenture upon any property subject to such Lien. Section 6.08. Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a) or (b) occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Issuers for the whole amount of principal of, premium, if any, and interest remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the compensation to the Trustee and its agents for all services rendered by them hereunder as shall have been agreed upon in writing from time to time among the Trustee or such agents, as the case may be, and the Issuers and the costs and expenses of collection, including the reasonable expenses, disbursements and advances of the Trustee (including the reasonable compensation and the reasonable expenses and disbursements of its agents and counsel). Section 6.09. Trustee May File Proofs of Claim. The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable expenses, disbursements and advances of the Trustee (including reasonable compensation and the reasonable expenses and disbursements of its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Issuers, their creditors or their property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable expenses, disbursements and advances of the Trustee (including reasonable compensation and the reasonable expenses and disbursements of its agents and counsel), and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. Section 6.10. Priorities. If the Trustee collects any money pursuant to this Article, it shall pay out the money in accordance with the requirements of the Pledge Agreement and to the extent received in accordance therewith for distribution hereunder in the following order: First: to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including, to the extent permitted thereunder, payment of all compensation, reasonable expenses and disbursements incurred, and all advances made, by the Trustee and the reasonable costs and expenses of collection; Second: to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, respectively; Third: without duplication, to Holders of Notes for any other Obligations (other than contingent reimbursement, indemnification or contribution Obligations) then owing to the Holders of the Notes under the Notes or this Indenture; and Fourth: to the Issuers or to such party as a court of competent jurisdiction shall direct. Notwithstanding the preceding paragraph, in the event of a conflict between the provisions of the Pledge Agreement and the mandatory provisions of the TIA, upon qualification of this Indenture under the TIA, the TIA shall control, and distributions shall be made in the order, and to the Persons specified under, the TIA. The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10. Section 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount of the then outstanding Notes. ARTICLE 7. TRUSTEE Section 7.01. Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (b) Except during the continuance of an Event of Default: (i) the duties of the Trustee shall be determined solely by the express provisions of this Indenture, the Pledge Agreement and the Collateral Documents, and the Trustee need perform only those duties that are specifically set forth in this Indenture, the Pledge Agreement and the Collateral Documents and no others, and no implied covenants or obligations shall be read into this Indenture, the Pledge Agreement and the Collateral Documents against the Trustee; and (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture, the Pledge Agreement and the Collateral Documents. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture, the Pledge Agreement and the Collateral Documents. (c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) this paragraph does not limit the effect of paragraph (b) of this Section 7.01; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (iii) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof. (d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01. (e) No provision of this Indenture, the Pledge Agreement or the Collateral Documents shall require the Trustee to expend or risk its own funds or incur any liability. The Trustee shall be under no obligation to exercise any of its rights and powers under this Indenture, the Pledge Agreement or the Collateral Documents at the request of any Holders, unless such Holder shall have offered to the Trustee security and indemnity reasonably satisfactory to it against any loss, liability or expense. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. Section 7.02. Rights of Trustee. (a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon. (c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture. (e) Unless otherwise specifically provided in this Indenture, the Pledge Agreement or the Collateral Documents, any demand, request, direction or notice from the Company shall be sufficient if signed by an Officer of the Company or NLC, as the case may be, on behalf of the Company or NLC, respectively. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture, the Pledge Agreement or the Collateral Documents at the request or direction of any of the Holders unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. Section 7.03. Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuers or any Affiliate of the Issuers with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof. Section 7.04. Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuers' use of the proceeds from the Notes or any money paid to the Issuers or upon the Issuers' direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication. Section 7.05. Notice of Defaults. If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the Default or Event of Default within 90 days after the occurrence of such Default or Event of Default. Except in the case of a Default or Event of Default in payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes. Section 7.06. Reports by Trustee to Holders of the Notes. Within 60 days after each October 15 beginning with the October 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee shall mail to the Holders of the Notes a brief report dated as of such reporting date that complies with TIA ss. 313(a) (but if no event described in TIA ss. 313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also shall comply with TIA ss. 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA ss. 313(c). A copy of each report at the time of its mailing to the Holders of Notes shall be mailed to the Issuers and filed with the SEC and each stock exchange on which the Notes are listed, if any, in accordance with TIA ss. 313(d). The Issuers shall promptly notify the Trustee when the Notes are listed on any stock exchange. Section 7.07. Compensation and Indemnity. The Issuers shall pay to the Trustee from time to time such compensation as the Issuers and the Trustee shall from time to time agree in writing for its acceptance of this Indenture and services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuers shall reimburse the Trustee promptly upon request for all reasonable expenses, disbursements and advances of the Trustee (including the reasonable compensation and the reasonable expenses and disbursements of its agents and counsel). The Issuers shall indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Issuers (including this Section 7.07) and defending itself against any claim (whether asserted by the Issuers or any Holder or any other person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its gross negligence, bad faith or willful misconduct. The Trustee shall notify the Issuers promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Issuers shall not relieve the Issuers of its obligations hereunder. The Issuers shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Issuers shall pay the reasonable fees and expenses of such counsel. The Issuers need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. The obligations of the Issuers under this Section 7.07 shall survive the satisfaction and discharge of this Indenture. To secure the Issuers' payment obligations in this Section, the Issuers hereby grant to the Trustee a security interest on all money or property held or collected by the Trustee, except that held in trust to pay principal, interest and premium, if any, on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture; provided, however, that such Lien shall be automatically released upon the payment in full of all amounts payable to the Trustee pursuant to the first paragraph of this Section 7.07 and of all other amounts then due and payable pursuant to the second paragraph of this Section 7.07. When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(e) or (f) hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law. The Trustee shall comply with the provisions of TIA ss. 313(b)(2) to the extent applicable. Section 7.08. Replacement of Trustee. A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee's acceptance of appointment as provided in this Section 7.08. The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Issuers. The Holders of a majority in principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Issuers in writing. The Issuers may remove the Trustee if: (a) the Trustee fails to comply with Section 7.10 hereof; (b) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law; (c) a custodian or public officer takes charge of the Trustee or its property; or (d) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuers shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuers. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, or the Holders of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuers. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, provided, however, all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Issuers' obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee, and the Issuers shall pay to any such replaced or removed Trustee all amounts owed to such replaced or removed Trustee under Section 7.07 upon such replacement or removal. Section 7.09. Successor Trustee by Merger, etc. If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another bank or corporation, the successor bank or corporation without any further act shall be the successor Trustee. Section 7.10. Eligibility; Disqualification. There shall at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof or of the District of Columbia that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state or the District of Columbia authorities and that has a combined capital and surplus of at least $150.0 million as set forth in its most recent published annual report of condition. This Indenture shall always have a Trustee who satisfies the requirements of TIA ss. 310(a)(1), (2) and (5). The Trustee is subject to TIA ss. 310(b). Section 7.11. Preferential Collection of Claims Against Issuers. The Trustee is subject to TIA ss. 311(a), excluding any creditor relationship listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to the extent indicated therein. The provisions of TIA ss. 311 shall apply to the Company as obligor on the Notes. ARTICLE 8. AMENDMENT, SUPPLEMENT AND WAIVER Section 8.01. Without Consent of Holders of Notes. Notwithstanding Section 8.02 of this Indenture, the Issuers and the Trustee may amend or supplement this Indenture, the Notes or the Collateral Documents without the consent of any Holder of a Note: (a) to cure any ambiguity, defect or inconsistency; (b) to provide for uncertificated Notes in addition to or in place of certificated Notes or to alter the provisions of Article 2 hereof (including the related definitions) in a manner that does not materially adversely affect any Holder; (c) to provide for the assumption of the Issuers' obligations to the Holders of the Notes by a successor to the Issuers pursuant to Article 5 hereof; (d) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder of the Notes; (e) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; or (f) to provide for the issuance of Additional Notes in accordance with the provisions set forth in this Indenture as of the date hereof. Upon the request of the Issuers accompanied by a resolution of their respective Board of Directors, as the case may be, authorizing the execution of any such amended or supplemental Indenture, and upon receipt by the Trustee of the documents described in Section 8.06 hereof, the Trustee shall join with the Issuers in the execution of any amended or supplemental Indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental Indenture that affects its own rights, duties or immunities under this Indenture or otherwise. Section 8.02. With Consent of Holders of Notes. Except as provided below in this Section 8.02, the Issuers and the Trustee may amend or supplement this Indenture (including Section 3.08 hereof), the Notes and the Collateral Documents with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Notes or the Collateral Documents may be waived with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes). Section 2.08 hereof shall determine which Notes are considered to be "outstanding" for purposes of this Section 8.02. Upon the request of the Issuers accompanied by a resolution of their Board of Directors, as the case may be, authorizing the execution of any such amended or supplemental Indenture, and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02(b) hereof, the Trustee shall join with the Issuers in the execution of such amended or supplemental Indenture unless such amended or supplemental Indenture, by its express terms, directly affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental Indenture. It shall not be necessary for the consent of the Holders of Notes under this Section 8.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. After an amendment, supplement or waiver under this Section 8.02 becomes effective, the Issuers shall mail to the Holders of Notes affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Issuers to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amended or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of not less than a majority in aggregate principal amount of the Notes then outstanding may waive compliance in a particular instance by the Issuers with any provision of this Indenture, the Notes or the Collateral Documents. However, without the consent of each Holder affected, an amendment, waiver or supplement under this Section 8.02 may not (with respect to any Notes held by a non-consenting Holder): (a) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes except as provided above with respect to Sections 3.08 hereof; (c) reduce the rate of or change the time for payment of interest, including default interest, on any Note; (d) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment Default that resulted from such acceleration); (e) make any Note payable in money other than that stated in the Notes; (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of or premium, if any, or interest on the Notes; (g) make any change in Section 6.04 or 6.07 hereof or in the foregoing amendment and waiver provisions; or (h) waive a redemption payment required to be made, or offered to be made, by the Company pursuant to Section 3.09 or Section 4.14. In addition, any amendment to, or waiver of, Article 9 of this Indenture that materially adversely affects the rights of the Holders of the Notes shall require the consent of the Holders of 100% in aggregate principal amount of Notes then outstanding. Section 8.03. Compliance with Trust Indenture Act. Every amendment or supplement to this Indenture or the Notes shall be set forth in a amended or supplemental Indenture that complies with the TIA as then in effect. Section 8.04. Revocation and Effect of Consents. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the waiver, supplement or amendment becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder. The Company may fix a record date for determining which Holders must consent to such supplemental indenture, amendment or waiver. If the Company fixes a record date, the record date shall be fixed at (i) the later of 30 days prior to the first solicitation of such consent or the date of the most recent list of Holders furnished to the Trustee prior to such solicitation pursuant to Section 2.05, or (ii) such other date as the Company shall designate. Section 8.05. Notation on or Exchange of Notes. The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Issuers in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver. Section 8.06. Trustee to Sign Amendments, etc. The Trustee shall sign any amended or supplemental Indenture authorized pursuant to this Article 8 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Issuers may not sign an amendment or supplemental Indenture until their Board of Directors approves it. In executing any amended or supplemental indenture, the Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall be fully protected in relying upon, in addition to the documents required by Section 12.04 hereof, an Officers' Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture. ARTICLE 9. SUBORDINATION Section 9.01. Agreement to Subordinate. The Issuers agree, and each Holder by accepting a Note agrees, that the Indebtedness evidenced by the Notes is subordinated in right of payment, to the extent and in the manner provided in this Article 9, to the prior payment in full of all Senior Indebtedness of the Issuers (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Indebtedness. Section 9.02. Liquidation; Dissolution; Bankruptcy. Upon any distribution to creditors of the Issuers in a liquidation or dissolution of the Issuers or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Issuers or its property, in an assignment for the benefit of creditors or any marshaling of the Issuers' assets and liabilities: (i) holders of Senior Indebtedness shall be entitled to receive payment in full of all Obligations due in respect of such Senior Indebtedness (including interest after the commencement of any such proceeding at the rate specified in the applicable Senior Indebtedness) before Holders of the Notes shall be entitled to receive any payment with respect to the Notes (except that Holders may receive and retain Permitted Subordinated Securities); and (ii) until all Obligations with respect to Senior Indebtedness (as provided in clause (i) above) are paid in full, any distribution to which Holders would be entitled but for this Article 9 shall be made to holders of Senior Indebtedness (except that Holders of Notes may receive Permitted Subordinated Securities), as their interests may appear. Section 9.03. Default on Senior Indebtedness. (a) The Issuers may not make any payment or distribution to the Trustee or any Holder in respect of Obligations with respect to the Notes and may not acquire from the Trustee or any Holder any Notes for cash or property (other than Permitted Subordinated Securities) until all principal and other Obligations with respect to the Senior Indebtedness have been paid in full if: (i) a default in the payment of any principal, interest or other Obligations with respect to Senior Indebtedness occurs and is continuing beyond any applicable grace period in the agreement, indenture or other document governing such Senior Indebtedness; or (ii) a default, other than a default under clause (i), on Senior Indebtedness occurs and is continuing that then permits holders of the Senior Indebtedness to accelerate its maturity and the Trustee receives a Payment Blockage Notice from a Person who may give it pursuant to Section 9.11 hereof. If the Trustee receives any such Payment Blockage Notice, no subsequent Payment Blockage Notice shall be effective for purposes of this Section unless and until (A) at least 360 days shall have elapsed since the effectiveness of the immediately prior Payment Blockage Notice and (B) all scheduled payments of principal, premium, if any, and interest on the Notes that have come due have been paid in full in cash. No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 90 days. (b) The Issuers may and shall resume payments on and distributions in respect of the Notes and the Company may acquire the Notes upon the earlier of: (i) in the case of a default referred to in clause (i) of Section 9.03(a) hereof, the date upon which the default is cured or waived, or (ii) in the case of a default referred to in clause (ii) of Section 9.03(a) hereof, upon the earlier of the date which such default is cured or waived or 181 days after the Payment Blockage Notice was received if the maturity of such Senior Indebtedness has not been accelerated, if this Article 9 otherwise permits the payment, distribution or acquisition at the time of such payment, distribution or acquisition. Section 9.04. Acceleration of Securities. If payment of the Notes is accelerated because of an Event of Default, the Issuers shall promptly notify holders of Senior Indebtedness of the acceleration. Section 9.05. When Distribution Must Be Paid Over. In the event that the Trustee or any Holder receives any payment of any Obligations with respect to the Notes at a time when the Trustee or such Holder, as applicable, has actual knowledge that such payment is prohibited by Section 9.03 hereof, such payment shall be held by the Trustee or such Holder, in trust for the benefit of, and shall be paid forthwith over and delivered, upon written request, to, the holders of Senior Indebtedness as their interests may appear or their Representative under the indenture or other agreement (if any) pursuant to which Senior Indebtedness may have been issued or incurred, as their respective interests may appear, for application to the payment of all Obligations with respect to Senior Indebtedness remaining unpaid to the extent necessary to pay such Obligations in full in accordance with their terms, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness. With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform only such obligations on the part of the Trustee as are specifically set forth in this Article 9, and no implied covenants or obligations with respect to the holders of Senior Indebtedness shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and shall not be liable to any such holders if the Trustee shall pay over or distribute to or on behalf of Holders or the Issuers or any other Person money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article 9, except if such payment is made as a result of the willful misconduct or negligence of the Trustee. Section 9.06. Notice by Issuers. The Issuers shall promptly notify the Trustee and the Paying Agent in writing of any facts known to the Issuers that would cause a payment of any Obligations with respect to the Notes to violate this Article 9, but failure to give such notice shall not affect the subordination of the Notes to the Senior Indebtedness as provided in this Article 9. Section 9.07. Subrogation. After all Senior Indebtedness is paid in full and until the Notes are paid in full, Holders of Notes shall be subrogated (equally and ratably with all other Indebtedness pari passu with the Notes) to the rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness to the extent that distributions otherwise payable to the Holders of Notes have been applied to the payment of Senior Indebtedness. A distribution made under this Article 9 to holders of Senior Indebtedness that otherwise would have been made to Holders of Notes is not, as between the Issuers and Holders, a payment by the Issuers on the Notes. Section 9.08. Relative Rights. This Article 9 defines the relative rights of Holders of Notes and holders of Senior Indebtedness. Nothing in this Indenture shall: (i) impair, as between the Issuers and Holders of Notes, the obligation of the Issuers, which is absolute and unconditional, to pay principal of and interest or premium, if any, on the Notes in accordance with their terms (ii) affect the relative rights of Holders of Notes and creditors of the Issuers other than their rights in relation to holders of Senior Indebtedness; or (iii) prevent the Trustee or any Holder of Notes from exercising its available remedies upon a Default or Event of Default, subject to the rights of holders and owners of Senior Indebtedness to receive distributions and payments otherwise payable to Holders of Notes. If the Issuers fails because of this Article 9 to pay principal of or interest or premium, if any, on a Note on the due date, the failure is still a Default or Event of Default. Section 9.09. Subordination May Not Be Impaired by the Issuers. No right of any holder of Senior Indebtedness to enforce the subordination of the Indebtedness evidenced by the Notes shall be impaired by any act or failure to act by the Issuers or any Holder or by the failure of the Issuers or any Holder to comply with this Indenture. Section 9.10. Distribution or Notice to Representative. Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness, the distribution may be made and the notice given to their Representative. Upon any payment or distribution of assets of the Issuers referred to in this Article 9, the Trustee and the Holders of Notes shall be entitled to rely upon any order or decree made by any court of competent jurisdiction or upon any certificate of such Representative or of the liquidating trustee or agent or other Person making any distribution to the Trustee or to the Holders of Notes for the purpose of ascertaining the Persons entitled to participate in such distribution, the holders of the Senior Indebtedness and other Indebtedness of the Issuers, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto, to this Article 9. Section 9.11. Rights of Trustee and Paying Agent. Notwithstanding the provisions of this Article 9 or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Trustee, and the Trustee and the Paying Agent may continue to make payments on the Notes, unless the Trustee shall have received at its Corporate Trust Office at least five Business Days prior to the date of such payment written notice of facts that would cause the payment of any Obligations with respect to the Notes to violate this Article 9. Only the Issuers or the Representative may give the notice. Nothing in this Article 9 shall impair the claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof. The Trustee in its individual or any other capacity may hold Senior Indebtedness with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. Section 9.12. Authorization to Effect Subordination. Each Holder of Notes, by the Holder's acceptance thereof, authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination as provided in this Article 9, and appoints the Trustee to act as such Holder's attorney-in-fact for any and all such purposes. If the Trustee does not file a proper proof of claim or proof of debt in the form required in any proceeding referred to in Section 6.09 hereof at least 30 days before the expiration of the time to file such claim, the Representative is hereby authorized to file an appropriate claim for and on behalf of the Holders of the Notes. Section 9.13. Amendments. The provisions of this Article 9 shall not be amended or modified without the written consent of the holders of all Senior Indebtedness. ARTICLE 10. COLLATERAL AND SECURITY Section 10.01. Collateral Documents. The due and punctual payment of the principal of and interest and premium, if any, on the Notes when and as the same shall be due and payable, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise, and interest on the overdue principal of and interest and premium (to the extent permitted by law), if any, on the Notes and performance of all other obligations of the Issuers to the Holders of Notes or the Trustee under this Indenture and the Notes, according to the terms hereunder or thereunder, shall be secured as provided in the Collateral Documents which the Issuers have entered into simultaneously with the execution of this Indenture and which are listed on Exhibit B hereto. Each Holder of Notes, by its acceptance thereof, consents and agrees to the terms of the Collateral Documents (including, without limitation, the provisions providing for foreclosure and release of Note Collateral) as the same may be in effect or may be amended from time to time in accordance with the terms of the Collateral Documents and authorizes and directs the Collateral Agent to enter into the Collateral Documents and to perform its obligations and exercise its rights thereunder in accordance therewith. The Issuers shall deliver to the Trustee copies of all documents delivered to the Collateral Agent pursuant to the Collateral Documents, and shall do or cause to be done all such acts and things as may be necessary or proper, or as may be required by the provisions of the Collateral Documents or as may be reasonably requested in writing by the Trustee, to assure and confirm to the Trustee and the Collateral Agent the security interest in the Note Collateral contemplated hereby and by the Collateral Documents or any part thereof, as from time to time constituted, so as to render the same available for the security and benefit of this Indenture and the Notes secured by the Collateral Documents, according to the intent and purposes therein expressed. The Issuers shall take, or shall cause their Subsidiaries that are party to one or more Collateral Documents to take, upon request of the Trustee, any and all actions reasonably required to cause the Collateral Documents to create and maintain, as security for the Obligations of the Issuers hereunder, a valid and enforceable perfected Lien in and on all the Note Collateral, in favor of the Collateral Agent for the benefit of the Holders of Notes with the priority required under the Collateral Documents, subject to Permitted Liens. Section 10.02. Recording and Opinions. (a) The Issuers shall furnish to the Trustee simultaneously with the execution and delivery of this Indenture an Opinion of Counsel either (i) stating that in the opinion of such counsel all action has been taken with respect to the recording, registering and filing of this Indenture, financing statements or other instruments necessary to make effective the Lien intended to be created by the Collateral Documents and reciting with respect to the security interests in the Collateral, the details of such action, or (ii) stating that, in the opinion of such counsel, no such action is necessary to make such Lien effective. (b) The Issuers shall furnish to the Trustee and the Collateral Agent within 30 days following April 30 of each year beginning with April 30, 2003, an Opinion of Counsel, dated as of the date such opinion is furnished, either (i) stating that, in the opinion of such counsel, all action has been taken with respect to the recording, registering, filing, re-recording, re-registering and refiling of all supplemental indentures, financing statements, continuation statements or other instruments of further assurance as is necessary to maintain the Lien of the Collateral Documents and reciting with respect to the security interests in the Collateral the details of such action or referring to prior Opinions of Counsel in which such details are given, or (ii) stating that, in the opinion of such counsel, no such action is necessary to maintain such Lien. (c) The Issuers shall otherwise comply with the provisions of TIA ss. 314(b). Section 10.03. Release of Note Collateral. (a) Subject to subsections (b), (c) and (d) of this Section 10.03, upon a sale of any Note Collateral and application of the net proceeds of such sale to repay the Notes to the extent required in accordance with the terms of Section 3.08, the Collateral Agent shall release the security interests in favor of the Collateral Agent in the Note Collateral sold; provided, however, that such net proceeds have been or shall be applied in accordance with this Indenture and the Senior Note Indenture; provided further that, prior to the application of such net proceeds, such net proceeds shall be deposited in an interest bearing cash collateral account held by the Paying Agent and pledged for the benefit of the Holders of Notes and the holders of Senior Notes. (b) No Note Collateral shall be released from the Lien and security interest created by the Collateral Documents pursuant to the provisions of the Collateral Documents unless there shall have been delivered to the Collateral Agent the certificates required by this Section 10.03 and by Sections 10.04 and 10.05 hereof. (c) At any time when a Default or Event of Default shall have occurred and be continuing and the maturity of the Notes shall have been accelerated (whether by declaration or otherwise) and the Trustee shall have delivered a notice of acceleration to the Collateral Agent, no release of Note Collateral pursuant to the provisions of the Collateral Documents shall be effective as against the Holders of Notes or the Trustee except in connection with foreclosure sales. (d) The release of any Note Collateral from the terms of this Indenture and the Collateral Documents or the release of, in whole or in part, the liens created by the Collateral Documents, or the termination of the Collateral Documents, shall not be deemed to impair the security under this Indenture in contravention of the provisions hereof if and to the extent the Note Collateral is released pursuant to the terms of the Collateral Documents and this Indenture. The Trustee and each of the Holders acknowledge that a release of any Note Collateral or a lien strictly in accordance with the terms of the Collateral Documents will not be deemed for any purpose to be an impairment of the lien on the Note Collateral in contravention of the terms of this Indenture. To the extent applicable, the Issuers shall cause TIA ss. 313(b), relating to reports, and TIA ss. 314(d), relating to the release of property or securities from the Lien and security interest of the Collateral Documents and this Indenture and relating to the substitution therefor of any property or securities to be subjected to the Lien and security interest of the Collateral Documents and this Indenture, to be complied with. Any certificate or opinion required by TIA ss. 314(d) may be made by an Officer of the Issuers except in cases where TIA ss. 314(d) requires that such certificate or opinion be made by an independent Person, which Person shall be an independent engineer, appraiser, accountant or other expert selected or approved by the Trustee and the Collateral Agent in the exercise of reasonable care. Section 10.04. Certificates of the Issuers. The Issuers shall furnish to the Trustee and the Collateral Agent, prior to each proposed release of Note Collateral pursuant to the Collateral Documents (i) all documents required by TIA ss.314(d) and the Collateral Documents and (ii) an Opinion of Counsel, which may be rendered by internal counsel of the Issuers, to the effect that such accompanying documents constitute all documents required by TIA ss.314(d). The Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof, accept as conclusive evidence of compliance with the foregoing provisions the appropriate statements contained in such documents. Section 10.05. Certificates of the Trustee. In the event that the Issuers wish to release Note Collateral in accordance with the Collateral Documents and have delivered the certificates and documents required by the Collateral Documents and Sections 10.03 and 10.04 hereof, once the Trustee has received all documentation required by TIA ss. 314(d) in connection with such release and the Opinion of Counsel delivered pursuant to Section 10.04(ii), the Trustee shall deliver a certificate to the Collateral Agent confirming receipt of such documentation and Opinion of Counsel; provided, however, that so long as the Trustee is the Collateral Agent, the requirement that the Trustee deliver a certificate to the Collateral Agent shall not be applicable. Section 10.06. Authorization of Actions to Be Taken by the Trustee Under the Collateral Documents. Subject to the provisions of Section 7.01 and 7.02 hereof and the provisions of the Collateral Documents, the Trustee may in the case of an ongoing Event of Default, in its sole discretion and without the consent of the Holders of Notes subject to Section 6.05, direct, on behalf of the Holders of Notes, the Collateral Agent to, take all actions it deems necessary or appropriate in order to (a) enforce any of the terms of the Collateral Documents and (b) collect and receive any and all amounts payable in respect of the Obligations of the Issuers hereunder. The Trustee shall have power to institute and maintain such suits and proceedings as it may deem expedient to prevent any impairment of the Note Collateral by any acts that may be unlawful or in violation of the Collateral Documents or this Indenture, and such suits and proceedings as the Trustee may deem expedient to preserve or protect its interests and the interests of the Holders of Notes in the Note Collateral (including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the security interest hereunder or be prejudicial to the interests of the Holders of Notes or of the Trustee). Section 10.07. Authorization of Receipt of Funds by the Trustee Under the Collateral Documents. The Trustee is authorized and required to receive any funds for the benefit of the Holders of Notes distributed under the Collateral Documents, and to make further distributions of such funds to the Holders of Notes according to the provisions of this Indenture and the Collateral Documents. Section 10.08. Termination of Security Interest. Upon the payment in full of all Obligations (other than contingent reimbursement, indemnification and contribution Obligations) of the Issuers under this Indenture and the Notes, the Trustee shall, at the request of the Issuers, deliver a certificate to the Collateral Agent stating that such Obligations have been paid in full, and instruct the Collateral Agent to release the Liens pursuant to this Indenture and the Collateral Documents to the extent such Liens secure the Obligations of the Issuers under this Indenture. ARTICLE 11. SATISFACTION AND DISCHARGE Section 11.01. Satisfaction and Discharge. This Indenture will be discharged and will cease to be of further effect as to all Notes issued hereunder, when: (1) either: (a) all Notes that have been authenticated (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust and thereafter repaid to the Issuers) have been delivered to the Trustee for cancellation; or (b) all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year and the Issuers have irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest, to pay and discharge the entire indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption; (2) no Default or Event of Default shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which either of the Issuers is a party or by which either of the Issuers is bound; (3) the Issuers have paid or caused to be paid all sums payable by it under this Indenture; and (4) the Issuers have delivered irrevocable written instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be. In addition, the Issuers shall each deliver an Officers' Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. Notwithstanding the satisfaction and discharge of this Indenture, if money shall have been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section, the provisions of Section 11.02 shall survive. Section 11.02. Application of Trust Money. All money deposited with the Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuers acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law. If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 11.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuers' obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01; provided, however, that if the Issuers have made any payment of principal of, premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Issuers shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent. ARTICLE 12. MISCELLANEOUS Section 12.01. Trust Indenture Act Controls. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA ss.318(c), the imposed duties shall control. Section 12.02. Notices. Any notice or communication by the Issuers or the Trustee to the others is duly given if in writing and delivered in person or mailed by first class mail (registered or certified, return receipt requested), telex, telecopier or overnight air courier guaranteeing next day delivery, to the others' address: If to the Issuers: Comdisco Holding Company, Inc. Comdisco, Inc. 6111 North River Road Rosemont, Illinois 60018 Attention: General Counsel Facsimile: (847) 518-5440 With a copy to: Skadden, Arps, Slate, Meagher & Flom (Illinois) 333 West Wacker, Suite 2100 Chicago, Illinois 60606 Facsimile: (312) 407-0411 Attention: John Wm. Butler, Jr., Esq. Attention: Charles W. Mulaney, Jr., Esq. If to the Trustee: Wells Fargo Bank Minnesota, National Association Corporate Trust Sixth and Marquette MAC N9303-120 Minneapolis, Minnesota 55479 Facsimile: (612) 667-9825 Attention: Comdisco Administrator with a copy (which shall not constitute notice to the Trustee) to: Jones, Day, Reavis & Pogue 222 East 41st Street New York, NY 10017-6702 Facsimile: (212) 755-7306 Attention: Donald F. Devine The Issuers or the Trustee, by notice to the others may designate additional or different addresses for subsequent notices or communications. All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed (provided, however, the Trustee shall not be deemed to have received such mail until it is received at its address set forth above); when answered back, if telexed; when receipt acknowledged, if telecopied; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. Any notice or communication to a Holder shall be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Any notice or communication shall also be so mailed to any Person described in TIA ss. 313(c), to the extent required by the TIA. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it (except as set forth above). If the Issuers mail a notice or communication to Holders, they shall mail a copy to the Trustee and each Agent at the same time. Section 12.03. Communication by Holders of Notes with Other Holders of Notes. Holders may communicate pursuant to TIA ss. 312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Issuers, the Trustee, the Registrar and anyone else shall have the protection of TIA ss. 312(c). Section 12.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Issuers to the Trustee to take any action under this Indenture, the Issuers shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied. Section 12.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA ss. 314(a)(4)) shall comply with the provisions of TIA ss. 314(e) and shall include: (c) a statement that the Person making such certificate or opinion has read such covenant or condition; (d) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (e) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been satisfied; and (f) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied. Section 12.06. Rules by Trustee and Agents. The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions. Section 12.07. No Personal Liability of Directors, Officers, Employees, Stockholders and Agents. No past, present or future director, officer, employee, incorporator, stockholder or agent of the Issuers shall have any liability for any obligations of the Issuers under the Notes, this Indenture or the Collateral Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Section 12.08. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. Section 12.09. No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuers or their Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. Section 12.10. Successors. All agreements of the Issuers in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. Section 12.11. Severability. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 12.12. Counterpart Originals. The parties may sign any number of copies of this Indenture (including by facsimile). Each signed copy shall be an original, but all of them together represent the same agreement. Section 12.13. Table of Contents, Headings, etc. The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following pages] SIGNATURES Dated as of August 12, 2002 COMDISCO HOLDING COMPANY, INC. By: /s/ Robert E.T. Lackey --------------------------------- Name: Robert E.T. Lackey Title: Executive Vice President, Secretary and Chief Legal Officer Attest: /s/ Carlotta A. Martini - ----------------------- Name: Carlotta A. Martini Title: Notary Republic COMDISCO, INC. By: /s/ Robert E.T. Lackey --------------------------------- Name: Robert E.T. Lackey Title: Executive Vice President, Secretary and Chief Legal Officer Attest: /s/ Carlotta A. Martini - ----------------------- Name: Carlotta A. Martini Title: Notary Republic WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION By: Jane Y. Schweiger --------------------------------- Name: Jane Y. Schweiger Title: Assistant Vice President Attest: Curtis D. Schwegman - ------------------- Authorized Signatory: Curtis D. Schwegman Date: August 12, 2002 SCHEDULE A SCHEDULED CASH RESERVE AMOUNT Date Aggregate Cash Reserve Amount ---- ----------------------------- September 30, 2002 $57,000,000.00 December 31, 2002 $55,000,000.00 March 31, 2003 $53,000,000.00 June 30, 2003 $51,000,000.00 September 30, 2003 $49,000,000.00 December 31, 2003 $47,000,000.00 March 31, 2004 $45,000,000.00 June 30, 2004 and thereafter $43,000,000.00 EXHIBIT A [Face of Note] - -------------------------------------------------------------------------------- CUSIP ____________ 11% Subordinated Secured Notes due 2005 No. ___ $____________ COMDISCO HOLDING COMPANY, INC. and COMDISCO, INC. promise to pay to _____________________________________________________________ or registered assigns, the principal sum of $650,000,000.00 on ______ ___, 2005. Interest Payment Dates: September 30, December 31, March 31 and June 30 Record Dates: September 15, December 15, March 15 and June 15 Dated: ___________, ____ COMDISCO HOLDING COMPANY, INC. COMDISCO, INC. By:_______________________ By:________________________ Name: Name: Title: Title: By:_______________________ By:________________________ Name: Name: Title: Title: This is one of the Notes referred to in the within-mentioned Indenture: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION as Trustee By: ___________________________ Authorized Signatory - -------------------------------------------------------------------------------- [Back of Note] 11% Subordinated Secured Notes due 2005 [INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE, PURSUANT TO THE PROVISIONS OF THE INDENTURE.] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Comdisco Holding Company, Inc., a Delaware corporation (the "Company"), and Comdisco, Inc., a Delaware corporation ("NLC" and, together with the Company, the "Issuers"), jointly and severally, promise to pay interest on the principal amount of this Note at the rate of 11.0% per annum from August 12, 2002 until maturity. The Issuers will pay interest quarterly in arrears on September 30, December 31, March 31 and June 30 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"); provided, however, that prior to the payment in full of all Senior Indebtedness, amounts in respect of regularly scheduled interest on the Notes shall be paid in kind by the issuance of Additional Notes equal in amount to the interest payment due (rounded to the nearest whole dollar) on such Interest Payment Date. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided, however, that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be ______ ___, 2002. The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except defaulted interest) as set forth in Section 1 of this Note to the Persons who are registered Holders of Notes at the close of business on September 15, December 15, March 15 and June 15 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Issuers maintained for such purpose within the City and State of New York, or, at the option of the Issuers, payment of interest (other than interest paid in kind as provided above) may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, if any, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Issuers or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, Wells Fargo Bank Minnesota, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar without notice to any Holder. The Issuers or any of their Subsidiaries may act in any such capacity. 4. INDENTURE AND COLLATERAL DOCUMENTS. The Issuers issued the Notes under an Indenture dated as of August 12, 2002 ("Indenture") among the Issuers and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.C. ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are secured obligations of the Issuers limited to $500,000,000 in aggregate principal amount plus Additional Notes issued in payment of interest on the Notes and any Additional Notes previously issued in payment of interest on the Additional Notes. The Notes are secured by a grant of a security interest in the Note Collateral pursuant to the Collateral Documents referred to in the Indenture. 5. OPTIONAL REDEMPTION. The Issuers may, at their option at any time after the Effective Date, redeem the Notes, in whole or in part, on at least 10 days' but not more than 60 days' notice to each Holder of Notes to be redeemed in cash at its registered address, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the redemption date; provided, however, that any such optional redemption shall be permitted only if no Senior Notes remain outstanding or if, concurrently with the redemption of the Notes, the Issuers redeem all Senior Notes then outstanding. 6. MANDATORY REDEMPTION. Pursuant to Section 3.08 of the Indenture, and except as provided thereon with respect to redemptions of less than $1.0 million principal amount of Notes, the Issuers shall be required to make mandatory redemptions of the principal amount of the Notes, plus accrued and unpaid interest thereon to the redemption date, in an amount equal to 100% of the Excess Cash. Mandatory redemptions, if any, shall be made for each fiscal quarter within 45 days after the end of such fiscal quarter; provided, however, that any such mandatory redemption shall be permitted only if no Senior Notes remain outstanding or if, concurrently with the redemption of the Notes, the Issuers redeem all Senior Notes then outstanding. 7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change in Control, subject to the provisions of Article 9 of the Indenture, the Issuers shall be required to make an offer (a "Change in Control Offer") to repurchase all or any part of each Holder's Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase (the "Change in Control Repurchase Price"). Within 15 days after the last date on which, in accordance with the Senior Note Indenture, holders of Senior Notes are permitted to deliver written notice of exercise of their right to require the Issuers to repurchase the Senior Notes pursuant to the Senior Note Indenture upon any Change in Control, the Issuers shall mail a notice to each Holder setting forth the procedures governing the Change in Control Offer as required by the Indenture. Prior to complying with this Section 7, but in any event within 90 days following a Change in Control, the Issuers shall either (1) repay all outstanding Senior Indebtedness (other than the Senior Notes) and offer to repurchase all outstanding Senior Notes in accordance with the terms of the Senior Note Indenture or (2) obtain the requisite consents, if any, under all agreements governing outstanding Senior Indebtedness to permit the repurchase of the Notes required by this Section 7. Holders of Notes that are subject to a Change in Control Offer will receive a Change in Control Offer from the Issuers prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes. (b) Notwithstanding anything to the contrary in the Indenture or this Section 7, the Issuers shall not be required to make a Change in Control Offer upon a Change in Control if a third party makes the Change in Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change in Control Offer made by the Issuers and purchases all Senior Notes and all Notes validly tendered and not withdrawn under the change in control offer required to be made under the Indenture and under the Change in Control Offer. 8. NOTICE OF REDEMPTION. Notice of optional redemption will be mailed at least 10 days but not more than 60 days before the redemption date and notice of a mandatory redemption will be mailed at least 10 days but no more than 30 days before the redemption date, in each case, to each Holder whose Notes are to be redeemed at its registered address. Notes may be redeemed in whole or in part, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons. The Notes are denominated in amounts of $1,000 and integral multiples thereof; provided, however, that the Notes may be in denominations (rounded to the nearest whole dollar) of less than $1,000 (but in no event less than $1.00) to make redemptions; provided, further, that the Additional Notes may be denominated in amounts (rounded to the nearest whole dollar) less than $1,000 (but in no event less than $1.00) or greater than $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuers may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuers need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Issuers need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Notes and the Collateral Documents may be amended or supplemented with the consent of the Holders of not less than a majority in aggregate principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture, the Notes or the Collateral Documents may be waived with the consent of the Holders of not less than a majority in aggregate principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture, the Notes or the Collateral Documents may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Issuers' obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act, or to provide for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture. Any amendment to, or waiver of, Article 9 of the Indenture that adversely affects the rights of the holders of the Notes shall require the consent of the holders of 100% in aggregate principal amount of Notes then outstanding. 12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest on the Notes whether or not prohibited by Article 9 of the Indenture; (ii) default in payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise whether or not prohibited by Article 9 of the Indenture, (iii) failure by the Issuers or any of their Subsidiaries to comply with Section 4.13, 5.01 or 5.02 of the Indenture; (iv) failure by the Issuers or any of their Subsidiaries for 60 days after notice to the Issuers by the Trustee or the Holders of at least 25% in principal amount of the Notes then outstanding to comply with certain other agreements in the Indenture or the Notes; (v) default under certain other agreements relating to Indebtedness (other than any Indebtedness for which recourse is limited to the property purchased) of the Issuers which default results in the acceleration of such Indebtedness prior to its express maturity, if the principal amount of any accelerated Indebtedness aggregates $25.0 million or more and such Indebtedness is not paid or such acceleration is not annulled within 10 days after written notice to the Issuers of such acceleration; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; or (vii) certain events of bankruptcy or insolvency with respect to the Issuers or any of their Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture, the Notes or the Collateral Documents, except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except (i) a continuing Default or Event of Default in the payment of interest on, or the principal of, or premium, if any, on the Notes; or (ii) an Event of Default with respect to any covenant or provision of the Indenture which cannot be waived without the consent of the Holders of each Note affected thereby. The Issuers are required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuers are required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. TRUSTEE DEALINGS WITH ISSUERS. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Issuers or their Affiliates, and may otherwise deal with the Issuers or their Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator or stockholder, of the Issuers shall have any liability for any obligations of the Issuers under the Notes, the Indenture or the Collateral Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers has caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Issuers will furnish to any Holder upon written request and without charge a copy of the Indenture, the Registration Rights Agreement and the Collateral Documents. Requests may be made to: Comdisco Holding Company, Inc. Comdisco, Inc. 6111 North River Road Rosemont, Illinois 60018 Attention: General Counsel 18. ADDITIONAL RIGHTS OF HOLDERS OF GLOBAL NOTES AND DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under the Indenture, certain Holders of Global Notes and Definitive Notes shall have all the rights set forth in the Registration Rights Agreement dated as of the Effective Date, among the Issuers and the parties named on the signature pages thereof (the "Registration Rights Agreement"). 19. SUBORDINATION. The Notes are subordinated to the Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, the Senior Indebtedness must be paid before the Notes may be paid. The Issuers agree, and each Holder by accepting a Note (including any Additional Note) agrees, that the Indebtedness evidenced by the Notes is subordinated in right of payment, to the extent and in the manner provided in the Indenture, to the prior payment in full of all Senior Indebtedness of the Issuers (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Indebtedness. ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to:__________________________________ (Insert assignee's legal name) _______________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint _______________________________________________________ to transfer this Note on the books of the Issuers. The agent may substitute another to act for him. Date: _______________ Your Signature: ___________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee*: _________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have all of your Note(s) purchased by the Issuers pursuant to Section 4.14 of the Indenture, state the amount you elect to have purchased: $_______________ If you want to elect to have only part of the Note(s) purchased by the Issuers pursuant to Section 4.14 of the Indenture, state the amount you elect to have purchased: $_______________ Date: _______________ Your Signature: ___________________________ (Sign exactly as your name appears on the face of this Note) Tax Identification No.:_____________________ Signature Guarantee*: __________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE* The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Principal Amount Amount of decrease Amount of increase in of this Global Note Signature of in Principal Amount Principal Amount following such authorized officer of of decrease of Trustee or Note Date of Exchange this Global Note this Global Note (or increase) Custodian ---------------- ---------------- ---------------- ------------- ---------
This schedule should be included only if the Note is issued in global form. EXHIBIT B LIST OF COLLATERAL DOCUMENTS Pledge Agreement encumbering all Note Collateral including: UCC-1 Financing Statements EX-4 8 ch338795.txt EXHIBIT 4.4 EXHIBIT 4.4 - ------------------------------------------------------------------------------- COMDISCO HOLDING COMPANY, INC. AND COMDISCO, INC. 11% SUBORDINATED SECURED NOTES DUE 2005 __________________________ FIRST SUPPLEMENTAL INDENTURE Dated as of October 7, 2002 to INDENTURE Dated as of August 12, 2002 __________________________ WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION Trustee ------------------------------------------------------------------------------- FIRST SUPPLEMENTAL INDENTURE, dated as of October 7, 2002 (the "First Supplemental Indenture"), between Comdisco Holding Company, Inc., a Delaware corporation (the "Company"), Comdisco, Inc., a Delaware corporation ("NLC" and, together with the Company, the "Issuers"), and Wells Fargo Bank Minnesota, National Association, a national banking association, as trustee (the "Trustee"). The Company, NLC and the Trustee mutually covenant and agree as follows for the benefit of each other and for the equal and ratable benefit of the holders (the "Holders") of the 11% Subordinated Secured Notes due 2005 (the "Notes"): WITNESSETH WHEREAS, the parties to this First Supplemental Indenture entered into that certain Indenture, dated as of August 12, 2002 (the "Subordinated Note Indenture"), among such parties, providing, among other things, for the authentication, delivery and administration of the Notes; WHEREAS, the Issuers desire to amend the Subordinated Note Indenture in certain respects; WHEREAS, Section 8.01 of the Subordinated Note Indenture provides, among other things, that the Issuers and the Trustee may amend or supplement the Subordinated Note Indenture and the Notes without the consent of any Holder of a Note, subject to certain exceptions and conditions specified in Section 8.01 of the Subordinated Note Indenture; WHEREAS, in order to amend or supplement the Subordinated Note Indenture in certain respects, it is necessary for the Issuers and the Trustee to enter into this First Supplemental Indenture; WHEREAS, the Issuers have directed the Trustee to execute and deliver this First Supplemental Indenture in accordance with the terms of the Subordinated Note Indenture; and WHEREAS, all requirements and conditions prescribed by the Subordinated Note Indenture for the validity of this First Supplemental Indenture as a binding and legal instrument have been satisfied and fulfilled, and the execution and delivery of this First Supplemental Indenture has been duly authorized by all necessary corporate action on the part of the Issuers. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration the receipt of which is hereby acknowledged, the Issuers and the Trustee have entered into, executed and delivered this First Supplemental Indenture for the uses and purposes hereinafter expressed as follows: Section 1. Amendments to the Subordinated Note Indenture. The Subordinated Note Indenture is hereby amended as follows: (a) Section 2.01(a) of the Subordinated Note Indenture is amended in its entirety to read as follows: "(a) General. The Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage, as applicable. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1.00 and integral multiples thereof. The Notes shall be in denominations (rounded to the nearest whole dollar) of $1.00 (but in no event less than $1.00) and integral multiples thereof to make redemptions pursuant to Section 3.07 and 3.08 hereof. The Additional Notes shall be denominated in amounts (rounded to the nearest whole dollar) of $1.00 (but in no event less than $1.00) and integral multiples thereof as necessary to make regularly scheduled interest payments on the Notes prior to the payment in full of all Senior Indebtedness. The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture, and the Issuers and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling." (b) Exhibit A of the Subordinated Note Indenture is amended and restated in its entirety as set forth on Exhibit A hereto. Section 2. Definitions. Capitalized terms used herein and not defined herein shall have the meaning ascribed to such terms in the Subordinated Note Indenture. Section 3. Ratification of Subordinated Note Indenture. Except as expressly amended hereby, the Subordinated Note Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. Upon the execution and delivery of this First Supplemental Indenture by the Issuers and the Trustee, this First Supplemental Indenture shall form a part of the Subordinated Note Indenture for all purposes, and every holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby. Any and all references to the Subordinated Note Indenture, whether within the Subordinated Note Indenture or in any notice, certificate or other instrument or document, shall be deemed to include a reference to this First Supplemental Indenture (whether or not made), unless the context shall otherwise require. Section 4. Governing Law. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS FIRST SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. Section 5. No Adverse Interpretation of Other Agreement. This First Supplemental Indenture may not be used to interpret any other indenture, loan or debt agreement of the Issuers or their Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this First Supplement Indenture. Section 6. Successors. All agreements of the Issuers in this First Supplemental Indenture shall bind its successors. All agreements of the Trustee in this First Supplemental Indenture shall bind its successors. Section 7. Severability. In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. Section 8. Counterpart Originals. The parties hereto may sign any number of copies of this First Supplemental Indenture (including by facsimile). Each signed copy shall be an original, but all of them together represent the same agreement. Section 9. Headings. The headings of Sections of this First Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this First Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof. [Signatures on following pages] SIGNATURES Dated as of October 7, 2002 COMDISCO HOLDING COMPANY, INC. By: /s/ Robert E.T. Lackey --------------------------------- Name: Robert E.T. Lackey Title: Executive Vice President, Chief Legal Officer and Secretary Attest: /s/ Carlotta A. Martini - ----------------------- Name: Carlotta A. Martini Title: Notary Republic COMDISCO HOLDING COMPANY, INC. By: /s/ Robert E.T. Lackey --------------------------------- Name: Robert E.T. Lackey Title: Executive Vice President Attest: /s/ Carlotta A. Martini - ----------------------- Name: Carlotta A. Martini Title: Notary Republic WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION By: /s/ Jane Y. Schweiger --------------------------------- Name: Jane Y. Schweiger Title: Vice President Attest: /s/ Roni Strassman - ------------------ Authorized Signatory: Roni Strassman Date: October 7, 2002 EXHIBIT A [Face of Note] - ------------------------------------------------------------------------------- CUSIP 200335 AB 3 11% Subordinated Secured Notes due 2005 No. ___ $____________ COMDISCO HOLDING COMPANY, INC. and COMDISCO, INC. , jointly and severally, promise to pay to ____________________________________ or registered assigns, the principal sum of $650,000,000.00 on August 12, 2005. Interest Payment Dates: September 30, December 31, March 31 and June 30 Record Dates: September 15, December 15, March 15 and June 15 Dated: _______________, ____ COMDISCO HOLDING COMPANY, INC. COMDISCO, INC. By:__________________________ By:___________________________ Name: Name: Title: Title: By:__________________________ By:___________________________ Name: Name: Title: Title: This is one of the Notes referred to in the within-mentioned Indenture: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION as Trustee By: ___________________________ Authorized Signatory - ------------------------------------------------------------------------------- [Back of Note] 11% Subordinated Secured Notes due 2005 [INSERT THE GLOBAL NOTE LEGEND, IF APPLICABLE, PURSUANT TO THE PROVISIONS OF THE INDENTURE.] Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated. 1. INTEREST. Comdisco Holding Company, Inc., a Delaware corporation (the "Company"), and Comdisco, Inc., a Delaware corporation ("NLC" and, together with the Company, the "Issuers"), jointly and severally, promise to pay interest on the principal amount of this Note at the rate of 11.0% per annum from August 12, 2002 until maturity. The Issuers will pay interest quarterly in arrears on September 30, December 31, March 31 and June 30 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an "Interest Payment Date"); provided, however, that prior to the payment in full of all Senior Indebtedness, amounts in respect of regularly scheduled interest on the Notes shall be paid in kind by the issuance of Additional Notes equal in amount to the interest payment due (rounded to the nearest whole dollar) on such Interest Payment Date. Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided, however, that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided, further, that the first Interest Payment Date shall be December 31, 2002. The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest will be computed on the basis of a 360-day year of twelve 30-day months. 2. METHOD OF PAYMENT. The Issuers will pay interest on the Notes (except defaulted interest) as set forth in Section 1 of this Note to the Persons who are registered Holders of Notes at the close of business on September 15, December 15, March 15 and June 15 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest at the office or agency of the Issuers maintained for such purpose within the City and State of New York, or, at the option of the Issuers, payment of interest (other than interest paid in kind as provided above) may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment by wire transfer of immediately available funds will be required with respect to principal of and interest, premium, if any, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Issuers or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. 3. PAYING AGENT AND REGISTRAR. Initially, Wells Fargo Bank Minnesota, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Issuers may change any Paying Agent or Registrar without notice to any Holder. The Issuers or any of their Subsidiaries may act in any such capacity. 4. INDENTURE AND COLLATERAL DOCUMENTS. The Issuers issued the Notes under an Indenture dated as of August 12, 2002 ("Indenture") among the Issuers and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended (15 U.S.C. ss.ss. 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are secured obligations of the Issuers limited to $650,000,000 in aggregate principal amount plus Additional Notes issued in payment of interest on the Notes and any Additional Notes previously issued in payment of interest on the Additional Notes. The Notes are secured by a grant of a security interest in the Note Collateral pursuant to the Collateral Documents referred to in the Indenture. 5. OPTIONAL REDEMPTION. The Issuers may, at their option at any time after the Effective Date, redeem the Notes, in whole or in part, on at least 10 days' but not more than 60 days' notice to each Holder of Notes to be redeemed in cash at its registered address, at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the redemption date; provided, however, that any such optional redemption shall be permitted only if no Senior Notes remain outstanding or if, concurrently with the redemption of the Notes, the Issuers redeem all Senior Notes then outstanding. 6. MANDATORY REDEMPTION. Pursuant to Section 3.08 of the Indenture, and except as provided thereon with respect to redemptions of less than $1.0 million principal amount of Notes, the Issuers shall be required to make mandatory redemptions of the principal amount of the Notes, plus accrued and unpaid interest thereon to the redemption date, in an amount equal to 100% of the Excess Cash. Mandatory redemptions, if any, shall be made for each fiscal quarter within 45 days after the end of such fiscal quarter; provided, however, that any such mandatory redemption shall be permitted only if no Senior Notes remain outstanding or if, concurrently with the redemption of the Notes, the Issuers redeem all Senior Notes then outstanding. 7. REPURCHASE AT OPTION OF HOLDER. (a) If there is a Change in Control, subject to the provisions of Article 9 of the Indenture, the Issuers shall be required to make an offer (a "Change in Control Offer") to repurchase all or any part of each Holder's Notes at a purchase price equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon, if any, to the date of purchase (the "Change in Control Repurchase Price"). Within 15 days after the last date on which, in accordance with the Senior Note Indenture, holders of Senior Notes are permitted to deliver written notice of exercise of their right to require the Issuers to repurchase the Senior Notes pursuant to the Senior Note Indenture upon any Change in Control, the Issuers shall mail a notice to each Holder setting forth the procedures governing the Change in Control Offer as required by the Indenture. Prior to complying with this Section 7, but in any event within 90 days following a Change in Control, the Issuers shall either (1) repay all outstanding Senior Indebtedness (other than the Senior Notes) and offer to repurchase all outstanding Senior Notes in accordance with the terms of the Senior Note Indenture or (2) obtain the requisite consents, if any, under all agreements governing outstanding Senior Indebtedness to permit the repurchase of the Notes required by this Section 7. Holders of Notes that are subject to a Change in Control Offer will receive a Change in Control Offer from the Issuers prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled "Option of Holder to Elect Purchase" on the reverse of the Notes. (b) Notwithstanding anything to the contrary in the Indenture or this Section 7, the Issuers shall not be required to make a Change in Control Offer upon a Change in Control if a third party makes the Change in Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Indenture applicable to a Change in Control Offer made by the Issuers and purchases all Senior Notes and all Notes validly tendered and not withdrawn under the change in control offer required to be made under the Indenture and under the Change in Control Offer. 8. NOTICE OF REDEMPTION. Notice of optional redemption will be mailed at least 10 days but not more than 60 days before the redemption date and notice of a mandatory redemption will be mailed at least 10 days but no more than 30 days before the redemption date, in each case, to each Holder whose Notes are to be redeemed at its registered address. Notes may be redeemed in whole or in part, unless all of the Notes held by a Holder are to be redeemed. On and after the redemption date interest ceases to accrue on Notes or portions thereof called for redemption. 9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons. The Notes shall be in denominations of $1.00 and integral multiples thereof. The Notes shall be in denominations (rounded to the nearest whole dollar) of $1.00 (but in no event less than $1.00) and integral multiples thereof to make redemptions. The Additional Notes shall be denominated in amounts (rounded to the nearest whole dollar) of $1.00 (but in no event less than $1.00) and integral multiples thereof as necessary to make regularly scheduled interest payments on the Notes. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuers may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuers need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Issuers need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the corresponding Interest Payment Date. 10. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes. 11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the Indenture, the Notes and the Collateral Documents may be amended or supplemented with the consent of the Holders of not less than a majority in aggregate principal amount of the then outstanding Notes, and any existing default or compliance with any provision of the Indenture, the Notes or the Collateral Documents may be waived with the consent of the Holders of not less than a majority in aggregate principal amount of the then outstanding Notes. Without the consent of any Holder of a Note, the Indenture, the Notes or the Collateral Documents may be amended or supplemented to cure any ambiguity, defect or inconsistency, to provide for uncertificated Notes in addition to or in place of certificated Notes, to provide for the assumption of the Issuers' obligations to Holders of the Notes in case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights under the Indenture of any such Holder, to comply with the requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act, or to provide for the issuance of Additional Notes in accordance with the limitations set forth in the Indenture. Any amendment to, or waiver of, Article 9 of the Indenture that adversely affects the rights of the holders of the Notes shall require the consent of the holders of 100% in aggregate principal amount of Notes then outstanding. 12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days in the payment when due of interest on the Notes whether or not prohibited by Article 9 of the Indenture; (ii) default in payment when due of principal of or premium, if any, on the Notes when the same becomes due and payable at maturity, upon redemption (including in connection with an offer to purchase) or otherwise whether or not prohibited by Article 9 of the Indenture; (iii) failure by the Issuers or any of their Subsidiaries to comply with Section 4.13, 5.01 or 5.02 of the Indenture; (iv) failure by the Issuers or any of their Subsidiaries for 60 days after notice to the Issuers by the Trustee or the Holders of at least 25% in principal amount of the Notes then outstanding to comply with certain other agreements in the Indenture or the Notes; (v) default under certain other agreements relating to Indebtedness (other than any Indebtedness for which recourse is limited to the property purchased) of the Issuers which default results in the acceleration of such Indebtedness prior to its express maturity, if the principal amount of any accelerated Indebtedness aggregates $25.0 million or more and such Indebtedness is not paid or such acceleration is not annulled within 10 days after written notice to the Issuers of such acceleration; (vi) certain final judgments for the payment of money that remain undischarged for a period of 60 days; or (vii) certain events of bankruptcy or insolvency with respect to the Issuers or any of their Subsidiaries. If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture, the Notes or the Collateral Documents, except as provided in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except (i) a continuing Default or Event of Default in the payment of interest on, or the principal of, or premium, if any, on the Notes, or (ii) an Event of Default with respect to any covenant or provision of the Indenture which cannot be waived without the consent of the Holders of each Note affected thereby. The Issuers are required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuers are required upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default. 13. TRUSTEE DEALINGS WITH ISSUERS. The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Issuers or their Affiliates, and may otherwise deal with the Issuers or their Affiliates, as if it were not the Trustee. 14. NO RECOURSE AGAINST OTHERS. No past, present or future director, officer, employee, incorporator or stockholder, of the Issuers shall have any liability for any obligations of the Issuers under the Notes, the Indenture or the Collateral Documents or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Notes. 15. AUTHENTICATION. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 16. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act). 17. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuers have caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. The Issuers will furnish to any Holder upon written request and without charge a copy of the Indenture, the Registration Rights Agreement and the Collateral Documents. Requests may be made to: Comdisco Holding Company, Inc. Comdisco, Inc. 6111 North River Road Rosemont, Illinois 60018 Attention: General Counsel 18. ADDITIONAL RIGHTS OF HOLDERS OF GLOBAL NOTES AND DEFINITIVE NOTES. In addition to the rights provided to Holders of Notes under the Indenture, certain Holders of Global Notes and Definitive Notes shall have all the rights set forth in the Registration Rights Agreement dated as of the Effective Date, among the Issuers and the parties named on the signature pages thereof (the "Registration Rights Agreement"). 19. SUBORDINATION. The Notes are subordinated to the Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, the Senior Indebtedness must be paid before the Notes may be paid. The Issuers agree, and each Holder by accepting a Note (including any Additional Note) agrees, that the Indebtedness evidenced by the Notes is subordinated in right of payment, to the extent and in the manner provided in the Indenture, to the prior payment in full of all Senior Indebtedness of the Issuers (whether outstanding on the date hereof or hereafter created, incurred, assumed or guaranteed), and that the subordination is for the benefit of the holders of Senior Indebtedness. ASSIGNMENT FORM To assign this Note, fill in the form below: (I) or (we) assign and transfer this Note to: _________________________________ (Insert assignee's legal name) _______________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint _______________________________________________________ to transfer this Note on the books of the Issuers. The agent may substitute another to act for him. Date: _______________ Your Signature: ________________________ (Sign exactly as your name appears on the face of this Note) Signature Guarantee*: _________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have all of your Note(s) purchased by the Issuers pursuant to Section 4.14 of the Indenture, state the amount you elect to have purchased: $_______________ If you want to elect to have only part of the Note(s) purchased by the Issuers pursuant to Section 4.14 of the Indenture, state the amount you elect to have purchased: $_______________ Date: _______________ Your Signature: _______________________ (Sign exactly as your name appears on the face of this Note) Tax Identification No.:________________ Signature Guarantee*: _________________________ * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE* The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:
Amount of decrease in Amount of increase in Principal Amount Principal Amount Principal Amount of this Global Note Signature of authorized of of following such decrease officer of Trustee Date of Exchange this Global Note this Global Note (or increase) or Note Custodian - ---------------- ---------------- ---------------- ------------- -----------------
* This schedule should be included only if the Note is issued in global form. EX-4 9 ch338801.txt EXHIBIT 4.5 - RIGHTS AGENT AGREEMENT EXHIBIT 4.5 EXECUTION COPY - ------------------------------------------------------------------------------ COMDISCO HOLDING COMPANY, INC. and MELLON INVESTOR SERVICES LLC as Rights Agent Rights Agent Agreement Dated as of August 12, 2002 - ------------------------------------------------------------------------------ TABLE OF CONTENTS
Section 1. Certain Definitions.........................................................................2 Section 2. Appointment of Rights Agent.................................................................4 Section 3. Issuance of Right Certificates..............................................................4 Section 4. Rights Distributions........................................................................7 Section 5. Release of Rights Distributions from Disputed Claims Reserve................................8 Section 6. Calculation of Recovery Percentages and Amount of Rights Distribution.......................9 Section 7. Form of Right Certificates..................................................................9 Section 8. Countersignature and Registration..........................................................10 Section 9. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates...............................................11 Section 10. Cancellation and Destruction of Right Certificates.........................................12 Section 11. Status and Availability of Rights and New Common Shares....................................12 Section 12. Common Shares Record Date..................................................................13 Section 13. Fractional Rights and Fractional Shares....................................................14 Section 14. Agreement of Right Holders.................................................................15 Section 15. Concerning the Rights Agent................................................................16 Section 16. Merger or Consolidation or Change of Name of Rights Agent..................................18 Section 17. Duties of Rights Agent.....................................................................19 Section 18. Change of Rights Agent.....................................................................22 Section 19. Notices....................................................................................23 Section 20. Supplements and Amendments.................................................................25 Section 21. Successors.................................................................................25 Section 22. Benefits of this Agreement.................................................................25 Section 23. Plan and Rights Terms Exhibit..............................................................25 Section 24. Tax Reporting; Withholding.................................................................26 Section 25. Severability...............................................................................27 Section 26. Governing Law..............................................................................27 Section 27. Counterparts...............................................................................27 Section 28. Descriptive Headings.......................................................................28
RIGHTS AGENT AGREEMENT Rights Agent Agreement, dated as of August 12, 2002, between Comdisco Holding Company, Inc., a Delaware corporation (the "Company"), and Mellon Investor Services LLC, a New Jersey limited liability company, as rights agent (the "Rights Agent"). WHEREAS, on July 30, 2002, Comdisco, Inc., a wholly-owned subsidiary of the Company ("Comdisco"), adopted, and the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the "Court") approved, the First Amended Joint Plan of Reorganization of Comdisco, Inc. and Its Affiliated Debtors, as amended and confirmed (the "Plan"); WHEREAS, pursuant to the Plan, the Company has authorized and will issue to holders of (i) Allowed Class C-5A Interests and (ii) Allowed Class C-5B Subordinated Claims freely transferable rights (the "Rights" and each, a "Right") to receive certain distributions to be made by the Company of cash or shares of Common Stock, $.01 par value, of the Company ("New Common Shares") or a combination of cash and New Common Shares as set forth in the Plan (the distributions to be made to the holders of the Rights hereunder to be referred to as "Rights Distributions"); WHEREAS, pursuant to the Plan, as of the Effective Date, one Right shall be issuable for each share of common stock constituting Old Equity and cancelled pursuant to the Plan (the "Cancelled Common Stock") that was held by each holder of Allowed Class C-5A Interests and each share of Cancelled Common Stock that was held by, and the subject of a Claim by, each holder of Class C-5B Subordinated Claims at the Close of Business on the Effective Date; provided, however, that notwithstanding anything to the contrary herein, no duplicate Rights will be issued in the event that any shares of Cancelled Common Stock are the subject of both Allowed Class C-5A Interests and Class C-5B Subordinated Claims; WHEREAS, the administration and processing of the Rights Distributions and other matters in connection with the Rights will involve substantial administration; WHEREAS, the Company desires that the Rights Agent act on behalf of the Company, and the Rights Agent is willing to so act, in connection with the Rights; Accordingly, in consideration of the premises and the mutual agreements herein set forth, the parties hereby agree as follows: Section 1. Certain Definitions. Capitalized terms used herein and not otherwise defined shall have the same meaning as set forth in the Plan. For purposes of this Agreement, the following terms have the meanings indicated: "Business Day" shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in the State of New York or the State of Illinois are authorized or obligated by law or executive order to close. "Class C-5A Interests" shall mean holders of Interests in Class C-5 as provided in the Plan. "Class C-5B Subordinated Claims" shall mean holders of Subordinated Claims in Class C-5 as provided in the Plan. "Close of Business" on any given date shall mean 5:00 P.M., Chicago, Illinois time, on such date; provided, however, that if such date is not a Business Day it shall mean 5:00 P.M., Chicago, Illinois time, on the next succeeding Business Day. "Code" shall have the meaning set forth in Section 24(a) hereof. "Company" shall have the meaning set forth in the introductory paragraph hereof. "Creditor Distribution Record Date" shall have the meaning set forth in Section 4(c) hereof. "Disputed Claims Reserve" shall have the meaning set forth in the Plan. "Disputed Rights" shall have the meaning set forth in Section 3(a)(iii) hereof. "Distributions to Creditors' shall have the meaning set forth in Exhibit A hereto. "Effective Date" shall mean August 12, 2002. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Form W-8" shall have the meaning set forth in Section 24(a) hereof. "Fractional Share Amount" shall have the meaning set forth in Section 13(b) hereof. "New Common Shares" shall mean the shares of common stock, par value $0.01 per share, of the Company issued on or after the Effective Date. "Person" shall mean any individual, firm, corporation, partnership, limited partnership, limited liability partnership, business trust, limited liability company, unincorporated association or other entity, and shall include any successor (by merger or otherwise) of such entity. "Right" or "Rights" shall mean freely transferable rights to receive Rights Distributions. Each Right shall entitle the holder thereof to receive a pro rata share of the Rights Distributions as set forth in Exhibit C-2 to the Plan. "Rights Agent" shall (i) have the meaning set forth in the introductory paragraph hereof, (ii) mean any successor or replacement to Mellon Investor Services LLC as provided in Sections 16 and 18 hereof or (iii) any additional Person appointed pursuant to Section 2 hereof. "Right Certificate" shall mean a certificate evidencing a Right in substantially the form of Exhibit B hereto. "Rights Distributions" shall mean any distributions from the Company of cash and/or New Common Shares (including distributions in respect of New Common Shares) to which the holders of the Rights are entitled pursuant to the terms of the Plan, including without limitation the Rights Terms Exhibit. "Rights Distribution Record Date" shall mean the record date established by the Company for a Rights Distribution to be made to the holders of Rights established pursuant to Section 4(d) hereof. "Rights Registry" shall have the meaning set forth in Section 8(b) hereof. "Rights Terms Exhibit" shall mean the Contingent Equity Distribution Agreement set forth as Exhibit C-2 to the Plan and attached hereto as Exhibit A. "Securities Act" shall mean the Securities Act of 1933, as amended. "Treasury Regulations" shall have the meaning set forth in Section 24(a) hereof. Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to act as agent for the Company in accordance with the terms and conditions hereof, and the Rights Agent hereby accepts such appointment. The Company may from time to time appoint such co-Rights Agents as it may deem necessary or desirable upon ten (10) days prior written notice to the Rights Agent. The Rights Agent shall have no duty to supervise, and in no event shall be liable for, the acts or omissions of any such co-Rights Agent.. Section 3. Issuance of Right Certificates. (a) Right Certificates will be issued pursuant to Sections 7.9 and 9.6(b) of the Plan as follows: (i) Each holder of record of Allowed Class C-5A Interests as of the Close of Business on the Effective Date will receive in accordance with the Plan a Right Certificate evidencing one Right for each share of Cancelled Common Stock represented by such Allowed Class C-5A Interest; (ii) Each holder of record of Allowed Class C-5B Subordinated Claims as of the Close of Business on the Effective Date will receive in accordance with the Plan a Right Certificate evidencing one Right for each share of Cancelled Common Stock represented by such Allowed Class C-5B Subordinated Claim; and (iii) The Company will issue to the Disbursing Agent for, and to be held in, the Disputed Claims Reserve, in respect of each holder of record of Class C-5B Subordinated Claims that are Disputed Claims as of the Close of Business on the Effective Date, a Right Certificate evidencing one Right for each share of Cancelled Common Stock which was the subject of such holder's Class C-5B Subordinated Claim ("Disputed Rights"). (b) Notwithstanding clause (a), if any such holder holds shares of Cancelled Common Stock that provided the basis for both an Allowed Class C-5A Interest and a Class C-5B Subordinated Claim, then no Rights shall be issued in respect of such holder's Class C-5B Subordinated Claims except to the extent the number of shares of Cancelled Common Stock relating to such Class C-5B Subordinated Claims exceeds the number of shares of Cancelled Common Stock represented by such holder's Allowed Class C-5A Interests. (c) Rights Distributions in respect of Right Certificates issued but not distributed pursuant to Section 9.6(b) of the Plan shall be held by the Rights Agent. If the distribution to a holder of a Right Certificate pursuant to Section 9.6(b) of the Plan occurs subsequent to any Rights Distribution in respect thereof, upon the receipt of specific, written instructions from the Company, the Rights Agent shall distribute all Rights Distributions paid with respect to such Right Certificate to the registered holder thereof. (d) Disputed Rights shall be held in a Disputed Claims Reserve subject to Article X of the Plan. In the event that any Class C-5B Subordinated Claim becomes an Allowed Class C-5B Subordinated Claim in whole or in part, the Disputed Rights (or portions thereof) issued in respect of such Allowed Class C-5B Subordinated Claim shall no longer be Disputed Rights and shall be distributed to the holder of such Allowed Class C-5B Subordinated Claim in accordance with the Plan. In the event that any Class C-5B Subordinated Claim is withdrawn or becomes a Disallowed Claim (in whole or in part) pursuant to Article X of the Plan, the Disputed Rights issued in respect of the Disallowed portion thereof shall be returned by the Disbursing Agent to the Rights Agent and cancelled. (e) On or prior to June 30, 2003, but in no event earlier than June 15, 2003, the Rights Agent, upon the receipt of specific written instructions from the Company (which the Company hereby agrees to provide) and at the expense of the Company, shall provide to the holders of record of Allowed Class C-5A Interests who have not yet surrendered to the Rights Agent certificates representing their shares of Cancelled Common Stock (or an affidavit of loss and indemnity satisfactory to the Rights Agent as specified in Section 9.6(b) of the Plan) written notice that the failure to surrender such certificates or to execute and deliver an affidavit of loss and indemnity pursuant to Section 9.6(b) of the Plan prior to August 12, 2003 shall result in the forfeiture of such holder's rights and interests in respect of such Cancelled Common Stock, including the right to participate in any distributions pursuant to the Plan. Such notice shall contain written instructions regarding the proper delivery of such certificates or such affidavit of loss and indemnity. Section 4. Rights Distributions. (a) The Company (or the Disbursing Agent or other distribution agent on the Company's behalf) shall distribute to the Rights Agent the Rights Distributions to which the holders of the Rights are entitled pursuant to the terms of the Plan, including without limitation the Rights Terms Exhibit, which terms are expressly incorporated herein and made a part hereof. As set forth in the Rights Terms Exhibit, holders of Rights will be entitled to Rights Distributions from the Company in the form of distributions of cash or New Common Shares or combination of cash and New Common Shares (as the Company may elect in its sole discretion) in accordance with the terms and conditions of the Rights Terms Exhibit and the Plan after certain Recovery Thresholds (as defined in the Rights Terms Exhibit) are met. (b) The Company hereby agrees to distribute, or to cause the Disbursing Agent or other distribution agent on its behalf to distribute, the full amount of any Rights Distributions constituting cash to be distributed to the Rights Agent in accordance with the Plan and the Rights Terms Exhibit. (c) The Company hereby agrees to distribute, or to cause the Disbursing Agent or other distribution agent or transfer agent on its behalf to distribute, the full amount of any Rights Distributions made in the form of New Common Shares to the Rights Agent in accordance with the Plan and the Rights Terms Exhibit, and on or prior to the record date (the "Creditor Distribution Record Date") for the corresponding Distributions to Creditors (as defined in the Rights Terms Exhibit), such that the holders of the Rights, by virtue of their ownership of New Common Shares, will receive the Rights Distribution in connection with the Distributions to Creditors to which the Rights Distribution relates. (d) ubject to the foregoing, the Company may establish a Rights Distribution Record Date (with prompt notice thereof to the Rights Agent), which shall be no more than thirty (30) days prior to any Rights Distribution for purposes of determining the holders of Rights entitled to receive their pro rata share of a Rights Distribution. When a Rights Distribution is received by the Rights Agent, together with specific written instructions as to such Rights Distribution from the Company, the Rights Agent shall promptly distribute to the registered holders of the Right Certificates as of the Rights Distribution Record Date, as applicable, the cash and/or certificates of New Common Shares constituting such Rights Distribution, any such stock certificates to be registered in such name or names as may be designated by such holder. (e) Rights Distributions in respect of Disputed Rights shall be distributed to the Disbursing Agent and held in the Disputed Claims Reserve until released in accordance with the Plan and the provisions hereof. (f) Distributions paid with respect to New Common Shares issued in a Rights Distribution will constitute a Rights Distribution under this Agreement and payment of a Contingent Equity Distribution pursuant to the Rights Terms Exhibit and the Plan. Section 5. Release of Rights Distributions from Disputed Claims Reserve. (a) Upon distribution of a Rights Certificate to the holder of a Disputed Claim that has become an Allowed Class C-5B Subordinated Claim pursuant to Section 3(d) hereof, the Company (or the Disbursing Agent or other distribution agent on the Company's behalf) shall distribute to the Rights Agent, together with specific written instructions as to such distribution from the Company, for distribution to such holder, that portion of any Rights Distributions previously distributed pursuant to the Plan allocable to such Allowed Class C-5B Subordinated Claim. (b) That portion of any Rights Distribution distributed in respect of and allocable to Disputed Rights (or portions thereof) that are subsequently withdrawn or Disallowed shall be held in the Supplemental Distribution Account, notwithstanding the cancellation of the Right Certificates to which such distributions related. At such time as no Disputed Rights remain in the Disputed Claim Reserve, any Rights Distributions remaining in the Supplemental Distribution Account shall be distributed by the Disbursing Agent to the Rights Agent. Upon the receipt of specific, written instructions from the Company (which shall include pro rata allocation amounts with respect to Rights), the Rights Agent shall promptly distribute such Rights Distributions to the registered holders of Right Certificates pro rata based on the number of Rights held by each such holder. Section 6. Calculation of Recovery Percentages and Amount of Rights Distribution. No later than 15 days prior to each Distribution Date, the Company shall calculate the amount of the proposed Rights Distribution payable to holders of Rights and the form (New Common Shares or cash, or a combination of New Common Shares and cash) of such Rights Distribution, and shall promptly notify the Rights Agent in writing of such amounts on an aggregate and per Right basis. Section 7. Form of Right Certificate. The Right Certificates shall be substantially the same as Exhibit B hereto and may have such marks of identification or designation and such legends, summaries or endorsements printed thereon as the Company may deem appropriate (but which do not affect the rights, duties or obligations of the Rights Agent as set forth in this Agreement) and as are not inconsistent with the provisions of this Agreement or the Plan, or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto, or to conform to usage. Subject to the other provisions of this Agreement, the Right Certificates, whenever issued or distributed, shall be dated as of the date of their issuance and on their face shall entitle the holders thereof to receive such percentage of Rights Distributions as shall be set forth therein. Section 8. Countersignature and Registration. (a) The Right Certificates shall be executed on behalf of the Company by its Chairman of the Board, its Chief Executive Officer, its President, any of its Vice Presidents, or its Treasurer, either manually or by facsimile signature, shall have affixed thereto the Company's seal or a facsimile thereof, and shall be attested by the Secretary or any Assistant Secretary of the Company, either manually or by facsimile signature. The Right Certificates shall be countersigned by the Rights Agent and shall not be valid for any purpose unless so countersigned, either manually or by facsimile. In case any officer of the Company who shall have signed any of the Right Certificates shall cease to be such officer of the Company before countersignature by the Rights Agent and issuance and delivery by the Company, such Right Certificates, nevertheless, may be countersigned by the Rights Agent and issued and delivered by the Company with the same force and effect as though the person who signed such Right Certificates had not ceased to be such officer of the Company; and any Right Certificate may be signed on behalf of the Company by any person who, at the actual date of the execution of such Right Certificate, shall be a proper officer of the Company to sign such Right Certificate, although at the date of the execution of this Rights Agent Agreement any such person was not such an officer. (b Upon the receipt of written notice from the Company that the initial distribution of Right Certificates pursuant to the Plan has occurred, the Rights Agent will keep or cause to be kept, at its office designated for such purposes, books for registration of the transfer of the Right Certificates issued hereunder (the "Rights Registry"). Such Rights Registry shall show the names and addresses of the respective holders of the Right Certificates, the number of Rights evidenced on its face by each of the Right Certificates and the date of each of the Right Certificates. Section 9. Transfer, Split Up, Combination and Exchange of Right Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. (a) Subject to the provisions of this Agreement, any Right Certificate or Right Certificates may be transferred, split up, combined or exchanged for another Right Certificate or Right Certificates, entitling the registered holder to receive a like percentage of Rights Distributions as the Right Certificate or Right Certificates surrendered then entitled such holder to receive. Any registered holder desiring to transfer, split up, combine or exchange any Right Certificate or Right Certificates shall make such request in writing delivered to the Rights Agent, and shall surrender the Right Certificate or Right Certificates to be transferred, split up, combined or exchanged at the office of the Rights Agent designated for such purposes; provided, however, no Right Certificate may be split up in a manner that would result in a fractional Right being issued. Thereupon the Rights Agent shall countersign and deliver to the Person entitled thereto a Right Certificate or Right Certificates, as the case may be, as so requested. The Company or the Rights Agent may require payment of a sum sufficient for any tax or governmental charge that may be imposed in connection with any transfer, split up, combination or exchange of Right Certificates. The Rights Agent shall have no duty or obligation to take any action under any Section of this Agreement which requires the payment by a Rights holder of applicable taxes and/or governmental charges unless and until it is satisfied that all such taxes or applicable governmental charges have been paid. (b) Subject to the provisions of this Agreement, upon receipt by the Company and the Rights Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of a Right Certificate, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and, at the Company's or the Rights Agent's request, reimbursement to the Company and the Rights Agent of all reasonable expenses incidental thereto, and upon surrender to the Rights Agent and cancellation of the Right Certificate if mutilated, the Company will make and deliver a new Right Certificate of like tenor to the Rights Agent for delivery to the registered holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated. Section 10. Cancellation and Destruction of Right Certificates. All Right Certificates surrendered for the purpose of transfer, split up, combination or exchange shall, if surrendered to the Company or to any of its agents, be delivered to the Rights Agent for cancellation or in canceled form, or, if surrendered to the Rights Agent, shall be canceled by it, and no Right Certificates shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Rights Agent Agreement. The Company shall deliver to the Rights Agent for cancellation and retirement, and the Rights Agent shall so cancel and retire, any other Right Certificate purchased or acquired by the Company. The Rights Agent shall deliver all canceled Right Certificates to the Company, or shall, at the written request of the Company, destroy such canceled Right Certificates, and in such case shall deliver a certificate of destruction thereof to the Company. Section 11. Status and Availability of Rights and New Common Shares. (a) The Company covenants and agrees that it will take all such action as may be necessary to ensure that all New Common Shares delivered to holders of Rights pursuant to this Agreement and the Plan shall, at the time of delivery of the certificates for such shares, be duly and validly authorized and issued and fully paid and non-assessable shares. (b) The Company further covenants and agrees that it will pay when due and payable any and all taxes and governmental charges which may be payable in respect of the issuance or delivery of the Right Certificates or of any New Common Shares. The Company shall not, however, be required to pay any tax or charge which may be payable in respect of any transfer or delivery of Right Certificates to a Person other than, or the issuance or delivery of certificates for the New Common Shares in a name other than that of, the registered holder of the Right Certificate evidencing Rights or to issue or to deliver any certificates for New Common Shares until any such tax or charge shall have been paid (any such tax or charge being payable by the holder of such Right Certificate at the time of surrender) or until it has been established to the Company's reasonable satisfaction that no such tax or charge is due. (c) The Company further covenants and agrees to use reasonable best efforts to register the Rights and the New Common Shares under either Section 12(b) or Section 12(g) of the Exchange Act and to file timely with the Securities and Exchange Commission all reports required to be filed thereunder so long as any Right Certificates are outstanding. The Company will include information regarding the Present Value of Distributions to Creditors in its annual and quarterly reports filed pursuant to the Exchange Act. Section 12. New Common Shares Record Date. Each Person in whose name any certificate for New Common Shares is issued in respect of the Rights shall for all purposes be deemed to have become the holder of record of the New Common Shares represented thereby on, and such certificate shall be dated, the date of issuance thereof, which date shall be no later than the applicable Creditor Distribution Record Date. Section 13. Fractional Rights and Fractional Shares. (a) The Company shall not be required to issue fractions of Rights or to distribute Right Certificates which evidence fractional Rights. The Company shall be entitled to round to the nearest whole number (up or down) the number of Rights to be issued to each record holder of Cancelled Common Stock that constitutes an Allowed Class C-5A Interest and each record holder of an Allowed Class C-5B Subordinated Claim, provided that a Right of 0.5 (one half) be rounded down to the next lowest number. (b) The Company shall not be required to issue fractions of New Common Shares or to distribute Common Share Certificates which evidence fractional New Common Shares. The Company shall be entitled to round down to the nearest whole number the number of New Common Shares to be issued to each holder of Rights in respect of Rights Distributions. The Company, at its option, shall either (i) instruct the Disbursing Agent in writing to sell at market a number of New Common Shares up to that portion of any Rights Distribution that would otherwise be payable in fractions of New Common Shares (the "Fractional Share Amount") and to distribute cash to the Rights Agent for distribution to holders of Rights in respect thereof pursuant to Section 4(d) hereof or (ii) if selling such New Common Shares at market is not practical or would adversely affect the price obtained therefor, distribute, in accordance with Section 4(b) hereof, cash to the Rights Agent for distribution to holders of Rights pursuant to Section 4(d) hereof in respect of the Fractional Share Amount, based on the average closing price of the New Common Shares during the twenty (20) trading days immediately preceding the applicable Rights Distribution Record Date. (c) The holder of a Right by the acceptance of the Right expressly waives any right to receive fractional Rights or fractional New Common Shares in respect of the Rights Distributions. (d) Whenever a payment for fractional Rights or fractional shares is to be made by the Rights Agent, the Company shall (i) promptly prepare and deliver to the Rights Agent a certificate setting forth in reasonable detail the facts related to such payments and the prices and/or formulas utilized in calculating such payments, and (ii) provide sufficient monies to the Rights Agent in the form of fully collected funds to make such payments. The Rights Agent shall be fully protected in relying upon such a certificate and shall have no duty with respect to, and shall not be deemed to have knowledge of any payment for fractional Rights or fractional shares under any Section of this Agreement relating to the payment of fractional Rights or fractional shares unless and until the Rights Agent shall have received such a certificate and sufficient monies. Section 14. Agreement of Right Holders. Every holder of a Right, by accepting the same, consents and agrees with the Company and the Rights Agent and with every other holder of a Right that: (a) the Right Certificates are subject to the terms, provisions and conditions of the Plan, including the Rights Terms Exhibit; (b) the Right Certificates are transferable only in the Rights Registry maintained by the Rights Agent if surrendered at the principal office of the Rights Agent, duly endorsed or accompanied by a proper instrument of transfer with a completed form of certification; (c) the Company and the Rights Agent may deem and treat the Person in whose name the Right Certificate is registered in the Rights Registry as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificates made by anyone other than the Company or the Rights Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent shall be affected by any notice to the contrary; and (d) notwithstanding anything in this Agreement to the contrary, neither the Company nor the Rights Agent shall have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other injunction, order, judgment, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority prohibiting or otherwise restraining performance of such obligation; provided, however, the Company agrees to use its best efforts to have any such injunction, order, judgment, decree or ruling lifted or otherwise overturned as soon as possible. Section 15. Concerning the Rights Agent. (a) The Company agrees to pay to the Rights Agent reasonable compensation for all services rendered by it hereunder and, from time to time, on demand of the Rights Agent, its reasonable expenses and counsel fees and other disbursements incurred in the preparation, administration, delivery, execution and amendment of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Rights Agent for, and to hold it harmless against, any loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost or expense (including, without limitation, the reasonable fees and expenses of legal counsel), incurred without gross negligence, bad faith or willful misconduct on the part of the Rights Agent (which gross negligence, bad faith or willful misconduct must be determined by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction), for any action taken, suffered or omitted by the Rights Agent in connection with the acceptance, exercise, performance or administration of its duties under this Agreement. The costs and expenses incurred by the Rights Agent in enforcing this right of indemnification shall be paid by the Company. The provisions of this Section 15 and Section 17 below shall survive the termination of this Agreement, the exercise or expiration of the Rights and the resignation or removal of the Rights Agent. (b) The Rights Agent shall be authorized and protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of this Agreement or the exercise or performance of its duties hereunder, in reliance upon any Right Certificate or certificate for New Common Shares or for other securities of the Company, instrument of assignment or transfer, power of attorney, endorsement, affidavit, letter, notice, instruction of the Company, direction, consent, certificate, statement, or other paper or document believed by it in the absence of bad faith to be genuine and to be signed, executed and, where necessary, verified or acknowledged, by the proper Person or Persons or otherwise upon the advice of counsel as set forth in Section 17 hereof. The Rights Agent shall not be deemed to have knowledge of any event of which it was supposed to receive notice or instruction thereof hereunder, and the Rights Agent shall be fully protected and shall incur no liability for failing to take any action in connection therewith unless and until it has received such notice or instruction. Section 16. Merger or Consolidation or Change of Name of Rights Agent. (a) Any Person into which the Rights Agent or any successor Rights Agent may be merged or with which it may be consolidated, or any Person resulting from any merger or consolidation to which the Rights Agent or any successor Rights Agent shall be a party, or any Person succeeding to the business of the Rights Agent or any successor Rights Agent, shall be the successor to the Rights Agent under this Agreement without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such Person would be eligible for appointment as a successor Rights Agent under the provisions of Section 18 hereof. In case at the time such successor Rights Agent shall succeed to the agency created by this Agreement, any of the Right Certificates shall have been countersigned but not delivered, any such successor Rights Agent may adopt the countersignature of the predecessor Rights Agent and deliver such Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, any successor Rights Agent may countersign such Right Certificates either in the name of the predecessor Rights Agent or in the name of the successor Rights Agent; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. (b) In case at any time the name of the Rights Agent shall be changed and at such time any of the Right Certificates shall have been countersigned but not delivered, the Rights Agent may adopt the countersignature under its prior name and deliver Right Certificates so countersigned; and in case at that time any of the Right Certificates shall not have been countersigned, the Rights Agent may countersign such Right Certificates either in its prior name or in its changed name; and in all such cases such Right Certificates shall have the full force provided in the Right Certificates and in this Agreement. Section 17. Duties of Rights Agent. The Rights Agent undertakes to perform only the duties and obligations expressly set forth in this Agreement and no implied duties or obligations shall be read into this Agreement against the Rights Agent. The Rights Agent shall perform those duties and obligations upon the following terms and conditions, by all of which the Company and the holders of Right Certificates, by their acceptance thereof, shall be bound: (a) The Rights Agent may consult with legal counsel (who may be legal counsel for the Company, or may be an employee of the Rights Agent), and the advice or opinion of such counsel shall be full and complete authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for or in receipt of any action taken, suffered or omitted by it in the absence of bad faith in accordance with such advice or opinion. (b) Whenever in the performance of its duties under this Agreement the Rights Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking, omitting or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by any one of the Chairman of the Board, the President, a Vice President, the Treasurer or the Secretary of the Company and delivered to the Rights Agent; and such certificate shall be full and complete authorization and protection to the Rights Agent and the Rights Agent shall incur no liability for or in respect of any action taken, omitted or suffered by it in the absence of bad faith under the provisions of this Agreement in reliance upon such certificate. (c) The Rights Agent shall be liable hereunder to the Company and any other Person only for its own gross negligence, bad faith or willful misconduct (which gross negligence, bad faith or willful misconduct must be determined by a final, non-appealable order, judgment, decree or ruling of a court of competent jurisdiction). Anything to the contrary notwithstanding, in no event shall the Rights Agent be liable for special, punitive, indirect, consequential or incidental loss or damage of any kind whatsoever (including, but not limited to, lost profits), even if the Rights Agent has been advised of the likelihood of such loss or damage. [Any and all liability of the Rights Agent under this Agreement will be limited to $50,000. (d) The Rights Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Right Certificates (except as to its countersignature thereof) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only. (e) The Rights Agent shall not have any liability for or be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Rights Agent) or in respect of the validity or execution of any Right Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Right Certificate; nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any New Common Shares to be issued pursuant to this Agreement or any Right Certificate or as to whether any New Common Shares will, when so issued, be validly authorized and issued, fully paid and nonassessable; nor shall it be responsible for any change in the exercisability of the Rights (including the Rights becoming null and void hereunder). (f) The Company agrees that it will perform, execute, acknowledge and deliver or cause to be performed, executed, acknowledged end delivered all such further and other acts, instruments and assurances as may reasonably be required by the Rights Agent for the carrying out or performing by the Rights Agent of the provisions of this Agreement. (g) The Rights Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from any one of the Chairman of the Board, the President, a Vice President, the Secretary or the Treasurer of the Company, and to apply to such officers for advice or instructions in connection with its duties, and such instructions shall be full authorization and protection to the Rights Agent, and the Rights Agent shall not be liable for any action taken, omitted or suffered to be taken by it in the absence of bad faith in accordance with instructions of any such officer. (h) The Rights Agent and any stockholder, affiliate, director, officer or employee of the Rights Agent may buy, sell or deal in any of the Rights or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to the Company or otherwise act as fully and freely as though it were not Rights Agent under this Agreement. Nothing herein shall preclude the Rights Agent from acting in any other capacity for the Company or for any other legal entity. (i) The Rights Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself (through its directors, officers and employees) or by or through its attorneys or agents. (j) No provision of this Agreement shall require the Rights Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of its rights if it believes that repayment of such funds or adequate indemnification against such risk or liability is not reasonably assured to it. (k) A copy of this Agreement shall be available at all reasonable times for inspection by any registered Right holder at the principal office of the Company. (l) The Rights Agent shall be protected and shall incur no liability for or in respect of any action taken, suffered or omitted by it in connection with its administration of the Rights or this Agreement in reliance upon an order, finding, instruction or other directive of the Bankruptcy Court, and shall act in accordance with any such order, finding, instruction or other directive. Section 18. Change of Rights Agent. The Rights Agent or any successor Rights Agent may resign and be discharged from its duties under this Agreement upon thirty (30) days' notice in writing mailed to the Company and to each transfer agent of the New Common Shares by registered or certified mail, and to the holders of the Right Certificates as set forth in the Rights Registry by first-class mail. The Company may remove the Rights Agent or any successor Rights Agent upon thirty (30) days' notice in writing, mailed to the Rights Agent or successor Rights Agent, as the case may be, and to each transfer agent of the New Common Shares by registered or certified mail. If the Rights Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Rights Agent. If the Company shall fail to make such appointment within a period of thirty (30) days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Rights Agent or by the holder of a Right Certificate (who shall, with such notice, submit his Right Certificate for inspection by the Company), then the registered holder of any Right Certificate may apply to any court of competent jurisdiction for the appointment of a new Rights Agent. Any successor Rights Agent, whether appointed by the Company or by such a court, shall be a corporation organized and doing business under the laws of the United States or of any state of the United States, in good standing, having an office in the United States which is authorized under the laws of the applicable jurisdiction to exercise corporate trust powers and is subject to supervision or examination by federal or state authority and which has at the time of its appointment as Rights Agent a combined capital and surplus of at least $100 million. After appointment, the successor Rights Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Rights Agent without further act or deed; but the predecessor Rights Agent shall deliver and transfer to the successor Rights Agent any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Not later than the effective date of any such appointment the Company shall file notice thereof in writing with the predecessor Rights Agent and each transfer agent of the New Common Shares, and publish a notice thereof in the Wall Street Journal. Failure to give any notice provided for in this Section 18, however, or any defect therein, shall not affect the legality or validity of the resignation or removal of the Rights Agent or the appointment of the successor Rights Agent, as the case may be. Section 19. Notices. Notices or demands authorized by this Agreement to be given or made by the Rights Agent or by the holder of any Right Certificate to or on the Company shall be sufficiently given or made if sent by facsimile or first-class mail, postage prepaid, addressed (until another address is filed in writing with the Rights Agent) as follows: Comdisco Holding Company, Inc. 6111 North River Road Rosemont, Illinois 60018-5159 Attention: Controller Facsimile: (847) 518-5440 with a copy to: Comdisco Holding Company, Inc. 6111 North River Road Rosemont, Illinois 60018-5159 Attention: General Counsel Facsimile: (847) 518-5478 with a copy to: Skadden, Arps, Slate, Meagher & Flom (llinois) 333 West Wacker Drive Chicago, IL 60606 Attention: L. Byron Vance III Facsimile: (312) 407-0411 Any notice or demand authorized by this Agreement to be given or made by the Company or by the holder of any Right Certificate to or on the Rights Agent shall be sufficiently given or made if sent by facsimile or first-class mail, postage prepaid, addressed (until another address is filed in writing with the Company) as follows: Mellon Investor Services, LLC 150 N. Wacker Drive - Suite 2120 Chicago, Il 60606 Attention: Relationship Manager Facsimile: (312) 704-7112 with a copy to: Mellon Investor Services LLC 85 Challenger Road Ridgefield Park, NJ 07660-2108 Attention: General Counsel Facsimile: (201) 296-4004 Notices or demands authorized by this Agreement to be given or made by the Company or the Rights Agent to the holder of any Right Certificate shall be sufficiently given or made if sent by first-class mail, postage prepaid, addressed to such holder at the address of such holder as shown on the Rights Registry. Section 20. Supplements and Amendments. Except as provided in the last sentence of this Section 20, for so long as the Rights are outstanding, the Company may, and the Rights Agent shall, if the Company so directs in writing, supplement or amend this Agreement without the approval of any holders of Rights, provided that no such supplement or amendment may (a) adversely affect the interests of the holders of Rights as such, (b) cause this Agreement again to become amendable other than in accordance with this sentence or (c) change or increase the Rights Agent's rights, duties, liabilities or obligations. Upon the delivery of a certificate from an appropriate officer of the Company which states that the supplement or amendment is in compliance with the terms of this Section 20, the Rights Agent shall execute such supplement or amendment, provided that any supplement or amendment that does not change or increase the Rights Agent's rights, duties, liabilities or obligations shall become effective immediately upon execution by the Company, whether or not also executed by the Rights Agent. Section 21. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. Section 22. Benefits of this Agreement. Nothing in this Agreement shall be construed to give to any Person other than the Company, the Rights Agent and the registered holders of the Right Certificates any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders of the Right Certificates. Section 23. Plan and Rights Terms Exhibit. This Agreement is entered into pursuant to the Plan and the Rights Terms Exhibit. Should any provision of this Agreement be inconsistent with a provision of the Plan or the Rights Terms Exhibit, the terms and conditions of the Plan or the Rights Terms Exhibit, as applicable, shall control; provided, however, that (i) in the event of an inconsistency between the Plan and the Rights Terms Exhibit with respect to a provision of this Agreement, the Rights Terms Exhibit shall control, and (ii) nothing in this Section 23 shall impact provisions of this Agreement that supplement provisions of the Plan or the Rights Terms Exhibit but are not inconsistent therewith. Section 24. Tax Reporting; Withholding. (a) On or before January 31st of the year following each year in which a holder of a Right or Rights receives any Rights Distribution hereunder, the Rights Agent shall prepare and mail to each such holder, unless such holder has provided the Rights Agent with a valid, properly completed Internal Revenue Service Form W-8BEN, W-8ECI, W-8EXP or W-8IMY (each, a "Form W-8"), as applicable, in accordance with United States Treasury Regulations (the "Treasury Regulations") promulgated under the Internal Revenue Code of 1986, as amended (the "Code"), an appropriate Form 1099 reporting the distribution(s) as of the year of payment, in accordance with the Code and the Treasury Regulations. The Rights Agent shall also prepare and file copies of such Forms 1099 by magnetic tape with the Internal Revenue Service on or before February 28th of the year following the distribution(s), in accordance with the Code and the Treasury Regulations. (b) If the Rights Agent has not received a valid, properly completed Internal Revenue Service Form W-9 (or substitute Form W-9) or a valid, properly completed Form W-8 as applicable, from a holder of a Right or Rights prior to making any payment or distribution to such holder hereunder, the Rights Agent shall deduct and withhold the appropriate withholding tax from any payment made to such holder pursuant to the Code and the Treasury Regulations, and shall timely remit any amount withheld to the Internal Revenue Service or other appropriate governmental authority or authorized financial institution in accordance with the Code and the Treasury Regulations. (c) Should any issue arise regarding federal income tax reporting or withholding, the Rights Agent shall be entitled, in its sole discretion, to refrain from taking any action, and shall be fully protected and shall not be liable in any way to the Company or any other Person or entity for refraining from taking such action, unless the Rights Agent receives written instructions signed by the Company which eliminate such issue to the reasonable satisfaction of the Rights Agent. Such action may be subject to additional fees. Section 25. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Section 26. Governing Law. This Agreement and each Right Certificate issued hereunder shall be deemed to be a contract made under the laws of the State of Delaware and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State; provided, however, that all provisions regarding the rights, duties and obligations of the Rights Agent shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed entirely within such State.. Section 27. Counterparts. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. Section 28. Descriptive Headings. Descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. IN WITNESS WHEREOF, the parties hereto have caused this Rights Agent Agreement to be duly executed and their respective corporate seals to be hereunder affixed and attested, all as of the day and year first above written. Attest: COMDISCO HOLDING COMPANY, INC. /s/ Gina M. Andreatti By: /s/ Ronald C. Mishler - --------------------- -------------------------------- Name: Ronald C. Mishler Title: Chief Executive Officer Attest: MELLON INVESTOR SERVICES LLC /s/ Ana M. Garcia By: /s/ Editha Paras - ------------------- -------------------------------- Name: Editha Paras Title: Vice President Exhibit A --------- Comdisco Contingent Equity Distribution Agreement Exhibit C-2 to Plan Definitions. - ------------ Company means Reorganized Comdisco. Creditor Securities means Creditor Shares, PIK Notes and Senior Notes, including any notes or securities issued by the Company with respect thereto pursuant to the accrual of interest or any stock split, stock dividend, recapitalization or similar transaction. Creditor Shares means New Common Shares issued to holders of Allowed Claims in Class C-4 pursuant to Section 5.1(d)(v) of the Plan and any securities of the Company issued with respect thereto pursuant to a stock split, stock dividend, recapitalization or similar transaction. Distributions to Creditors means, at any time, the sum of any and all cash or other property (other than Creditor Securities) distributed to holders of Allowed Claims in Class C-4 in respect of such Allowed Claims, including without limitation (i) the Net Available Comdisco Cash actually distributed to holders of Allowed Claims in Class C-4 pursuant to Section 5.1(d)(i) of the Plan, (ii) cash payments of principal, interest and premiums actually made in respect of the New Senior Notes and the New PIK Notes issued to holders of Allowed Claims in Class C-4, (iii) distributions of cash actually made to holders of Allowed Claims in Class C-4 from the proceeds of Trust Assets, (iv) distributions of cash or property in kind (other than Creditor Securities) actually made in respect of Creditor Securities, (specifically excluding therefrom any distributions made in respect of New Common Shares issued to holders of Claims or Interests in Class C-5A, C-5B, or to any other person or entity, including any securities issued by the Company or its subsidiary Affiliates with respect thereto pursuant to a stock split, stock dividend, recapitalization or similar transaction), plus (v) if, but only if, a Liquidity Event has occurred, the value of the consideration received or, if applicable, receivable by (or deemed to be received or receivable by), the holders of Creditor Shares in exchange for such Creditor Shares. No party to a Liquidity Event may assume any obligations to make, or otherwise make, payments under a Creditor Security that is not a Creditor Share (e.g. the New Senior Notes and the New PIK Notes) without also assuming obligations to make ongoing distributions under the Rights as if such successor was a party to the Plan. For the avoidance of doubt, any amounts held in the Disputed Claims Reserve shall not constitute a Distribution to Creditors unless and until distributed to the holder of an Allowed Claim. In calculating the nominal value of distributions of property in kind received in respect of Creditor Securities, the same nominal value as is used by the Company for purposes of calculating the returns and upside sharing under the Management Incentive Plan, as determined by the Board of Directors of the Company, shall be used and shall be conclusive of the value of such distributions. In calculating the value of Creditor Shares in respect of a Liquidity Event, such Creditor Shares shall be given the value ascribed to them in connection with a merger or sale of the Company, or if no merger or sale is occurring, shall be given a value equal to the average closing price of the Creditor Shares during the twenty (20) trading days immediately preceding the occurrence of such Liquidity Event. Present Value of Distributions to Creditors means, at any time, the present value of Distributions to Creditors discounted on a per annum basis from the date such distribution was made to the Effective Date using the per annum discount rate set forth in the footnotes on the last page of Appendix E to the Disclosure Statement with respect to the Plan and applicable to the sources of cash or other property comprising each distribution, except that the value of Creditor Shares that are includable in the case of a Liquidity Event as a Distribution to Creditors pursuant to clause (v) of the definition of Distributions to Creditors shall be discounted from the date the Liquidity Event occurs to the Effective Date at a per annum discount rate equal to 11.92%. In calculating the Present Value of Distributions to Creditors, the same categories of sources of distributed cash or property shall be used as are used in calculating the present value of returns and upside sharing under the Management Incentive Plan. Capitalized terms otherwise used herein shall have the meaning given them in the First Amended Joint Plan of Reorganization of Comdisco, Inc. and Its Affiliated Debtors, as amended and confirmed (the "Plan"). 1. Rights. At the Effective Date, the Company shall distribute to holders of Allowed Comdisco Interests in Class C-5A and holders of Allowed Subordinated Claims in Class C-5B, in accordance with the Plan, freely transferable rights (the "Rights"). The Rights will require the Company, after the Present Value of Distributions to Creditors equals or exceeds 85% of the amount of Allowed Claims in Class C-4, at the election of the Company to either (a) issue to the holders of Rights the appropriate percentage of New Common Shares or (b) pay to the holders of Rights the applicable amounts of cash, or any combination of (a) and (b), based upon the then-existing Present Value of Distributions to Creditors in accordance with the table below; provided, however, that the Company will be required only to issue New Common Shares pursuant to clause (a) above and not have the right to elect to distribute cash if such election to distribute cash would preclude the tradeability of the Rights (as contemplated by Section 4 below of this Exhibit C-2). At the time Distributions to Creditors reach a "Recovery Threshold" set forth below, the Company shall elect (subject to the foregoing caveat regarding tradeability) the form of consideration to be issued to holders of Rights (New Common Shares or distributions of cash, or a specified combination of the two), which election shall apply to the form of consideration to be issued to holders of Rights until the next higher Recovery Threshold is reached, at which time the Company may make a new election applicable to the form of future consideration to be issued to holders of Rights until the next Recovery Threshold is reached. o After the Present Value of Distributions to Creditors equals or exceeds 85% of the amount of Allowed Claims in Class C-4 (the "85% Recovery Threshold"), the holders of Rights shall be entitled to receive, at the Company's election, either New Common Shares aggregating 3% of the total number of Creditor Shares then issued and outstanding (including any shares held in the Disputed Claims Reserve), or cash equal to 3% of all amounts constituting Distributions to Creditors in excess of such 85% Recovery Threshold, when and as such Distributions to Creditors are made, or in the case of a Liquidity Event, when such Liquidity Event occurs; or any such combination of New Common Shares and cash distributions. o After the Present Value of Distributions to Creditors equals or exceeds 91% of the amount of Allowed Claims in Class C-4 (the "91% Recovery Threshold"), the holders of Rights shall be entitled to receive, at the Company's election, either New Common Shares aggregating 9% (i.e., an additional 6%) of the total number of Creditor Shares issued and outstanding (including any shares held in the Disputed Claims Reserve), or cash equal to 9% of all Distributions to Creditors in excess of such 91% Recovery Threshold, when and as such Distributions to Creditors are made, or in the case of a Liquidity Event, when such Liquidity Event occurs; or any such combination of New Common Shares and cash distributions. o After the Present Value of Distributions to Creditors equals or exceeds 95% of the amount of Allowed Claims in Class C-4 (the 95% Recovery Threshold"), the holders of Rights shall be entitled to receive, at the Company's election, either New Common Shares aggregating 21% (i.e., an additional 12%) of the total number of Creditor Shares issued and outstanding (including any shares held in the Disputed Claims Reserve), or cash equal to 21% of all Distributions to Creditors in excess of such 95% Recovery Threshold, when and as such Distributions to Creditors are made, or in the case of a Liquidity Event, when such Liquidity Event occurs; or any such combination of New Common Shares and cash distributions. o After the Present Value of Distributions to Creditors equals or exceeds 100% of the amount of Allowed Claims in Class C-4 (the "100% Recovery Threshold"), the holders of Rights shall be entitled to receive, at the Company's election, either New Common Shares aggregating 37% (i.e., an additional 16%) of the total number of Creditor Shares issued and outstanding (including any shares held in the Disputed Claims Reserve), or cash equal to 37% of all Distributions to Creditors in excess of such 100% Recovery, when and as such Distributions to Creditors are made, or in the case of a Liquidity Event, when such Liquidity Event occurs; or any such combination of New Common Shares and cash distributions. In consideration for the Rights, the holders of Rights agree to be bound and limited by the purposes of the Company as set forth in the Certificate of Incorporation and By-laws. Regardless of the form of the Right, prior to the issuance of New Common Shares to the holders of Rights, a Rights holder shall have no rights as a stockholder. Except to assert in the Bankruptcy Court (or, if the Bankruptcy Court no longer has jurisdiction, in any court of competent jurisdiction) (i) enforcement of their rights under the Plan or (ii) claims based upon fraud or other willful misconduct, the holders of Rights shall have no right or standing to, and agree not to, institute suit or make any claim against the Company or its directors or officers arising out of the Rights or the related Plan provisions (a) so long as any New Senior Notes or any New PIK Notes are outstanding, without the written consent of the holders of at least two-thirds in amount and one-half in number of the outstanding New Senior Notes and New PIK Notes, and (b) after the New Senior Notes and the New PIK Notes have been fully paid and discharged, without the consent of the holders of two-thirds of the New Common Shares. The consent of a majority in amount of each of the New Senior Notes and the New PIK Notes, and a majority of the issued and outstanding New Common Shares, as applicable, shall be required to conduct such a vote. The holders of Rights hereby acknowledge and agree that holders of New Senior Notes, New PIK Notes, and New Common Shares shall have and owe no duties whatsoever, whether under the Plan, in contract, by statute, by case law, in equity or otherwise, to the holders of Rights to cause any vote to be taken or to consent to the institution or making of any claim or lawsuit and may act solely in their own self-interest with respect to all such matters. Nothing herein shall be construed to give a holder of Rights any right or standing that a Rights holder does not otherwise have under applicable law to assert claims based upon fraud or other willful misconduct, and nothing herein shall constitute an agreement or admission that a holder of Rights has standing or is entitled to assert such claims under applicable law. 2. Liquidity Events. Liquidity Events shall consist of: (i) consummation of a merger; (ii) closing of the sale of more than 80% of the issued and outstanding New Common Shares of the Company in a transaction or series of related transactions to a person or a group of persons acting in concert through tender offer or otherwise; or (iii) provided that the New Senior Notes and the New PIK Notes have been fully paid and discharged, if, but only if, the Company's shareholders rescind the first two sentences of Clause THIRD of the Certification of Incorporation*, at any time for a period of twenty (20) consecutive trading days thereafter the Present Value of Distributions to Creditors, based upon the mean average closing price of the Creditor Shares during each of such twenty (20) trading days, equals or exceeds the 85% Recovery Threshold. 3. Early Liquidation. Upon the occurrence prior to one year after the Effective Date of (i) a Liquidity Event under clauses (i) or (ii) of Section 2 above of this Exhibit C-2, or (ii) consummation of the sale of all or substantially all of the assets of the Company in a single transaction or a series of related transactions, in either case that results in a Present Value of Distributions to Creditors that equals or exceeds the 85% Recovery Threshold, the Rights holders in the aggregate shall receive a minimum distribution in cash of Three Million Dollars ($3,000,000). 4. NASDAQ OTC Trading. The Company will use reasonable efforts to have the New Common Shares tradeable on the NASDAQ OTC quotation service (or BBX quotation service when that comes into effect), and to maintain such trading status. The Company will include information regarding the Present Value of Distributions to Creditors in its annual and quarterly reports filed with the Securities and Exchange Commission. _________________ * THIRD: The business purpose of the Corporation is to sell, collect or otherwise reduce to money the assets of the Corporation in the ordinary course in an orderly manner, pay and discharge the Corporation's liabilities and distribute any excess to the Corporation's shareholders in the form of dividends or other distributions. The Corporation shall not be permitted to engage in any activities inconsistent with the foregoing purpose. The Corporation may engage in any lawful transaction of any or all lawful purposes for which corporations may be incorporated under the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the "GCL") to accomplish that business purpose. Exhibit B --------- Form of Right Certificate THIS RIGHT CERTIFICATE IS SUBJECT TO ALL OF THE TERMS, PROVISIONS AND CONDITIONS OF A RIGHTS AGENT AGREEMENT, DATED AUGUST 12, 2002, AND THE FIRST AMENDED JOINT PLAN OF REORGANIZATION OF COMDISCO, INC., AND ITS AFFILIATED DEBTORS, COPIES OF WHICH ARE AVAILABLE UPON WRITTEN REQUEST TO THE COMPANY'S EXECUTIVE OFFICES AT 6111 NORTH RIVER ROAD, ROSEMONT, ILLINOIS 60018-5159. Certificate No. R-_____ ______ Rights CUSIP No. 200334 11 8 Contingent Distribution Right Certificate COMDISCO HOLDING COMPANY, INC. This certifies that __________________, or registered assigns, is the registered owner of the number of Rights set forth above, each of which entitles the owner thereof, subject to the terms, provisions and conditions of the Rights Agent Agreement, dated as of August 12, 2002 (the "Rights Agent Agreement"), between Comdisco Holding Company, Inc., a Delaware corporation (the "Company"), and Mellon Investor Services LLC (the "Rights Agent"), to receive certain Rights Distributions from the Company, as provided in the Rights Agent Agreement. This Right Certificate is subject to all of the terms, provisions and conditions of the Rights Agent Agreement, which terms, provisions and conditions are hereby incorporated herein by reference and made a part hereof and to which Rights Agent Agreement reference is hereby made for a full description of the rights, limitations of rights, obligations, duties and immunities hereunder of the Rights Agent, the Company and the holders of the Right Certificates. Copies of the Rights Agent Agreement are on file at the principal executive offices of the Company and the offices of the Rights Agent. The Company will mail to the holder of this Right Certificate a copy of the Rights Agent Agreement without charge after receipt of a written request therefor. This Right Certificate, with or without other Right Certificates, upon surrender at the principal office of the Rights Agent, may be exchanged for another Right Certificate or Right Certificates of like tenor and date evidencing Rights entitling the holder receive a like portion of the Rights Distributions as the Rights evidenced by the Right Certificate or Right Certificates surrendered shall have entitled such holder to receive. No fractional New Common Shares will be issued in respect of any Right or Rights evidenced hereby, but in lieu thereof a cash payment will be made, as provided in the Rights Agent Agreement. This Right Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Rights Agent. WITNESS the facsimile signature of the proper officers of the Company and its corporate seal. Dated as of _____________ , _____. Attest: COMDISCO HOLDING COMPANY, INC. ___________________________ By:___________________________ [Title] [Title] Countersigned: Mellon Investor Services LLC, as Rights Agent By: ________________________ Authorized Signature Form of Reverse Side of Contingent Distribution Right Certificate FORM OF ASSIGNMENT ------------------ (To be executed by the registered holder if such holder desires to transfer the Right Certificate.) FOR VALUE RECEIVED _____________________________________________ hereby sells, assigns and transfers unto _____________________________________________ _______________________________________________________________________________ (Please print name and address of transferee) this Right Certificate, together with all right, title and interest therein, and does hereby irrevocably constitute and appoint ____ , Attorney, to transfer the within Right Certificate on the books of the within-named Company, with full power of substitution. Dated: ________________, ____ ___________________________ Signature Signature Guaranteed: Signatures must be guaranteed by an eligible guarantor institution (a bank, stockbroker, savings and loan association or credit union with membership in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15 of the Securities Exchange Act of 1934. ============================================================================== NOTICE ------ The signature in the foregoing Form of Assignment must conform to the name as written upon the face of this Right Certificate in every particular, without alteration or enlargement or any change whatsoever. EX-4 10 ch338796.txt EXHIBIT 4.6 - PLEDGE AGREEMENT EXHIBIT 4.6 PLEDGE AGREEMENT THIS PLEDGE AGREEMENT (as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms hereof, this "Pledge Agreement") is made and entered into as of August 12, 2002 by COMDISCO HOLDING COMPANY, INC., a Delaware corporation ("Holding") and COMDISCO, INC. a Delaware corporation ("Comdisco"; Holding and Comdisco are each referred to herein as a "Pledgor" and, collectively, as the "Pledgors"), in favor of WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION ("Wells Fargo"), not individually but in its capacity as collateral agent hereunder (in such capacity, together with its successors, the "Collateral Agent") for the benefit of (i) Wells Fargo, not individually but in its capacity as trustee (in such capacity, together with its successors, the "Senior Indenture Trustee") for the holders (the "Senior Holders") of the Senior Notes (as defined herein), and (ii) Wells Fargo, not individually but in its capacity as trustee (in such capacity, together with its successors, the "Subordinated Indenture Trustee") for the holders (the "Subordinated Holders", and together with the Senior Holders, the "Holders") of the Subordinated Notes (as defined herein). W I T N E S S E T H : WHEREAS, (i) each Pledgor and the Senior Indenture Trustee have entered into that certain Indenture, dated as of August 12, 2002 (as amended, amended and restated, supplemented or otherwise modified from time to time, the "Senior Indenture"), pursuant to which the Pledgors are jointly and severally issuing on the date hereof $400,000,000 in aggregate principal amount of their Variable Rate Senior Secured Notes due 2003 (the "Senior Notes") and (ii) each Pledgor and the Subordinated Indenture Trustee have entered into that certain Indenture, dated as of August 12, 2002 (as amended, amended and restated, supplemented or otherwise modified from time to time, the "Subordinated Indenture", and together with the Senior Indenture, the "Indentures"), pursuant to which the Pledgors are jointly and severally issuing on the date hereof $650,000,000 in aggregate principal amount of their 11% Subordinated Secured Notes due 2005 (the "Subordinated Notes", and together with the Senior Notes, the "Notes"); WHEREAS, each Pledgor is the legal and beneficial owner of the outstanding shares of Capital Stock and other Equity Interests set forth opposite its name on Schedule I hereto (the "Pledged Equity") of their Domestic Subsidiaries listed thereon (each such Domestic Subsidiary, in its capacity as an issuer of a portion of the Pledged Equity being an "Issuer"); and WHEREAS, to secure the indebtedness and other obligations of the Pledgors to the Collateral Agent hereunder and to the Senior Indenture Trustee, the Subordinated Indenture Trustee and to Holders under the Indentures and the Notes (all of such indebtedness and other obligations are collectively referred to herein as the "Obligations"), each Pledgor has agreed to pledge to the Collateral Agent, for the benefit of the Secured Parties (as defined below), and grant to the Collateral Agent, for the benefit of the Secured Parties, a security interest in the Collateral (as defined herein). A G R E E M E N T : NOW, THEREFORE, in consideration of the premises contained herein and in order to induce the Holders to purchase the Notes, each Pledgor hereby agrees with the Collateral Agent as follows: SECTION 1. DEFINITIONS. ----------- (a) Capitalized terms used and not otherwise defined herein shall have the meanings given to such terms in the Senior Indenture, and terms defined in the Uniform Commercial Code as in effect from time to time in the State of New York (the "UCC") and not otherwise defined herein shall have the meanings ascribed thereto in the UCC. (b) The following terms shall have the following meanings: "Capital Stock" means any and all shares or other equivalents (however designated) of capital stock, including all common stock and all preferred stock, in the case of a corporation, or partnership interests or other equivalents (however designated) in the case of a partnership, joint venture or limited liability company or common shares of beneficial interest or other equivalents (however designated) in the case of a trust. "Collateral" means, collectively, (i) the Pledged Equity and the certificates, if any, representing the Pledged Equity; (ii) all additional Capital Stock or other Equity Interests of any Domestic Subsidiaries of either Pledgors owned or from time to time acquired by either Pledgor in any manner (other than the Capital Stock or other Equity Interests of the Excluded Subsidiaries until such time, if any, as the Capital Stock and Equity Interests of the Excluded Subsidiaries are required to be pledged to the Collateral Agent hereunder pursuant to Section 6(i) hereof), and the certificates representing any such additional Capital Stock or other Equity Interests (any such additional Capital Stock or other Equity Interests shall constitute part of the Pledged Equity under and as defined in this Pledge Agreement); and (iii) all Proceeds of any of the foregoing, wherever located, whether now owned or existing or hereafter acquired or arising. "Domestic Subsidiaries" means any direct Subsidiary of either Pledgor that is organized under the laws of the United States or any State thereof. "Equity Interests" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Event of Default" means (i) if the Senior Notes are still outstanding, an "Event of Default" as defined in the Senior Indenture and (ii) if the Senior Notes are no longer outstanding, an "Event of Default" as defined in the Subordinated Indenture. "Excluded Subsidiaries" means the collective reference to (i) CDO RM, Inc., a Delaware corporation, (ii) CDO Capital, L.L.C., a Delaware limited liability company and (iii) Technology Receivables L.L.C., a Delaware limited liability company. "Pledge Documents" means, collectively, this Pledge Agreement and each of the stock powers and other instruments and documents pertaining to the Collateral required to be delivered by either Pledgor pursuant to the terms hereof, as the same may be amended, restated or otherwise modified from time to time in accordance with the terms hereof and of the Indentures. "Proceeds" shall have the meaning ascribed thereto in the UCC and shall include, without limitation and in any event, whatever is now or hereafter received by either Pledgor upon the sale, exchange, collection or other disposition of any other Collateral or any proceeds thereof, including, without limitation, all dividends, cash, options, warrants, rights, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Collateral. "Secured Parties" means the collective reference to the Collateral Agent, the Senior Indenture Trustee, for the benefit of the Senior Holders, and the Subordinated Indenture Trustee, for the benefit of the Subordinated Holders "UCC" has the meaning provided in Section 8(a) hereof. SECTION 2. PLEDGE. ------ To secure the full and prompt payment and performance when due of the Obligations, each Pledgor hereby pledges to the Collateral Agent for the benefit of the Secured Parties, and grants to the Collateral Agent for the benefit of the Secured Parties, a continuing security interest in and Lien upon all of such Pledgor's right, title and interest in the Collateral. SECTION 3. DELIVERY OF COLLATERAL. ---------------------- All certificates or instruments representing or evidencing any of the Collateral shall be delivered to and held by or on behalf of the Collateral Agent pursuant hereto and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed, undated stock powers or other instruments of transfer or assignment in blank, all in form and substance satisfactory to the Collateral Agent. The Collateral Agent is hereby authorized to file UCC financing statements describing the Collateral in those jurisdictions necessary to perfect its security interest therein. SECTION 4. REPRESENTATIONS AND WARRANTIES. ------------------------------ Each Pledgor hereby represents and warrants that: (a) Due Authorization. The execution, delivery and performance by such Pledgor of the Pledge Documents have been duly authorized by all necessary corporate action of each Pledgor, and each of the Pledge Documents to which it is a party has been duly executed and delivered such Pledgor. (b) Enforceability. Each of the Pledge Documents to which it is a party constitutes a legal, valid and binding obligation of such Pledgor, enforceable against such Pledgor in accordance with its terms, except as enforceability may be limited by the effect of applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally or the application of equitable principles. (c) No Violation; No Consents. The execution, delivery and performance of the Pledge Documents by each Pledgor party thereto will not violate, conflict with or constitute a breach of any of the terms or provisions of, or a default under (or an event that, with notice or the lapse of time, or both, would constitute a default), or require consent under, or result in the imposition of a Lien on any properties of either Pledgor (except for the security interest created by this Pledge Agreement) or an acceleration of indebtedness pursuant to: (i) either Pledgor's charter or by-laws, (ii) any bond, debenture, note, indenture, mortgage, deed of trust or other agreement or instrument to which either Pledgor is a party or by which either of them or their property is or may be bound, (iii) any statute, rule or regulation applicable to either Pledgor or any of their assets or properties, or (iv) any judgment, order or decree of any court or governmental agency or authority having jurisdiction over either Pledgor or any of their respective assets or properties. No consent, approval, authorization or other action by, or order of, or filing, registration, qualification, license or permit of or with, any court or governmental agency, body or administrative agency is required either (i) for the pledge by the Pledgors of the Collateral pursuant to this Pledge Agreement or for the execution, delivery and performance of the Pledge Documents by the Pledgors or (ii) for the exercise by the Collateral Agent of the voting and other rights provided for in this Pledge Agreement or the remedies in respect of the Collateral pursuant to this Pledge Agreement (except for the Plan and except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally). No consents or waivers from any other person or entity are required for the execution, delivery and performance by either Pledgor of the Pledge Documents other than such consents and waivers as have been obtained. (d) Pledged Equity. The Pledged Equity has been duly authorized and validly issued and are fully paid and non-assessable. (e) Security Interest. Each Pledgor is (or, to the extent Collateral is acquired after the date hereof, will be) the sole legal, record and beneficial owner of the Pledge Shares identified as owned by it on Schedule I hereto. Upon delivery to the Collateral Agent of the certificates, if any, evidencing the Pledged Equity, together with duly executed, undated stock powers or other instruments of transfer or assignment in blank and the filing of the UCC financing statements contemplated in Section 2 hereof, the pledge of the Collateral pursuant to this Pledge Agreement will create a valid and perfected first priority security interest in the Collateral in favor of the Collateral Agent, for the benefit of the Trustee, the Senior Holders and the Subordinated Holders, securing the payment of the Obligations. As of the date hereof, the Trustee's security interest in the Collateral is free and clear of any Lien or claims of any person or entity except for Liens permitted under the Senior Indenture and the Subordinated Indenture (collectively, "Permitted Liens") and the security interest created by this Pledge Agreement. (f) Litigation. No litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the knowledge of either Pledgor, threatened by or against either Pledgor or against any of its properties or revenues with respect to any of the Pledge Documents or any of the transactions contemplated thereby. (g) Capital Stock. The Capital Stock component of the Pledged Equity constitute all of the authorized, issued and outstanding Capital Stock of the respective Issuers beneficially owned by the Pledgors. (h) No Prohibition. The pledge of the Collateral pursuant to the Pledge Documents is not prohibited by any applicable law or governmental regulation, release, interpretation or opinion of the Board of Governors of the Federal Reserve System or other regulatory agency (including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System). SECTION 5. VOTING RIGHTS; DIVIDENDS; ETC. ------------------------------ (a) So long as no Event of Default shall have occurred and be continuing, the Pledgors shall be entitled to exercise any and all voting and other consensual rights pertaining to the Pledged Equity or any part thereof for any purpose not inconsistent with the terms of this Pledge Agreement or the Indentures. (b) So long as no Event of Default shall have occurred and be continuing, and subject to the other terms and conditions hereof, the Pledgors shall be entitled to receive, and to utilize free and clear of the Lien of this Pledge Agreement, all dividends and distributions paid from time to time in respect of the Pledged Equity as permitted by the Indenture other than dividends and distributions in the form of additional shares of capital stock of the respective Issuers which shall be Collateral pursuant to Section 6(h) hereof. (c) The Trustee shall execute and deliver (or cause to be executed and delivered) to the Pledgors all such proxies and other instruments as the Pledgors may reasonably request for the purpose of enabling either Pledgor to exercise the voting and other rights that it is entitled to exercise pursuant to Sections 5(a) and (b) above. (d) Upon the occurrence and during the continuance of an Event of Default, upon written notice to the Pledgors from the Collateral Agent to such effect, all rights of the Pledgors to exercise the voting and other consensual rights that they would otherwise be entitled to exercise pursuant to Section 5(a) shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall thereupon have the sole right to exercise such voting and other consensual rights so long as an Event of Default is continuing. (e) Upon the occurrence and during the continuance of an Event of Default and the giving by the Collateral Agent of the notice contemplated under Section 5(d) hereof, the Pledgors shall execute and deliver (or cause to be executed and delivered) to the Collateral Agent all such proxies and other instruments as the Collateral Agent may reasonably request for the purpose of enabling the Collateral Agent to exercise the voting and other rights that it is entitled to exercise pursuant to Section 5(d) hereof. (f) All dividends or other distributions that are received by the Pledgors with respect to the Pledge Shares during the continuance of an Event of Default or otherwise contrary to the provisions of this Section 5 shall be received in trust for the benefit of the Collateral Agent and shall be segregated from the other property or funds of the Pledgors and be forthwith delivered to the Collateral Agent as Collateral in the same form as so received (with any necessary endorsements). SECTION 6. COVENANTS. --------- Each Pledgor covenants and agrees with the Collateral Agent from and after the date of this Pledge Agreement until all principal and interest on the Notes and all other Obligations that are then due and payable have been paid in full: (a) Claims against Collateral. The Pledgors will defend the Collateral against all Liens, claims and demands of all persons and entities at any time claiming any interest therein. (b) Further Assurances. Promptly upon request by the Collateral Agent, each Pledgor will execute and deliver or cause to be executed and delivered, or use its best efforts to procure, all stock powers, proxies, assignments, instruments and other documents, all in form and substance reasonably satisfactory to the Collateral Agent, deliver any instruments to the Collateral Agent and take any other actions (including filing any financing statement covering the Collateral or any portion thereof) that are necessary or desirable to perfect, continue the perfection and priority of the Collateral Agent's security interest in the Collateral, protect the Collateral against the rights, claims, or interests of third persons or entities (other than holders of Permitted Liens) or to effect the purposes of the Pledge Documents. Each Pledgor also hereby authorizes the Collateral Agent to file any financing or continuation statements with respect to the Collateral describing the Collateral. Such financing statements may describe the Collateral in the same manner as described herein or may contain an indication or description of the collateral that describes such property in any other manner that the Collateral Agent may determine is necessary, advisable or prudent to ensure the perfection of the security interest in the Collateral. The Pledgors jointly and severally agree to pay all reasonable costs incurred in connection with any of the foregoing. (c) No Liens. Without the prior written consent of the Collateral Agent, no Pledgor will create or permit to exist any Lien upon any of the Collateral or any portion thereof, except for Permitted Liens. (d) Disposition of Collateral. The Pledgors will not sell, transfer, assign or otherwise dispose of, or grant any option or warrant with respect to, any of the Collateral, except as permitted by the Indentures. If the Collateral, or any part thereof, is sold, transferred, assigned, exchanged or otherwise disposed of in violation of these provisions, the security interest of the Collateral Agent shall continue in such Collateral or part thereof notwithstanding such sale, transfer, assignment, exchange or other disposition. In addition to its rights under Section 6(f) below, following such a sale, transfer, assignment, exchange or other disposition, the Collateral Agent may elect to have either Pledgor transfer such proceeds to the Collateral Agent in kind. (e) No Restriction on Sales. Except as permitted by the Indentures, neither Pledgor will enter into any agreement or understanding that would restrict the Collateral Agent's rights or remedies hereunder, including, without limitation, the Collateral Agent's right or ability to sell or otherwise dispose of the Collateral or any part thereof after the occurrence and during the continuance of an Event of Default. (f) Rights of Collateral Agent. Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall have the right at any time to make any payments and do any other acts the Collateral Agent may deem necessary to protect its security interests in the Collateral, including, without limitation, the rights to pay, purchase, contest or compromise any Lien which, in the judgment of the Collateral Agent, may be prior to or superior to the security interests granted hereunder, and challenge any action or proceeding purporting to affect its security interests in, and/or the value of, the Collateral. Each Pledgor hereby jointly and severally agrees to reimburse the Collateral Agent for all reasonable and documented payments made and expenses incurred under the Pledge Documents including the reasonable fees, expenses and disbursements of attorneys and paralegals (including, the allocated costs of inside counsel) acting for the Collateral Agent, including any of the foregoing payments under or acts taken to perfect or protect its security interests in the Collateral, which amounts shall be secured under the Pledge Documents, and agrees that it shall be bound by any payment made or act taken by the Collateral Agent hereunder. The Collateral Agent shall have no obligation to make any of the foregoing payments or perform any of the foregoing acts. (g) No Merger. Except as permitted by the Indenture, each Pledgor agrees that it will not permit any Issuer to merge or consolidate, unless all outstanding capital stock of the surviving corporation is, upon such merger or consolidation, pledged hereunder to the Collateral Agent. (h) Additional Collateral. Each Pledgor agrees that immediately upon becoming the beneficial owner of any additional Capital Stock or other Equity Interests of any Domestic Subsidiaries of such Pledgor (other than the Capital Stock or other Equity Interests of the Excluded Subsidiaries until such time, if any, as the Capital Stock and Equity Interests of the Excluded Subsidiaries are required to be pledged to the Collateral Agent hereunder pursuant to Section 6(i) hereof), it will pledge and deliver to the Collateral Agent for its benefit and the benefit of the Senior Holders and the Subordinated Holders any certificates or instruments representing such additional Capital Stock or other Equity Interests (together with duly executed stock powers or other instruments of transfer or assignment in blank, all in form and substance satisfactory to the Collateral Agent), and will take such other actions as the Collateral Agent may reasonably request to grant or confirm, for the Collateral Agent's benefit and the benefit of the Senior Holders and the Subordinated Holders, a continuing first priority security interest in such Capital Stock or other Equity Interests. (i) Excluded Subsidiaries. (A) If at any time and from time to time after the date hereof: (1) all of the existing indebtedness of CDO Capital, L.L.C. is paid in full, Pledgors shall promptly either (i) cause the Capital Stock or other Equity Interests in the CDO Capital, L.L.C. and CDO RM, Inc. owned by either Pledgor to be pledged to the Collateral Agent as Collateral hereunder and/or (ii) cause substantially all of the assets of CDO Capital, L.L.C. and CDO RM, Inc. to be owned by one or both Pledgors, and (2) all of the existing indebtedness of Technology Receivables, L.L.C. is paid in full, Pledgors shall promptly either (i) cause the Capital Stock or other Equity Interests in the Technology Receivables, L.L.C. owned by either Pledgor to be pledged to the Collateral Agent as Collateral hereunder and/or (ii) cause substantially all of the assets of Technology Receivables, L.L.C. to be owned by one or both Pledgors. (B) The Pledgors may cause the assets of the Excluded Subsidiaries to be owned by the Pledgors (as required by clauses (1) and (2), above) by means of the dissolution or liquidation of such Excluded Subsidiaries, merger into a Pledgor, asset transfers to a Pledgor or recapitalization or other transaction(s). (C) Each Pledgor represents and warrants to the Collateral Agent that as of the date hereof (x) the principal amount of indebtedness owed by the Excluded Subsidiaries in the aggregate is not greater than $125,000,000 and (y) CDO RM, Inc. owns no assets and engages in no operations other than the ownership of approximately 1.7% of the limited liability interests in CDO Capital, L.L.C. and engaging in management functions relating to CDO Capital, L.L.C. (D) Each Pledgor agrees that it will not transfer any assets to any Excluded Subsidiary until such time, if any, as it has caused the Capital Stock or Equity Interests of such Excluded Subsidiary to be pledged hereunder as contemplated under Section 6(i)(A) hereof. (j) Notice of Liens. Each Pledgor will advise the Collateral Agent promptly of any Lien on, or claim asserted against, any of the Collateral. (k) Taxes. Each Pledgor shall pay all taxes, assessments and levies as and to the extent required by Section 4.05 of the Indentures; provided that the Pledgors shall in any event pay such taxes, assessments or levies not later than five days prior to the date of any proposed sale under any judgment, writ or warrant of attachment with regard to any Collateral entered or filed against any Pledgor as a result of the failure to make such payment. SECTION 7. SUBSEQUENT CHANGES AFFECTING COLLATERAL. --------------------------------------- Each Pledgor represents to the Collateral Agent that such Pledgor has made its own arrangements for keeping informed of changes or potential changes affecting the Collateral (including, but not limited to, rights to convert, rights to subscribe, payment of dividends, reorganization or other exchanges, tender offers and voting rights), and each Pledgor agrees that neither the Collateral Agent, the Senior Holders nor the Subordinated Holders shall have any responsibility or liability for informing the Pledgors of any such changes or potential changes or for taking any action or omitting to take any action with respect thereto. Except as permitted by the Indentures, each Pledgor covenants that it will not, without the prior written consent of the Collateral Agent, vote to enable, or take any other action to permit, any Issuer to issue any capital stock to any Person other than the Pledgors. SECTION 8. REMEDIES UPON DEFAULT. --------------------- (a) If any Event of Default shall have occurred and be continuing, the Collateral Agent shall have, subject to Section 8(d) hereof and in addition to all other rights given by law or by the Pledge Documents and the Indentures, all of the rights and remedies with respect to the Collateral of a secured party under the applicable Uniform Commercial Code (the "UCC") in effect at that time. Subject to Section 8(d) hereof, the Collateral Agent may, without notice and at its option, transfer or register, and the Pledgors shall register or cause to be registered upon request therefor by the Collateral Agent, the Collateral or any part thereof on the books of the Issuers into the name of the Collateral Agent or the Collateral Agent's nominee(s). In addition, subject to Section 8(d) hereof, with respect to any Collateral that shall then be in or shall thereafter come into the possession or custody of the Collateral Agent, the Collateral Agent may sell or cause the same to be sold at any broker's board or at public or private sale, in one or more sales or lots, at such price or prices as the Collateral Agent may deem best, for cash or on credit or for future delivery, without assumption of any credit risk. The purchaser of any or all Collateral so sold shall thereafter hold the same absolutely, free from any claim, encumbrance or right of any kind whatsoever. Unless any of the Collateral threatens to decline speedily in value or is or becomes of a type sold on a recognized market, the Collateral Agent will give the Pledgors reasonable notice of the time and place of any public sale thereof, or of the time after which any private sale or other intended disposition is to be made. Any requirements of reasonable notice shall be met if such notice is mailed to the Pledgors as provided in Section 12(a) herein, at least thirty (30) days before the time of the sale or disposition. The Collateral Agent or any Holder may, in its own name or in the name of a designee or nominee, buy any of the Collateral at any public sale and, if permitted by applicable law, at any private sale. All expenses (including court costs and reasonable attorneys' fees, expenses and disbursements) of, or incident to, the enforcement of any of the provisions hereof shall be recoverable from the proceeds of the sale or other disposition of the Collateral. (b) In view of the fact that federal and state securities laws may impose certain restrictions on the method by which a sale of certain of the Collateral may be effected after an Event of Default, each Pledgor agrees that upon the occurrence and during the continuance of an Event of Default, subject to Section 8(d) hereof, the Collateral Agent may, from time to time, attempt to sell all or any part of the Collateral by means of a private placement, restricting the prospective purchasers to those who will represent and agree that they are purchasing for investment only and not for distribution. In so doing, the Collateral Agent may solicit offers to buy the Collateral, or any part of it, for cash, from a limited number of investors who might be interested in purchasing the Collateral. Each Pledgor acknowledges and agrees that any such private sale may result in prices and terms less favorable than if such sale were a public sale and, notwithstanding such circumstances, agrees that any such private sale shall be deemed to have been made in a commercially reasonable manner. The Collateral Agent shall be under no obligation to delay a sale of any of the Collateral for the period of time necessary to permit the Pledgors to cause the Issuer to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if the Pledgors could cause the Issuer to do so. (c) Each Pledgor further agrees to use its best efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Collateral pursuant to this Section 8 valid and binding and in compliance with any and all other applicable requirements of law. Each Pledgor further agrees that a breach of any of the covenants contained in this Section 8 will cause irreparable injury to the Collateral Agent and the Holders, that the Collateral Agent and the Holders have no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 8 shall be specifically enforceable against the Pledgors by the Collateral Agent, and each Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred and is continuing. (d) Notwithstanding anything to the contrary contained in this Pledge Agreement, the Collateral Agent shall not: (i) if the Senior Notes are still outstanding, be required to take any action with respect to the foreclosure upon or disposition of the Collateral until and unless (A) any Event of Default has occurred and is continuing, and (B) the Collateral Agent has received, and is acting pursuant to the authority granted to it under, written instructions from Senior Holders holding of record at least a majority of the outstanding principal amount of the Senior Notes; and (ii) if the Senior Notes are no longer outstanding, be required to take any action with respect to the foreclosure upon or disposition of the Collateral until and unless (A) any Event of Default (as defined in the Subordinated Indenture) has occurred and is continuing, and (B) the Collateral Agent has received, and is acting pursuant to the authority granted to it under, written instructions from Subordinated Holders holding of record at least a majority of the outstanding principal amount of the Subordinated Notes. SECTION 9. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO THE ISSUER. -------------------------------------------------------- Each Pledgor hereby authorizes and instructs each Issuer to comply with any instruction received by such Issuer from the Collateral Agent that (i) states that an Event of Default has occurred and is continuing and (ii) is otherwise in accordance with the terms of this Pledge Agreement, without any other or further instructions from either Pledgor, and each Pledgor agrees that each Issuer shall be fully protected in so complying. SECTION 10. COLLATERAL ACCOUNT; DISTRIBUTIONS. ---------------------------------- (a) On the Effective Date there shall be established and, at all times thereafter until this Pledge Agreement shall have terminated, there shall be maintained with the Collateral Agent at the office of the Collateral Agent's corporate trust division an account which shall be entitled the "Comdisco Collateral Account" (the "Collateral Account"). All moneys which are required by this Pledge Agreement to be delivered to the Collateral Agent while an Event of Default has occurred and is continuing and all proceeds of Sales of Collateral shall be deposited in the Collateral Account and held by the Collateral Agent as Collateral and applied in accordance with the terms of this Pledge Agreement. Upon the waiver or cure of any such Event(s) of Default, the Collateral Agent shall cause all funds on deposit in the Collateral Account (other than amounts representing Proceeds of Collateral sold or otherwise disposed of by the Collateral Agent pursuant to the terms hereof) to be forthwith paid over to the Pledgors. (b) The Collateral Agent shall invest and reinvest moneys on deposit in the Collateral Account at any time in any of the following (provided, in each case, that the Collateral Agent shall have a perfected, first priority security interest therein): (i) marketable obligations of the United States having a maturity of not more than three months from the date of acquisition; (ii) marketable obligations directly and fully guaranteed by the United States having a maturity of not more than three months from the date of acquisition; (iii) bankers' acceptances and certificates of deposit and other interest-bearing obligations issued by Citibank, N.A., Wells Fargo Bank Minnesota, National Association or any other bank organized under the laws of the United States or any state thereof with capital, surplus and undivided profits aggregating at least $100,000,000, in each case having a maturity of not more than three months from the date of acquisition; (iv) repurchase obligations with a term of not more than one day for underlying securities of the types described in clauses (i), (ii) and (iii) above entered into with Citibank, N.A., Wells Fargo Bank Minnesota, National Association or any other bank meeting the qualifications specified in clause (iii) above; and (v) commercial paper rated at least A-1 or the equivalent thereof by Standard & Poor's, a division of the McGraw-Hill Companies, or P-1 or the equivalent thereof by Moody's Investors Service, Inc. and maturing within six months after the date of acquisition; provided that unless an Event of Default has occurred and is continuing, the Collateral Agent shall not make any such investment except at the written direction of the Pledgors. All such investments and the interest and income received thereon and the net proceeds realized on the sale or redemption thereof shall be held in the Collateral Account. (c) All moneys held by the Collateral Account or received by the Collateral Agent shall, to the extent available for distribution (it being understood that the Collateral Agent may liquidate investments prior to maturity in order to make a distribution pursuant to this Section 10(b), be distributed as soon as reasonably practicable by the Collateral Agent in the following order of priority: First: to the Collateral Agent for any unpaid fees and other amounts due to the Collateral Agent hereunder or to the trustees under the Indentures; Second: to the Senior Holders in an amount equal to the unpaid principal amount of, and unpaid interest on, the Senior Notes then due and payable (including, without limitation, by virtue of the mandatory redemption provisions contained in the Senior Indenture), and, if such moneys shall be insufficient to pay such amounts in full, then ratably (without priority of any one over any other) to the Senior Holders in proportion to the unpaid amounts thereof on such date. Third: to the Senior Holders, amounts equal to all other sums which constitute Obligations owed to them that are then due and payable, including without limitation the costs and expenses of the Senior Holders and their representatives which are reimbursable under the terms of the Senior Indenture and which constitute Obligations as of such date, and, if such moneys shall be insufficient to pay such sums in full, then ratably to the Senior Holders in proportion to such sums; Fourth: to the Subordinated Holders in an amount equal to the unpaid principal amount of, and unpaid interest on, the Subordinated Notes then due and payable, (including, without limitation, by virtue of the mandatory redemption provisions contained in the Subordinated Indenture), and, if such moneys shall be insufficient to pay such amounts in full, then ratably (without priority of any one over any other) to the Subordinated Holders in proportion to the unpaid amounts thereof on such date. Fifth: to the Subordinated Holders, amounts equal to all other sums which constitute Obligations owed to them that are then due and payable, including without limitation the costs and expenses of the Subordinated Holders and their representatives which are reimbursable under the terms of the Subordinated Indenture and which constitute Obligations as of such date, and, if such moneys shall be insufficient to pay such sums in full, then ratably to the Subordinated Holders in proportion to such sums; and Sixth: any surplus then remaining shall be paid to the Pledgors or their successors or assigns or to whomsoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct. (d) In making the determinations and allocations required by this Section 10, the Collateral Agent may conclusively rely (i) upon the Senior Indenture Trustee as to the amounts payable with respect to Obligations constituting unpaid principal or interest under the Senior Notes and the Senior Indenture, (ii) upon the Subordinated Indenture Trustee as to the amounts payable with respect to Obligations constituting unpaid principal or interest under the Subordinated Notes and the Subordinated Indenture and (iii) upon information supplied by any Holder or either Pledgor as to any other amounts payable with respect to other Obligations, and the Collateral Agent shall have no liability to any Holder for actions taken in reliance on any such information, provided, that nothing in this sentence shall prevent any Pledgor from contesting any amounts claimed by any Holder in any information so supplied. SECTION 11. CONCERNING THE COLLATERAL AGENT ------------------------------- (a) Appointment of Collateral Agent. The Senior Indenture Trustee, on behalf of the Senior Holders, and the Subordinated Indenture Trustee, on behalf of the Senior Holders, hereby appoint Wells Fargo Bank Minnesota, National Association to act as Collateral Agent pursuant to the terms of this Pledge Agreement and the other Pledge Documents, and the Collateral Agent hereby accepts such appointment. The relationship between the Collateral Agent, the Senior Indenture Trustee, the Subordinated Indenture Trustee and the holders of the Notes is and shall be that of agent and principal only, and nothing contained in this Pledge Agreement, the Indentures, the Notes or the Pledge Documents shall be construed to constitute the Collateral Agent as a trustee for any such holder. (b) Limitations on Responsibility of Collateral Agent. The Collateral Agent shall not be responsible in any manner whatsoever for the correctness of any recitals, statements, representations or warranties contained herein or in any Pledge Document, except for those made by it herein. The Collateral Agent makes no representation as to the value or condition of the Collateral or any part thereof, as to the title of either Pledgor to the Collateral, as to the security afforded by this Pledge Agreement or any other Pledge Document or as to the validity, execution, enforceability, legality or sufficiency of this Pledge Agreement or any Pledge Document, and the Collateral Agent shall incur no liability or responsibility in respect of any such matters. Except as may be expressly provided in any Pledge Document, the Collateral Agent shall not be responsible for insuring the Collateral, for the payment of taxes, charges, assessments or liens upon the Collateral or otherwise as to the maintenance of the Collateral, except as provided in the immediately following sentence when the Collateral Agent has possession of the Collateral. The Collateral Agent shall have no duty to the Pledgors or to the holders of the Notes as to any Collateral in its possession or control or in the possession or control of any agent or nominee of the Collateral Agent or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto, except the duty to accord such of the Collateral as may be in its possession substantially the same care as it accords its own assets and the duty to account for monies received by it. The Collateral Agent shall have no obligations to file any UCC financing statements or UCC continuation statements except at the written direction of the Pledgors and upon receipt of such statements completed and in a proper form for filing provided to the Collateral Agent at least fifteen Business Days in advance of any requested filing date. The Collateral Agent shall not be responsible for the consequences of any oversight or error of judgment whatsoever, except that the Collateral Agent shall be liable for losses due to its willful misconduct or gross negligence. The Collateral Agent shall not be required to ascertain or inquire as to the performance by either Pledgor of any of the covenants or agreements contained herein or in the Indentures, the Notes or the Pledge Documents. Neither the Collateral Agent nor any officer, agent or representative thereof shall be personally liable for any action taken or omitted to be taken by any such person in connection with this Pledge Agreement or any other Pledge Document except for such person's own negligence or willful misconduct. Neither the Collateral Agent nor any officer, agent or representative thereof shall be personally liable for any action taken by any such person in accordance with any written notice given by the Senior Indenture Trustee and/or the Subordinated Indenture Trustee pursuant to the terms of this Pledge Agreement even if, at the time such action is taken by any such person, the Senior Indenture Trustee or the Subordinated Indenture Trustee, as the case may be, is not entitled to give such notice, except where the account officer of the Collateral Agent responsible for the Pledgors' accounts has actual knowledge that the Senior Indenture Trustee or the Subordinated Indenture Trustee is not entitled to give such notice. The Collateral Agent may execute any of the powers granted under this Pledge Agreement or any of the other Pledge Documents and perform any duty hereunder or thereunder either directly or by or through agents or attorneys-in-fact, and shall not be responsible for the misconduct of any agents or attorneys-in-fact selected by it with due care. (c) Rights and Duties of Collateral Agent. (i) Whenever in the performance of its duties under this Pledge Agreement the Collateral Agent shall deem it necessary or desirable that a matter be proved or established with respect to any Person in connection with the taking, suffering or omitting of any action hereunder by the Collateral Agent, such matter may be conclusively deemed to be proved or established by a certificate executed by an officer of such Person, and absent gross negligence or willful misconduct, the Collateral Agent shall have no liability with respect to any action taken, suffered or omitted in reliance thereon. (ii) The Collateral Agent may consult with counsel and, in the absence of bad faith, shall be fully protected in taking any action hereunder in accordance with any advice of such counsel. The Collateral Agent shall have the right but not the obligation at any time to seek instructions concerning the administration of this Pledge Agreement, the duties created hereunder or any of the Collateral from any court of competent jurisdiction. (iii) The Collateral Agent shall be fully protected in relying upon any resolution, statement, certificate, instrument, opinion, report, notice, request, consent, order or other paper or document which it believes to be genuine and to have been signed or presented by the proper party or parties. In the absence of its negligence or willful misconduct the Collateral Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificate or opinions furnished to the Collateral Agent in connection with this Pledge Agreement and the other Pledge Documents. (iv) The Collateral Agent shall not be deemed to have actual, constructive, direct or indirect notice or knowledge of the occurrence of any Event of Default unless and until the Collateral Agent shall have received a written notice of Event of Default. The Collateral Agent shall have no obligation whatsoever either prior to or after receiving such a notice of Event of Default to inquire whether an Event of Default has, in fact, occurred and shall be entitled to rely conclusively, and shall be fully protected in so relying, on any certificate so furnished to it and shall have no obligation, absent written instructions from the Senior Indenture Trustee or the Subordinated Indenture Trustee, to take or omit to take any action with respect to such notice of Event of Default. (v) If the Collateral Agent has been requested by the Senior Indenture Trustee or the Subordinated Indenture Trustee to take any specific action pursuant to any provision of this Pledge Agreement or the other Pledge Documents, the Collateral Agent shall not be under any obligation to exercise any of the rights or powers vested in it by this Pledge Agreement and the other Pledge Documents in the manner so requested unless, if so requested by the Collateral Agent, it shall have been provided indemnity reasonably satisfactory to it against the costs, expenses and liabilities which may be incurred by it in compliance with such request or direction. (vi) If any dispute or disagreement shall arise as to the allocation of any sum of money received by the Collateral Agent hereunder, under the Indentures or under any Pledge Document, the Collateral Agent shall have the right to deliver such sum to a court of competent jurisdiction and therein commence an action for interpleader. (d) Resignation or Replacement of the Collateral Agent. A resignation or removal of the Collateral Agent and appointment of a successor Collateral Agent shall become effective only upon the successor Collateral Agent's acceptance of appointment as provided in this Section 11(d). (i) The Collateral Agent may resign in writing at any time and be discharged from the trust hereby created by so notifying the Pledgors, the Senior Indenture Trustee and the Subordinated Indenture Trustee. The holders of a majority in principal amount of the then outstanding Senior Notes, and after payment in full of the Obligations with respect to the Senior Notes the holders of a majority in principal amount of the then outstanding Subordinated Notes, may remove the Collateral Agent by so notifying the Collateral Agent and the Pledgors in writing. The Pledgors may remove the Collateral Agent if: (A) the Collateral Agent is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Collateral Agent under Title 11, U.S. Code or any similar federal or state law for the relief of debtors; (B) a custodian or public officer takes charge of the Collateral Agent or its property; or (C) the Collateral Agent becomes incapable of acting. (ii) If the Collateral Agent resigns or is removed or if a vacancy exists in the office of Collateral Agent for any reason, the Pledgors shall promptly appoint a successor Collateral Agent. Within one year after the successor Collateral Agent takes office, the holders of a majority in principal amount of the then outstanding Senior Notes, and after payment in full of all Obligations in respect of the Senior Notes the holders of a majority in principal amount of the then outstanding Subordinated Notes, may appoint a successor Collateral Agent to replace the successor Collateral Agent appointed by the Pledgors. (iii) If a successor Collateral Agent does not take office within 60 days after the retiring Collateral Agent resigns or is removed, the retiring Collateral Agent, the Pledgors or the holders of at least 10% in principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Collateral Agent. (iv) A successor Collateral Agent shall deliver a written acceptance of its appointment to the retiring Collateral Agent, the Senior Indenture Trustee, the Subordinated Indenture Trustee and the Pledgors. Thereupon, the resignation or removal of the retiring Collateral Agent shall become effective, and the successor Collateral Agent shall have all the rights, powers and duties of the Collateral Agent under this Pledge Agreement. The successor Collateral Agent shall mail a notice of its succession to the Senior Indenture Trustee and the Subordinated Indenture Trustee. The retiring Collateral Agent shall promptly transfer all property held by it as Collateral Agent to the successor Collateral Agent, provided all sums owing to the Collateral Agent hereunder have been paid. Notwithstanding replacement of the Collateral Agent pursuant to this Section 11(d), the Pledgor's obligations under Section 11(e) hereof shall continue for the benefit of the retiring Collateral Agent, and the Pledgors shall pay to any such replaced or removed Collateral Agent all amounts owed to such replaced or removed Collateral Agent under Section 11(e) hereof upon such replacement or removal. (e) Compensation and Indemnity. (i) The Pledgors jointly and severally agree to pay to the Collateral Agent from time to time such compensation as the Pledgors and the Collateral Agent shall from time to time agree in writing for its acceptance of this Pledge Agreement and services hereunder and under the other Pledge Documents. The Collateral Agent's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Pledgors jointly and severally agree to reimburse the Collateral Agent promptly upon request for all reasonable expenses, disbursements and advances of the Collateral Agent (including the reasonable compensation and the reasonable expenses and disbursements of its agents and counsel). (ii) The Pledgors jointly and severally agree to indemnify the Collateral Agent against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Pledge Agreement and the other Pledge Documents, including the costs and expenses of enforcing this Pledge Agreement and the other Pledge Documents against the Pledgors (including this Section 11(e)) and defending itself against any claim (whether asserted by the Pledgors or any holder of Notes or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense may be attributable to its gross negligence, bad faith or willful misconduct. The Collateral Agent shall notify the Pledgors promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Pledgors shall not relieve the Pledgors of its obligations hereunder. The Pledgors shall defend the claim and the Trustee shall cooperate in the defense. The Trustee may have separate counsel and the Pledgors shall pay the reasonable fees and expenses of such counsel. The Pledgors need not pay for any settlement made without its consent, which consent shall not be unreasonably withheld. (iii) The obligations of the Pledgors under this Section shall survive the termination of this Pledge Agreement and the satisfaction and discharge of the Indentures. (f) Release of Collateral. (i) The Trustee is hereby authorized to release any Collateral pursuant to the provisions of the Indentures and the Pledge Documents. (ii) Whether or not so instructed by the Senior Indenture Trustee and the Subordinated Indenture Trustee, the Collateral Agent may release any Collateral and may provide any release, termination statement or instrument of subordination required by order of a court of competent jurisdiction or otherwise required by applicable law; provided that the Collateral Agent notifies the Pledgors, the Senior Indenture Trustee and the Subordinated Indenture Trustee prior to the release and gives the Pledgor, the Senior Indenture Trustee or the Subordinated Indenture Trustee the opportunity to contest such release within two (2) Business Days. (g) Priority of Rights Against Collateral and Proceeds Thereof. (i) If the Collateral Agent receives any cash amounts in respect of the Collateral (which amounts, under the terms of the Indentures or any of the Pledge Documents, are to be applied to any of the Obligations under the Senior Indenture or the Subordinated Indenture), including, without limitation, any net proceeds received by the Collateral Agent during an insolvency proceeding or in connection with any sale, exchange, destruction, condemnation, or other disposition of any of the Collateral (such net proceeds to be deemed to include any amounts received by the Collateral Agent underss.507(b) of the United States Bankruptcy Code as compensation for a failure of adequate protection in the context of an insolvency proceeding), such cash amounts shall be paid forthwith to the Senior Indenture Trustee and the Subordinated Indenture Trustee to be applied in accordance with the terms and conditions of the Indentures, the Pledge Documents and this Pledge Agreement. (ii) If the Collateral Agent receives any non-cash distributions or proceeds in respect of the Collateral, then, unless the Pledge Documents expressly provide to the contrary, the Collateral Agent shall hold such non-cash distributions and proceeds as Collateral upon the terms of this Pledge Agreement, the Pledge Documents and the Indentures until converted to cash and thereupon distributed in accordance with the provisions of the Indenture, the Pledge Documents and this Pledge Agreement. (h) Recourse of Senior Indenture Trustee and of Subordinated Indenture Trustee to Collateral. The Senior Indenture Trustee and the Subordinated Indenture Trustee (i) shall only have recourse to the Collateral through the Collateral Agent and they shall have no independent recourse to the Collateral and (ii) the Collateral Agent shall have no obligation to take any action, or refrain from taking any action, except upon written instructions from the Senior Indenture Trustee and the Subordinated Indenture Trustee in accordance with the terms of this Pledge Agreement. (i) Acts of Senior Indenture Trustee and of Subordinated Indenture Trustee. Any request, demand, authorization, direction, notice, consent, waiver or other action permitted or required by this Pledge Agreement to be given or taken by the Senior Indenture Trustee or the Subordinated Indenture Trustee, may be and, at the request of the Collateral Agent, shall be embodied in and evidenced by one or more instruments reasonably satisfactory in form to the Collateral Agent and signed by or on behalf of the Senior Indenture Trustee or the Subordinated Indenture Trustee, as the case may be, and, except as otherwise expressly provided in any such instrument, any such action shall become effective when such instrument or instruments shall have been delivered to the Collateral Agent. The instrument or instruments evidencing any action (and the action embodied therein and evidenced thereby) are sometimes referred to herein as an "Act" of the Persons signing such instrument or instruments. The Collateral Agent shall be entitled to rely absolutely upon an Act of the Senior Indenture Trustee or the Subordinated Indenture Trustee, as the case may be, if such Act purports to be taken by or on behalf of the Senior Indenture Trustee or the Subordinated Indenture Trustee, and nothing in this Section 11(i) or elsewhere in this Pledge Agreement shall be construed to require the Senior Indenture Trustee or the Subordinated Indenture Trustee to demonstrate that it has been authorized by the holders of Senior Notes or Subordinated Notes, as the case may be, to take any action which it purports to be taking, the Collateral Agent being entitled to rely conclusively, and being fully protected in so relying, on any Act of the Senior Indenture Trustee or the Subordinated Indenture Trustee. (j) Notices by the Collateral Agent. The Collateral Agent shall within three (3) Business Days following receipt thereof furnish to each of the Senior Indenture Trustee, the Subordinated Indenture Trustee, the holders of the Notes and the Pledgors: (a) written notice of any release or subordination by the Collateral Agent of any Collateral; and (b) subject to the provisions of this Pledge Agreement such other notices required by the terms of this Pledge Agreement to be furnished by the Collateral Agent. (k) Actions Under Pledge Documents. The Collateral Agent shall not be obligated to take any action under this Pledge Agreement or any of the other Pledge Documents except for the performance of such duties as are specifically set forth herein or therein or as may be requested in writing by the holders of the Notes required hereunder. Subject to the provisions of this Pledge Agreement, the Collateral Agent shall take any action under or with respect to the Pledge Documents which is requested by the holders of the Notes required hereunder and which request shall not be contrary to this Pledge Agreement and the Indentures; provided that the Collateral Agent shall not amend or waive any provision of the Pledge Documents except in accordance with the terms hereof. The Collateral Agent shall, subject in all cases to the provisions of this Pledge Agreement, exercise or refrain from exercising all such rights, powers and remedies as shall be available to it under the Pledge Documents or any of them in accordance with any written instructions received from the holders of the Notes. The Collateral Agent shall have the right to decline to follow any such direction if the Collateral Agent, being advised in writing by counsel, determines that the directed action is not permitted by the terms of this Pledge Agreement, the Pledge Documents, the Indentures or the Notes, may not lawfully be taken or could reasonably be expected to jeopardize its rights with respect to the Collateral. Subject to the provisions of this Pledge Agreement, the Collateral Agent may rely on any such written direction given to it by the holders of the Notes and shall be fully protected, and shall under no circumstances (absent the negligence or willful misconduct of the Collateral Agent) be liable to the Pledgors, any holder of Notes or any other Person for taking or refraining from taking action in accordance therewith. In the absence of written instructions (which may relate to the exercise of specific remedies or to the exercise of remedies in general) from the holders of the Notes as provided herein, the Collateral Agent shall not exercise remedies available to it under any Pledge Documents with respect to the Collateral or any part thereof. (l) Rights of Collateral Agent. Notwithstanding the provisions of this Pledge Agreement or any other provision of the Indentures, the Subordinated Indenture Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment or distribution by the Subordinated Indenture Trustee, and the Subordinated Indenture Trustee may continue to make payments on the Subordinated Notes, unless the Subordinated Indenture Trustee shall have received at least five (5) Business Days prior to the date of such payment written notice of facts that would cause the payment of any Obligations with respect to the Subordinated Notes to violate this Pledge Agreement or the Subordinated Indenture. Only the Pledgors or the Senior Indenture Trustee may give the notice. Nothing in this Pledge Agreement or the Subordinated Indenture shall impair the claims of, or payments to, the Collateral Agent under or pursuant to the Indentures. SECTION 12. MISCELLANEOUS PROVISIONS. ------------------------ (a) Notices. All notices, approvals, consents or other communications required or desired to be given hereunder shall be in the form and manner, and delivered to each of the parties hereto at their respective addresses, as set forth in Section 12.02 of the Senior Indenture and Section 13.02 of the Subordinated Indenture. (b) Severability. The provisions of the Pledge Documents are severable, and, if any clause or provision shall be held invalid, illegal or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect in that jurisdiction only such clause or provision, or part thereof, and shall not in any manner affect such clause or provision in any other jurisdiction or any other clause or provision of any Pledge Document in any jurisdiction. (c) Headings. The headings in this Pledge Agreement have been inserted for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof. (d) Counterpart Originals. This Pledge Agreement may be signed in two or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same agreement. (e) Benefits of Pledge Agreement. Nothing in this Pledge Agreement, express or implied, shall give to any person or entity, other than the parties hereto and the beneficiaries whom they represent or act for, and their respective successors and permitted assigns, any benefit or any legal or equitable right, remedy or claim under the Pledge Documents. (f) Amendments, Waivers and Consents. Any amendment or waiver of any provision of this Pledge Agreement and any consent to any departure by any Pledgor from any provision of any Pledge Document shall be effective only if made or given in compliance with all of the terms and provisions of the Indentures, and the Collateral Agent shall not be deemed, by any act, delay, indulgence, omission or otherwise (other than as expressly set forth in a writing signed by the Collateral Agent), to have waived any right or remedy hereunder or to have acquiesced in any Default or Event of Default or in any breach of any of the terms and conditions hereof. Failure of the Collateral Agent to exercise, or delay in exercising, any right, power or privilege hereunder shall not operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by the Collateral Agent of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that the Collateral Agent would otherwise have on any future occasion. The rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. (g) Interpretation of Pledge Documents. Time is of the essence in each provision of the Pledge Documents of which time is an element. To the extent a term or provision of this Pledge Agreement conflicts with the Indentures, the Indentures shall control with respect to the subject matter of such term or provision. Acceptance of or acquiescence in a course of performance rendered under the Pledge Documents shall not be relevant to determine the meaning of any Pledge Document even though the accepting or acquiescing party had knowledge of the nature of the performance and opportunity for objection. (h) Continuing Security Interest. The Pledge Documents shall create a continuing security interest in the Collateral and shall (i) unless otherwise provided in the Indentures or in the Pledge Documents, remain in full force and effect until all principal and interest on the Notes, and all other Obligations then due and payable, have been paid in full, (ii) be binding upon each Pledgor and its successors and assigns and (iii) inure to the benefit of the Collateral Agent and the Holders and their respective successors and permitted transferees and assigns. (i) Security Interest Absolute. All rights of the Collateral Agent, and all obligations of the Pledgors, hereunder, shall be absolute and unconditional irrespective of: (i) any lack of validity or enforceability of either Indenture or any other agreement or instrument relating thereto; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to any departure from any Indenture; (iii) any exchange, surrender, release or non-perfection of any Liens on any other collateral, or any release or amendment or waiver of or consent to departure from any guarantee, for all or any of the Obligations; or (iv) any other circumstance which might otherwise constitute a defense available to, or a discharge of, any Pledgor in respect of the Obligations or of the Pledge Documents. (j) Reinstatement. The Pledge Documents shall continue to be effective or be reinstated, as the case may be, if at any time any amount received by the Collateral Agent or any Holder in respect of the Obligations is rescinded or must otherwise be restored or returned by the Collateral Agent or any Holder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of either Pledgor or upon the appointment of any receiver, intervenor, conservator, trustee or similar official for either Pledgor or any substantial part of its assets, or otherwise, all as though such payments had not been made. (k) Survival of Representations. All representations and warranties of the Pledgors contained herein shall survive the execution and delivery of the Pledge Documents. (l) Power of Attorney. In addition to all of the powers granted to the Collateral Agent pursuant to Article 7 of the Indentures, each Pledgor hereby appoints and constitutes the Collateral Agent as such Pledgor's attorney-in-fact to exercise all of the following powers upon and at any time after the occurrence and during the continuance of an Event of Default: (i) collection of Proceeds; (ii) conveyance of any item of Collateral to any purchaser thereof; (iii) exercising voting and other consensual rights under Section 5(d) hereof; (iv) collecting dividends or other distributions under Section 5(f); (v) giving of any notices or recording of any Liens under Section 6(b) hereof; (vi) making of any payments or taking any acts under Section 6(f) hereof; and (vii) paying or discharging taxes or Liens levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by the Collateral Agent in its sole discretion, and such payments made by the Collateral Agent to become the Obligations of the Pledgors to the Collateral Agent, due and payable immediately upon demand. The Collateral Agent's authority hereunder shall include, without limitation, the authority to endorse and negotiate any checks or instruments constituting Collateral in the name of the appropriate Pledgor, execute and give receipt for any document, transfer title to any item of Collateral, prepare and file all financing statements describing the Collateral or any other documents deemed necessary or appropriate by the Collateral Agent to preserve, protect or perfect the security interest in the Collateral and to file the same, and to take any other actions arising from or incident to the powers granted to the Collateral Agent in this Pledge Agreement. This power of attorney is coupled with an interest and is irrevocable by the Pledgors. (m) Waivers. Each Pledgor waives presentment and demand for payment of any of the Obligations, protest and notice of dishonor or default with respect to any of the Obligations, and all other notices to which such Pledgor might otherwise be entitled, except as otherwise expressly provided herein or in the Indentures. (n) Authority of the Collateral Agent. (i) The Collateral Agent shall have and be entitled to exercise all powers hereunder that are specifically granted to the Collateral Agent by the terms hereof, together with such powers as are reasonably incident thereto. The Collateral Agent may perform any of its duties hereunder or in connection with the Collateral by or through agents or employees and shall be entitled to retain counsel and to act in reliance upon the advice of counsel concerning all such matters. Neither the Collateral Agent, any director, officer, employee, attorney or agent of the Collateral Agent nor any Holder shall be liable to the Pledgors for any action taken or omitted to be taken by it or them hereunder, except for its or their own negligence or bad faith, nor shall the Collateral Agent be responsible for the validity, effectiveness or sufficiency hereof or of any document or security furnished pursuant hereto. The Collateral Agent and its directors, officers, employees, attorneys and agents shall be entitled to rely on any communication, instrument or document believed by it or them to be genuine and correct and to have been signed or sent by the proper person or persons. (ii) Each Pledgor acknowledges that the rights and responsibilities of the Collateral Agent under this Pledge Agreement with respect to any action taken by the Collateral Agent or the exercise or non-exercise by the Collateral Agent of any option, right, request, judgment or other right or remedy provided for herein or resulting or arising out of this Pledge Agreement shall, as between the Collateral Agent and the Holders, be governed by the Indentures and by such other agreements with respect thereto as may exist from time to time among them, but, as between the Collateral Agent and the Pledgors, the Collateral Agent shall be conclusively presumed to be acting as agent for the Holders with full and valid authority so to act or refrain from acting, and neither Pledgor shall be obligated or entitled to make any inquiry respecting such authority. (o) Release; Termination of Pledge Agreement. (i) This Pledge Agreement shall terminate upon (A) payment in full of all principal and interest on the Notes and all other Obligations that are then due and payable (including, payment in full of all fees and expenses owing by the Pledgors to the Collateral Agent), and (B) receipt by the Collateral Agent of an Officers' Certificate to the effect that all such Obligations have been paid in full. (ii) Upon any termination of the Pledge Documents or release of Collateral as permitted by the Indentures, the Collateral Agent will, at the expense of the Pledgors, execute and deliver to the Pledgors such documents and take such other actions as the Pledgors shall reasonably request to evidence the termination of the Pledge Documents and the Lien created thereby or the release of such Collateral, as the case may be. Any such action taken by the Collateral Agent shall be without warranty by or recourse to the Collateral Agent, except as to the absence of any prior assignments by the Collateral Agent of its interests in the Collateral, and shall be at the expense of the Pledgors. The Collateral Agent may conclusively rely on any Officers' Certificate delivered to it by either Pledgor stating that the execution of such documents and release of the Collateral is in accordance with and permitted by the terms of the Pledge Documents and the Indentures. (p) No Duty. The powers conferred on the Collateral Agent hereunder are solely to protect the interest of the Collateral Agent and the Holders in the Collateral and shall not impose any duties on the Collateral Agent or any Holder to exercise such powers. Except for the exercise of reasonable care in the custody of any Collateral in its possession and the accounting for any monies actually received by it hereunder or under the Indentures, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to the Collateral. The Collateral Agent shall be deemed to exercise reasonable care in the custody and preservation of the Collateral if the Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property, it being understood that the Collateral Agent shall have no responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Collateral, whether or not the Collateral Agent has or is deemed to have knowledge of such matters, or (ii) collection of any proceeds of any Collateral or by reason of any invalidity, lack of value or uncollectibility of any of the payments received by it from obligors or otherwise. (q) Payment of Fees and Expenses. Each Pledgor jointly and severally agrees to pay upon demand by the Collateral Agent, without duplication, the amount of all reasonable expenses, including without limitation, the reasonable fees, expenses and disbursements of its counsel and agents retained by the Collateral Agent that the Collateral Agent may incur in connection with (i) administration of the Pledge Documents, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of the Collateral, (iii) the exercise or enforcement of any of the rights of the Collateral Agent hereunder or (iv) the failure by either Pledgor to perform or observe any of the provisions hereof. (r) Final Expression. The Pledge Documents are intended by the parties as a final expression of the Pledge Documents and are intended as a complete and exclusive statement of the terms and conditions thereof. (s) Limitation by Law. All rights, remedies and powers provided herein may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions hereof are intended to be subject to all applicable mandatory provisions of law which may be controlling and to be limited by the extent necessary so that they will not render any of the Pledge Documents invalid, unenforceable in whole or in part or not entitled to be recorded, registered or filed under provisions of any applicable law. (t) Governing Law. This Pledge Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. [SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, each Pledgor and the Collateral Agent have each caused this Pledge Agreement to be duly executed and delivered as of the date first above written. PLEDGORS: COMDISCO HOLDING COMPANY, INC. By: /s/ Robert E.T. Lackey --------------------------------- Name: Robert E.T. Lackey Title: Vice President and Secretary COMDISCO, INC. By: /s/ Robert E.T. Lackey --------------------------------- Name: Robert E.T. Lackey Title: Executive Vice President, Secretary and Chief Legal Officer SENIOR INDENTURE TRUSTEE: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee By: /s/ Jane Y. Schweiger --------------------------------- Name: Jane Y. Schweiger Title: Assistant Vice President SUBORDINATED INDENTURE TRUSTEE: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee By: /s/ Jane Y. Schweiger --------------------------------- Name: Jane Y. Schweiger Title: Assistant Vice President COLLATERAL AGENT: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Collateral Agent By: /s/ Jane Y. Schweiger --------------------------------- Name: Jane Y. Schweiger Title: Assistant Vice President SCHEDULE I PLEDGED SHARES --------------
----------------------------------------------------------------------------------------------------------------------------- | Pledgor | Issuer | Class | No. of | Certif. No. | Percentage | | | | | Shares | | of Class | |---------------------------------|-----------------------------------------|-----------|----------|-------------|------------| | COMDISCO HOLDING COMPANY, INC. | COMDISCO, INC. | COMMON | 1,000 | 1 | 100% | |---------------------------------|-----------------------------------------|-----------|----------|-------------|------------| | COMDISCO HOLDING COMPANY, INC. | COMDISCO GLOBAL HOLDING COMPANY, INC. | COMMON | 1,000 | 1 | 100% | |---------------------------------|-----------------------------------------|-----------|----------|-------------|------------| | COMDISCO, INC. | COMDISCO DOMESTIC HOLDING COMPANY, INC. | COMMON | 1,000 | 1 | 100% | |---------------------------------|-----------------------------------------|-----------|----------|-------------|------------| | COMDISCO, INC. | COMDISCO VENTURES, INC. | COMMON | 1,000 | 1 | 100% | ----------------------------------------------------------------------------------------------------------------------------
EX-10 11 chi339973.txt EXHIBIT 10.1 Exhibit 10.1 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re: ) Case No. 01-24795 ) (Jointly Administered) COMDISCO, INC. ) Chapter 11 et al., ) Hon. Ronald Barliant ) Hearing Date: June 18, 2002 Debtors. ) Hearing Time: 10:00 a.m. ) Obj. Deadline: June 11, 2002 MOTION FOR AN ORDER PURSUANT TO 11 U.S.C. ss.ss. 105(a) AND 363(b)(1) APPROVING AND AUTHORIZING THE DEBTORS' STAY BONUS PLAN AND MANAGEMENT INCENTIVE PLAN Comdisco, Inc. ("Comdisco") and fifty of its domestic subsidiaries and affiliates (the "Affiliate Debtors"), debtors and debtors-in-possession in the above captioned cases (collectively, the "Debtors" or the "Company"), hereby move (the "Motion") this Court for an order pursuant to 11 U.S.C. ss.ss. 105(a) and 363(b)(1) authorizing and approving the Debtors' Stay Bonus Plan and Management Incentive Plan. In further support of this Motion, the Debtors respectfully represent as follows: BACKGROUND A. The Chapter 11 Filings 1. On July 16, 2001 (the "Petition Date"), Comdisco and each of the fifty Affiliate Debtors filed a voluntary petition in this Court for reorganization relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. ss.ss. 101 et seq., as amended (the "Bankruptcy Code"). The Debtors continue to operate their businesses and manage their properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. None of Comdisco's international subsidiaries located outside of the United States have filed for reorganization or insolvency protection in any jurisdiction and each continues to operate in the ordinary course of business. 2. On July 24, 2001, the United States Trustee (the "Trustee") appointed an Official Committee of Unsecured Creditors (the "Creditors' Committee") in these cases. On September 5, 2001, the Trustee appointed an Official Equity Committee (the "Equity Committee") in these cases. (Together, the Creditors' Committee and the Equity Committee are referred to as the "Statutory Committees.") 3. This Court has jurisdiction over this Application pursuant to 28 U.S.C. ss.ss. 157 and 1334. Venue is proper pursuant to 28 U.S.C. ss.ss. 1408 and 1409. This matter is a core proceeding pursuant to 28 U.S.C. ss. 157(b)(2). 4. The statutory predicates for the relief requested herein are sections 105(a) and 363(b)(1) of the Bankruptcy Code. B. Current Business Operations of the Debtors 5. Comdisco was founded in 1969 and incorporated in Delaware in 1971. In its early years, Comdisco engaged primarily in the procurement and placement of new and used computer equipment, principally mainframe and related peripherals. Today, Comdisco provides technology services to help its customers maximize technology functionality and predictability, while freeing them from the complexity of managing their technology. The Company's operations are conducted through its principal office in Rosemont, Illinois, and approximately 25-35 offices in the United States, Canada, Europe and the Pacific Rim. As of June 1, 2001, the Company employed approximately 2,300 full-time employees. For the fiscal year ended September 30, 2000, the Company had consolidated total revenues of approximately $3.9 billion and administered assets of $8.8 billion, and for the fiscal year ended September 30, 2001, the Company had consolidated total revenues of approximately $2.7 billion and administered assets of $6.1 billion. As a result of the sale of certain of the Company's business units and the Company's intention (announced earlier this year) to sell or run off its remaining assets, the Company had approximately 800 employees as of May 1, 2002. 6. To support its business operations, the Company recruited new senior management during 2001, including Mr. Norman P. Blake, Jr. as its new Chairman and Chief Executive Officer, Mr. Robert E. T. Lackey as Senior Vice President and Chief Legal Officer, and Mr. Ronald C. Mishler as Senior Vice President and Treasurer (and now Chief Operating Officer). 7. As of the Petition Date, the Company's product offering was divided along three primary business lines: (1) technology services ("Availability Solutions"), which includes continuity services, storage services, Web services, network services, desktop management services (marketed under the company's IT CAP Solutions brand name) and software tools to support these areas; (2) global leasing ("Leasing"), which includes the leasing and remarketing of distributed systems, such as PCs, servers, workstations and routers, communications equipment, equipment leasing and technology life-cycle management services; and (3) venture financing, referred to as Comdisco Ventures group, which provides venture leases, venture debt and direct equity financing to venture capital-backed companies. 8. On July 16, 2001, Comdisco announced that, as a result of a strategic review commenced in April 2001, it had reached agreement to sell its Availability Solutions business to Hewlett-Packard Company for $610 million in cash, subject to higher or otherwise better bids in the bankruptcy court auction process. Pursuant to the bidding procedures, the Debtors ultimately sold their Availability Solutions business to SunGard Data Systems, Inc. ("SunGard") on November 15, 2001 for $825 million. The sale included the purchase of assets of Comdisco's U.S. operations and the stock of subsidiaries in the United Kingdom, France and Canada. The sale excluded the purchase of the stock of subsidiaries in Germany and Spain, as well as other identified assets including network services and IT Cap Solutions. 9. In addition to the sale of its Availability Solutions business, Comdisco is currently pursuing other strategic alternatives to create value for its stakeholders. These alternatives included an evaluative sale process for certain of its leasing assets. To facilitate this evaluation process, on August 30, 2001, the Court approved bidding procedures to conduct a sale auction process for one or more of its Leasing business units. Following receipt of final bids on January 7, 2002, pursuant to the bidding procedures, the Debtors selected the bid of General Electric Capital Corporation as the highest and best bid for the Electronics and Laboratory and Scientific segments of the Leasing business. On April 18, 2002, the Debtors received Court approval to sell the Healthcare Leasing segment to General Electric Capital Corporation. The Debtors intend to run off or sell their remaining businesses as more fully set forth in the Debtors' Plan and Disclosure Statement (as defined below). C. Events Leading to Chapter 11 Filing 10. In February 1999, Comdisco acquired Prism Communication Services, Inc. ("Prism"), a provider of dedicated high-speed connectivity, for a cash purchase price of approximately $53 million. From the date of acquisition through September 30, 2000, Comdisco provided Prism with cash totaling $478 million for the expansion of its network and for its operating costs. Prism's operations through September 2000 resulted in significant cash losses. Therefore, on October 1, 2000, Comdisco's Board of Directors voted to cease funding the ongoing operations of Prism. On October 1, 2000, the Prism Board of Directors voted to cease operations and pursue the immediate sale of Prism's assets. Comdisco's wind-down of Prism has continued since that time, and the Debtors expect to complete this process as part of the chapter 11 cases. Approximately 35 of the 51 Debtors in the chapter 11 cases are Prism-related affiliates of Comdisco. 11. The venture leases, venture debt and direct equity financing provided by the Comdisco Ventures group to venture capital-backed companies in the technology and Internet-based industries are, by their nature, high risk. The net revenue of the Ventures group for fiscal 2000 was $673 million. However, during the first and second calendar quarter of 2001, a market downturn in the technology and Internet-based sectors resulted in a substantial decrease in the revenues of the Ventures group. As a result, the Ventures group had a pretax loss of $39 million for the nine months ended June 30, 2001 compared to the pretax earnings of $178 million for the nine month period ended June 30, 2000. 12. As a result of the losses associated with Prism and the Comdisco Ventures group, the Debtors' cash reserves, overall financial performance and financial condition were negatively impacted. As a result, in part, of the erosion of the Ventures group's business and the losses associated with Prism, the Company's debt ratings were downgraded below investment grade and the Company lost access to the commercial paper market. In order to retire commercial paper obligations and other scheduled debt maturities and to finance operations, Comdisco borrowed the remaining availability under the prepetition credit agreements in April, 2001. 13. Another fundamental challenge faced by the Debtors was the tenor of their debt structure, which involved relatively short-term debt maturities over the next several years and longer-term lease and financing obligations associated with their principal business products. Accordingly, although the Debtors' operations generally generate sufficient cash to meet their working capital needs, without access to the commercial paper market, the Debtors could not generate sufficient cash to retire all of the debt maturities scheduled to be repaid during 2001 and 2002. As a result of these challenges, in early 2001, the Debtors retained Goldman Sachs & Co. ("GSC") and McKinsey & Co. ("McKinsey") to evaluate strategic alternatives, including the sale of all or a portion of the Debtors' businesses. This strategic review led to the announcement concerning the sale of the Availability Solutions business and the evaluation of the potential sale of one or more of the Leasing business units through court-approved competitive bidding procedures. D. Plan and Disclosure Statement 14. On April 26, 2002, the Debtors filed their Joint Plan of Reorganization (the "Plan") and Disclosure Statement (the "Disclosure Statement) with respect to the Plan (collectively, the "Plan and Disclosure Statement"). A hearing on the Disclosure Statement is scheduled for May 31, 2002. The Debtors anticipate that they will solicit votes on the Plan prior to July 30, 2002 and will seek confirmation of the Plan on July 30, 2002. RELIEF REQUESTED 15. By this Motion, the Debtors seek the Court's approval and authorization, under sections 105(a) and 363(b)(1) of the Bankruptcy Code, of a stay bonus plan (the "Stay Bonus Plan") and a management incentive plan (the "Management Incentive Plan") (collectively, the "Programs"). The Stay Bonus Plan was designed to provide incentives for the Debtors' essential support and professional staff to remain in the Debtors' employ throughout the pendency of these chapter 11 cases and the execution of the Debtors' Plan. The Management Incentive Plan was designed to provide incentive compensation to certain key employees tied to various performance-based criteria related to maximizing the value of the Debtors' estates. 16. The Debtors have concluded in their business judgment that it is essential that critical employees be retained and remain motivated to execute the Debtors' post-emergence business strategies. The Programs were designed to minimize management and other key employee turnover by providing incentives for employees, including senior management, to remain in the Debtors' employ.(1) Retaining these key employees will enable the Debtors to effectively implement the Plan and to maximize recoveries under the Plan. BASIS FOR RELIEF A. Need for the Programs 17. The Plan sets forth a strategy through which the Debtors intend to run off or sell their remaining Leasing portfolios, Ventures, European operations and other assets. In order to maximize recoveries under the Plan, it is essential that critical employees be retained and remain motivated to execute the Debtors' post-emergence business strategies under the Plan. Specifically, the Debtors believe that value can be maximized in connection with the run off or sale of the various segments of the Debtors' assets by leveraging the long-standing relationships that the Debtors' current employees have in the marketplace. Thus, the Debtors have developed a comprehensive compensation program that includes the Management Incentive Plan, which is designed to retain key employees and incentivize them to maximize the value of the estates at each of the business units and at the corporate headquarters and the Stay Bonus Plan, which is designed to retain essential support and professional staff. A summary of the costs of, and number of employees associated with, the Programs is attached as Exhibit A.(2) 18. The Programs are designed to provide stability and the appropriate incentives for employees to maintain their employment with the Debtors through the implementation of the Plan. In essence, the employees need to know what they will be paid for maintaining their employment with the Debtors. The Programs are designed to clearly set forth compensation incentives both for length of stay and for performance. Additionally, the Programs recognize that the participant employees will have shifting and expanding responsibilities as a result of the implementation of the Plan. To maximize recovery through a run off, employees will need to utilize their existing business knowledge and relationships and shift their focus to managing existing business and maximizing recoveries from that of building long term relationships. The Debtors seek to incentivize employees to stay despite such demands. 19. The Management Incentive Plan is designed to compensate employees who effectively work to maximize recovery under the Plan. Compensation to employees under the Management Incentive Plan increases only if the recovery to stakeholders under the Plan increases. The Management Incentive Plan thus aligns the interests of eligible employees with that of stakeholders - to maximize recovery. 20. The Programs have been heavily negotiated with (and have the approval of) the Creditors' Committee. Additionally, information regarding the Programs was provided to the Equity Committee beginning on March 8, 2002 and the Programs are further described in the Disclosure Statement, thus providing the Equity Committee with ample opportunity to comment. The Debtors also worked closely with their financial advisors, the Human Capital Group of Arthur Andersen (now the Human Capital Advisory Services Group of Deloitte & Touche), to develop the Programs and assess the reasonableness of the Programs and their necessity in the marketplace. As a result, the Programs represent a strategic, well-targeted program designed to maximize employee incentive to remain with the Debtors throughout the run off or sale of the remaining businesses and to maximize the value to the estates. B. The Stay Bonus Plan 21. The Stay Bonus Plan is a retention program covering approximately 426 employees, including 65 European employees, and is designed to retain essential support and professional personnel who assist managers and key employees most directly responsible for the success of the Plan. Support and professional employees in the business units are essential to continuing operations, servicing contracts and supporting the run off of the Leasing portfolio and other assets. Support and professional employees in the corporate department maintain the systems and perform other functions critical to continuing the operations of the entire Company throughout the Plan period. 22. Eligible participants under the Stay Bonus Plan will accrue one week's salary for every two weeks of work after April 1, 2002. One-half of such accrued benefits will be paid in two semiannual installments to be paid each year on or about May 15 and November 15 (with the first such payment to be made on November 15, 2002). The remaining one-half will be paid upon job termination other than for cause or voluntary resignation. The total cost of the Stay Bonus Plan is expected to be approximately $18.5 million. Employees eligible for the Stay Bonus Plan are not eligible to participate in the Management Incentive Plan. The Stay Bonus Plan replaces any prior bonus/incentive/commission compensation programs for which such employees would have been eligible, with the exception of any payments with respect to previously approved retention programs and payments from the previously approved chairman's discretionary fund. C. The Management Incentive Plan 23. The Management Incentive Plan covers key managers and employees directly responsible for the overall direction of a particular business unit and the results achieved within that business unit. Additionally, the Management Incentive Plan covers key corporate employees whose services are required to facilitate business operations and to administer claims and related chapter 11 matters. The Management Incentive Plan replaces any prior bonus/incentive/commission compensation programs for which such employees would have been eligible. Employees who voluntarily terminate their employment prior to their respective payment dates under the Management Incentive Plan, as set forth in more detail below, or are terminated for cause are not eligible for any payments from these plans that have not already been paid, with the exception of any payments with respect to previously approved retention programs and payments from the previously approved chairman's discretionary fund. 24. The Management Incentive Plan is tailored to provide appropriate levels of compensation to key employees in each of the reorganized Debtors' business units - U.S. Leasing, Ventures, European Leasing and Corporate Asset Management Group - as well as at the corporate level. While the award opportunities differ for each of these units, the Management Incentive Plan as a whole is intended to provide adequate compensation for retention of key employees within a unit as that unit moves toward its post-emergence business targets and to provide additional performance-based reward opportunities if those targets are exceeded. 25. The Management Incentive Plan establishes varying levels of incentive compensation depending upon whether a given business unit reaches its "threshold target" or "business plan target." A threshold target and a higher business plan target have been established for each of the business units as is described below in more detail. For purposes of measuring achievement relative to threshold or plan, cash flows will be discounted using rates specified in each business unit plan at the time the cash is distributed to creditors. However, prior to the initial distribution following confirmation, the incremental cash that would otherwise have been available for distribution at the end of each month will be discounted at the appropriate discount rate from the end of that month to April 1, 2002. (1) U.S. Leasing 26. The Management Incentive Plan for the U.S. Leasing unit covers approximately 32 key employees. All participants under this plan are eligible to receive semiannual performance bonuses, and approximately 22 of these employees are eligible to receive "upside" sharing opportunities. The Debtors have set a Leasing threshold target of approximately $571 million and a business plan target of approximately $649 million on a present value basis using an appropriate discount rate to April 1, 2002. 27. The semiannual performance bonus component is designed to reward employees for meeting specified business objectives. Participants who meet their specified objectives will accrue bonuses up to a certain percentage of their annual base salary for each six months of employment after April 1, 2002. These percentages are based on position and range from 50-100% of annual base salary. For participants eligible for an upside sharing bonus, after the end of fiscal year 2003, these semi-annual bonus percentages shall be reduced by one-half. For participants other than sales personnel, one-half of the participant's accrued bonus will be paid semi-annually on or about May 15 and November 15 of each year (with the first such payment to be made on November 15, 2002); the remaining one-half will be paid upon job termination other than for cause or voluntary resignation. Sales personnel will receive the entire accrued bonus amount at each semi-annual payment date. 28. Debtors' management will evaluate whether a given participant has attained the specified performance objectives. One-half of the bonus amount will be determined by management's assessment of individual job performance. The other one-half of the bonus amount will be dependent upon meeting the business unit's cumulative cash-flow objectives necessary to achieve the targeted threshold and plan recoveries. 29. For the cash flow component, participants are eligible to receive a range of 70% of their cash flow bonus amount (if the unit reaches 90% of the threshold target amount for that time period, on a cumulative basis) to 100% of their cash flow bonus amount (if the unit reaches or exceeds the business plan target amount for that time period, on a cumulative basis). If the unit does not achieve 90% of the threshold target for that time period, on a cumulative basis, participants are not eligible to receive a cash flow bonus amount. For example, for a manager with an annual salary of $80,000 and a semi-annual bonus of 75% of base salary, if the business unit reaches 90% of its cumulative threshold target amount for a given time period, on a cumulative basis, the employee's cash flow bonus amount would be $21,000 ($80,000 x 75% x 70% x 50%). Additionally, if Debtors' management has determined that the employee's job performance merits a full individual performance bonus, the eligible participant would receive an individual performance bonus of $30,000 ($80,000 x 75% x 100% x 50%). Thus, the total semi-annual bonus for this eligible participant would be $51,000, one-half of which would be paid at the semi- annual payment date and one-half of which would be paid upon job termination (other than for cause or voluntary resignation). 30. If an employee is terminated (other than for cause or voluntary resignation) between semi-annual payment dates, the employee also will receive a prorated portion of the amount that would otherwise be due on the next semi-annual payment date. The total maximum cost of the semi-annual bonus component for eligible U.S. Leasing employees is approximately $8.8 million. 31. In addition, approximately 22 participants are eligible to share at predetermined levels in the "upside" of the performance of the post-emergence U.S. Leasing unit. This element of compensation is designed to directly incentivize participants to maximize the present value recovery in connection with the run off of the U.S. Leasing business - the greater the present value recovery, the greater the incentive compensation. If the threshold target is not achieved, eligible participants will not receive any upside sharing compensation. If the threshold target is exceeded, eligible participants would share in a pool funded as follows: % Above Threshold/ Sharing Maximum Maximum Total % of Plan Percentage Incremental Incentive Payment(3) Incentive Payment 0-2% above threshold 3% $0.3 million $0.3 million ($571-580 million) 2-3% above threshold 7% $0.6 million $0.9 million ($580-589 million) 3-5% above threshold 11% $1.0 million $1.9 million ($589-598 million) 5-8% above threshold 16% $3.0 million $4.9 million ($598-617 million) 8% above threshold to 18% $5.8 million $10.7 million plan ($617-649 million) 100-104% of plan ($649- 18% $4.7 million $15.4 million 675 million) 104-106% of plan ($675- 16% $2.1 million $17.5 million 688 million) 106-110% of plan ($688- 14% $3.6 million $21.1 million 714 million) 110-114% of plan ($714- 12% $3.1 million $24.2 million 740 million) 114-115% of plan ($740- 10% $0.6 million $24.8 million 746 million) 115-116% of plan ($746- 7% $0.5 million $25.3 million 753 million) 116% of plan and above 5% 5% of $25.3 million plus 5% (over $753 million) incremental of incremental value value over $753 million 32. Participants will be considered fully vested in the upside sharing plan when 75% or greater of the total present value recovery has been realized. "Fully vested" means that the participants will receive their full share in the upside sharing plan at the "End of Term" when upside sharing is distributed.(4) All other salary and bonus amounts which would have otherwise been earned subsequent to termination, and until the End of Term, will not be paid. If terminated (without cause) prior to achievement of 75% of the total present value recovery, participants will receive a pro rata share of the upside sharing amount based on the percentage of total present value recovery achieved at the time of that participant's termination, such pro rata share to be paid at the End of Term. However, if prior to termination such employee satisfactorily performed and completed substantially all duties for which such employee is responsible under the plan and at least 50% of the total present value recovery has been achieved, then such employee will be considered fully vested. There will be no payment if the participant resigns voluntarily or is terminated for cause. Upside sharing payments will not be made until End of Term. 33. If substantially all of the U.S. Leasing assets are sold (including a stock sale) prior to the unit achieving its business plan target, and assuming that performance is either tracking with plan or exceeding plan, then participants will receive the greater of (a) the upside sharing payout at plan target (as set forth in the chart above) or (b) the upside sharing amount (as set forth in the chart above) if the sale proceeds exceed the plan target. In this case, upside sharing amount payments will be made on a present value basis (i.e., discounted from the plan End of Term to the date of payment utilizing the applicable discount rate). (2) Ventures 34. The Management Incentive Plan for the Ventures unit covers approximately 25 key employees. This program is structured similarly to that for the U.S. Leasing unit and includes a semiannual performance bonus and an upside sharing opportunity. The Debtors have set a Ventures threshold target of approximately $376 million and a business plan target of approximately $427 million on a present value basis using an appropriate discount rate to April 1, 2002. 35. The semiannual performance bonus component is designed to reward employees for meeting specified business objectives. Participants who meet their specified objectives will accrue bonuses up to a certain percentage of their annual base salary for each six months of employment after April 1, 2002. These percentages are based on position and range from 37.5-50% of annual base salary. For participants eligible for an upside sharing bonus, after the end of fiscal year 2003, these semi-annual bonus percentages shall be reduced by one-half. One-half of the participant's accrued bonus will be paid semi-annually on or about May 15 and November 15 of each year (with the first such payment to be made on November 15, 2002); the remaining one-half will be paid upon job termination other than for cause or voluntary resignation. 36. Debtors' management will evaluate whether a given participant has attained the specified performance objectives. One-half of the bonus amount will be determined by management's assessment of individual job performance. The other one-half of the bonus amount will be dependent upon meeting the business unit's cumulative cash-flow objectives necessary to achieve the targeted threshold and plan recoveries. 37. For the cash flow component, participants are eligible to receive a range of 70% of their cash flow bonus amount (if the unit reaches 90% of the threshold target amount for that time period, on a cumulative basis) to 100% of their cash flow bonus amount (if the unit reaches or exceeds the business plan target amount for that time period, on a cumulative basis). If the unit does not achieve 90% of the threshold target for that time period, on a cumulative basis, participants are not eligible to receive a cash flow bonus amount. 38. If an employee is terminated (other than for cause or voluntary resignation) between semi-annual payment dates, the employee also will receive a prorated portion of the amount that would otherwise be due on the next semi-annual payment date. The total maximum cost of the semi-annual bonus component for eligible Ventures employees is approximately $4 million. 39. The upside sharing opportunities for the key Ventures employees has been established at predetermined levels and is based upon exceeding targeted present value recovery in connection with the run off of the Ventures portfolio. If the threshold target is not achieved, eligible participants will not receive any upside sharing compensation. If the threshold target is exceeded, eligible participants would share in a pool funded as follows: % Above Threshold/ Sharing Maximum Maximum Total % of Plan Percentage Incremental Incentive Payout(5) Incentive Payout 0-2% above threshold 5% $0.4 million $0.4 million ($376-384 million) 2-9% above threshold 10% $2.6 million $3.0 million ($384-410 million) 9-13% above threshold 12.5% $1.9 million $4.9 million ($410-425 million) 13% above threshold to 15% $0.3 million $5.2 million plan ($425-427 million) 100-105% of plan ($427- 15% $3.2 million $8.4 million 448 million) 105-110% of plan ($448- 12.5% $2.7 million $11.1 million 470 million) 110-115% of plan ($470- 10% $2.1 million $13.2 million 491 million) 115% of plan and above 5% 5% of $13.2 million plus 5% (over $491 million) incremental of incremental value value over $491 million 40. In addition, the Ventures leasing portfolio includes the ability to realize value on warrants and equity issued to the Debtors by various Ventures' portfolio customers. The value of these warrants and equity is highly speculative. The Debtors have designed the plan to incentivize participants in the Ventures Management Incentive Plan to create potential value opportunities in the Debtors' warrant and equity positions through restructuring the obligations and repricing of warrants while seeking to maximize the value of the portfolio. Because the value of warrants and equity is significantly dependent upon market factors which are outside of the employee's control, the Debtors have sought to incentivize participants without overly compensating such participants if a higher range of warrant and equity values should be realized. Therefore, only 25% of every dollar realized in both warrant and equity proceeds contributes toward achieving the threshold and plan targets. Additionally, no more than 10% of the present value recovery may come from warrant proceeds and no more than 10% of the present value recovery may come from equity proceeds. 41. Participants will be considered fully vested in the upside sharing plan when 75% or greater of the total present value recovery has been realized. "Fully vested" means that the participants will receive their full share in the upside sharing plan at the End of Term(6) when upside sharing is distributed. All other salary and bonus amounts which would have otherwise been earned subsequent to termination, and until the End of Term, will not be paid. If terminated (without cause) prior to achievement of 75% of the total present value recovery, participants will receive a pro rata share of the upside sharing amount based on the percentage of total present value recovery achieved at the time of that participant's termination, such pro rata share to be paid at the End of Term. There will be no payment if the participant resigns voluntarily or is terminated for cause. Upside sharing payments will not be made until End of Term. 42. If substantially all of the Ventures assets are sold (including a stock sale) prior to the unit achieving its business plan target, and performance is either tracking with plan or exceeding plan, then participants will receive the greater of (a) the upside sharing payout at plan target (as set forth in the chart above) or (b) the upside sharing amount (as set forth in the chart above) if the sale proceeds exceed the plan target. In this case, upside sharing amount payments will be made on a present (3) Europe 43. In addition to previously approved and implemented country-specific retention programs, the Chief Executive Officer and the Chief Financial Officer of European operations are eligible to participate in the European Management Incentive Plan. The European Management Incentive Plan is structured around meeting separate objectives for the core European countries (i.e., Germany and France) and the remaining non-core European countries. 44. With respect to the core European countries, the two participants are eligible to receive a bonus of 1.5 to 2 times base salary in connection with a sale of those business units depending upon percentage of Net Book Value(7) realized and speed of closing a transaction. The total maximum cost of this program in the event of a sale of core European countries is approximately $1.4 million. 45. If a sale of the core European business cannot be timely effectuated or a decision is made to abandon a sale process, then the foregoing sale compensation plan will not be operative. In its place, the following would apply: (a) the two participants would be eligible to receive a semiannual performance bonus of up to 75% of base salary if other business objectives related to an orderly liquidation are satisfied by the participants (payments will be made retroactive to April 1, 2002 and (b) the two participants would receive a one-time payment of up to 100% of base salary if more than 75% of book value is ultimately realized on the core European assets. The maximum cost of the orderly liquidation program will not exceed $1.4 million per year during the orderly liquidation period. 46. With respect to the non-core European businesses, the two participants are eligible to receive a bonus payment of up to 50% of base salary if the leasing portfolios in those countries are either sold, orderly liquidated or consolidated into the core countries and the respective offices are closed by December 31, 2002. 47. All other employees in the core and non-core European countries are eligible to participate in one or more retention or incentive programs with a total aggregate cost of up to approximately $5.7 million. (4) Corporate Asset Management Group 48. Five key employees are eligible to participate in a Management Incentive Program relating to the corporate assets not included in U.S. Leasing, Ventures or European operations including the assets excluded from previously sold businesses (i.e., Electronics, Laboratory and Scientific and Healthcare). This program also includes a semiannual performance bonus and an upside sharing opportunity. The Debtors have set a Corporate Asset Management Group threshold target of approximately $465 million and a business plan target of approximately $527 million on a present value basis using an appropriate discount rate to April 1, 2002. 49. The semiannual performance bonus component is designed to reward employees for meeting specified business objectives. Participants who meet their specified objectives will accrue bonuses up to a certain percentage of their annual base salary for each six months of employment after April 1, 2002. These percentages are based on position and range from 50-75% of annual base salary. For participants eligible for an upside sharing bonus, after the end of fiscal year 2003, these semi-annual bonus percentages shall be reduced by one-half. One-half of the participant's accrued bonus will be paid semi-annually on or about May 15 and November 15 of each year (with the first such payment to be made on November 15, 2002); the remaining one-half will be paid upon job termination other than for cause or voluntary resignation. 50. Debtors' management will evaluate whether a given participant has attained the specified performance objectives. One-half of the bonus amount will be determined by management's assessment of individual job performance. The other one-half of the bonus amount will be dependent upon meeting the business unit's cumulative cash-flow objectives necessary to achieve the targeted threshold and plan recoveries. 51. For the cash flow component, participants are eligible to receive a range of 70% of their cash flow bonus amount (if the unit reaches 90% of the threshold target amount for that time period, on a cumulative basis) to 100% of their cash flow bonus amount (if the unit reaches or exceeds the business plan target amount for that time period, on a cumulative basis). If the unit does not achieve 90% of the threshold target for that time period, on a cumulative basis, participants are not eligible to receive a cash flow bonus amount. 52. If an employee is terminated (other than for cause or voluntary resignation) between semi-annual payment dates, the employee also will receive a prorated portion of the amount that would otherwise be due on the next semi-annual payment date. The total maximum cost of the semi-annual bonus component for eligible Corporate Asset Management Group employees is approximately $1.4 million. 53. Three of the five Management Incentive Plan eligible employees in the Corporate Asset Management Group will share in the upside sharing opportunities for the Corporate Asset Management Group employees based upon exceeding targeted present value recovery in connection with the sale of all corporate assets not included in U.S. Leasing, Ventures or European operations including the assets excluded from previously sold businesses (i.e., Electronics, Laboratory and Scientific and Healthcare). If the threshold target is not achieved, eligible participants will not receive any upside sharing compensation. If the threshold target is exceeded, eligible participants would share in a pool funded as follows: % Above Threshold/ Sharing Maximum Maximum Total % of Plan Percentage Incremental Incentive Payout(8) Incentive Payout 0-6% above threshold 1% $0.3 million $0.3 million ($464-492 million) 6-12% above threshold 1.25% $0.3 million $0.6 million ($492-520 million) 12% above threshold to 1.5% $0.1 million $0.7 million plan ($520-527 million) 100-110% of plan ($527- 1.5% $0.8 million $1.5 million 580 million) 110-115% of plan ($580- 1.125% $0.3 million $1.8 million 606 million) 115-120% of plan ($606- 0.75% $0.2 million $2.0 million 632 million) 120% of plan and above 0.375% 0.375% of $2.0 million plus (over $632 million) incremental 0.375% of incremental value value over $632 million 54. Two of the five Management Incentive Plan eligible employees in the Corporate Asset Management Group are eligible to share in 5% of the upside realized from the sale of specific Electronics and Laboratory and Scientific inventory in excess of a threshold target of $29 million and a plan target of $38.4 million. The anticipated cost of this program at plan is approximately $0.4 million. For these two participants, the upside sharing bonus is capped at an achievement of 150% of the plan target. 55. Participants will be considered fully vested in either of the Corporate Asset Management upside sharing plans when 75% or greater of the total present value recovery has been realized. "Fully vested" means that the participants will receive their full share in the upside sharing plan at the End of Term when upside sharing is distributed. All other salary and bonus amounts which would have otherwise been earned subsequent to termination, and until the End of Term will not be paid. If terminated (without cause) prior to achievement of 75% of the total present value recovery, participants will receive a pro rata share of the upside sharing amount based on the percentage of total present value recovery achieved at the time of that participant's termination, such pro rata share to be paid at the End of Term. There will be no payment if the participant resigns voluntarily or is terminated for cause. Upside sharing payments will not be made until End of Term. 56. If substantially all of the Corporate Asset Management Group assets are sold (including a stock sale) prior to the unit achieving its business plan target, and assuming that performance is either tracking with plan or exceeding plan, then participants will receive the greater of (a) the upside sharing payout at plan target (as set forth in the chart above) or (b) the upside sharing amount (as set forth in the chart above) if the sale proceeds exceed the plan target. In this case, upside sharing amount payments will be made on a present value basis (i.e., discounted from the plan End of Term to the date of payment utilizing the applicable discount rate). (5) Corporate 57. Approximately 17 division executives and members of corporate management whose services facilitate the overall functioning of the Company's operations (i.e., areas such as information systems, legal, finance, and human resources) are eligible to participate in a semiannual performance bonus plan.(9) Approximately 10 employees are eligible to participate in an additional incentive pool based on meeting certain claims reduction targets. 58. The semiannual performance bonus component is designed to reward employees for meeting specified business objectives. Participants who meet their specified objectives will accrue bonuses up to a certain percentage of their annual base salary for each six months of employment after April 1, 2002. These percentages are based on position and range from 50-150% of annual base salary. For the Chief Executive Officer, the semi-annual bonus shall be reduced by one-half after fiscal year 2003. One-half of the participant's accrued bonus will be paid semi- annually on or about May 15 and November 15 of each year (with the first such payment to be made on November 15, 2002); the remaining one-half will be paid upon job termination other than for cause. 59. One-half of the bonus amount will be determined by an assessment of individual job performance. For the Chief Executive Officer, this assessment is made by the Company's Board of Directors; for all other participant's this assessment is made by the Chief Executive Officer. The other one-half of the bonus amount will be dependent upon meeting the business unit's cumulative cash-flow objectives necessary to achieve the targeted threshold and plan recoveries. The Debtors have set a consolidated corporate threshold target of approximately $1,511 million and a plan target of approximately $1,717 million on a present value basis using various discount rates to April 1, 2002 . 60. For the cash flow component, participants are eligible to receive a range of 70% of their cash flow bonus amount (if corporate reaches 90% of the threshold target amount for that time period, on a cumulative basis) to 100% of their cash flow bonus amount (if corporate reaches or exceeds the business plan target amount for that time period, on a cumulative basis). If corporate does not achieve 90% of the threshold target for that time period, on a cumulative basis, participants are not eligible to receive a cash flow bonus amount. 61. If an employee is terminated (other than for cause or voluntary resignation) between semi-annual payment dates, the employee also will receive a prorated portion of the amount that would otherwise be due on the next semi-annual payment date. The total maximum cost of the semi-annual bonus component for eligible corporate employees is $9.9 million. 62. The Chief Executive Officer is incentivized to maximize overall recovery by an upside sharing bonus opportunity based upon exceeding targeted present value recovery for the consolidated Company. As discussed above, the Debtors have set a consolidated corporate threshold target of approximately $1,511 million and a consolidated corporate plan target of approximately $1,717 million on a present value basis using various discount rates to April 1, 2002 . For purposes of measuring achievement, value realized through warrant and equity positions will be included at full value because the consolidated corporate threshold and plan targets include estimates of the full value to be realized from warrants and equity. If the threshold target is not achieved, the Chief Executive Officer will not receive any upside sharing compensation. If the threshold target is exceeded, the Chief Executive Officer will receive an upside bonus amount as follows: % Above Threshold/ Percentage Maximum Maximum Total % of Plan Incremental Incentive Payout(10) Incentive Payout 0-3% above threshold 0.25% $0.1 million $0.1 million ($1,511-1,556 million) 3-6% above threshold 0.4% $0.2 million $0.3 million ($1,556-1,602 million) 6-10% above threshold 0.6% $0.4 million $0.7 million ($1,602-1,662 million) 10% above threshold to 0.8% $0.4 million $1.1 million plan ($1,662-1,717 million) 100-110% of plan 0.72% $1.2 million $2.3 million ($1,717-1,889 million) 110-115% of plan 0.5% $0.4 million $2.7 million ($1,889-1,975 million) 115-120% of plan 0.3% $0.3 million $3.0 million ($1,975-2,060 million) 120% of plan and above 0.2% 0.2% of $3.0 million plus 0.2% (over $2,060 million) incremental of incremental value value over $2,060 million 63. The Chief Executive Officer will be considered fully vested in the upside sharing plan when 75% or greater of the total present value recovery has been realized. "Fully vested" means that the Chief Executive Officer will receive his full share in the upside sharing plan at the End of Term when upside sharing is distributed. All other salary and bonus amounts which would have otherwise been earned subsequent to termination, and until the End of Term, will not be paid. If terminated (without cause) prior to achievement of 75% of the total present value recovery, the Chief Executive Officer will receive a pro rata share of the upside sharing amount based on the percentage of total present value recovery achieved at the time of the Chief Executive Officer's termination, such pro rata share to be paid at the End of Term. There will be no payment if the participant resigns voluntarily or is terminated for cause. Upside sharing payments will not be made until End of Term. 64. If substantially all of the consolidated corporate assets are sold (including a stock sale) prior to achieving its business plan target, and assuming that performance is either tracking with plan or exceeding plan, then the Chief Executive Officer will receive the greater of (a) the upside sharing payout at plan target (as set forth in the chart above) or (b) the upside sharing amount (as set forth in the chart above) if the sale proceeds exceed the plan target. In this case, upside sharing amount payments will be made on a present value basis (i.e., discounted from the plan End of Term to the date of payment utilizing various applicable discount rates). 65. In addition, the approximately ten corporate management and staff participants with direct line responsibility for claims management are eligible to participate in an incentive pool based on reducing off-balance sheet claims and tax claims filed in these chapter 11 cases. To the extent that those claims are ultimately reduced to below a threshold of $267 million (excluding SIP Claims), participants in this program are eligible to share in a graduated incentive pool (capped at 100% of base salary) as follows: Claims Amount Incremental Incremental Bonus Total Bonus Pool Management % Pool Share $267 million 0% $0 $0 (threshold) $217 million .5% $0.2 million $0.2 million $167 million .75% $0.4 million $0.6 million (plan) $117 million 1.0% $0.5 million $1.1 million $67 million 2.0% $1.0 million $2.1 million In the event the Bankruptcy Court permits additional late-filed claims to participate in the estates, the Debtors in consultation, as appropriate, with either the Statutory Committees or the Board of Directors will adjust the above plan or create a supplemental plan to incentivize the reduction of such late-filed claims substantially as set forth above. D. Severance 66. In order to provide appropriate severance compensation for senior key executives and senior managers who are new to the Company, the Debtors have established an enhanced severance plan. Designated senior executives (i.e., business unit heads, corporate executive vice presidents and the Chief Financial Officer of European operations) and designated senior managers (i.e., portfolio and sales team leaders, corporate senior managers, etc.) are eligible for the plan. The plan will pay the greater of (1) the regular severance program (based on length of service) or (2) either (a) 100% of base salary for senior executives and 50% of base salary for senior managers, as designated, if terminated (other than for cause) within twelve months of emergence from the chapter 11 cases or (b) 50% of annual base salary for senior executives and 25% of annual base salary for senior management, as designated, if terminated (other than for cause) after twelve months of emergence from the chapter 11 cases. 67. For participants in the enhanced severance plan, the semi-annual bonus plan, or upside sharing plan, whose total compensation over the time period from April 1, 2002 to their termination date exceeds 300% of their total base salary over the same time period, their end of term payment will be reduced by such excess up to a maximum reduction equal to the total severance amount. Participants whose end of term payments have not been reduced by the full amount of severance, as stated above, will receive their severance payments in monthly installments following termination. To be eligible for each monthly severance installment, each employee must certify to the Company that they have not obtained employment or that their post-Comdisco base compensation is less than what their base compensation would have been if still employed by the Company (in which case the monthly severance installment would be reduced by the compensation received from their other employment). 68. In July 2001, the Debtors filed a motion and received approval from the Bankruptcy Court to retain the Company's regular severance plan. This program will continue for all employees except those eligible for an enhanced severance plan (as described above) or an executive severance program (as follows) or who participate in the semi-annual bonus or upside sharing plan. In August 2001, the Debtors received Bankruptcy Court Approval for an executive severance program. Any employee who was designated as eligible for this program will no longer be eligible if he or she participates in the Management Incentive Plan. Employees who remain eligible for an executive severance program and participate in the Stay Bonus Plan will continue to participate in the approved executive severance program for six months following confirmation of the Plan and emergence from the chapter 11 cases. There will be no severance for voluntary resignations. In addition, all other employees will continue to be eligible for the Company's regular severance plan. E. Consulting Agreement 69. The Debtors propose to enter into a consulting agreement (the "Consulting Agreement") with William Pontikes (the "Consultant"), to provide high- level consulting services associated with the implementation of the Debtors' post- emergence business strategy, in lieu of the Consultant's participation in the Management Incentive Plan. While the Debtors believe that the Consulting Agreement is within the ordinary course of business, because the Consultant has a long-standing relationship with the Company and is currently a director and was formerly a senior officer of the Company, out of an abundance of caution, the Debtors are seeking the Court's approval for the Consulting Agreement. The Debtors seek to enter into the Consulting Agreement because of the Consultant's unique knowledge of the Company, relationships with the Company's employees and customers and ability to help maximize the value of the estates through the implementation of the Plan. 70. The Consulting Agreement includes, without limitation, the following terms:(11) TERM: No more than 24 months, commencing on the earlier of (a) the effective date of the plan, (b) the date when the Consultant ceases to be employed by the Company, or (c) August 1, 2002. SERVICES: The Consultant shall provide on-site assistance and spearhead special assignments as directed by the President, Chief Executive Officer or other designated officer of the Company. BASE COMPENSATION: The Consultant will be compensated with a base salary of $275,000 per year. INCENTIVE COMPENSATION: The Consultant will also be eligible for incentive compensation of: (a) an emergence bonus of $68,750 following the Company's emergence from the chapter 11 cases; (b) a $137,500 annual bonus, contingent on meeting certain performance objectives established by the Company's Chief Executive Officer, one-half of which is payable semi- annually and one-half of which is payable at End of Term; (c) an upside sharing bonus in the amount of (i) $495,000 if the corporate plan described in Section C(5) is achieved or exceeded or (ii) $742,500 if the corporate plan described in Section C(5) is exceeded by 10% or more. SIP: 50% of any upside sharing bonus will be applied toward the Consultant's remaining obligation under the SIP. The Consultant will receive a 60% reduction in his SIP obligation, provided the Consultant releases the Company from all SIP-related claims and SIP-related stock interests and all other claims and pays, within 30 days of receipt of the Consultant's last employee compensation earnings from the Company, the Consultant's outstanding SIP obligation. Reduction of SIP obligation is reduced to 20% if Consultant terminates the Consulting Agreement or Comdisco terminates the Agreement for cause. The Consulting Agreement also contains further standard terms and provisions, including, without limitation, those governing termination, non-competition, non- solicitation and confidentiality. APPLICABLE AUTHORITY 71. Bankruptcy Code section 363(b)(1) permits a debtor-in-possession to use property of the estate "other than in the ordinary course of business" after notice and a hearing. 11 U.S.C. ss. 363(b)(1). Additionally, Bankruptcy Code section 105(a) allows this Court to "issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of [the Bankruptcy Code]." 11 U.S.C. ss. 105(a). 72. This Court should approve and authorize the Programs. This relief can be granted outside the ordinary course of business if the Debtors demonstrate a sound business justification for obtaining it. See In re Lionel Corp., 722 F.2d 1063, 1071 (2d Cir. 1983) (business judgment rule requires a finding that a good business reason exists to grant a debtor's application under section 363(b)); In re Delaware Hudson Ry. Co., 124 B.R. 169, 179 (Bankr. D. Del. 1991). 73. Once the Debtors articulate a valid business justification, "[t]he business judgment rule 'is a presumption that in making a business decision the directors of a corporation acted on an informed basis, in good faith and in the honest belief that the action was in the best interests of the company.'" In re Integrated Resources, Inc., 147 B.R. 650, 656 (S.D.N.Y. 1992) (quoting Smith v. Van Gorkom, 488 A.2d 858, 872 (Del. 1985)). 74. The business judgment rule has vitality in chapter 11 cases and shields a debtor's management from judicial second-guessing. Id.; In re Johns-Manville Corp., 60 B.R. 612, 615-16 (Bankr. S.D.N.Y. 1986) ("[T]he Code favors the continued operation of a business by a debtor and a presumption of reasonableness attaches to a Debtor's management decisions."). 75. Given the importance of the Debtors' employees to the Debtors' Plan of Reorganization, this Court should approve the relief requested herein. Courts in this District and others have recognized the needs of chapter 11 debtors to retain their employees in order to assure continued business functions in chapter 11 and therefore have approved retention, incentive, and severance programs under Bankruptcy Code section 363(b)(1) similar to those proposed herein (each program, of course, being tailored to the needs of particular debtors) as a proper exercise of a debtor's business judgment. See, e.g., In re Outboard Marine Corporation, Case No. 00-37405 (Bankr. N.D. Ill. Dec. 22, 2000); In re Sourceone Wireless, Inc., Case No. 99-13841 (Bankr. N.D. Ill. April 29, 1999); In re Long John Silver's Restaurants, Inc. No. 98-01164 (Bankr. D. Del. Aug. 18, 1998) (approving a $13 million employee retention program for top 26 management personnel); In re America West Airlines, Inc., 171 B.R. 674, 678 (Bankr. D. Ariz 1994) (holding that proposal to pay bonuses on confirmation of reorganization plan was exercise of debtor's sound business judgment); In re Interco, Inc., 128 B.R. 229, 234 (Bankr. E.D. Mo. 1991) (concluding that implementation of a critical employee retention plan was a proper exercise of debtor's business judgment). As part of its first day papers in this case, the Debtors sought, and this Court approved, the continuation of the Debtors' employee retention, bonus and severance plan. See In re Comdisco, Inc., Case No. 01-24795 (Bankr. N.D. Ill. Aug. 29, 2001). 76. The Programs are critical to the Debtors' success in retaining employees necessary to implement the Plan. The Programs are necessary because of critical employees' need to know the level of compensation that they will achieve for continuing their employment with the Debtors through the implementation of the Plan. The Debtors' employees' knowledge of the existing business and their business relationships make them critical to the administration of the portfolios and the maximization of recovery to the estates. Finally, the Programs are designed to incentivize employees in maximizing the recovery to the Debtors' estates under the Plan. 77. The Debtors have determined that the costs associated with the adoption of the Programs are more than justified by the benefits that the Debtors expect to realize from them, including boosting morale and discouraging resignations among key employees, as well as incentivizing employees to assist vigorously in maximizing the value of the Debtors' estates through the run off process.(12) 78. The proposed relief will enable the Debtors to retain the knowledge, experience and loyalty of the key employees who are crucial to the Debtors' post- emergence business plans and the maximization of value of the assets. If key employees were to leave their current jobs at this critical point in the Debtors' chapter 11 cases, it would be impossible for the Debtors to replace the experience, knowledge and relationships that the employees have developed with respect to the Debtors' business. The maximum value of a run off will not be realized if those employees are not available to utilize that experience and knowledge and those relationships. 79. Suitable new employees, even if available, would not have in-depth and historical knowledge of the Debtors' businesses. The time and costs incurred, and the learning curve necessarily involved in hiring replacements for key employees, outweigh the potential costs of payments made under the Programs. 80. In sum, the Debtors have determined in the exercise of their business judgment that it is essential that the senior officers and other key employees continue to focus their efforts on supporting and maintaining the Debtors' reorganization efforts in the coming months. Accordingly, the Debtors believe that granting the relief requested in this Motion is in the best interests of the Debtors' estates, their creditors, and other interested parties. 81. No previous request for the relief sought herein has been made to this Court or any other court. WHEREFORE, the Debtors respectfully request that the Court enter an order (i) approving and authorizing the Programs on the terms outlined herein, and (ii) granting such other and further relief as is just and proper. Dated: Chicago, Illinois Respectfully submitted, May 24, 2002 Comdisco, Inc., et al., By: /s/ John Wm. Butler, Jr. --------------------------------------- John Wm. Butler, Jr. (ARDC No. 06209373) George N. Panagakis (ARDC No. 06205271) Felicia Gerber Perlman (ARDC No. 06210753) SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS) 333 West Wacker Drive, Suite 2100 Chicago, Illinois 60606-1285 (312) 407-0700 Attorneys for the Debtors and Debtors in Possession __________________ (1) Pursuant to a Shared Investment Plan (the "SIP") 106 Comdisco managers took out approximately $109 million in full recourse, personal loans to purchase over six million shares of stock in Comdisco. Employees who participated in the SIP are not eligible to participate in (a) any upside sharing bonus described herein or (b) any other incentive compensation described herein to the extent that such incentive compensation exceeds such employee's existing contractual bonus entitlement, if any, unless such employee elects to accept the resolution of SIP indebtedness with respect to the SIP as set forth in the Plan, as may be amended. (2) It is contemplated that any amounts earned by participants under the Programs will be escrowed or otherwise legally segregated from the funds of the Debtors for the benefit of the participants prior to the payout dates. Additionally, as is explained in more detail in the Motion, participants may forfeit their rights to bonuses under the plans if they voluntarily terminate their employment or are terminated for cause. Disposition of forfeited monies as a result of voluntary resignation or for-cause termination shall be available for general corporate purposes as determined by the Company's Board of Directors. (3) Upside sharing amounts herein do not reflect any impact of adjustments as a result of severance payment reductions described in paragraph 67. (4) "End of Term" is when the plan is substantially completed (90-95%) and management has made, and the Board of Directors approved, a determination as to the disposition and value of the assets remaining in each respective business unit (i.e., by auction, liquidator, etc.). (5) Upside sharing amounts herein do not reflect any impact of adjustments as a result of severance payment reductions described in paragraph 67. (6) "End of Term" is when the plan is substantially completed (90-95%) and management has made, and the Board of Directors approved, a determination as to the disposition and value of the assets remaining in each respective business unit (i.e., by auction, liquidator, etc.). value basis (i.e., discounted from the plan End of Term to the date of payment utilizing the applicable discount rate). (7) "Net Book Value" means the net leased assets, receivables and inventory at the time of sale. (8) Upside sharing amounts herein do not reflect any impact of adjustments as a result of severance payment reductions described in paragraph 67. (9) In addition to being eligible for the Programs Gregory D. Sabatello shall have an employment agreement with the Company. Mr. Sabatello's employment agreement will include, without limitation, the following: (x) participation in the corporate plan portion of the Programs described in this Motion; (y) a guaranteed two-year term; and (z) if terminated prior to April 1, 2004, receipt of semi-annual bonus and base salary payments for period between termination date and April 1, 2004. (10) Upside sharing amounts herein do not reflect any impact of adjustments as a result of severance payment reductions described in paragraph 67. (11) In the event of any conflict between the description of the terms of the Agreement in this Motion and the Consulting Agreement, the Consulting Agreement shall govern. (12) Since the proposed Programs are needed to retain key employees who are in turn necessary for the preservation of the Debtors' estates the payment rights of the key employees under the Programs are "actual, necessary costs and expenses of preserving the [Debtors'] estate[s]," and should be accorded 11 U.S.C. ss. 503(b)(1)(A) administrative expense status to the extent they become due. IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re: ) Case No. 01-24795 ) (Jointly Administered) COMDISCO, INC. ) Chapter 11 et al., ) ) Hon. Ronald Barliant Debtors. ) ORDER PURSUANT TO 11 U.S.C. ss.ss. 105(a) AND 363(b)(1) APPROVING AND AUTHORIZING THE DEBTORS' STAY BONUS PLAN AND MANAGEMENT INCENTIVE PLAN This matter having come before the Court on the Motion (the "Motion") of the above captioned, debtors and debtors-in-possession (the "Debtors") for Order pursuant to 11 U.S.C. ss.ss. 105(a) and 363(b)(1), to approve and authorize the Debtors' Stay Bonus Plan and Management Incentive Plan (collectively, the "Programs"); and it appearing that notice of the Motion was good and sufficient under the particular circumstances and that no other or further notice need be given; and it appearing that the relief requested in the Motion is in the best interests of the Debtors, their estates and creditors and other parties in interest; and upon the record of the Hearing; and after due deliberation thereon; and good cause appearing therefor, it is hereby ORDERED, ADJUSTED AND DECREED THAT: 1. The Motion is granted. 2. The Programs described in the Motion are hereby authorized and approved in all respects. Dated: Chicago, Illinois June 18, 2002 /s/ Hon. Ronald Barliant ------------------------------- UNITED STATES BANKRUPTCY JUDGE John Wm. Butler, Jr. (ARDC No. 06209373) George N. Panagakis (ARDC No. 06205271) Felicia Gerber Perlman (ARDC No. 06210753) SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS) 333 West Wacker Drive Chicago, Illinois 60606 (312) 407-0700 Attorney for Debtors and Debtors-in-Possession EX-10 12 chi339990.txt EXHIBIT 10.2 Exhibit 10.2 May 29, 2002 Official Committee of Unsecured Creditors of Comdisco, Inc. c/o Ms. Susan Dollinger Citigroup 250 West Street 8th Floor New York, NY 10013 Dear Sue: As you aware, Comdisco, Inc. and fifty of its domestic subsidiaries and affiliates (the "Debtors") filed their Motion for Order Pursuant to 11 U.S.C. ss.ss. 105(a) and 363(b)(1) Approving and Authorizing the Debtors' Stay Bonus Plan and Management Incentive Plan (the "Motion"). Certain components of the incentive compensation described in the Motion utilize benchmarks and discount rates that arc material, non-public information that may reveal the Debtors' pricing analyses of certain of its businesses. Because of the sensitive nature of that information, the Debtors have not disclosed it in the Motion but are providing it to you through this letter. The Motion establishes certain plan and threshold targets as benchmarks for incentive compensation. Those plan and threshold targets are established by utilizing various discount rates to April 1, 2002. Those discount rates are referred to, but not disclosed, in the Motion. They are as follows: - ------------------------------------------- ---------------------------------- Business Unit Discount Rate - ------------------------------------------- ---------------------------------- U.S. Leasing 10% - ------------------------------------------- ---------------------------------- Ventures 14% - ------------------------------------------- ---------------------------------- Corporate Asset Management Group 10% - ------------------------------------------- ---------------------------------- Consolidated Corporate As stated above, plus: Europe - 14% Other Corporate - 10% - ------------------------------------------- ---------------------------------- The Motion also refers to incentive compensation associated with the sale of the Debtors' core European operations (Germany and France) based on percentage of Net Book Value at the time of sale and sale closing dates. Net Book Value is defined as net leased assets, accounts receivable and inventory. The following table summarizes the award opportunities in connection with a sale of these units:
- ------------------------------------- ----------------------------------- ----------------------------------- Percentage of Book Value Realized Sale by 12/31/02 Sale by 3/31/03 - ------------------------------------- ----------------------------------- ----------------------------------- Greater than 85% 2.0 times base salary 1.5 times base salary - ------------------------------------- ----------------------------------- ----------------------------------- 50-85% 1.5 times base salary 1.5 times base salary - ------------------------------------- ----------------------------------- -----------------------------------
In addition, the forecasted Net Book Value of the German and French core European operations as of September 30, 2002 is approximately $554 million ($509.3 million leased assets, $44.1 million accounts receivable, and $0.6 million inventory). Therefore, assuming the forecast is correct and that the sale occurs on September 30, 2002, the 50% target in the above table would equate to $277 million and the 85% target would equate to $470.9 million. Please contact me if you have any questions. Sincerely, /s/ Ronald C. Mishler --------------------------- Ronald C. Mishler Cc: Chaim J. Fortgang, Esq. Mr. Randolph I. Thornton John Wm. Butler, Jr., Esq. George N. Panagakis, Esq. EX-10 13 chi340039.txt EXHIBIT 10.3 Exhibit 10.3 July 3, 2002 Official Committee of Unsecured Creditors of Comdisco, Inc. c/o Ms. Susan Dollinger Citigroup 250 West Street, 8th Floor New York, NY 10013 Dear Sue: The following is intended to confirm our understanding relative to the compensation plan target revisions. Please note that the revisions discussed below serve to reconcile the detailed compensation plan targets to the Plan of Reorganization and Disclosure Statement, which was distributed for voting and includes an estimated 89.8% recovery for unsecured creditors. Consolidated Corporate Present Value Target The compensation plan motion filed on May 29, 2002, which was approved on June 18th, included present value plan targets based on the best and most current forecast of cash flows available at that time. However, subsequent to May 29th and prior to the filing of a revised and final Plan of Reorganization on June 13th the estate valuation was modified as follows: a) The estimate of post-emergence taxes was increased (This change was communicated to the Creditor's Committee prior to the filing of the Plan of Reorganization and Disclosure Statement on May 31st). b) The calculation of the present value of forecasted European IT Leasing cash flows was corrected. c) Cash on the balance sheet as of March 31, 2002, which was previously viewed as escrowed for the benefit of third parties, was reclassified to properly reflect ownership by Comdisco. d) The estimate of the tax liability of Comdisco UK relating to the sale of Comdisco Continuity Services UK was decreased. The impact of the above modifications is summarized in millions of dollars in the table below.
- ---------------------------- -------------------------- -------------------------- -------------------------- Present Value of Future Cash Available for Total Impact on Cash Flows Distributions 3/31/02 Valuations - ---------------------------- -------------------------- -------------------------- -------------------------- a) US Tax (30) - (30) - ---------------------------- -------------------------- -------------------------- -------------------------- b) Europe (43) - (43) - ---------------------------- -------------------------- -------------------------- -------------------------- c) Cash - 21 21 - ---------------------------- -------------------------- -------------------------- -------------------------- d) UK tax 17 - 17 - ---------------------------- -------------------------- -------------------------- -------------------------- Total (56) 21 (35) - ---------------------------- -------------------------- -------------------------- --------------------------
Although the total impact on valuation is ($35) million, the impact on the present value of future cash flows and the consolidated corporate present value target if ($56) million. Therefore the consolidated corporate present value target should be reduced by $56 million and the table in paragraph 62 of the compensation plan motion/order should be revised as follows:
- ------------------------------- ----------------------- -------------------------- -------------------------- % Above Threshold/ % of Plan Percentage Maximum Incremental Maximum Total Incentive Incentive Payout Payout - ------------------------------- ----------------------- -------------------------- -------------------------- 0-3% above threshold 0.25% $0.1 million $0.1 million ($1,462-1,506 million) - ------------------------------- ----------------------- -------------------------- -------------------------- 3-6% above threshold 0.4% $0.2 million $0.3 million ($1,506-1,550 million) - ------------------------------- ----------------------- -------------------------- -------------------------- 6-10% above threshold 0.6% $0.4 million $0.7 million ($1,550-1,608 million) - ------------------------------- ----------------------- -------------------------- -------------------------- 10% above threshold to plan 0.8% $0.4 million $1.1 million ($1,608-1,661 million) - ------------------------------- ----------------------- -------------------------- -------------------------- 100-110% of plan 0.72% $1.2 million $2.3 million ($1,661-1,827 million) - ------------------------------- ----------------------- -------------------------- -------------------------- 110-115% of plan 0.5% $0.4 million $2.7 million ($1,827-1,910 million) - ------------------------------- ----------------------- -------------------------- -------------------------- 115-120% of plan 0.3% $0.2 million $2.9 million ($1,910-1,993 million) - ------------------------------- ----------------------- -------------------------- -------------------------- 120% of plan and above (over 0.2% 0.2% of incremental value $2.9 million plus 0.2% $1,993 million) of incremental value over $1,993 million - ------------------------------- ----------------------- -------------------------- --------------------------
Semi-annual Bonus Present Value Targets The compensation plan motion/order describes in detail the semi-annual bonus program. However, it does not include the present value of the forecasted six-month cash flows, which will be the targets for determining achievement of a significant portion of the semi-annual bonuses. Attached as Exhibit A is a schedule listing those targets. The gross cash flows included in the schedule tie to the forecasted financials in the Plan. The business unit semi-annual present value cash flow targets presented in the schedule sum to the plan targets in the compensation motion/order. And, the consolidated corporate semi-annual present value cash flow targets presented in the schedule tie to the revised target discussed above. Please contact me if you have any questions. Sincerely, /s/ Ronald C. Mishler ------------------------ Ronald C. Mishler cc: Chaim J. Fortgang, Esq. Mr. Randolph I. Thornton John Wm. Butler, Jr., Esq. George N. Panagakis, Esq. RCM/is Attachment
Comdisco, Inc. Cumulative PV Targets (in millions) - ------------------------- -------------------------------------------------------------------------------------------------------- Cumulative PV of 6 Month Cash Flows (1) - ------------------------- -------------------------------------------------------------------------------------------------------- 2002 2003 2003 2004 2004 2005 2005 2006 2006 - ------------------------- -------------------------------------------------------------------------------------------------------- Apr - Oct - Apr - Oct - Apr - Oct - Apr - Oct - Apr - Sept Mar Sept Mar Sept Mar Sept Mar Sept - ------------------------- -------------------------------------------------------------------------------------------------------- US Leasing $ 209.3 $ 366.9 $ 516.5 $ 563.4 $ 649.3 $ 649.3 $ 649.3 $ 649.3 $ 649.3 - ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Ventures 173.6 302.0 375.1 408.8 421.2 424.4 427.5 427.5 427.5 - ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Ventures Equity 16.9 19.8 22.1 24.3 26.7 29.8 32.6 40.7 48.2 - ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Ventures Warrants - 0.5 1.0 1.3 1.6 10.6 19.0 19.0 19.0 - ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Total Ventures 190.6 322.3 398.2 434.5 449.5 464.8 479.1 487.2 494.8 - ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- CAM 377.2 404.1 464.0 476.7 510.5 526.0 526.7 526.7 526.7 - ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Corporate (263.4) (298.7) (310.4) (305.0) (297.0) (294.5) (287.8) (268.2) (288.6) - ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Consolidated Europe - - - - - - - - ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Core Europe - 117.2 226.6 226.6 226.6 226.6 226.6 226.6 226.6 - ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Non-Core Europe - 27.0 52.3 52.3 52.3 52.3 52.3 52.3 52.3 - ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Consolidated Corporate $ 513.8 $ 938.8 $1,347.1 $ 1,448.4 $ 1,591.1 $1,624.4 $ 1,646.1 $1,653.8 $ 1,661.0 - ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- - --------------------------------------------------------------------------------------------------------------------------------- (1) Semiannual bonus PV cash flow targets - ---------------------------------------------------------------------------------------------------------------------------------
PV of 6 Month Cash Flows Discount 2002 2003 2003 2004 2004 2005 2005 2006 2006 Rate Apr - Oct - Apr - Oct - Apr - Oct - Apr - Oct - Apr - Total (2) Sept Mar Sept Mar Sept Mar Sept Mar Sept US Leasing 10% $ 209.3 $ 157.6 $ 149.6 $ 46.9 $ 85.9 $ - $ - $ - $ - $ 549.3 Ventures 14% 173.6 128.4 73.1 33.8 12.3 3.3 3.0 0.0 0.0 427.5 Ventures Equity 14% 16.9 2.9 2.3 2.2 2.4 3.0 2.8 8.1 7.6 48.2 Venture Warrants 14% - 0.5 0.5 0.3 0.3 9.0 8.4 - - 19.0 ----------------------------------------------------------------------------------------------------- Total Ventures 190.6 131.8 75.9 36.2 15.0 15.3 14.3 8.1 7.6 494.8 ----------------------------------------------------------------------------------------------------- CAM 10% 377.2 26.9 59.8 12.7 33.8 15.5 0.7 - - 526.7 Corporate 10% (263.4) (35.4) (11.7) 5.4 8.0 2.5 6.7 (0.4) (0.4) (288.6) including secured claims Consolidated Europe Core Europe 14% - 117.2 109.4 - - - - - - 226.6 Non-Core Europe 14% - 27.0 25.2 - - - - - - 52.3 ----------------------------------------------------------------------------------------------------- Consolidated $ 513.8 $ 425.1 $ 408.3 $ 101.3 $ 142.7 $ 33.3 $ 21.7 $ 7.7 $ 7.2 $1,661.0 Corporate ----------------------------------------------------------------------------------------------------- 1,661.0 Gross Cash Flow US Leasing 214.6 169.7 169.2 55.8 107.2 - - - - 716.5 Ventures 179.7 142.3 86.8 42.9 16.8 4.8 4.8 0.0 0.0 478.2 Ventures Equity 17.5 3.2 2.8 2.8 3.3 4.4 4.4 13.6 13.6 65.5 Ventures 0.0 0.6 0.6 0.4 0.4 13.1 13.1 0.0 0.0 28.2 Warrants ----------------------------------------------------------------------------------------------------- Total Ventures 197.2 146.1 90.2 46.1 20.5 22.3 22.3 13.6 13.6 571.9 ----------------------------------------------------------------------------------------------------- CAM 386.7 29.0 67.7 15.1 42.2 20.3 1.0 - - 562.0 Corporate (264.7) (13.2) (13.2) 6.4 10.0 3.3 9.3 (0.6) (0.6) (263.4) Consolidated Europe Core Europe 129.9 129.9 259.8 Non-Core Europe 30.0 30.0 60.0 ----------------------------------------------------------------------------------------------------- Total Cash Flow 533.7 491.4 473.8 123.4 180.0 45.9 32.6 13.0 13.0 1,906.9(1) from Projections ----------------------------------------------------------------------------------------------------- Other Secured (6.5) (6.5) (13.0) Claims (3) Liabilities not (18.4) (18.4) (36.8) subject to Compromise (3) Impact of 19.7 19.7 Change in Discounting Methodology (3) ----------------------------------------------------------------------------------------------------- Total Cash 528.5 466.5 473.8 123.4 180.0 45.9 32.6 13.0 13.0 1,876.8 ----------------------------------------------------------------------------------------------------- 1) Ties to Plan of Reorganization Financial Statements Exhibit E $3,950.4 ($942 Pmts on new roles + $22.3 Cash Interest pmt on new notes + $2,866.1 Cash Avail, After debt service) Less $1,943.5 distributable cash as of March 31, 2002 ($2,206.7 Total Cash - $178.4 Restricted Cash - $84.8 Europe IT Cash) equals $1,906.9 2) Ties to Compensation Plan Upside Sharing Targets 3) Claims & other issues consolidated into the Corporate PV for compensation plan purposes.
EX-10 14 ch339817.txt EXHIBIT 10.5 Exhibit 10.5 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re: ) ) USDC No. 01 C 7255 COMDISCO, INC. ) USBC No. 01 B 24795 et al., ) ) Hon. David H. Coar ) Debtors. ) AGREED MOTION FOR DISMISSAL WITH PREJUDICE Pursuant to Federal Rule of Bankruptcy Procedure 8001(c)(2), appellant Official Committee of Unsecured Creditors of Comdisco, Inc. et al. (the "Creditors Committee") and appellees Comdisco, Inc., et al. (the "Debtors" or "Comdisco"), the parties to this appeal (collectively, the "Parties"), hereby move this Court as follows: 1. This appeal arises from a dispute regarding the Debtors' assumption of the pre-petition employment agreement (the "Employment Agreement") of the Debtors' chief executive officer, Mr. Norman P. Blake, Jr. (the "Executive"), a copy of which is found at Tab 6 in the record on appeal (the "Record"). On August 30, 2001, the United States Bankruptcy Court for the Northern District of Illinois entered an order approving the Debtors' assumption of the Employment Agreement (the "Bankruptcy Court Order"). Paragraph 3 of the Bankruptcy Court Order, which is found at tab 11 in the Record, incorporated an agreement between the Debtors and the Executive to cap the Executive's total compensation under both the incentive and severance provisions of the Employment Agreement, including without limitation ss.ss. 2 and 4 of the Employment Agreement, to a maximum of $9.6 million in the aggregate. 2. The Parties, in a good faith effort to resolve this dispute, have agreed to settle and compromise this appeal by agreeing to limit the Executive's total compensation under both the incentive and severance provisions of the Employment Agreement, including without limitation ss.ss. 2 and 4 of the Employment Agreement, to a maximum of $7.25 million in the aggregate. The Parties have not agreed to modify, and have not modified, any other provision or term of the Employment Agreement or Bankruptcy Court Order. 3. The Parties attach hereto an Agreed Order for Dismissal With Prejudice incorporating the Parties' settlement and resolving this matter in full. 4. The Parties therefore request that this Court enter the Agreed Order dismissing this appeal with prejudice pursuant to the terms set forth therein. WHEREFORE, for the reasons set forth above, the Parties respectfully request that this Court grant this Agreed Motion and enter the Agreed Order dismissing the above-captioned appeal with prejudice. Dated: March 7, 2002 Respectfully submitted, /s/ William J. Barrett /s/ Christina M. Tchen - --------------------------------- --------------------------------- William J. Barrett Christina M. Tchen Melissa B. Glass Matthew R. Kipp GARDNER, CARTON & DOUGLAS Ryan J. Rohlfsen 321 North Clark Street SKADDEN, ARPS, SLATE, Chicago, IL 60610-4795 MEAGHER & FLOM (ILLINOIS) (312) 644-3000 333 West Wacker Drive, Suite 2100 Chicago, Illinois 60606-1285 Attorneys for Appellants (312) 407-0700 Official Committee of Unsecured Creditors Attorneys for Appellees Comdisco, of Comdisco, Inc. et al. Inc., et al., Debtors and Debtors-in- Possession IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION In re: ) ) USDC No. 01 C 7255 COMDISCO, INC. ) USBC No. 01 B 24795 et al., ) ) Hon. David H. Coar ) Debtors. ) AGREED ORDER FOR DISMISSAL WITH PREJUDICE This matter having come before the Court on the parties' Agreed Motion for Dismissal With Prejudice, dated March 7, 2002, of appellant Official Committee of Unsecured Creditors of Comdisco, Inc. et al. (the "Creditors Committee") and appellees Comdisco, Inc., et al. (the "Debtors" or "Comdisco"); and the Court having reviewed the Agreed Motion, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED THAT: 1. The Agreed Motion be, and it hereby is, GRANTED. 2. Pursuant to the parties' agreement, the Employment Agreement is hereby modified such that the total maximum compensation that the Debtors' chief executive officer, Mr. Norman P. Blake, Jr., can receive under both the incentive and severance provisions of the Employment Agreement, including without limitation ss.ss. 2 and 4 of the Employment Agreement, shall not exceed $7.25 million in the aggregate. No other terms of the Employment Agreement, or the order of the Bankruptcy Court below, are modified or altered. 3. This appeal is hereby dismissed with prejudice, with each party to bear its own costs. IT IS SO ORDERED. Entered: Dated: March 14, 2002 /s/ David H. Coar ---------------------------- HONORABLE DAVID H. COAR UNITED STATES DISTRICT JUDGE EX-10 15 ch339748.txt EXHIBIT 10.6 Exhibit 10.6 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into as of July 5, 2001 (the "Effective Date"), by and between Michael Fazio (the "Executive") and Comdisco, Inc. (the "Company"). WHEREAS, the Company desires to provide for the service and employment of the Executive with the Company and the Executive wishes to perform services for the Company, all in accordance with the terms and conditions provided herein; NOW THEREFORE, in consideration of the mutual covenants and agreements set forth below, it is hereby covenanted and agreed by the Executive and the Company as follows, effective as of the Effective Date: 1. Performance of Services. The Executive's employment with the Company shall be subject to the following: (a) Subject to the terms of this Agreement, the Company hereby agrees to employ the Executive as its Executive Vice President and Chief Financial Officer or a more senior position during the Agreement Term (as defined below), and the Executive hereby agrees to remain in the employ of the Company during the Agreement Term. (b) During the Agreement Term, while the Executive is employed by the Company, the Executive shall devote his full time, energies and talents to serving as its Executive Vice President and Chief Financial Officer or a more senior position. (c) The Company agrees that its Board of Directors will elect the Executive, as a member of the Board of Directors of the Company not later than the first regularly scheduled meeting of the Board of Directors to occur after the Effective Date. The Executive agrees that he will serve on the boards of directors of the Company's Subsidiaries (as defined below) as the Company shall request from time to time. (d) The Executive agrees that he shall perform his duties faithfully and efficiently subject to the directions of the Chairman and Chief Executive Officer. The Executive's duties may include providing services for both the Company and the Subsidiaries, as determined by the Chairman and Chief Executive Officer; provided that the Executive shall not, without his consent, be assigned tasks that would be inconsistent with those of Executive Vice President and Chief Financial Officer or a more senior position. The Executive shall report to the Chairman and Chief Executive Officer and shall have such authority, power, responsibilities and duties as are inherent in his position (and the undertakings applicable to his position) and necessary to carry out his responsibilities and the duties required of him hereunder. The Executive will also be subject to the Company policies that are applicable to the Company's other senior management employees. Notwithstanding the foregoing provisions of this paragraph 1, during the Agreement Term, the Executive may devote reasonable time to activities other than those required under this Agreement, including activities involving professional, charitable, community, educational, religious and similar types of organizations, speaking engagements, membership on the boards of directors of other organizations, and similar types of activities, to the extent that such other activities do not, in the judgment of the Chairman and Chief Executive Officer, inhibit or prohibit the performance of the Executive's duties under this Agreement, or conflict in any material way with the business of the Company or any Subsidiary; provided, however, that the Executive shall not serve on the board of any business, render to others services of any kind for compensation, or hold any other position with any business, without the written consent of the Board. (e) Subject to the terms of this Agreement, the Executive shall not be required to perform services under this Agreement during any period that he is Disabled. The Executive shall be considered "Disabled" during any period in which he has a physical or mental disability which renders him incapable, after reasonable accommodation, of performing his duties under this Agreement. In the event of a dispute as to whether the Executive is Disabled, the Company may refer the same to a mutually acceptable licensed practicing physician, and the Executive agrees to submit to such tests and examinations as such physician shall deem appropriate. During the period in which the Executive is Disabled, the Company may appoint a temporary replacement to assume the Executive's responsibilities. (f) The "Agreement Term" shall be the period beginning on July 5, 2001 (the "Employment Commencement Date") and ending on the two-year anniversary of the Employment Commencement Date. (g) For purposes of this Agreement, the term "Subsidiary" shall mean any corporation, partnership, joint venture or other entity during any period in which at least a fifty percent interest in such entity is owned, directly or indirectly, by the Company (or a successor to the Company). 2. Compensation. Subject to the terms of this Agreement, during the Agreement Term, while the Executive is employed by the Company, the Company shall compensate him for his services as follows: (a) Salary. The Executive shall receive, for each 12 consecutive month period beginning on the Employment Commencement Date and each anniversary thereof, in substantially equal monthly or more frequent installments, an annual base salary of not less than $500,000 (the "Salary"). The Executive's Salary rate shall be reviewed by the Board on or about October 1 of each year during the Agreement Term, while the Executive is employed by the Company, to determine whether an increase in the amount of Salary is appropriate. The salary rate of the Executive shall not be reduced. (b) Annual Bonus. The Executive shall participate in an annual bonus program. The bonus program shall provide for a maximum bonus amount of 100% of the Executive's annual salary (the "Annual Bonus"), which shall be pro-rated for the 2001 fiscal year of the Company based on the actual number of days of service of the Executive during such fiscal year. The performance goals shall be established by the Board. For the period ending on the first anniversary of the Employment Commencement Date, the Executive shall be entitled to a guaranteed bonus in an amount equal to 100% of the Executive's annual salary, which amount shall be payable in quarterly installments on the last business day of each of the four consecutive quarters commencing with the quarter ending September 30, 2001; provided, that the Executive is employed by the Company on the date such installment is payable and such payments are offset against any payments otherwise earned under the annual bonus programs in the Company's 2001 and 2002 fiscal years allocable to the first twelve months following the Employment Commencement Date. (c) Location. The Executive's office shall be in the Company's headquarters. As of July 5, 2001, such headquarters have been in Rosemont, Illinois. Thereafter, the headquarters shall be at Rosemont or such other location as is determined by the Board. During the first ten months of the Agreement Term, the Executive may reside in Greenwich, Connecticut. During such period, the Executive will be provided with round-trip commercial first class airline transportation for commuting to and from Greenwich, Connecticut. The Executive shall be entitled to a Tax Gross-Up with respect to the provision of such transportation. (d) Apartment. During the first ten months of the Agreement Term, the Company will provide the Executive with a furnished apartment or other suitable accommodations in the vicinity of the Company's headquarters. The Executive shall be entitled to a Tax Gross-Up with respect to the provision of such apartment. The total cost to the Company under this paragraph 2(d), excluding any Tax Gross-Up, shall not exceed $18,000, except that such limitation shall not apply to expenses incurred during the first month of the Agreement Term. (e) Relocation. The Executive shall be provided with relocation benefits consistent with the Company's relocation benefits program established by the Company for its senior officers at the time of such relocation. (f) Expenses. The Executive is authorized to incur reasonable expenses for entertainment, traveling, meals, lodging and similar items in promoting the Company's business. The Company will reimburse the Executive for all reasonable business expenses so incurred, provided that such expenses are incurred and accounted for in accordance with the reasonable policies and procedures established by the Company. (g) Vacation. The Executive shall be eligible for four weeks of vacation per fiscal year; provided, that the Executive shall be eligible for one week of vacation for the 2001 fiscal year of the Company. (h) Fringe Benefits. Except as otherwise specifically provided to the contrary in this Agreement, the Executive shall be provided with the welfare benefits and other fringe benefits to the same extent and on the same terms as those benefits are provided by the Company from time to time to the Company's other senior management employees; provided, however, that if any such benefits are adjusted to reflect an executive's position, the Executive's benefits shall be adjusted in a manner commensurate with his position. The Executive shall also be entitled to the perquisites that are customarily provided in connection with his position. Nothing in this paragraph 2(h) shall be construed to prevent the Company from revising the benefits or perquisites generally provided to executives from time to time. However, the Company shall not be required to provide a benefit under this paragraph 2(h) if such benefit would duplicate (or otherwise be of the same type as) a benefit specifically required to be provided under another provision of this Agreement. The Executive shall complete all forms and physical examinations, and otherwise take all other similar actions to secure coverage and benefits described in this paragraph 2(h), to the extent determined to be necessary or appropriate by the Company. (i) Tax Gross-Up. The term "Tax Gross-Up" with respect to any benefit means an amount payable to the Executive such that, after payment of federal, state and local income taxes, payroll taxes, excise and other taxes applicable to the Executive on such amount, there remains a balance sufficient to pay all such taxes being reimbursed as determined by the Company's auditors. (j) $500,000 Signing Bonus. As soon as practicable after the Effective Date, the Executive shall receive from the Company a one-time lump sum cash payment of $500,000. (k) Emergence Bonus. In the event that the Company commences judicial reorganization cases under Title 11 of the United States Code, the Executive shall receive the amount of $1,000,000 in cash or cash equivalents on the effective date of any confirmed plan of reorganization in such cases provided that: (a) the reorganization plan provides for the emergence and reorganization of at least one of the three principal businesses in which the Company is engaged as of the date of this Agreement; (b) the Executive is employed with the Company on the date that such reorganization plan is first filed in such cases in the executive position provided for in this Agreement or a more senior position; and (c) the Executive meets reasonable performance criteria as determined by the Chairman and Chief Executive Officer and the Compensation Committee of the Board of Directors during such cases. 3. Termination. The Executive's employment with the Company during the Agreement Term may be terminated by the Company or the Executive without any breach of this Agreement only under the circumstances described in paragraphs 3(a) through 3(f): (a) Death. The Executive's employment hereunder will terminate upon his death. (b) Permanent Disability. The Company may terminate the Executive's employment during any period in which he is Permanently Disabled. The Executive shall be considered "Permanently Disabled" during any period in which he is Disabled; provided, however, that the Executive shall not be considered to be "Permanently Disabled" unless (i) the Executive, as a result of a physical or mental disability, is incapable, after reasonable accommodation, of performing any substantial portion of the Executive's duties under this Agreement on a permanent, full-time basis; and (ii) such disability is determined by the Board to be of a long-term nature. In the event of a dispute as to whether the Executive is Permanently Disabled, the Company may refer the same to a mutually acceptable licensed practicing physician, and the Executive agrees to submit to such tests and examination as such physician shall deem appropriate. (c) Cause. The Company may terminate the Executive's employment hereunder at any time for Cause. For purposes of this Agreement, the term "Cause" shall mean: (i) the willful and continued failure by the Executive to substantially perform his material duties with the Company (other than any such failure resulting from the Executive's being Disabled), within a reasonable period of time after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed his duties; (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise; or (iii) the engaging by the Executive in egregious misconduct involving serious moral turpitude with the result that the Executive's credibility and reputation no longer conform to the standard of the Company's executives. For purposes of this Agreement, no act, or failure to act, on the Executive's part shall be deemed "willful" unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive's action or omission was in the best interest of the Company. "Cause" shall not include (i) bad judgment, (ii) failure of the Company to meet financial performance objectives, or (iii) any act or omission of which any member of the Board who is not a party to such act or omission has had actual knowledge for at least twelve months. (d) Constructive Discharge. If (I) the Executive provides written notice to the Company of the occurrence of Good Reason (as defined below) within a reasonable time after the Executive has knowledge of the circumstances constituting Good Reason, which notice shall specifically identify the circumstances which the Executive believes constitute Good Reason; (II) the Company fails to correct the circumstances within 30 days after receiving such notice; and (III) the Executive resigns within a reasonable time after the Company fails to correct such circumstances; then the Executive shall be considered to have been subject to a Constructive Discharge by the Company. For purposes of this Agreement, "Good Reason" shall mean, without the Executive's express written consent (and except in consequence of a prior termination of the Executive's employment), the occurrence of any one or more of the following circumstances: (i) A material adverse change in the status, title, authority, responsibilities or perquisites of the Executive. "Good Reason" shall be deemed to exist under this paragraph 3(d)(i) if the Executive is not, within six months following the Employment Commencement Date, appointed to the position of Chief Operating Officer of the Company (or a more senior position) and, within twelve months of the Employment Commencement Date, appointed to the position of Chief Executive Officer of the Company. (ii) A reduction by the Company in the Executive's salary or benefits to an amount that is less than required under paragraph 2. (iii) Any purported termination of the Executive's employment that is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph 3(g) below (and, if applicable, the requirements of paragraph 3(b) above), and for purposes of this Agreement, no such purported termination shall be effective. (iv) Any material breach of this Agreement by the Company not described in paragraphs 3(d)(i) through 3(d)(iii) above. The Executive's right to terminate his employment pursuant to this paragraph 3(d) shall not be affected by his incapacity due to physical or mental illness. (e) Termination by Executive. The Executive may terminate his employment hereunder at any time for any reason by giving the Company prior written Notice of Termination (as defined in paragraph 3(g)), which Notice of Termination shall be effective not less than 90 days after it is given to the Company. Nothing in this Agreement shall require the Executive to specify a reason for any such termination. However, to the extent that the procedures specified in paragraph 3(d) are required, the procedures of this paragraph 3(e) may not be used in lieu of the procedures required under paragraph 3(d). (f) Termination by Company. The Company may terminate the Executive's employment hereunder at any time for any reason, by giving the Executive prior written Notice of Termination, which Notice of Termination shall be effective immediately, or such later time as is specified in such notice. The Company shall not be required to specify a reason for the termination under this paragraph 3(f), provided that termination of the Executive's employment by the Company shall be deemed to have occurred under this paragraph 3(f) only if it is not for reasons described in paragraph 3(b), 3(c), 3(d), or 3(e). (g) Notice of Termination. Any termination of the Executive's employment by the Company or the Executive (other than a termination pursuant to paragraph 3 (a)) must be communicated by a written Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" means a dated notice which indicates the Date of Termination (not earlier than the date on which the notice is provided), and which indicates the specific termination provision in this Agreement relied on and which sets forth in reasonable detail the facts and circumstances, if any, claimed to provide a basis for termination of the Executive's employment under the provision so indicated. (h) Date of Termination. "Date of Termination" means the last day the Executive is employed by the Company, provided that the Executive's employment is terminated in accordance with the foregoing provisions of this paragraph 3. (i) Effect of Termination. If, on the Date of Termination, the Executive is a member of the Board of Directors of the Company or any of the Subsidiaries, or holds any other position with the Company and the Subsidiaries (other than the position described in paragraph 1 (a)), the Executive shall resign from all such positions as of the Date of Termination. 4. Rights Upon Termination. The Executive's right to payment and benefits under this Agreement for periods after his Date of Termination shall be determined in accordance with the following provisions of this paragraph 4: (a) General. If the Executive's Date of Termination occurs during the Agreement Term for any reason, the Company shall pay to the Executive: (i) The Executive's Salary for the period ending on the Date of Termination. (ii) Payment for unused vacation days, as determined in accordance with Company policy as in effect from time to time. (iii) If the Date of Termination occurs after the end of a performance period for the Annual Bonus, and prior to the payment of the Annual Bonus (as described in paragraph 2(b)) for the year, the Executive shall be paid such bonus amount at the regularly scheduled time. (iv) The Executive and any of his dependents shall be eligible for medical continuation coverage under the provisions of section 4980B of the Internal Revenue Code or section 601 of the Employee Retirement Income Security Act (sometimes called "COBRA coverage") to the extent required by applicable law. (v) Any other payments or benefits to be provided to the Executive by the Company pursuant to any employee benefit plans or arrangements adopted by the Company, to the extent such amounts are due from the Company. Except as may otherwise be expressly provided to the contrary in this Agreement, nothing in this Agreement shall be construed as requiring the Executive to be treated as employed by the Company for purposes of any employee benefit plan or arrangement following the date of the Executive's Date of Termination. (b) Death. If the Executive's Date of Termination occurs during the Agreement Term by reason of the Executive's death, then, in addition to the amounts payable in accordance with paragraph 4(a), the Executive's estate shall receive payment of the Annual Bonus for the performance period in which his Date of Termination occurs, based on actual performance for the entire period, and payable at the same time as it is payable for other participants in the Annual Bonus program; provided, however, that it shall be subject to a pro-rata reduction for the portion of the performance period following the Date of Termination. (c) Disability. If the Executive's Date of Termination occurs during the Agreement Term under circumstances described in paragraph 3(b) (relating to Executive's being Permanently Disabled) then, in addition to the amounts payable in accordance with paragraph 4(a): (i) The Executive shall receive payment of the Annual Bonus for the performance period in which his Date of Termination occurs, based on actual performance for the entire period, and payable at the same time as it is payable for other participants in the Annual Bonus Program; provided, however, that it shall be subject to a pro-rata reduction for the portion of the performance period following the Date of Termination. (ii) If, at the Date of Termination under circumstances described in paragraph 3(b), the Executive is not eligible for income replacement benefits under the Company's long-term disability plan or another arrangement by the Company providing substantially similar benefits, then, in lieu of receiving any benefits under such plan or arrangement, the Executive, for a period of two years after the Date of Termination, shall continue to receive monthly or more frequent payments at his salary rate in effect immediately prior to the Date of Termination. (d) Cause. If the Executive's Date of Termination occurs during the Agreement Term under circumstances described in paragraph 3(c) (relating to the Executive's termination for Cause) then, except as otherwise expressly provided in this Agreement, the Company shall have no obligation to make payments under the Agreement for periods after the Executive's Date of Termination. (e) Resignation. If the Executive's Date of Termination occurs during the Agreement Term under circumstances described in paragraph 3(e) (relating to the Executive's resignation), then, except as otherwise expressly provided in this Agreement, the Company shall otherwise have no obligation to make payments under the Agreement for periods after the Executive's Date of Termination. (f) Termination Without Cause and Constructive Discharge. If the Executive's Date of Termination occurs during the Agreement Term under circumstances described in paragraph 3(d) (relating to Constructive Discharge) or paragraph 3(f) (relating to termination by the Company without Cause) then, in addition to the amounts payable in accordance with paragraph 4(a): (i) The Executive shall receive, in a lump sum payment as soon as practicable after the Termination Date, the sum of: (A) All of the salary that would be payable to the Executive if he continued in the employ of the Company until the End of the Severance Period (as defined below) and received the rate of salary in effect immediately prior to his Date of Termination. Plus (B) The total Annual Bonus payments he would have received if he remained in the employ of the Company until the End of the Severance Period, with the rate of bonus payment to be not less than the greater of $500,000 per year or the highest Annual Bonus payment received by the Executive from the Company for his period of employment; provided that if the End of the Severance Period occurs on a date other than the last day of a performance period, the Annual Bonus deemed to be earned under this paragraph 4(f)(i)(B) for the performance period in which the End of the Severance Period occurs shall be the amount determined in accordance with this paragraph 4(f)(i)(B) for the period, but subject to a pro-rata reduction to reflect the portion of the performance period following the End of the Severance Period. The "End of the Severance Period" shall be the date that is the one-year anniversary of the date of Termination. (ii) The Company will provide the Executive with medical and dental benefits with respect to the Executive and his dependents to the extent that such benefits would have been provided to the Executive (with respect to the Executive and his dependents) under the Company's medical and dental plans applicable to the Company's senior executives (as those plans may be amended from time to time in accordance with their terms) as though the Executive remained employed by the Company until the end of the Agreement Term. The period of coverage under the foregoing provisions of this paragraph 4(f)(ii) shall be counted toward the Company's obligation to provide COBRA coverage. The period of coverage required under this paragraph 4(f)(ii) shall cease as of the first day on which the Executive has medical benefit coverage from his employer (including a new employer or a prior employer) after the Date of Termination. The Executive agrees that during any period after the Date of Termination during which he is eligible to obtain medical benefit coverage (with respect to the Executive or his dependents) from the Executive's employer, or other person to whom the Executive provides service, the Executive will file such an application, and take such other steps as may be necessary to obtain such coverage (including the payment of premiums). In no event, however, shall the Executive be entitled to receive any amounts, rights, or benefits under this paragraph 4(f) unless he executes a release of claims against the Company in a form prepared by the Company. (g) Other Benefits. Except as may be otherwise specifically provided in an amendment of this paragraph 4(g) adopted in accordance with paragraph 10, the Executive's rights under this paragraph 4 shall be in lieu of any benefits that may be otherwise payable to or on behalf of the Executive pursuant to the terms of any severance pay arrangement of the Company or any Subsidiary or any other, similar arrangement of the Company or any Subsidiary providing benefits upon involuntary termination of employment. 5. Duties on Termination. Subject to the terms and conditions of this Agreement, during the period beginning on the date of delivery of a Notice of Termination, and ending on the Date of Termination, the Executive shall continue to perform his duties as set forth in this Agreement, and shall also perform such services for the Company as are necessary and appropriate for a smooth transition to the Executive's successor, if any. Notwithstanding the foregoing provisions of this paragraph 5, the Company may suspend the Executive from performing his duties under this Agreement following the delivery of a Notice of Termination providing for the Executive's resignation, or delivery by the Company of a Notice of Termination providing for the Executive's termination of employment for any reason; provided, however, that during the period of suspension (which shall end on the Date of Termination), the Executive shall continue to be treated as employed by the Company for other purposes, and his rights to compensation or benefits shall not be reduced by reason of the suspension. 6. Mitigation and Set-Off. The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise. The Company shall be entitled to set off against amounts payable to the Executive any amounts owed to the Company by the Executive, but the Company shall not be entitled to set off against the amounts payable to the Executive under this Agreement any amounts earned by the Executive in other employment after termination of his employment with the Company, or any amounts which might have been earned by the Executive in other employment had he sought such other employment. 7. Employee Agreement. As of the Employment Commencement Date, the Executive shall enter into the "Employee Agreement," in the form set forth as Supplement 1 to this Agreement, which is attached to and forms a part of this Agreement. 8. Assistance with Claims. The Executive agrees that, for the period beginning on the Employment Commencement Date, and continuing for a reasonable period after the Executive's Date of Termination, the Executive will assist the Company and the Subsidiaries in defense of any claims that may be made against the Company and the Subsidiaries, and will assist the Company and the Subsidiaries in the prosecution of any claims that may be made by the Company or the Subsidiaries, to the extent that such claims may relate to services performed by the Executive for the Company and the Subsidiaries. The Executive agrees to promptly inform the Company if he becomes aware of any lawsuits involving such claims that may be filed against the Company or any Subsidiary. The Company agrees to provide legal counsel to the Executive in connection with such assistance (to the extent legally permitted), and to reimburse the Executive for all of the Executive's reasonable out-of-pocket expenses associated with such assistance, including travel expenses. For periods after the Executive's employment with the Company terminates, the Company agrees to provide reasonable compensation to the Executive for such assistance. The Executive also agrees to promptly inform the Company if he is asked to assist in any investigation of the Company or the Subsidiaries (or their actions) that may relate to services performed by the Executive for the Company or the Subsidiaries, regardless of whether a lawsuit has then been filed against the Company or the Subsidiaries with respect to such investigation. 9. Nonalienation. The interests of the Executive under this Agreement are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment, or garnishment by creditors of the Executive or the Executive's beneficiary. 10. Amendment. This Agreement may be amended or cancelled only by mutual agreement of the parties in writing without the consent of any other person. So long as the Executive lives, no person, other than the parties hereto, shall have any rights under or interest in this Agreement or the subject matter hereof. 11. Applicable Law. The provisions of this Agreement shall be construed in accordance with the laws of the State of Illinois, without regard to the conflict of law provisions of any state. All disputes shall be arbitrated or litigated (whichever is applicable) in Chicago, Illinois. 12. Severability. The invalidity or unenforceability of any provision of this Agreement will not affect the validity or enforceability of any other provision of this Agreement, and this Agreement will be construed as if such invalid or unenforceable provision were omitted (but only to the extent that such provision cannot be appropriately reformed or modified). 13. Waiver of Breach. No waiver by any party hereto of a breach of any provision of this Agreement by any other party, or of compliance with any condition or provision of this Agreement to be performed by such other party, will operate or be construed as a waiver of any subsequent breach by such other party of any similar or dissimilar provisions and conditions at the same or any prior or subsequent time. The failure of any party hereto to take any action by reason of such breach will not deprive such party of the right to take action at any time while such breach continues. 14. Successors, Assumption of Contract. This Agreement is personal to the Executive and may not be assigned by the Executive without the written consent of the Company. However, to the extent that rights or benefits under this Agreement otherwise survive the Executive's death, the Executive's heirs and estate shall succeed to such rights and benefits pursuant to the Executive's will or the laws of descent and distribution; provided that the Executive shall have the right at any time and from time to time, by notice delivered to the Company, to designate or to change the beneficiary or beneficiaries with respect to such benefits. This Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company. 15. Notices. Notices and all other communications provided for in this Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid (provided that international mail shall be sent via overnight or two-day delivery), or sent by facsimile or prepaid overnight courier to the parties at the addresses set forth below (or such other addresses as shall be specified by the parties by like notice). Such notices, demands, claims and other communications shall be deemed given: (a) in the case of delivery by overnight service with guaranteed next day delivery, the next day or the day designated for delivery; (b) in the case of certified or registered U.S. mail, five days after deposit in the U.S. mail; or (c) in the case of facsimile, the date upon which the transmitting party received confirmation of receipt by facsimile, telephone or otherwise; provided, however, that in no event shall any such communications be deemed to be given later than the date they are actually received. Communications that are to be delivered by the U.S. mail or by overnight service or two-day delivery service are to be delivered to the addresses set forth below: to the Company: Comdisco, Inc. 6111 N. River Road Rosemont, Illinois 60018 with a copy to: Michael A. Lawson, Esq. Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue Los Angeles, California 90071-3144 or to the Executive: Michael Fazio 18 Hedgerow Lane Greenwich, Connecticut 06831 with a copy to: Aurora Cassirer, Esq. Jenkens & Gilchrist Parker Chapin LLP The Chrysler Building 405 Lexington Avenue New York, New York 10174 All notices to the Company shall be directed to the attention of the General Counsel of the Company, with a copy to the Secretary of the Company. Each party, by written notice furnished to the other party, may modify the applicable delivery address, except that notice of change of address shall be effective only upon receipt. 16. Arbitration of All Disputes. Any controversy or claim arising out of or relating to this Agreement (or the breach thereof) shall be settled by final, binding and non-appealable arbitration in Chicago, Illinois by three arbitrators. Except as otherwise expressly provided in this paragraph 16, the arbitration shall be conducted in accordance with the rules of the American Arbitration Association (the "Association") then in effect. One of the arbitrators shall be appointed by the Company, one shall be appointed by the Executive, and the third shall be appointed by the first two arbitrators. If the first two arbitrators cannot agree on the third arbitrator within 30 days of the appointment of the second arbitrator, then the third arbitrator shall be appointed by the Association. This paragraph 16 shall not be construed to limit the Company's or the Executive's right to obtain equitable relief under the Employee Agreement with respect to any matter or controversy subject to the Employee Agreement, and, pending a final determination by the arbitrator with respect to any such matter or controversy, the Company and/or the Executive shall be entitled to obtain any such relief by direct application to state, federal, or other applicable court, without being required to first arbitrate such matter or controversy. 17. Legal Costs. (a) The Company shall reimburse the Executive for reasonable attorneys' fees, costs and related expenses incurred in connection with the negotiation and drafting of this Agreement. (b) If, after the conclusion of the negotiation and drafting of this Agreement, but before the Executive's termination of employment or before the Executive has determined in good faith that there exists a reasonable basis to conclude that the Company may be in breach of this Agreement, the Executive incurs attorneys' fees, costs and related expenses for the interpretation and implementation of his rights under the Agreement, subject to the approval of such reimbursement by the Chairman of the Compensation Committee of the Company which approval shall not be unreasonably withheld, the Executive shall be reimbursed for such attorneys' fees, costs and related expenses incurred for the interpretation and implementation of his rights under the Agreement. (c) To the extent the Executive incurs legal fees, costs, and related expenses in a good faith effort to enforce his rights under this Agreement (including the Supplements attached hereto), at any time after Executive has a termination of employment or at such time when the Executive has determined in good faith that there exists a reasonable basis to conclude that the Company may be in breach of this Agreement, the Company shall reimburse Executive for any and all such legal fees, costs, and related expenses. 18. Survival of Agreement. Except as otherwise expressly provided in this Agreement, the rights and obligations of the parties to this Agreement shall survive the termination of the Executive's employment with the Company. 19. Entire Agreement. Except as otherwise noted herein, this Agreement (including Supplement 1 attached hereto) constitutes the entire agreement between the parties concerning the subject matter hereof and supersedes all prior and contemporaneous agreements, if any, between the parties relating to the subject matter hereof. 20. Acknowledgment by Executive. The Executive represents and warrants that (i) he is not, and will not become a party to any agreement, contract, arrangement or understanding, whether of employment or otherwise, that would in any way restrict or prohibit him from undertaking or performing his duties in accordance with this Agreement or that restricts his ability to be employed by the Company in accordance with this Agreement; (ii) his employment by the Company will not violate the terms of any policy of any prior employer of the Executive regarding competition; and (iii) his position with the Company, as described in this Agreement, will not require him to improperly use any trade secrets or confidential information of any prior employer, or any other person or entity for whom he has performed services. 21. Interest on Overdue Payments. If the Company fails to pay any amount provided under this Agreement within thirty (30) days of the due date of such amount, the Company shall pay interest on such amount at a rate equal to the rate from time to time in effect under the Company's revolving credit, and if such a rate is not available, then at a rate equal to two hundred (200) basis points in excess of the prime commercial lending rate announced from time to time by Citibank Bank, N.A.; provided however, that if the interest rate determined in accordance with this paragraph 21 exceeds the highest legally-permissible interest rate, then the interest rate shall be the highest legally-permissible interest rate. 22. Compensation as Specified in this Agreement. Except as specifically provided for in this Agreement (including the Supplement attached hereto), the Executive shall not be entitled to any other compensation, equity or other incentives, retirement benefits or other payments. IN WITNESS WHEREOF, the Executive has hereunto set his hand, and the Company has caused these presents to be executed in its name and on its behalf all as of the Effective Date. /s/ Michael Fazio ___________________________ Michael Fazio Comdisco, Inc. By: /s/ Norman P. Blake, Jr. _______________________ Its: Chairman and C.E.O. Supplement 1 Employee Agreement This Supplement 1 is attached to and forms a part of the employment agreement (the "Agreement") between Michael Fazio (the "Executive") and Comdisco, Inc. (the "Company") dated July 5, 2001, the Effective Date of the Agreement. The purpose of this Supplement 1 is to set forth the following "Employee Agreement." EMPLOYEE AGREEMENT I have entered into an employment agreement with Comdisco dated July 5, 2001, the Effective Date (the "Agreement"). As a condition of entering into such Agreement, I have agreed to enter into this Employee Agreement, and therefore I agree as follows: 1. Background. I acknowledge that Comdisco's Business (as defined herein) is highly competitive, is marketed primarily to large and medium sized companies nationally and internationally, involves long "lead times" often exceeding one year to secure initial contracts, and requires ongoing, comprehensive customer support. 2. Definitions. I understand that for purposes of this Employee Agreement, the following definitions will apply: 2.1 "Comdisco" will mean Comdisco, Inc. or the Comdisco, Inc. subsidiary, division or affiliate by whom I am employed, now or in the future. 2.2 "Comdisco's Business" shall mean (1) while I am employed by Comdisco, any business in which Comdisco was engaged during the two-year period immediately preceding that date (including, without limitation, any business if Comdisco devoted material resources to entering into such business during such two-year period), and (2) following the termination of my Comdisco employment, any business in which Comdisco was engaged during the two-year period immediately preceding the termination of my Comdisco employment (including, without limitation, any business if Comdisco devoted material resources to entering into such business during such two-year period). 2.3 "Confidential Information" will mean all trade secrets, know-how or other confidential information not known to the public at large that I obtained from Comdisco, or that I learned, discovered, developed, conceived, originated or prepared in the scope of my Comdisco employment. Confidential information includes, but is not limited to, information and materials developed, collected or used by Comdisco personnel, and information disclosed to Comdisco by Customers, potential Customers or third parties in the course of a business relationship or proposed business relationship. Confidential Information includes, but is not limited to, the following general categories: (1) information concerning Comdisco's operations, organizational structure, methods, technology, procedures, finances, accounting and legal matters; (2) information concerning Comdisco's sales activities and strategies, marketing activities and strategies, servicing activities and strategies, bidding activities and strategies, product development activities and strategies, expansion/acquisition or contraction/divestiture plans, reorganization plans, and strategic business activities; (3) information concerning Comdisco's past, present and potential Customers, including the names, addresses, telephone numbers and e-mail addresses of these Customers; the identities of individuals responsible for buying products and services on behalf of these Customers; the needs and buying tendencies of these Customers; contract negotiations between Comdisco and these Customers; the contents and duration of contracts and agreement between Comdisco and these Customers; financial and credit information concerning these Customers' business operations; the identity, quantity and prices of products and services purchased from Comdisco by these Customers; and any Confidential Information regarding a Customer that I have learned in the course of providing services to and/or for the Customer; (4) vendor and supplier information, including the names, addresses, telephone numbers and e-mail addresses of Comdisco's vendors and suppliers; information regarding Comdisco's relationship with its vendors and suppliers; contract negotiations between Comdisco and its vendors and suppliers; the contents and duration of contracts and agreements between Comdisco and its vendors and suppliers; financial and credit information concerning its vendors and suppliers; and the identity, quantity and prices of products and services purchased by Comdisco from its vendors and suppliers; (5) information regarding Comdisco's pricing of its products and services, including price lists, pricing policies and pricing strategies; (6) employment and payroll data, including recruiting and succession plans; and (7) other information that Comdisco tells me is to be kept confidential, or that I should reasonably deem to be kept confidential, or that is designated as Confidential Information on an Attachment hereto. Confidential Information may be contained on paper records, computer printouts or disks, or other forms of documentation or media, but it need not necessarily be reduced to a tangible form. Confidential Information does not include information that, now or in the future, is available to the public (other than through improper disclosure by me or another person) or information rightfully acquired from a third party. 2.4 "Customer" will mean any person, firm or other business entity which, during the two-year period immediately preceding the termination of my Comdisco employment, (1) has contracted for any type of services or equipment from or through Comdisco, or (2) has contacted Comdisco or been contacted by Comdisco with respect to the availability or offering of Comdisco's services or equipment and has requested or received a detailed proposal or offer from Comdisco, or (3) was assigned to me, either directly or indirectly, for account servicing or supervisory responsibilities (including, without limitation, accounts where I participated in sales calls or conference calls, and accounts for which I participated in sales strategy sessions regarding the account, whether or not such sessions were conducted in conjunction with representatives of the account). 3. Covenant Not to Disclose or Use Confidential Information. I acknowledge that I have access to Confidential Information that must be maintained in strict confidence in order for Comdisco to protect its business and its competitive position in the marketplace. I acknowledge that it is difficult to ascertain how long Confidential Information would remain useful to Comdisco's competitors and potential competitors during my Comdisco employment and thereafter, and that some Confidential Information may remain useful to Comdisco's competitors for periods of indefinite duration. Therefore, during my Comdisco employment and thereafter, except as required in the performance of my duties to Comdisco, I will not directly or indirectly publish or disclose any Confidential Information to any competitor or other person outside Comdisco, and I will not remove from Comdisco premises or use for my own benefit or otherwise appropriate or copy any Confidential Information. This will apply whether or not I developed the Confidential Information. 4. Covenant Not to Work for a Major Competitor. 4.1 Given the nature of Comdisco's Business, I recognize that engaging in employment or other work for a major competitor would necessarily and inevitably lead to my unauthorized use or disclosure of confidential information. Accordingly, if I resign, or if Comdisco terminates my employment due to poor job performance (as determined by Comdisco) or due to my criminal, dishonest or improper behavior, then I will not directly or indirectly work for any major Comdisco competitor in the Comdisco Business for a period of one year after the termination of my Comdisco employment. This will include work as an employee, officer, director, owner, shareholder, partner, associate, consultant, advisor, contractor, joint venturer, manager, agent, representative or salesperson. This will not apply to subsidiaries, divisions or other units of a major Comdisco competitor which are not involved in the Comdisco Business. 4.2 Upon termination of my Comdisco employment, at my request, Comdisco will give me a list of its major competitors in the Comdisco Business. I acknowledge that the major competitors of Comdisco in the Comdisco Business currently include (without limitation) those listed on the Attachment(s) hereto. 4.3 I understand that Comdisco may, in its discretion, consider waiving this restriction completely or in part in unusual termination situations. I recognize that any waiver would be based on the facts and circumstances of the termination, and will not serve as a precedent for other situations. 4.4 During my Comdisco employment, I will comply with Comdisco's Conflicts of Interest Policy, as published in the Comdisco Code of Conduct, and I will not engage in any business activity that is competitive with Comdisco (unless agreed to by Comdisco in writing), and I will not take part in any activities which would be detrimental to Comdisco's interests. 5. Covenant Regarding Customers. 5.1 During my Comdisco employment and for a period of one year after the termination of my Comdisco employment for whatever reason, I will not compete or attempt to compete with Comdisco for the sale or procurement of services or equipment by or to any of the Comdisco Customers (or any person or entity affiliated with them) with whom I had contact during the two-year period preceding the termination of my Comdisco employment. "Competing" includes, but is not limited to, accepting orders from a Customer, diverting a Customer's business from Comdisco, disparaging Comdisco or its employees with a Customer, or otherwise interfering with Comdisco's business with a Customer, even if a Customer initiates contact with me. 5.2 During my Comdisco employment and for a period of one year after the termination of my Comdisco employment for whatever reason, I will not solicit or contact, directly or through other persons or entities, for the purpose of competing with Comdisco's Business, any of the Comdisco Customers (or any person or entity affiliated with them) with whom I had contact during the two-year period preceding the termination of my Comdisco employment. 5.3 I acknowledge that Comdisco has a protectible business interest in its relationships with its Customers, and in the continued loyalty of its Customers. I acknowledge that Comdisco seeks to maintain and/or promote its business with its Customers for an indefinite time period, even though there are a number of competitors with which they could do business. I acknowledge that I have had, and will have, contact with Comdisco's Customers (and have developed my knowledge regarding their ongoing business needs) primarily, if not exclusively, as a result of my employment with Comdisco. 6. Covenant Not to Solicit Employees. During my Comdisco employment and for a period of one year after the termination of my Comdisco employment for whatever reason, I will not (either directly or indirectly) employ, solicit or endeavor to entice away from Comdisco (whether for my own business or on behalf of another person or entity) any persons who are either employees in the Comdisco Business or who have been employed by Comdisco within a six-month period prior to my action. 7. Developments. 7.1 I agree that I will have no proprietary interest in any idea, invention, design, technical or business innovation, computer program and related documentation, or any other work product developed, conceived, or used by me, in whole or in part, that arises out of my employment with Comdisco, or that are otherwise made through the use of Comdisco's time, facilities or materials (all collectively called "Developments"). I acknowledge that all Developments are and will be the sole property of Comdisco, and that Comdisco is not required to designate me as the author thereof. I will promptly disclose all Developments to my manager, and will at Comdisco's request and expense, do all things that may be necessary and appropriate to establish or document Comdisco's ownership of the Developments (including, but not limited to, the execution of the appropriate copyright or patent applications or assignments). 7.2 I have identified at the end of this Employee Agreement all inventions and other intellectual property in which I claim any right, title or interest and which were made or conceived solely or jointly by me, or written wholly or in part by me, but that have been neither published nor filed in any patent or copyright office. If none is indicated, then I agree that I do not have any to identify. (Note: It is in your interest to establish that any of the above were made, conceived or written before the commencement of your employment by Comdisco. You should not disclose them in detail, but identify them only by titles and dates of documents describing them. If you wish to interest Comdisco in any of them, you may contact the Board, who will provide you with instructions for submitting them to Comdisco.) 8. Remedies. 8.1 I acknowledge that Comdisco has expended and continues to expend substantial time, money and effort to: (1) develop proprietary and commercially valuable Confidential Information and Developments; (2) locate Customers and to establish and maintain long-term and near permanent business relationships with them; and (3) recruit, train and compensate its work force. I understand that it would be extremely difficult to measure the damages that might result from any breach by me of this Employee Agreement, and that a breach may cause irreparable injury to Comdisco that could not be compensated by money damages. I agree that my commitments in this Employee Agreement are supported by adequate consideration from Comdisco. Accordingly, Comdisco will be entitled, in addition to any other rights and remedies it may have, to specific performance and to a court order (without the posting of any bond) prohibiting me (and any others involved) from breaching this Employee Agreement. I consent to the jurisdiction and venue of any state or federal court located in Illinois for any suit involving this Employee Agreement. 8.2 If a court decides that I have violated any provision of this Employee Agreement, then I agree to pay any reasonable court costs, attorneys' fees or litigation expenses incurred by Comdisco in enforcing this Employee Agreement. If I violate paragraph 4, 5 or 6 of this Employee Agreement, then the violated paragraph(s) will remain in force for one year after the violation ends. I understand that this Employee Agreement will be construed and enforced in accordance with Illinois law, without regard to its conflicts of law rules. If a court decides that any part of this Employee Agreement is not enforceable, then the rest of this Employee Agreement will not be affected. If a court decides that any part of this Employee Agreement is too broad, then the court may limit that part and enforce it as limited. 9. Business Opportunities. I acknowledge that the foregoing restrictions will not unreasonably prevent me from obtaining gainful employment in my occupation or field of expertise, or otherwise cause me undue hardship. I agree that there are numerous other employment and business opportunities available to me in the geographic area reasonably near my place of residence that are not affected by these restrictions. I acknowledge that these restrictions do not disproportionately benefit Comdisco, and are reasonable and necessary in order to protect Comdisco's legitimate interests. I acknowledge that Comdisco will rely on these restrictions now and in the future in assigning duties and responsibilities to me. I agree to make this Employee Agreement known to any prospective employers before accepting new employment, and I understand that Comdisco may make this Employee Agreement known to such prospective employers or other persons. 10. Confidential Information of Third Parties. 10.1 I confirm that I will not disclose to Comdisco, or use in Comdisco's Business, or cause or induce others to use in Comdisco's Business, any information or materials that are confidential to any third party (including any of my prior employers and/or their customers) and that Comdisco does not otherwise have the right to use. Without limiting the foregoing, I have signed an agreement with this Pretzel Logic Software (a current or prior employer) relating to confidential information. I can furnish Comdisco with a copy of this agreement. 10.2 I will comply, and do all things necessary to permit Comdisco to comply, with the laws and regulations of all governments under which Comdisco does business, and with the provisions of contracts between Comdisco and any such government or its contractors, or between Comdisco and any private contractors, that relate to intellectual property or the safeguarding of information, including the signing of any confidentiality agreements required in connection with the performance of my duties during my employment with Comdisco. 11. Non-Violation of Other Restrictive Covenants. I confirm that my employment with Comdisco does not and will not violate any restrictive covenant or similar contractual provision (including, but not limited to, non-competition or non-solicitation obligations) that I may have agreed to or am bound by with any prior employer or other third party. I confirm that I have never been employed by or worked for SunGard Data Systems Inc. or any related entity. 12. Duties Upon Termination of Employment. 12.1 I acknowledge that my termination of employment with Comdisco shall be governed by the provisions of the Agreement. 12.2 Upon the termination of my Comdisco employment (or at any other time if so requested), I agree to promptly deliver to Comdisco all "Comdisco Materials," which include all assets, files, documents, business records, notes, designs, data, software, manuals, equipment, keys, credit cards, passwords, lists of Customers, and any other Comdisco-owned items of any nature (regardless of the medium in which they are contained and regardless of how they entered my possession or control) that are in my possession or control, including materials that contain or are derived from Confidential Information or Developments. I will retain no copies, excerpts or summaries of any Comdisco Materials, nor will I make arrangements to place any Comdisco Materials in the possession or control of another person or entity in advance of my termination. 12.3 I understand that my responsibilities regarding Comdisco Materials include an obligation to avoid undertaking or causing any "clean-up" activities that might result in the loss of information of value to Comdisco. I agree that I will not, in connection with or anticipation of the termination of my Comdisco employment, throw out any documents or other Comdisco Materials, nor will I attempt to delete, purge or clean out software files, e-mails or any other intangible items on computer that I utilize in connection with my work for Comdisco. 13. Miscellaneous. (13.1) By signing this Employee Agreement and performing services for Comdisco, I will not, to the best of my knowledge, be violating any other contract, agreement or understanding to which I am a party. (13.2) Nothing in this Employee Agreement will be deemed to create, either expressly or by implication, a contract of employment for a specific period of time. (13.3) This Employee Agreement, together with the Agreement (including the Supplements thereto) represents my entire understanding with Comdisco on the subjects covered herein, and supersedes any prior understandings or agreements. This Employee Agreement may be changed only by a written agreement signed by an authorized Comdisco representative and me in accordance with the amendment procedures under the Agreement. (13.4) This Employee Agreement will benefit any successors or assigns of Comdisco, and will bind my heirs, estate and personal and legal representatives. This Employee Agreement is personal to me and I may not assign it. (13.5) If Comdisco waives my breach of this Employee Agreement, this will not constitute a waiver of any subsequent breaches. Any Comdisco waiver must be in writing and signed by an authorized Comdisco representative. I ACKNOWLEDGE THAT I HAVE READ THIS EMPLOYEE AGREEMENT IN ITS ENTIRETY. I UNDERSTAND THAT THIS EMPLOYEE AGREEMENT IS LEGALLY ENFORCEABLE. I ACKNOWLEDGE THAT I HAVE HAD THE OPPORTUNITY TO CONFER WITH ANYONE OF MY CHOICE CONCERNING THIS EMPLOYEE AGREEMENT. BY SIGNING BELOW, I ACKNOWLEDGE THAT I AM ENTERING THIS EMPLOYEE AGREEMENT VOLUNTARILY AND INTEND TO BE BOUND BY IT. EMPLOYEE'S SIGNATURE: /s/ Michael Fazio _________________ EMPLOYEE'S NAME: Michael Fazio DATE SIGNED: July ____, 2001 EX-10 16 ch341296.txt EXHIBIT 10.7 Exhibit 10.7 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT, dated as of this 9th day of September 2002, is by and between Comdisco, Inc., a Delaware corporation (the "Company"), and Gregory Sabatello ("Executive"). The Company and Executive are referred to collectively herein as the "Parties." RECITALS The Company desires to employ the Executive to have the benefits of his expertise and knowledge. The Executive, in turn, desires to be employed by the Company. The parties, therefore, enter into this Agreement to establish the terms and conditions of the Executive's employment with the Company. The signing by the Executive of the release of all claims contained herein is a material part of the consideration being given in exchange for the Executive's employment by the Company. In consideration of the mutual promises, terms, covenants, and conditions set forth herein, and the performance of each, the Parties hereto, intending legally to be bound, hereby agree as follows: AGREEMENTS 1. Effective Date. This Agreement will become effective on the eighth (8th) day after the date of its execution by the Executive (the "Effective Date"). 2. Position and Duties. The Company hereby employs Executive as Executive Vice President and Chief Information Officer of the Company during the Employment Term described in Paragraph 2. As such, Executive shall have such duties and responsibilities as properly assigned to him by the Company including but not limited to being responsible primarily for the information services activities of the Company and its subsidiaries in connection with the implementation of the Company's "Post-Emergence Plan" after the effective date (the "Plan Effective Date") of the confirmation of the Plan of Reorganization (the "Reorganization Plan") filed by the Company with the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division (the "Bankruptcy Court") in Case Number 01-24795 and all related bankruptcy proceedings (the "Comdisco Bankruptcy Proceeding") and the execution of the Plan and the Post-Emergence Plan. Executive will report directly to the Chairman and Chief Executive Officer of the Company. On or about the Plan Effective Date the Company intends to appoint the Executive to the position of Executive Vice President and Chief Information Officer of the reorganized Company. Executive hereby accepts this employment upon the terms and conditions contained herein and agrees to devote substantially all of his professional time, attention, and efforts to promote and further the business of the Company to the best of his abilities in a diligent, trustworthy, businesslike and efficient manner. Executive shall faithfully adhere to, execute, and fulfill all policies generally established by the Company. 3. Employment Term. The Company hereby employs Executive to perform the duties described herein, and Executive hereby accepts employment with the Company, for an initial term of twenty-four (24) months beginning as of April 1, 2002 ("Commencement Date") and terminates on March 31, 2004 (the "Employment Term"). This Agreement may be extended by the mutual agreement of the Executive and Company for additional six (6) month periods on the same terms and conditions set forth herein after its originally scheduled termination date. Executive's employment may be terminated prior to the end of the Term only in the manner provided for in Paragraph 7 below. 4. Compensation. For all services rendered by Executive, the Company shall compensate Executive as follows: (a) Base Salary. Effective on the date hereof, the base salary payable to Executive shall be $250,000 per annum, which salary shall be payable on a regular basis in accordance with the Company's standard payroll procedures. (b) Benefits, and Other Compensation. During the Employment Term, Executive shall be entitled to receive all benefits as have been extended to him prior to his appointment as Executive Vice President and Chief Information Officer based on his prior employment with the Company and such other all benefits as are customarily provided by the Company to its executive employees, subject to such changes, additions, or deletions as the Company may make generally from time to time, as well as such other benefits as may be specified from time to time by the Board. (c) Semi-Annual Performance Bonus. During the Term, Executive shall receive semi-annual bonus payments as defined in the Company's Post-Emergence Compensation Plan and subject to the terms of the Bankruptcy Court approval of that Plan (Motion for an order pursuant to 11 USC 105(a) and 363 (b)(1) approving the debtors' Management Incentive Plan). Payments payable under this Plan will be based on meeting specified individual and corporate objectives. 5. Expense Reimbursement. The Company shall reimburse Executive for (or, at the Company's option, pay) all business travel and other out-of-pocket expenses reasonably incurred by Executive in the performance of his services hereunder during the Term. All reimbursable expenses shall be appropriately documented in reasonable detail by Executive upon submission of any request for reimbursement, and in a format and manner consistent with the Company's expense reporting policy, as well as applicable federal and state tax record keeping requirements. 6. Place of Performance. Executive shall perform his services under this Agreement at the principal offices of the Company which shall initially be located at the headquarters of the Company in Rosemont, Illinois. The Company may change the location of the headquarters of the Company and, in the event of such change, the Executive may perform his services under this Agreement at a location which shall be agreeable to the Company. 7. Termination: Rights on Termination. Executive's employment may be terminated in any one of the following ways, prior to the expiration of the Term: (a) Death. The death of Executive shall immediately terminate the Term, and, subject to Paragraph 7(f), no severance compensation shall be owed to Executive's estate other than the payment of any accrued and unpaid Base Salary. (b) Disability. If, as a result of incapacity due to physical or mental illness or injury, Executive shall have been unable to perform the material duties of his position on a full-time basis for a period of three (3) consecutive months, or for a total of four (4) months in any six (6) month period, then thirty (30) days after written notice to the Executive (which notice may be given before or after the end of the aforementioned periods, but which shall not be effective earlier than the last day of the applicable period), the Company may terminate Executive's employment hereunder if Executive is unable to resume his full-time duties at the conclusion of such notice period. Subject to Paragraph 7(f) below, if Executive's employment is terminated as a result of Executive's disability, the Company shall continue to pay Executive his Base Salary at the then-current rate for the lesser of (i) three (3) months from the effective date of termination, or (ii) whatever time period is remaining under the then-current period of the Employment Term, regardless of whether Executive is eligible for coverage under the Company's Long-Term Disability Plan. In addition, Executive shall be entitled to receive Severance and any compensation to which the Executive has been vested in under the Post-Emergence Plan. Such payments shall be made in accordance with the Company's regular payroll cycle except that all payment payable under the Post-Emergence Plan shall be made in accordance with the terms and conditions of the Post-Emergence Plan. (c) Termination by the Company "For Cause." The Company may terminate the Employment Term fifteen (15) days after written notice to Executive "for cause," or "cause" which shall be determined by the Board or the Chairman of the Board of the Company and is defined as: (i) the Executive's persistent and repeated refusal, failure or neglect to perform the material duties of his employment under this Agreement (other by reason of the Executive's physical or mental illness or impairment), provided that such Cause shall be deemed to occur only after the Company gave notice thereof to the Executive specifying in reasonable detail the conduct constituting Cause, and the Executive failed to cure and correct his conduct within 30 days after such notice; (ii) committing any act of fraud or embezzlement, provided that such Cause shall be deemed to occur only after the Company gave notice thereof to the Executive specifying in reasonable detail the instances of such conduct, and the Executive had the opportunity to be heard at a meeting of the Board; (iii) breach of the agreements and covenants under Paragraphs 8 and 9 below provided that such Cause shall be deemed to occur only after the Company gave notice thereof to the Executive specifying in reasonable detail the conduct constituting Cause, and the Executive failed to cure and correct his conduct within 30 days after such notice; (iv) conviction of a felony (including pleading guilty to a felony) or commitment of other acts causing or likely to cause a material detriment to the reputation of the Company; (v) habitual abuse of alcohol or drugs in violation of the terms of the Company's written policies that, in the judgment of the Board or the Chairman of the Board of the Company, materially impairs Executive's ability to perform his duties hereunder; (vi) Executive's gross negligence in the performance of his duties hereunder, intentional nonperformance or misperformance of such duties, or refusal to abide by or comply with the directives of the Board, his superior officers, or the Company's policies and procedures, which actions continue for a period of at least fifteen (15) days after receipt by Executive of written notice of the need to cure or cease, or (vii) Executive's willful dishonesty, fraud, or misconduct with respect to the business or affairs of the Company that, in the good faith judgment of the Chairman of the Board or Board, materially and adversely affects the operations or reputation of the Company. In the event of termination "for cause," as enumerated above, Executive shall have no right to any Severance compensation or any other amounts payable to the Executive under the terms of the Post-Emergence Plan. (d) Without Cause or For Good Reason. At any time, the Company may, other than for cause, terminate the Employment Term and Executive's employment, effective thirty (30) days after written notice is provided to Executive. Should Executive be terminated by the Company without cause during the Employment Term hereof then Executive shall receive from the Company all amounts of Base Salary and benefits accrued but unpaid through the date of such termination as well as the Severance Payment described in Paragraph 7(f) below. In the event that the Executive's employment hereunder is terminated by the Executive for Good Reason, the Executive shall receive the Severance Payment described in Paragraph 7(f) below. For purposes of this Agreement, "Good Reason" for the Executive to terminate employment shall mean voluntary termination as a result of (i) the relocation of the Company's executive offices or principal business location to a point more than fifty (50) miles from the location of such offices or business as of the date the Executive signs this Agreement or (ii) the reduction by the Company of the Executive's Base Salary and/or Executive's Performance Bonus Target. In no event, however, shall the Executive be entitled to receive any amounts, rights or benefits under this Paragraph 7(d) unless he executes a release of claims against the Company in a form prepared by the Company. (e) Resignation Without Good Reason. In the event that the Executive terminates his employment hereunder other than for Good Reason, or death or disability as defined in Paragraph 7(b) above, the Executive shall be entitled to receive all amounts of Base Salary and benefits accrued but unpaid through the date of such termination. All other compensation of the Executive hereunder shall terminate as of the date of any such termination described in this Paragraph 7(e). (f) Severance Payments. If the Executive's employment under this Agreement is terminated by the Company without Cause or by the Executive for Good Reason (as defined in herein), the Company shall pay the Executive a lump sum cash payment, within 30 days of the date of such termination, equal to the sum of: (i) the aggregate amount of the Executive's unpaid Base Salary, as specified in paragraph 4(a) of this Agreement, payable at the annual rate in effect on the termination date, for the shorter of either (x) twenty-four (24) months or (y) whatever time period is remaining under the remaining Employment Term of this Agreement. In addition, Executive shall be entitled to receive any remaining semi-annual performance bonus amounts to which the Executive would be entitled to receive under the Post-Emergence Plan for the same duration, provided however, that the amounts of such semi-annual performance bonus attributable for performance occurring after the date of termination and payable to the Executive shall be not less than the amounts awarded for performance occurring prior to the date of termination unless the CEO of the Company has determined that the Executive is entitled to payment of a greater sum. For purposes of this subparagraph (f), the Employment Term shall be deemed to continue as if no termination of employment occurred, provided that the Employment Term shall not be renewed as provided herein and shall not be deemed to have ended earlier than six (6) months after the date of termination. The payments described in this paragraph shall be made in accordance with the Company's regular payroll cycle cycle except that all payments payable under the Post-Emergence Plan shall be made in accordance with the terms and conditions of the Post-Emergence Plan. (g) Payment Through Termination. Upon termination of Executive's employment for any reason provided above, Executive shall be entitled to receive all accrued and unpaid compensation earned and all benefits and reimbursements (including payments for accrued vacation, in each case in accordance with applicable policies of the Company) due through the effective date of termination. Additional compensation subsequent to termination, if any, including any incentive compensation payable under the Post-Emergence Plan will be due and payable to Executive only to the extent and in the manner expressly provided above in this Paragraph 7. All other rights and obligations of the Company and Executive under this Agreement shall cease as of the effective date of termination, except that the Company's obligations under this Paragraph 7 and Paragraph 15 below and Executive's obligations under Paragraphs 8, 9 and 15 below shall survive such termination in accordance with their terms. If Executive voluntarily resigns or otherwise terminates his employment for any reason or for no reason, Executive shall forfeit all deferred semi-annual bonus payments and will not be eligible for any severance benefits. 8. Covenant Not to Compete or Use Confidential Information. (a) During the entire term of this Agreement, the Executive shall not, directly or indirectly, engage in any business or activity in which the Company is engaged in or the Commencement Date or has been engaged within eighteen (18) months of the Commencement Date ("Competitive Business") nor be employed by, render services of any kind to, advise or receive compensation in any form from nor invest or participate in any manner or capacity in, any entity or person which directly or indirectly engages in a Competitive Business or is an existing leasing customer or a person with whom the Company has an existing financing arrangement or lease arrangement within eighteen (18) months prior to the Commencement Date ("Existing Customer"). Further, during the term of this Agreement and for a period of one (1) year after the expiration or earlier termination of this Agreement, Executive shall not directly or indirectly (i) solicit to employ, (ii) solicit for employment on behalf of others, or (iii) otherwise encourage to terminate his or her present employment, any existing employee of the Company at the end of the Employment Term nor shall Executive engage in activities or communications which might serve to harm the reputation and goodwill of the Company and its relationship with its investors, market analysts, customers, suppliers, vendors or others affecting the business performance of the Company. The Company may, in its discretion, consider waiving this restriction completely or in part in unusual termination situations. Any waiver would be based on the facts and circumstances of the termination, and will not serve as a precedent for other situations. (b) It is agreed by both parties hereto that the covenants contained in Paragraph 8 (a) above are reasonable and necessary to protect the confidentiality of the trade secrets, and other confidential information concerning the Company, acquired by the Executive. (c) The Executive and the Company recognize and agree that (i) because of the nature of the businesses in which the Company is engaged and because of the nature of the confidential information which the Executive has acquired or will acquire with respect to the business of the Company it would be impracticable and excessively difficult to determine the actual damages of the Company in the event that the Executive breaches any of the covenants contained in Paragraph 8(a) above, and (ii) damages in an action at law would not constitute reasonable or adequate compensation to the Company in the event that the Executive breaches any of such covenants. Accordingly, if the Executive commits any breach of such covenants or threatens to commit any such breach, then the Company shall have the right to have the covenants contained in Paragraph 8(a) above specifically enforced by any court having equity jurisdiction, without posting bond or other security, it being acknowledged and agreed by both parties hereto that any such reach or threatened breach would cause irreparable injury to the Company and that an injunction may be issued against the Executive. The rights described in this Paragraph 8(c) shall be in addition to, and not in lieu of, any other rights to remedies available to the Company under law or in equity. (d) Notwithstanding the foregoing, nothing herein shall prevent passive investments by the Executive of, directly or indirectly, less than 5% of the outstanding common equity of any entity whose common equity is listed for trading on the New York Stock Exchange or the American Stock Exchange, or quoted on the NASDAQ National Market System. 9. Covenant Not to Compete or Use Confidential Information. (a) For purposes of this Agreement, "Confidential Information" shall mean information or material proprietary to the Company or designated as Confidential Information by the Company, of or to which the Executive develops or of which the Executive may obtain knowledge or access through or as a result of the Executive's relationship with the Company (including information conceived, originated, discovered or developed in whole or in part by the Executive). The Confidential Information includes, but is not limited to, the following types of information and other information of a similar nature (whether or not reduced to writing): discoveries, ideas, concepts, software in various stages of development, designs, drawings, specifications, techniques, models, data, source code, object code, documentation, diagrams, flow charts, research, development, processes, procedures, "know how," marketing techniques and materials, marketing and development plans, customer names and other information related to customers, price lists, pricing policies and financial information. Confidential Information also includes any information described above which the Company obtains from another party and which the Company treats as proprietary or designates as Confidential Information, whether or not owned or developed by the Company. INFORMATION PUBLICLY KNOWN THAT IS GENERALLY EMPLOYED BY THE TRADE AT OR AFTER THE TIME THE EXECUTIVE FIRST LEARNS OF SUCH INFORMATION, OR GENERIC INFORMATION OR KNOWLEDGE WHICH THE EXECUTIVE WOULD HAVE LEARNED IN THE COURSE OF SIMILAR SERVICES OR WORK ELSEWHERE IN THE TRADE, SHALL NOT BE DEEMED PART OF THE CONFIDENTIAL INFORMATION. (b) All notes, data, reference materials, sketches, drawings, memoranda, documentation and records in any way incorporating or reflecting any of the Confidential Information shall belong exclusively to the Company and the Executive agrees to turn over all copies of such materials in the Executive's control as of the date first set forth above to the Company immediately and those which thereafter may come into Executive's possession during the course of this Agreement upon the Company's request or upon termination of the Executive's engagement by the Company. (c) The Executive agrees during his engagement by the Company and thereafter to hold in confidence and not to directly or indirectly reveal, report, publish, disclose or transfer any of the Confidential Information to any person or entity, or utilize any of the Confidential Information for any purpose, except in the course of the Executive's work for the Company. (d) The Executive agrees that any inventions or ideas in whole or in part conceived or made by the Executive during or after the term of his relationship with the Company which are made through the use of any of the Confidential Information or any of the Company's equipment, facilities, trade secrets or time, or which result from any work performed by the Executive for the Company shall belong exclusively to the Company and shall be deemed part of the Confidential Information. (e) Because of the unique nature of the Confidential Information, the Executive understands and agrees that the Company will suffer irreparable harm in the event that the Executive fails to comply with any of his obligations under this Paragraph 9 and that monetary damages will be inadequate to compensate the Company for such breach. Accordingly, the Executive agrees that the Company will, in addition to any other remedies available to it at law or in equity, be entitled to injunctive relief to enforce the terms of this Paragraph 9 above. 10. Release by the Executive. The Executive hereby knowingly and voluntarily, fully and finally releases, acquits, and forever discharges the Company and its respective affiliates and subsidiaries, each of its present and former officers, directors, members, shareholders, agents, partners, consultants, and employees, and the successors or assigns of said persons and entities (the "Released Parties"), from any and all claims, charges, complaints, liens, demands, causes of action, obligations, damages, liabilities, attorneys' fees, and legal responsibilities, known or unknown, suspected or unsuspected, that the Executive had, now has, or may hereafter claim to have against the Released Parties from the beginning of time through the Effective Date of this Agreement. This release specifically extends to, without limitation, any claims in law, equity, contract, tort or any claims under the Fair Labor Standards Act, the Worker Retraining and Notification Act, Title VII of the Civil Rights Act of 1964, the Americans With Disabilities Act, the Employee Retirement Income Security Act, the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act, the Illinois Statutes, the Illinois Human Rights Act, as amended from time to time. The Executive also expressly waives all rights afforded by any provision comparable to Section 1542 of the California Civil Code with respect to the Released Parties or any other local ordinance or federal or state statute or constitution. Section 1542 states as follows: A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASED, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECT HIS SETTLEMENT WITH THE DEBTOR. Notwithstanding the provisions of Section 1542 or any comparable legal provision and for the purpose of implementing a full and complete release, the Executive understands and agrees that this Agreement is intended to include all claims, if any, that he may have and does not now know or suspect to exist against the Released Parties, and that this Agreement extinguishes those claims. 11. No Further Claims. The Executive agrees forever that he has not filed, initiated or caused to be filed or initiated, any claim, charge, suit, complaint, grievance, action or cause of action against the Released Parties. Except to the extent that such waiver is prohibited by law, order, or regulation, executive further promises and agrees that the Executive will not file, refile, initiate, or cause to be filed, refiled or initiated any claim, charge, suit, complaint, grievance, action or cause of action based upon, arising out of, or relating to any claim, demand, or cause of action released herein, nor shall the Executive participate, assist or cooperate in any claim, charge or action whether before a court of administrative agency against the Released Parties, except to the extent such waiver is prohibited by law, order, or regulation. 12. Review and Revocation Period. The Executive acknowledges that he has been advised to consult with his counsel prior to signing this Agreement and that he has been given at least twenty-one (21) days during which to review and consider the provisions of this Agreement before signing, although Executive may sign and return it sooner if he so desires. The Executive further agrees that he has been advised of his right to revoke this Agreement for a period of seven (7) days after signing it and that this Agreement shall not become effective or enforceable until such seven (7)-day revocation period has expired. The Executive acknowledges and agrees that, if he wishes to revoke this Agreement, he must do so in writing, signed by the Executive and received by the Company, no later than 5:00 p.m. Central Standard Time on the seventh (7th) day after the Executive has signed this Agreement. The Executive further agrees that, in the event that he revokes this Agreement, it shall have no force or effect. The Executive represents that he has read this Agreement and understand its terms and enters into this Agreement freely, voluntarily, and without coercion. 13. Return of Company Property. Promptly upon termination of Executive's employment with the Company for any reason or no reason, Executive or Executive's personal representative shall return to the Company (a) all Confidential Information; (b) all other records, designs, patents, business plans, financial statements, manuals, memoranda, lists, correspondence, reports, records, charts, advertising materials, and other data or property delivered to or compiled by Executive by or on behalf of the Company and its subsidiaries, vendors, or customers that pertain to the business of the Company or its subsidiaries, whether in paper, electronic, or other form; and (c) all keys, credit cards, vehicles, and other property of the Company or its subsidiaries. Executive shall not retain or cause to be retained any copies of the foregoing. Executive hereby agrees that all of the foregoing shall be and remain the property of the Company or its subsidiaries, as the case may be, and shall be subject at all times to their discretion and control. 14. No Prior Agreement. Executive hereby represents and warrants to the Company that the execution of this Agreement by Executive, his employment by the Company, and the performance of his duties hereunder will not violate or be a breach of any agreement with a former employer, client, or any other Person. Further, Executive agrees to indemnify and hold harmless the Company and its officers, directors, and representatives for any claim, including, but not limited to, reasonable attorneys' fees and expenses of investigation, of any such third party that such third party may now have or may hereafter come to have against the Company or such other persons, based upon or arising out of any non-competition agreement, invention, secrecy, or other agreement between Executive and such third party that was in existence as of the date of this Agreement. To the extent that Executive had any oral or written employment agreement or understanding with the Company, this Agreement shall automatically supersede such agreement or understanding, and upon execution of this Agreement by Executive and the Company, such prior agreement or understanding automatically shall be deemed to have been terminated and shall be null and void. 15. Assignment: Binding, Effect. Executive understands that he has been selected for employment by the Company on the basis of his personal qualifications, experience, and skills. Executive agrees, therefore, that he cannot assign all or any portion of his performance under this Agreement. This Agreement may not be assigned or transferred by the Company without the prior written consent of Executive. Subject to the preceding two sentences, this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the Parties hereto and their respective heirs, legal representatives, successors, and assigns. Notwithstanding the foregoing, if Executive accepts employment with a subsidiary or affiliate of the Company, unless Executive and his new employer agree otherwise in writing, this Agreement shall automatically be deemed to have been assigned to such new employer (which shall thereafter be an additional or substitute beneficiary of the covenants contained herein, as appropriate), with the consent of Executive, such assignment shall be considered a condition of employment by such new employer, and references to the "Company" in this Agreement shall be deemed to refer to such new employer. If the Company is merged with or into another subsidiary or affiliate of the Company, such action shall not be considered to cause an assignment of this Agreement, and the surviving or successor entity (including any subsidiary or division of the Company) shall become the beneficiary of this Agreement and all references to the "Company" shall be deemed to refer to such surviving or successor entity. 16. Complete Agreement; Waiver; Amendment. This Agreement is not a promise of future employment. Executive has no oral representations, understandings, or agreements with the Company or any of its officers, directors, or representatives covering the same subject matter as this Agreement. This Agreement together with the Asset Purchase Agreement is the final, complete, and exclusive statement and expression of the agreement between the Company and Executive with respect to the subject matter hereof and thereof, and cannot be changed, contradicted, or supplemented by evidence of any prior or contemporaneous oral or written agreements. This written Agreement may not be later modified except by a writing signed by a duly authorized officer of the Company and Executive, and no term of this Agreement may be waived except by a writing signed by the party waiving the benefit of such term. The Executive confirms that he is aware of his legal rights concerning the Executive's Comdisco employment. The Executive agrees that, except as specified in this Agreement, and in any Comdisco Shared Investment Plan (SIP) relief program, the Executive will be entitled to no other salary, or other form of compensation (including bonus or commissions) from Comdisco. 17. Notice. Whenever any notice is required hereunder, it shall be given in writing addressed as follows: To the Company: Comdisco, Inc. 6111 River Road, Rosemont, IL 60018 Attention: EVP and Chief Administrative Officer Telecopy: (847) 518-5088 To Executive: Gregory Sabatello 1105 N. Chestnut Arlington Heights, Il 60004 Attention: Gregory Sabatello Notice shall be deemed given and effective three days after the deposit in the U.S. mail of a writing addressed as above and sent pre-paid first class mail, certified, return receipt requested, or, if sent by express delivery, hand delivery, or facsimile, when actually received. Either Party may change the address for notice by notifying the other Party of such change in accordance with this Paragraph 17. 18. Counterparts. This Agreement may be executed in one or more counterparts and may include more than one signature page, all of which shall be deemed to be one instrument. Fully executed copies of this Agreement may be used in lieu of the original. 19. Severability; Headings. If any portion of this Agreement is held invalid or inoperative, the other portions of this Agreement shall be deemed valid and operative and, so far as is reasonable and possible, effect shall be given to the intent manifested by the portion held invalid and inoperative. The paragraph headings herein are for reference purposes only and are not intended in any way to describe, interpret, define or limit the extent or intent of the Agreement or of any part hereof. 20. Equitable Remedy. Because of the difficulty of measuring economic losses to the Company as a result of a breach of the restrictive covenants set forth in Paragraphs 8 and 9 and because of the immediate and irreparable damage that would be caused to the Company for which monetary damages would not be a sufficient remedy, it is hereby agreed that in addition to all other remedies that may be available to the Company at law or in equity, the Company shall be entitled to specific performance and any injunctive or other equitable relief as a remedy for any breach or threatened breach of the aforementioned restrictive covenants. 21. Governing Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Illinois without giving effect to any choice or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. 22. Venue. Executive hereby consents to venue in Illinois or in any other state where the Company then has its principal place of business. Executive hereby waives any objections based on forum non conveniens and any objections to venue of any action arising out of, connected with, related to or incidental to the employment contemplated by or the relationship established in connection with this Agreement. 23. Voluntary Agreement; No Inducements. The Executive and the Company acknowledge and represent that he or it has fully and carefully read this Agreement prior to signing it, has been, or has had the opportunity to be advised by independent legal counsel of his own choice as to the legal effect and meaning of each of the terms and conditions of this Agreement, and is signing and entering into this Agreement as a free and voluntary act without duress or undue pressure or influence of any kind or nature whatsoever and has not relied on any promises, representations or warranties regarding the subject matter hereof other than as set forth in this Agreement. * * * * * IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the date first written above. COMDISCO, INC. By: /s/ Nazneen Razi ------------------------------ Name: Nazneen Razi Title: Executive Vice President & Chief Administrative Officer EXECUTIVE: /s/ Gregory Sabatello - ---------------------------- Name: Gregory Sabatello EX-10 17 ch339510.txt EXHIBIT 10.13 Exhibit 10.13
TABLE OF CONTENTS Page ARTICLE I PURCHASE AND SALE OF ASSETS Section 1.1 Acquired and Excluded Assets................................................1 Section 1.2 Excluded Assets.............................................................3 Section 1.3 Assumed Liabilities.........................................................4 Section 1.4 Excluded Liabilities........................................................4 Section 1.5 Purchase Price..............................................................4 Section 1.6 Purchase Price: Adjustment and Payment Provisions...........................4 Section 1.7 Commission on Sales after Closing...........................................7 Section 1.8 Allocation of Purchase Price for Tax Purposes...............................9 ARTICLE II THE CLOSING Section 2.1 Closing.....................................................................9 Section 2.2 Deliveries at Closing.......................................................9 Section 2.3 Reconciliation of Funds....................................................11 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER Section 3.1 Organization...............................................................11 Section 3.2 Authority Relative to this Agreement.......................................12 Section 3.3 Consents and Approvals.....................................................12 Section 3.4 No Violations..............................................................12 Section 3.5 [Intentionally Omitted]....................................................13 Section 3.6 Title to Property..........................................................13 Section 3.7 Brokers....................................................................13 Section 3.8 Compliance with Laws.......................................................13 Section 3.9 Books and Records; Summary of Financial Position...........................13 Section 3.10 Ability to Conduct Business................................................14 Section 3.11 [Intentionally Omitted]....................................................14 Section 3.12 Acquired Contracts.........................................................14 Section 3.13 Taxes......................................................................15 Section 3.14 Seller Benefit Plans.......................................................16 Section 3.15 No Other Representations or Warranties.....................................17 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER Section 4.1 Organization...............................................................17 Section 4.2 Authority Relative to this Agreement.......................................18 Section 4.3 Consents and Approvals.....................................................18 Section 4.4 No Violations..............................................................18 Section 4.5 Brokers....................................................................18 Section 4.6 Financing..................................................................18 ARTICLE V COVENANTS Section 5.1 Conduct of Business by the Seller Pending the Closing......................19 Section 5.2 Access and Information.....................................................19 Section 5.3 Approvals and Consents; Cooperation; Notification..........................19 Section 5.4 Additional Matters.........................................................20 Section 5.5 Further Assurances.........................................................20 Section 5.6 Cure Costs.................................................................20 Section 5.7 Bankruptcy Actions.........................................................20 Section 5.8 Employment of Business Employees...........................................20 Section 5.9 Books and Records; Personnel...............................................21 Section 5.10 [Intentionally Omitted]....................................................21 Section 5.11 Resolution of Claims.......................................................21 Section 5.12 Non-competition/Non-solicitation...........................................21 Section 5.13 Post Transition Support by Purchaser.......................................22 Section 5.14 Insurance..................................................................22 ARTICLE VI CONDITIONS PRECEDENT Section 6.1 Conditions Precedent to Obligation of the Seller and the Purchaser.........22 Section 6.2 Conditions Precedent to Obligation of the Seller...........................22 Section 6.3 Conditions Precedent to Obligation of the Purchaser........................23 ARTICLE VII TERMINATION, AMENDMENT, AND WAIVER Section 7.1 Termination by Mutual Consent..............................................23 Section 7.2 Termination by Either the Purchaser or the Seller..........................23 Section 7.3 Effect of Termination and Abandonment......................................23 ARTICLE VIII SURVIVAL AND INDEMNIFICATION Section 8.1 Survival...................................................................24 Section 8.2 Indemnification by Purchaser...............................................24 Section 8.3 Indemnification by the Seller..............................................24 Section 8.4 Notice and Defense of Claims...............................................24 Section 8.5 Liability Minimum and Limit on Liability...................................25 Section 8.6 Exclusive Remedy...........................................................25 ARTICLE IX GENERAL PROVISIONS Section 9.1 Taxes......................................................................25 Section 9.2 Notices....................................................................25 Section 9.3 Descriptive Headings.......................................................27 Section 9.4 Entire Agreement; Assignment...............................................27 Section 9.5 Governing Law..............................................................27 Section 9.6 Expenses...................................................................27 Section 9.7 Amendment..................................................................27 Section 9.8 Waiver.....................................................................27 Section 9.9 Counterparts; Effectiveness................................................27 Section 9.10 Severability; Validity; Parties in Interest................................27 Section 9.11 Payments Received..........................................................28 ARTICLE X DEFINITIONS
ASSET ACQUISITION AGREEMENT THIS ASSET ACQUISITION AGREEMENT, dated as of January 31, 2002 (the "Agreement"), is made by and between Comdisco, Inc., a Delaware corporation (the "Seller"), and T-Systems Inc., a Delaware corporation (the "Purchaser"). Capitalized terms used herein and not otherwise defined shall have the meanings set forth in Article X. WHEREAS, the Seller is engaged in the business of leasing and providing remarketing services for distributed computing systems (servers, workstations, personal computers, local area networks and other high technology equipment), acquisition management and expenditure tracking and other services that facilitate equipment procurement and expense tracking (the "Business"); WHEREAS, the Seller, along with certain of its affiliates, has filed voluntary petitions (the "Petitions") for relief commencing a case (the "Chapter 11 Case") under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Northern District of Illinois (the "Bankruptcy Court"); WHEREAS, the Purchaser desires to purchase and acquire, and the Seller desires to sell, convey, assign and transfer, the Acquired Assets and the Purchaser is willing to assume, and the Seller desires to assign and delegate to the Purchaser, the Assumed Liabilities, all in the manner and subject to the terms and conditions set forth herein and in accordance with Sections 105, 363 and 365 of the Bankruptcy Code (the "Acquisition"). NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, the parties hereto agree as follows: ARTICLE I PURCHASE AND SALE OF ASSETS Section 1.1 Acquired and Excluded Assets. On the terms and subject to the conditions set forth in this Agreement and pursuant to Sections 105, 363 and 365 of the Bankruptcy Code, at the Closing, the Seller shall sell, assign, transfer, convey and deliver to the Purchaser, and the Purchaser shall purchase and accept from the Seller all right, title and interest of the Seller in and to all rights, properties and assets of the Seller that are listed or described below (collectively, the "Acquired Assets"): (a) [Intentionally Omitted]; and (b) all rights and incidents of interest to: (i) the (A) customer contracts of the Seller listed on Schedule 1.1(b)(i) (the "Customer Contracts") and (B) the master technology services agreements and/or master agreements, and all schedules and supplements thereto in each case to the extent related solely to the Customer Contracts; provided, however, if any such agreements or arrangements described in clause (B) relate to the Customer Contracts and to other businesses of the Seller, such agreements or arrangements shall not be Acquired Assets; (ii) the agreements, contracts and arrangements between the Seller and a vendor or other third party listed or described on Schedule 1.1(b)(ii) for the provision of goods or services primarily relating to the provision of services under the Customer Contracts; (iii) to the extent assignable, the agreements, contracts and arrangements regarding confidentiality, assignment of invention, non-competition and other employment matters between the Seller and employees of the Seller who are primarily engaged in providing the infrastructure support and management services, including, but not limited to, procurement support, asset management, maintenance and installation of hardware, help desk and program management services for desktop, server and network assets (the "Customer Services") required to be provided by the Seller under the Customer Contracts (such employees are listed on Schedule 1.1(b)(iii) (the "Employees") and, for purposes of this Agreement, such Employees who accept an offer of employment with the Purchaser shall be referred to herein as "Transitioned Employees"); (iv) [Intentionally Omitted]; (v) the Tangible Personal Property as defined in Schedule 1.1(b)(v); (vi) all rights as of the Closing under all warranties, representations and guarantees made by suppliers, manufacturers and contractors in connection with any of the Acquired Assets; (vii) to the extent transferable, all material licenses, permits, authorizations and approvals issued to the Seller by any Governmental Entity primarily relating to any of the Acquired Assets; (viii) the books and records of the Seller to the extent specifically relating to the provision of services under the Customer Contracts and listed on Schedule 1.1(b)(viii); and (ix) all the rights, properties or assets that are listed or described on Schedule 1.1(b)(ix). EXCEPT FOR SPECIFIC REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS AGREEMENT, THE ACQUIRED ASSETS ARE BEING SOLD ON AN "AS IS," "WHERE IS" BASIS AND SELLER MAKES NO WARRANTIES, EXPRESS OR IMPLIED, OF MERCHANTABILITY, FITNESS OR OTHERWISE WITH RESPECT TO THE ACQUIRED ASSETS WHICH EXTEND BEYOND THE AFORESAID SPECIFIC REPRESENTATIONS AND WARRANTIES. Section 1.2 Excluded Assets. Notwithstanding anything contained in this Agreement to the contrary, the following rights, properties and assets (collectively, the "Excluded Assets"), among others, will not be included in the Acquired Assets: (a) all cash, cash equivalents or marketable securities; (b) all of the accounts receivable arising out of the operation of the Customer Contracts calculated on a daily pro rata basis on or prior to the Closing Date; (c) all of the agreements, contracts and arrangements that have terminated or expired prior to the Closing in the ordinary course of business; (d) any agreement, contract or arrangement or portion thereof not included in the Acquired Assets, including, without limitation, those listed or described on Schedule 1.2(d) (the "Excluded Contracts"); (e) any agreement, contract or arrangement with respect to which the Purchaser does not assume all liabilities that arise on or after the Closing Date in accordance with the Section 363/365 Order; (f) Tangible Personal Property transferred or disposed of in the ordinary course of business; (g) [Intentionally Omitted]; (h) except as listed on Schedule 1.1(b)(viii), the company seal, minute books, charter documents, stock or equity record books and such other books and records as pertain to the organization, existence or capitalization of the Seller as well as any other records or materials relating to the Seller generally and not involving or related to the Acquired Assets; (i) all contracts of insurance; (j) any right, property or asset that is listed or described on Schedule 1.2(j); (k) the word and name "Comdisco" and the Seller's monograms and other Trademarks or any variations or combinations thereof which include such word or name or any other confusingly similar words, names or other Trademarks; (l) all avoidance actions and similar rights and causes of action, including causes of action under Sections 544 through 553 inclusive, of the Bankruptcy Code (solely to the extent that such rights and actions do not contradict the obligations of Seller as set forth in Section 1.4); (m) any right the Seller has with respect to a refund for Taxes; (n) [Intentionally Omitted]; (o) except as otherwise specifically provided in this Agreement, all master technology services agreements and/or master agreements, and all schedules and supplements thereto, that relate to the Customer Contracts and to other of the businesses of the Seller; and (p) all equipment, including any right, title and interest (including any security interest) of the Seller in any such equipment, leased to third parties pursuant to the Customer Contracts or otherwise provided to third parties pursuant to similar usage agreements. Section 1.3 Assumed Liabilities. On the terms and subject to the conditions set forth in this Agreement, at the Closing, the Purchaser shall assume from the Seller and thereafter pay, perform or otherwise discharge in accordance with their terms, and shall hold the Seller harmless from, all of the liabilities and obligations of the Seller with respect to, arising out of or relating to (collectively, the "Assumed Liabilities") the ownership, possession or use of the Acquired Assets (of any nature or kind, and whether based in common law or statute or arising under written contract or otherwise, known or unknown, fixed or contingent, accrued or unaccrued on a daily pro rata basis, liquidated or unliquidated, real or potential) arising on and after the Closing Date, including, without limitation, all of the obligations and liabilities arising under the agreements, contracts and arrangements included in the Acquired Assets, and liabilities relating to Transitioned Employees as provided in Schedule 5.8. Section 1.4 Excluded Liabilities. The Purchaser shall not assume or agree to pay, perform or otherwise discharge any liabilities, obligations or expenses other than the Assumed Liabilities. Without limiting the foregoing, the Purchaser does not assume or agree to pay, perform or otherwise discharge the payables, liabilities and obligations of any nature or kind arising prior to the Closing Date, whether based in common law or statute or arising under written contract or otherwise, known or unknown, fixed or contingent, accrued or unaccrued, liquidated or unliquidated, real or potential, as to which the Seller or any of its affiliates is an obligor or is otherwise responsible or liable. Section 1.5 Purchase Price. In consideration for the Acquired Assets, the Purchaser shall, in addition to the assumption of the Assumed Liabilities, pay to the Seller the sum of Six Million Eight Hundred Forty Six Thousand Four Hundred Fifty Two Dollars ($6,846,452.00), subject to adjustment pursuant to Section 1.6 hereafter (the "Purchase Price"). The Purchase Price will be paid to the Seller as set forth in, and subject to, the terms and conditions of Section 1.6 below. Section 1.6 Purchase Price: Adjustment and Payment Provisions. The Purchaser will pay the Purchase Price in accordance with the following terms and provisions: (a) At Closing, the Purchaser shall: (i) transfer, assign, convey and deliver to the Seller, and the Seller shall otherwise be entitled to take possession of and retain, the bid deposit amount previously deposited by the Purchaser, in the amount of Four Hundred Twenty Thousand Dollars ($420,000.00), plus interest accrued thereon as of the Closing Date (collectively, the "Bid Deposit Payment"), said Bid Deposit Payment to be free and clear of all liens, claims, encumbrances and security interests. Notwithstanding the foregoing, the Purchaser hereby agrees that the Purchaser shall be solely responsible for payment of all Taxes relating to interest included in the Bid Deposit Payment; and (ii) pay the Seller the amount of Four Million Seventy Five Thousand Two Hundred Sixty Nine Dollars ($4,075,269.00) less the Bid Deposit Payment (the "Cash Payment"). The Cash Payment will be made in one lump sum by wire transfer of immediately available funds to an account or accounts designated by the Seller. The Bid Deposit Payment and the Cash Payment, taken together, in the amount of Four Million Seventy Five Thousand Two Hundred Sixty Nine Dollars ($4,075,269.00), will be collectively referred to in this Agreement as the "First Payment". (b) On or before the date that is nine (9) months after the Closing Date, the Purchaser will pay to the Seller the amount of Two Million Three Hundred Sixty Three Thousand Six Hundred Fifty Six Dollars ($2,363,656.00). Purchaser's obligation to make such payment is unconditional and shall not be subject to setoff or reduction in respect of any amount owed or claimed to be owed by the Seller or any of its affiliates. (c) The Purchaser will pay the balance of the Purchase Price, Four Hundred Seven Thousand Five Hundred Twenty Seven Dollars ($407,527.00) (the "Holdback"), in accordance with the following terms and conditions. After any adjustments required by the terms of this Section 1.6, the Holdback will be paid as set forth below: (i) Schedule 1.6 sets forth an estimated gross profit of approximately $16,768,000.00 in the aggregate (the "Projected Gross Profits") to be earned from the Customer Contracts for the period from January 1, 2002 until the end of the contract terms of the Customer Contracts (for each of the Customer Contracts, the "Runoff Term"). (ii) In order to verify the Projected Gross Profits, the Purchaser, within seven (7) months after the Closing Date, will verify the assumptions and basis underlying the gross profit projections set forth on Schedule 1.6 for each of the Customer Contracts, in the aggregate, for the first six (6) months following the Closing Date (the "Evaluation Period"). Such verification will be limited to reviewing the following items only: (a) the Customer Contracts; (b) the vendor contracts listed on Schedule 1.1(b)(ii); (c) actual customer invoices; (d) actual vendor invoices; and (e) salary, incentive bonus and retention bonus expenses for those certain Employees used to calculate the "Projected Comdisco Cost Only" listed on Schedule 1.6. Based on the foregoing verification, the Purchaser will adjust, if necessary, the estimated gross profit from the Customer Contracts in the aggregate over the Runoff Term (the "Verified Projected Gross Profits"). For the sake of clarity, the parties hereto do not intend for the Projected Gross Profits to be measured against the actual results obtained by the Purchaser in operating under the Customer Contracts, but rather that the verification of Projected Gross Profits shall be limited to a review of the underlying assumptions and basis for the Projected Gross Profits as set forth in Schedule 1.6. (iii) In the event the Verified Projected Gross Profits is less than the Projected Gross Profits, the Purchaser will decrement the Holdback on a dollar for dollar basis for the difference. The final payment made after such adjustment will be referred to as the "Holdback Payment". If the Purchaser decrements the Holdback pursuant to the terms of this Section 1.6(c)(iii), the Purchaser will be entitled to retain any balance of the Holdback remaining after the payment to the Seller of the Holdback Payment, and the Purchase Price will be adjusted accordingly. In no event shall the decrement to the Holdback pursuant to the terms of this Section 1.6(c) exceed the sum of Four Hundred Seven Thousand Five Hundred Twenty Seven Dollars ($407,527.00). (iv) In the event the Verified Projected Gross Profits are equal to or greater than the Projected Gross Profits, the Purchaser will pay the Seller the full amount of the Holdback. (v) The Purchaser shall perform the calculations specified above in Sections 1.6(c)(ii), 1.6(c)(iii) and 1.6(c)(iv) and shall notify the Seller in writing of the detail and result of those calculations (the "Holdback Notice") not later than eight (8) months after the Closing Date (the "Holdback Notice Date"). If the Purchaser fails to notify the Seller of the detail and result of such calculations by the Holdback Notice Date, the Purchaser waives any and all rights to decrement the Holdback pursuant to this Section 1.6(c), and the Seller shall be entitled to receive the full amount of the Holdback as the Holdback Payment. If the Seller disputes the Purchaser's calculations, the Seller must notify the Purchaser in writing within thirty (30) days of the Holdback Notice Date. If the Seller does not timely serve notice of the Seller's objections, the Purchaser's calculations shall be conclusive and binding. If the Seller disputes the Purchaser's calculations, the Purchaser and the Seller agree to work in good faith to establish a final calculation reasonably acceptable to both parties as promptly as practicable. (vi) In the event that the Purchaser and the Seller are unable to establish a final calculation of the Holdback Payment that is reasonably acceptable to both parties, within ninety (90) days of the Holdback Notice Date, at the election of either party by notice to the other, the final calculation of the Holdback Payment will be settled exclusively by arbitration as provided in this Section 1.6(c)(vi). The arbitration and all preliminary proceedings related thereto will be conducted in accordance with such rules as may be agreed upon by the parties, or failing such agreement on such rules, in accordance with the Rules for Commercial Arbitration of the American Arbitration Association ("AAA"), as amended from time to time and as modified by this Agreement. The dispute will be presented to an arbitrator sitting in Chicago, Illinois. If, within thirty (30) days of the date of the election by a party to submit the dispute to arbitration, the parties have been unable to agree on an arbitrator, the parties, or either of them, may submit the dispute to the AAA for arbitration. If, within fifteen (15) days after the AAA has provided a list of possible arbitrators, the parties are unable to agree on an arbitrator, then either of the parties may request that the AAA select the arbitrator. The arbitrator will possess appropriate business experience in the principal issues in dispute and will be independent of the Purchaser and the Seller. The arbitrator will be officed in the Chicago, Illinois metropolitan area. Except as may otherwise be agreed in writing by the parties or as ordered by the arbitrators upon substantial justification shown, the hearing for the dispute will be held within sixty (60) days of submission of the dispute to arbitration. The arbitrator will render the final award within thirty (30) days following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrator. The arbitrator will state the factual basis for the award. The decision of the arbitrator will be final and binding, except as provided in the Federal Arbitration Act, 9 U.S.C.ss.1, et seq., and except for errors of law based on the findings of fact. Final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective. (vii) Except for any amount in dispute under this Section 1.6, the Purchaser will pay the Holdback Payment or the Holdback, as applicable, to the Seller on the date that is nine (9) months from the Closing Date (the "Holdback Period"). (viii) Notwithstanding anything to the contrary contained in this Agreement, in no event shall the Holdback Payment be negatively impacted by, among other things: (a) actions taken solely by the Purchaser with respect to any of the Customer Contracts after the Closing Date that adversely affect the actual gross profits or revenue realized from the Customer Contracts during the Evaluation Period; (b) receivable collectibility; (c) delivery failures after the Closing Date unless due to a breach by the Seller under the Software License Agreement; (d) defaults by customers under the Customer Contracts; or (e) actions mutually agreed upon by the parties hereto. (d) The Purchase Price and the First Payment shall be reduced by Twelve Thousand One Hundred Twelve Dollars ($12,112.00) for each calendar day after January 1, 2002 through and including the Closing Date, until the Closing occurs; provided, however, that neither the Purchase Price nor the First Payment shall be reduced as otherwise provided in this Section 1.6(d) if such delay in Closing is in any way attributable to the Purchaser's material breach of the terms of this Agreement, provided that the Seller is not in material breach of any of the terms of this Agreement. Section 1.7 Commission on Sales after Closing. (a) The Purchaser anticipates acquiring per contract revenue for each of the Customer Contracts, as set forth under the "Revenue" heading in Schedule 1.6 (the "Projected Revenue") during the Runoff Term. (b) As detailed below, for qualified increases or adjustments (including, but not limited to, contract extensions, increased seat counts, utilization of demand services, additional site rollouts and new sales to existing customers) ("Adjustments") made to the existing scope of the Customer Services provided under each of the Customer Contracts, the Purchaser will pay to the Seller eight percent (8%) of any additional committed sales or revenue as calculated on a contract-by-contract basis for each of the Customer Contracts (as opposed to the aggregate Projected Revenue for all Customer Contracts combined), derived from such Adjustments (the "Additional Revenue"). Purchaser's obligation to pay such Additional Revenue is unconditional and shall not be subject to setoff or reduction in respect of any amount owed or claimed to be owed by the Seller or any of its affiliates. (c) In order to qualify for payment under this Section 1.7(c), Adjustments must be made during the period of time starting on the day after the Closing Date and extending through the last day of the twenty-third (23rd) calendar month thereafter (the "Adjustment Period"), regardless of whether the Customer Services to be provided pursuant to such Adjustments are actually commenced. Adjustments contemplated by the express terms of the Customer Contracts, and/or any Additional Revenue that is generated by the Customer Contracts in the course of the performance of the Customer Services, that result in per contract revenue greater than that specified on Schedule 1.6, on a contract-by-contract basis, for each of the Customer Contracts will qualify for the payment as provided in Section 1.7(b). In addition, renewals and/or extensions of the Customer Services set forth in the Customer Contracts as of the Closing Date, and any sales of the Purchaser's information technology management services, that result in per contract revenue greater than that specified on Schedule 1.6, on a contract-by-contract basis, for each of the Customer Contracts will qualify for the payment as provided in Section 1.7(b). (d) The Seller will not have any right to receive any payments under Section 1.7(b) for: (a) revenue attributable to sales of any services to any entity other than the customers specified in the Customer Contracts; or (b) any sales to the customers specified in the Customer Contracts other than the services contemplated by the terms of Section 1.7(c) above (i.e., sales of network management services are not included). (e) The Purchaser will determine the Additional Revenue expected by the Purchaser, on a contract-by-contract basis, within seven (7) days after the date that the Purchaser enters into an Adjustment to a Customer Contract during the Adjustment Period. Any such Additional Revenue shall be paid to the Seller according to the following schedule: (a) within forty-five (45) days of the Purchaser entering into any Adjustment, twenty-five percent (25%) of any such Additional Revenue; (b) within six (6) months thereof, another twenty-five percent (25%) of any such Additional Revenue; (c) within twelve (12) months thereof, another twenty-five percent (25%) of any such Adjustment Payment; and (d) within eighteen (18) months thereof, the final twenty-five percent (25%) of any such Additional Revenue. The expiration of the Adjustment Period shall not limit the Purchaser's obligation to make the foregoing payments with respect to an Adjustment occurring during the Adjustment Period. Additional Revenue will be paid to the Seller on a contract-by-contract basis according to the foregoing schedule regardless of whether such revenue is actually realized by the Purchaser. The Purchaser shall provide the Seller with quarterly written reports that compare and itemize, on a contract-by-contract basis, the actual revenues and Additional Revenues realized by the Purchaser during such calendar quarter to the corresponding periodic Projected Revenue for such calendar quarter. (f) Notwithstanding anything to the contrary in Section 1.7, for the duration of the Adjustment Period, the Purchaser agrees that any Additional Revenue attributable solely to a customer seat buy-down Adjustment under the terms of the Deluxe Corporation Customer Contract listed on Schedule 1.1(b)(i) shall be paid to the Seller as follows: (i) within five (5) days after the date that the Purchaser receives payment of such customer seat buy-down Adjustment, the Purchaser shall pay to the Seller one hundred percent (100%) of the portion of such Additional Revenue that is allocable to the provision of leased equipment, hardware and other assets as provided in the Deluxe Agreement; and (ii) within thirty (30) days after the date that the Purchaser receives payment of such customer seat buy-down Adjustment, the Purchaser shall pay to the Seller the sum of eight percent (8%) of the portion of such Additional Revenue that is allocable to the provision of Customer Services. Except as expressly provided in this Section 1.7(f), Purchaser shall pay all other Additional Revenue to the Seller pursuant to the terms otherwise set forth in Section 1.7. Section 1.8 Allocation of Purchase Price for Tax Purposes. The Seller and the Purchaser agree that the allocation of the Purchase Price and the Assumed Liabilities to the Acquired Assets shall be as set forth on Schedule 1.8 attached hereto, which has been approved by arm's length negotiation. If there is any adjustment to the First Payment, other payment, or the Assumed Liabilities, the Seller and the Purchaser agree to make appropriate adjustments to the allocation set forth in Schedule 1.8 attached hereto. The Seller and the Purchaser shall be bound by such allocation (and if necessary, any revised allocation), and shall file, or cause to be filed, all applicable federal, state, local and foreign income, franchise and excise Tax Returns in a manner that is consistent with such allocation, unless otherwise required by law, in which case the party making such a determination will notify the other party of that determination as promptly as possible with the justification therefore. If the allocation set forth on Schedule 1.8 is disputed by any taxing authority, the party receiving notice of such dispute shall promptly notify the other party hereto concerning the existence of such dispute and the parties shall consult with each other with respect to all issues related to the allocation in connection with such dispute. ARTICLE II THE CLOSING Section 2.1 Closing. Subject to the satisfaction or waiver of the conditions set forth in Article VI, the closing of the transactions contemplated by this Agreement (the "Closing") shall take place (i) at the offices of Skadden, Arps, Slate, Meagher & Flom (Illinois), 333 West Wacker Drive, Chicago, Illinois 60606 at 10:00 a.m. on February 28, 2002 or (ii) at such other time, date and place as shall be fixed by agreement among the parties (the date of the Closing being herein referred to as the "Closing Date"). Except as otherwise expressly provided herein, the Closing shall be deemed effective for tax, accounting and financial purposes as of the close of business on the Closing Date. Section 2.2 Deliveries at Closing. (a) At the Closing, or as otherwise specified in this Section 2.2(a), the Seller shall deliver to the Purchaser: (i) a duly executed bill of sale and assignment, substantially in the form of Exhibit A attached hereto, transferring the Acquired Assets to the Purchaser; (ii) all other conveyance documents reasonably necessary to transfer to the Purchaser the Acquired Assets; (iii) if applicable, the Acquired Assets by making the Acquired Assets available to the Purchaser at their present location; (iv) the general assumption agreement to be entered into between the Seller and the Purchaser (the "Assumption Agreement"), substantially in the form of Exhibit B attached hereto, duly executed by the Seller evidencing the assignment and assumption by the Purchaser of the Assumed Liabilities; (v) a duly executed Software License Agreement (the "Software License Agreement"), substantially in the form of Exhibit C attached hereto, duly executed by the Seller; (vi) the transition services agreement to be entered into between the Seller and the Purchaser (the "Transition Services Agreement"), substantially in the form of Exhibit D attached hereto, duly executed by the Seller; (vii) the Deluxe Agreement to be entered into by the Seller and the Purchaser (the "Deluxe Agreement"), the form and terms of which will be reasonably agreed upon by the parties hereto on or prior to February 10, 2002, duly executed by the Seller; (viii) to the extent included in the Acquired Assets, all the Customer Contracts, including all schedules, attachments, exhibits, or amendments thereto and all correspondence and service, support and maintenance records relating thereto within the Seller's possession or control; (ix) to the extent included in the Acquired Assets, all subcontracts and supplier agreements relating to the Customer Contracts, including all schedules, attachments, exhibits or amendments thereto and all correspondence and other available records relating to such subcontracts within the Seller's possession or control; (x) to the extent included in the Acquired Assets, all issue logs and financial information (including accounting and payment records) relating to each of the Customer Contracts and the subcontractors and supplier agreements described in (viii) and (ix) above; (xi) within ten (10) business days after Closing, copies, and not originals, of all personnel files relating to the Transitioned Employees, subject to the Transitioned Employee signing a written consent releasing such files, and an assignment to the Purchaser of all of the Seller's rights under any and all agreements with the Transitioned Employees, duly executed by the Seller; and (xii) all other previously undelivered certificates and other closing documents required to be delivered by the Seller to the Purchaser at or prior to the Closing Date in connection with the Acquisition. (b) At the Closing, the Purchaser shall deliver to the Seller: (i) the Cash Payment by wire transfer in immediately available funds to an account or accounts designated by the Seller; (ii) the Assumption Agreement duly executed by the Purchaser; (iii) the Transition Services Agreement duly executed by the Purchaser; (iv) the Software License Agreement duly executed by the Purchaser; (v) the Deluxe Agreement duly executed by the Purchaser; and (vi) all other previously undelivered certificates and other closing documents required to be delivered by the Purchaser to the Seller at or prior to the Closing Date in connection with the Acquisition. Section 2.3 Reconciliation of Funds. The parties hereby agree that, notwithstanding anything to the contrary in this Agreement, all revenues to be paid by customers for Customer Services rendered on or prior to the Closing Date will accrue to the benefit of the Seller, and all revenues to be paid by customers for Customer Services rendered after the Closing Date will accrue to the benefit of the Purchaser. Both revenues and liabilities will accrue on a pro rata basis for the number of days elapsed in the month. To the extent that either party receives funds that accrue to the other party, each party agrees that such funds will be forwarded to the other party with reasonable promptness. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE SELLER Except as disclosed in the written statement delivered by the Seller to the Purchaser at or prior to the execution of this Agreement (the "Seller Disclosure Schedule"), which shall be attached hereto and made part hereof, or in the Seller SEC Documents, the Seller represents and warrants to the Purchaser as follows: Section 3.1 Organization. The Seller is validly existing and in good standing (or its equivalent) under the laws of the State of Delaware and has the requisite corporate power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to be so existing and in good standing or to have such power and authority would not have a Material Adverse Effect. The Seller is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified, licensed and in good standing would not have a Material Adverse Effect. The Seller has heretofore made available to the Purchaser a complete and correct copy of the organizational documents of the Seller, as currently in effect. Section 3.2 Authority Relative to this Agreement. The Seller has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement and of the other agreements contemplated hereby by the Seller and the consummation by the Seller of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action. Subject to the entry and effectiveness of the Section 363/365 Order, this Agreement has been duly and validly executed and delivered by the Seller and (assuming this Agreement constitutes a valid and binding obligation of the Purchaser) constitutes a valid and binding agreement of the Seller, enforceable against the Seller in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors' rights generally from time to time in effect and to general equitable principles. Section 3.3 Consents and Approvals. No consent, approval, or authorization of, or declaration, filing or registration with, any Governmental Entity is required to be made or obtained by the Seller in connection with the execution, delivery and performance of this Agreement and the consummation of the Acquisition, except (a) for consents, approvals or authorizations of, or declarations or filings with, the Bankruptcy Court, and (b) for consents, approvals, authorizations, declarations, filings or registrations, which, if not obtained, would not, individually or in the aggregate, have a Material Adverse Effect. Section 3.4 No Violations. Assuming that the consents, approvals, authorizations, declarations, and filings referred to in Section 3.3 have been made or obtained and shall remain in full force and effect and the conditions set forth in Article VI shall have been satisfied or waived, neither the execution, delivery, or performance of this Agreement by the Seller, nor the consummation by the Seller of the transactions contemplated hereby, nor compliance by the Seller with any of the provisions hereof or of the agreements contemplated hereby will (a) conflict with or result in any breach of any provisions of the certificate of incorporation or bylaws of the Seller, (b) result in a violation, or breach of, or constitute (with or without due notice or lapse of time) a default (or give rise to any right of termination, cancellation, vesting, payment, exercise, acceleration, suspension or revocation) under any of the terms, conditions or provisions of any contract (including the Customer Contracts), agreement or arrangement that is included as an Acquired Asset or any note, bond, mortgage, deed of trust, security interest, indenture, license, contract, agreement, plan or other instrument or obligation by which the Seller's properties or any of the Acquired Assets may be bound or affected or (c) violate any federal, state, local, foreign or administrative order, writ, injunction, decree, judgment, principal of common law, constitution, statute, rule or regulation ("Legal Requirements") applicable to the Seller, its subsidiaries or the Acquired Assets, except in the case of clauses (b) or (c) for violations, breaches, defaults, terminations, cancellations, accelerations, creations, impositions, suspensions or revocations that (i) would not individually or in the aggregate have a Material Adverse Effect or (ii) are excused by or unenforceable as a result of the filing of the Petitions. Section 3.5 [Intentionally Omitted] Section 3.6 Title to Property. Upon the entry and effectiveness of the Section 363/365 Order, the Seller will have the power and right to sell, or assign, transfer and deliver, as the case may be, to the Purchaser the Acquired Assets and, on the Closing Date, will sell, assign, transfer and deliver the Acquired Assets free and clear of all liens, claims, encumbrances and security interests. Section 3.7 Brokers. Except for Goldman, Sachs & Co., no person is entitled to any brokerage, financial advisory, finder's or similar fee or commission payable by the Seller in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Seller. Section 3.8 Compliance with Laws. (a) The Seller is, and has been, in compliance with each Legal Requirement that is or was applicable to the Acquired Assets or the employment of the Employees, except where the failure to be in such compliance would not have a Material Adverse Effect. (b) Except as would not reasonably be likely to have a Material Adverse Effect, the Seller currently holds all permits, license, authorizations, certificates, exemptions and approvals of Governmental Entities (collectively, "Permits") necessary or proper for the current use and operation of the Acquired Assets held by the Seller, and, to the knowledge of the Seller, all such Permits are in full force and effect. Except as would not reasonably be likely to have a Material Adverse Effect, as of the date hereof, the Seller has not received written notice from any Governmental Entity and no proceeding is pending or, to the knowledge of the Seller, threatened, revoking, modifying or refusing to renew any Permit or providing notice of violations under any Permit. Section 3.9 Books and Records; Summary of Financial Position. (a) The books, records and accounts of the Seller maintained with respect to the Acquired Assets accurately and fairly reflect, in reasonable detail, in all material respects, the transactions and the assets and liabilities of the Seller with respect to the Acquired Assets, including the employment of the Transitioned Employees by Seller. The Seller has not: (i) engaged in any material transactions with respect to the Acquired Assets; (ii) maintained any bank account for the Acquired Assets; or (iii) used any of its funds in connection with the Acquired Assets, except for transactions, bank accounts and funds which have been and are reflected in the normally maintained books and records of the Seller. (b) All records delivered or exhibited to Purchaser in connection with the Acquired Assets were prepared on a basis consistent with prior practices of the Seller and fairly present, in all material respects, what they purport to present as of their respective dates noted thereon. (c) Schedule 3.9(c) sets forth certain historical data relating to the Customer Contracts. Section 3.10 Ability to Conduct Business. Except for this Agreement or pursuant to the Chapter 11 Case, there is no agreement, judgment, injunction, order or decree binding upon the Seller which has or would reasonably be expected to have the effect of prohibiting or impairing the use of the Acquired Assets. Section 3.11 [Intentionally Omitted]. Section 3.12 Acquired Contracts. (a) Enforceability; etc. (i) Except as would not reasonably be likely, individually or in the aggregate, to have a Material Adverse Effect, each Customer Contract and each other contract included in the Acquired Assets (with the Customer Contracts, the "Acquired Contracts") is a valid, binding and enforceable agreement of the Seller and is in full force and effect and is enforceable against the Seller in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors' rights generally from time to time in effect and to general equitable principles. Except as set forth in Schedule 3.12(a)(i), the Seller is not in default or breach under any of the terms of any Acquired Contract and no party thereto (other than the Seller) is in default of payment under the terms of any such Acquired Contract and, to the knowledge of the Seller, no party thereto is in non-payment default or breach under any of the terms of any such Acquired Contract; (ii) the Seller has made available to the Purchaser complete and accurate copies of all of the Acquired Contracts, and such documents are the only documents executed relating to the obligations of the Seller to the customers or other parties named therein; (iii) the Acquired Contracts conform with all Legal Requirements, except where the failure to so conform would not have a Material Adverse Effect; (iv) to the knowledge of the Seller, all signatures, names, addresses, amounts, descriptions and other statements and facts contained in the Acquired Contracts are genuine, true and accurate; (v) except as set forth on Schedule 3.12(a)(v), to the knowledge of the Seller, there are no disputes concerning the Acquired Contracts and the Acquired Contracts are not subject to any defenses, setoffs or counterclaims of any kind, and no suit or any legal action or proceeding, administrative, judicial or otherwise has been brought or, to the Seller's knowledge, threatened to be brought by or against Seller in connection therewith; and (vi) to the knowledge of the Seller, as of the date of this Agreement, no party, other than Seller, to an Acquired Contract is the subject of any bankruptcy or insolvency proceeding. (b) Customer Records; Information on Schedules. Except as would not reasonably be likely to have a Material Adverse Effect, each of the Seller's reports, ledger cards and other records pertaining to the Customer Contracts are accurate in all material respects, and all information contained on the Schedules attached to this Agreement, including, without limitation, information regarding the unpaid balances owing on the Customer Contracts, is accurate. (c) Payments on Customer Contracts. To the knowledge of the Seller, no payments made on the Customer Contracts were made by any guarantor of a customer's obligations or made or financed, directly or indirectly, by the Seller or any of its Affiliates. To the knowledge of the Seller, no payment has been made on a Customer Contract attributable to any time after the Closing Date. Section 3.13 Taxes. (a) Definitions. For purposes of this Agreement: (i) The term "Tax" means any of the Taxes, and "Taxes" means (A) all net income, capital gains, gross income, gross receipts, sales, use, ad valorem, franchise, capital, profits, license, and other withholding, employment, social security, payroll, transfer, conveyance, documentary, stamp, property, value added, customs duties, minimum taxes, estimated and any other taxes, fees, charges, levies, excises, duties or assessments of any kind whatsoever, together with additions to tax or additional amounts, interest and penalties relating thereto that may be imposed by the federal government or any state, local or foreign government and (B) any liability of the Seller for the payment of any amount of any type described in clause (A) as a result of the Seller being a transferee or a member of an affiliated or combined group prior to the Closing, (ii) "Tax Returns" means all returns, reports, statements and forms required to be filed in respect of any Tax, and (iii) "Code" means the Internal Revenue Code of 1986, as amended including the rules and regulations thereunder and any substitute or successor provisions. (b) The Seller has paid or finally settled all Taxes relating to the Acquired Assets that have become due and payable for any taxable period or portion of any taxable period, ending on or prior to the date of this Agreement. The Seller has properly filed on a timely basis all Tax Returns relating to the Acquired Assets for any taxable period or portion of any taxable period ending on or prior to the date of this Agreement. With respect to any period for which Tax Returns relating to the Acquired Assets have not yet been filed, or for which Taxes relating to the Acquired Assets are not yet due or owing, the Seller has made due and sufficient accruals for such Taxes on its books and records. (c) There are no liens for Taxes (other than for current Taxes not yet due and payable) on the Acquired Assets. (d) All sales, use and property taxes required to be collected or paid by the Seller with respect to the Acquired Assets have been timely collected and paid. (e) The Seller has not received from any Governmental Entity or other taxing authority any written notice of proposed adjustment, deficiency or underpayment of any sales, use or property taxes required to be paid by the Seller with respect to the Acquired Assets. There are no claims that have been asserted or threatened relating to such taxes against Seller, and there are no agreements for the extension of time for the assessment of any such taxes. (f) The Seller is a United States person within the meaning of the Code. Section 3.14 Seller Benefit Plans. (a) Schedule 3.14(a) includes a list of each material employee benefit plan, program, arrangement and contract (including, without limitation, any "Employee Benefit Plan", as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")) maintained or contributed to by the Seller for the benefit of any Employees (collectively, the "Seller Benefit Plans"). The Seller has made available to the Purchaser true and correct copies of (i) the Seller Benefit Plans and (ii) the most recent summary plan description for each Seller Benefit Plan for which a summary plan description is required. (b) Each of the Seller Benefit Plans has been operated and administered in all material respects in accordance with all Legal Requirements, including, but not limited to, ERISA and the Code. Each Seller Benefit Plan intended to be "qualified" within the meaning of Section 401(a) of the Code has received a favorable determination letter as to such qualification from the IRS and, to the knowledge of the Seller, no event has occurred, either by reason of any action or failure to act, which would cause the loss of any such qualification or would have a Material Adverse Effect, individually or in the aggregate, on such Seller Benefit Plan. (c) The Seller is not a party to any collective bargaining or other labor union contract applicable to the Employees and no collective bargaining agreement is being negotiated by the Seller with respect to the Employees. As of the date of this Agreement, there is no labor dispute, strike or work stoppage against the Seller, pending or threatened in writing. As of the date of this Agreement, to the knowledge of the Seller, the Seller has not committed any unfair labor practices in connection with the Employees, and there is no charge or complaint against the Seller by the National Labor Relations Board or any comparable state agency pending or threatened in writing. (d) Except as set forth on Schedule 3.14(d), none of the Seller Benefit Plans provides or promises to provide retiree medical or life insurance benefits. (e) The Seller does not currently sponsor or contribute to or, within the last six years, sponsored or contributed to a Seller Benefit Plan that is (i) subject to Title IV of ERISA or Section 412 of the Code, (ii) a "multiemployer plan" within the meaning of Sections 3(37) or 4001(a)(3) of ERISA or (iii) a "multiple employer plan" which is or has been subject to Sections 4063 or 4064 of ERISA. (f) To the Seller's knowledge, each Seller Benefit Plan that is an employee welfare benefit plan complies and has complied with the continuation coverage ("COBRA") requirements of Section 4980B of the Code to the extent such Section is applicable to the Seller Benefit Plan. (g) As of the date of this Agreement, the Seller is in compliance with the requirements the Workers Adjustment and Restraining Notification Act ("WARN") and has no outstanding liabilities pursuant to WARN. Section 3.15 No Other Representations or Warranties. EXCEPT AS SPECIFICALLY AND EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY AGREEMENT, INSTRUMENT, CERTIFICATE OR OTHER DOCUMENT CONTEMPLATED HEREBY, (I) THE SELLER MAKES NO REPRESENTATION OR WARRANTY, (WHETHER ARISING UNDER STATUTE OR OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USAGE OF TRADE) EXPRESS OR IMPLIED, AT LAW OR IN EQUITY, RELATING TO THE ACQUIRED ASSETS OR THE ASSUMED LIABILITIES, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY AS TO VALUE, MERCHANTABILITY, NON-INFRINGEMENT FITNESS FOR A PARTICULAR PURPOSE OR FOR ORDINARY PURPOSES, OR ANY OTHER MATTER, (II) THE SELLER MAKES NO, AND HEREBY DISCLAIMS ANY, OTHER REPRESENTATION OR WARRANTY REGARDING THE ACQUIRED ASSETS OR THE ASSUMED LIABILITIES AND (III) THE ACQUIRED ASSETS, AND THE ASSUMED LIABILITIES BEING TRANSFERRED TO THE PURCHASER ARE CONVEYED ON AN "AS IS, WHERE IS" BASIS AS OF THE CLOSING, AND THE PURCHASER SHALL RELY UPON ITS OWN EXAMINATION THEREOF. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE SELLER MAKES NO REPRESENTATION OR WARRANTY REGARDING ANY ASSETS OTHER THAN THE ACQUIRED ASSETS OR ANY LIABILITIES OTHER THAN THE ASSUMED LIABILITIES, AND NONE SHALL BE IMPLIED AT LAW OR IN EQUITY. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER The Purchaser represents and warrants to the Seller as follows: Section 4.1 Organization. The Purchaser is a corporation validly existing and in good standing under the laws of its jurisdiction of incorporation and has the corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted. The Purchaser is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the character of its properties owned or held under lease or the nature of its activities make such qualification necessary. Section 4.2 Authority Relative to this Agreement. The Purchaser has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement by the Purchaser and the consummation by the Purchaser of the transactions contemplated hereby have been duly authorized by all requisite corporate actions. This Agreement has been duly and validly executed and delivered by the Purchaser and (assuming this Agreement constitutes a valid and binding obligation of the Seller) constitutes a valid and binding agreement of the Purchaser, enforceable against the Purchaser in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors' rights generally from time to time in effect and to general equitable principles. Section 4.3 Consents and Approvals. No consent, approval or authorization of, or declaration, filing or registration with, any Governmental Entity is required to be made or obtained by the Purchaser in connection with the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby. Section 4.4 No Violations. Neither the execution, delivery or performance of this Agreement by the Purchaser, nor the consummation by the Purchaser of the transactions contemplated hereby, nor compliance by the Purchaser with any of the provisions hereof, will (a) conflict with or result in any breach of any provisions of the articles or certificate of incorporation, as the case may be, or bylaws of the Purchaser, (b) result in a violation or breach of, or constitute (with or without due notice or lapse of time) a default (or give rise to any right of termination, cancellation, acceleration, vesting, payment, exercise, suspension, or revocation) under any of the terms, conditions or provisions of any note, bond, mortgage, deed of trust, security interest, indenture, license, contract, agreement, plan or other instrument or obligation to which the Purchaser is a party or by which the Purchaser or the Purchaser's properties or assets may be bound or affected, (c) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Purchaser or the Purchaser's properties or assets, (d) result in the creation or imposition of any encumbrance on any asset of the Purchaser or (e) cause the suspension or revocation of any permit, license, governmental authorization, consent or approval necessary for the Purchaser to conduct its business as currently conducted, except in the case of clauses (b), (c), (d) and (e) for violations, breaches, defaults, terminations, cancellations, accelerations, creations, impositions, suspensions or revocations that would not individually or in the aggregate have a Material Adverse Effect. Section 4.5 Brokers. No person is entitled to any brokerage, financial advisory, finder's or similar fee or commission payable by the Purchaser in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Purchaser. Section 4.6 Financing. As of the date hereof, the Purchaser has, and on the Closing Date, the Purchaser will have sufficient funds available to deliver the Cash Payment to the Seller and consummate the transactions contemplated by this Agreement. Upon the consummation of the Acquisition, (i) the Purchaser will not be insolvent, (ii) the Purchaser will not be left with unreasonably small capital, (iii) the Purchaser will not have incurred debts beyond its ability to pay such debts as they mature and (iv) the capital of the Purchaser will not be impaired. ARTICLE V COVENANTS Section 5.1 Conduct of Business by the Seller Pending the Closing. The Seller covenants and agrees that, except (i) as contemplated by this Agreement, (ii) as disclosed in the Seller Disclosure Schedule, (iii) with the prior written (including electronic mail) consent of the Purchaser or (iv) after reasonable notice to the Purchaser, as required by, arising out of, relating to or resulting from, the Petitions or otherwise approved by the Bankruptcy Court, after the date hereof and prior to the Closing Date: (a) the Seller shall use commercially reasonable efforts to perform Seller's obligations under the Customer Contracts and contracts with the Employees only in the ordinary course; and (b) the Seller shall not take the following actions with respect to the Acquired Assets: (i) acquire, sell, lease or dispose of any of the Acquired Assets, or amend or modify or terminate any of the Acquired Contracts, including, without limitation, the Customer Contracts, subcontracts related thereto, and/or any agreements, arrangements, obligations or liabilities related to Employees; (ii) mortgage or pledge any of the Acquired Assets; (iii) materially change any of the accounting methods used with respect to the Acquired Assets unless required by U.S. generally accepted accounting principles or applicable law; (iv) offer continued opportunities of employment to any of the Employees or interfere with the Purchaser's efforts to employ, or the Purchaser's employment of, those individuals; or (v) authorize or enter into an agreement to do any of the foregoing. Section 5.2 Access and Information. Subject to applicable law and the reasonable requirements of the Seller to protect competitively sensitive information, the Seller shall afford to the Purchaser and to the Purchaser's financial advisors, legal counsel, accountants, consultants, financing sources and other authorized representatives reasonable access during normal business hours throughout the period prior to the Closing Date to the books, records, properties, the customers to whom Seller is providing services under the Customer Contracts, applicable vendors and subcontractors, and personnel of the Seller and its subsidiaries and affiliates, and during such period, shall furnish reasonably promptly to the Purchaser such information as the Purchaser reasonably may request. Section 5.3 Approvals and Consents; Cooperation; Notification. (a) The parties hereto shall use their respective reasonable best efforts, and cooperate with each other, to obtain as promptly as practicable all approvals, consents or waivers from Governmental Entities required in order to consummate the transactions contemplated by this Agreement. (b) Each of the Seller and the Purchaser shall give prompt notice to the other of the occurrence or failure to occur of an event that would, or with the lapse of time would, cause any condition to the consummation of the transactions contemplated hereby not to be satisfied. Section 5.4 Additional Matters. Subject to the terms and conditions herein provided, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things commercially necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement. Section 5.5 Further Assurances. In addition to the provisions of this Agreement, from time to time after the Closing Date, the Seller and the Purchaser shall use all commercially reasonable efforts to execute and deliver such other instruments of conveyance, transfer or assumption, as the case may be, and take such other action as may be reasonably requested to implement more effectively the conveyance and transfer of the Acquired Assets to the Purchaser and the assumption of the Assumed Liabilities by the Purchaser. Section 5.6 Cure Costs. The Seller shall pay any and all cure and reinstatement costs or expenses of or relating to the assumption and assignment of the contracts, agreements or arrangements included in the Acquired Assets. Section 5.7 Bankruptcy Actions. (a) The Seller shall provide the Purchaser with copies of all motions, applications and supporting papers prepared by the Seller (including forms of orders and notices to interested parties) relating to the Purchaser or the transactions contemplated by this Agreement prior to the filing thereof in the Chapter 11 Case. (b) The Seller shall give appropriate notice, and provide appropriate opportunity for hearing, to the Purchaser and to all parties entitled thereto, of all motions, orders, hearings or other proceedings relating to this Agreement or the transactions contemplated hereby. Section 5.8 Employment of Business Employees. The Purchaser shall make offers of employment, effective upon the Closing, to the Employees on terms and conditions that, with respect to salary, are substantially equivalent to those currently offered to each such Employee, and which terms and conditions will continue for a period of at least six (6) months in accordance with the terms set forth in Schedule 5.8. The Purchaser will also provide each Transitioned Employee with all benefits generally provided to the Purchaser's employees with similar seniority and responsibility, and the Purchaser will also provide such other benefits and assume such liabilities as specified in Schedule 5.8. Notwithstanding any of the foregoing, the Purchaser shall comply with the covenants and provisions set forth in Schedule 5.8. Section 5.9 Books and Records; Personnel. For a period of three (3) years after the Closing Date (or such longer period as may be required by any Governmental Entity or legal proceeding): (a) the Purchaser shall not dispose of or destroy any of the business records and files related to the Acquired Assets which are in its possession or under its control; and (b) the Purchaser shall allow the Seller and any of its directors, officers, employees, counsel, representatives, accountants and auditors access to all business records and files of the Seller, which are solely and specifically related to the Customer Contracts and the Employees, and which are reasonably required by the Seller solely for purposes related to the Chapter 11 Case and/or Tax matters, during regular business hours and upon reasonable notice, and the Seller shall have the right to make copies of any such records and files at Seller's cost. Section 5.10 [Intentionally Omitted]. Section 5.11 Resolution of Claims. (a) Notwithstanding anything to the contrary in this Agreement or elsewhere, with respect to all liabilities that arise from the Seller's acts or omissions which occur prior to the Closing Date, and which are based in any way on the services provided by the Seller under the Customer Contracts (including, but not limited to, disputes, claims, litigation and/or liabilities based on incomplete or deficient service), subcontracts associated with the Customer Contracts, and/or any liabilities arising from employment of the Employees hired by the Purchaser, the Seller agrees as follows: either (A) all such claims, litigation and/or liabilities will be settled and disposed of prior to the Closing Date by the Seller at the Seller's expense; or (B) if such claims, litigation and/or liabilities are not so settled and disposed of prior to the Closing Date, such claims, litigation and liabilities will be treated as Excluded Liabilities. (b) In addition, prior to the Closing Date, the Seller must disclose to the Purchaser all known disputes, claims, litigation and other disagreements relating to the services provided by the Seller to customers under the Customer Contracts and to the subcontracts pursuant to which the Seller provides services under the Customer Contracts. Section 5.12 Non-competition/Non-solicitation. With respect to each of the Customer Contracts, for a period equal to the "Term" (as defined in each Customer Contract), of such Customer Contract plus an additional twelve (12) months, the Seller will not sell managed desktop services (which term the Purchaser agrees does not include equipment leasing asset management services) to the customers specified in such Customer Contract except if otherwise expressly provided in the Deluxe Agreement. In addition, the Seller agrees not to, directly or indirectly, (A) induce or attempt to induce any Employee who becomes an employee of the Purchaser in connection with the purchase of the Acquired Assets to leave the employ of the Purchaser; or (B) employ or otherwise engage as an employee, independent contractor or otherwise any such employee of the Purchaser; provided, however, the foregoing shall not prohibit the Seller or any of its affiliates from employing or otherwise engaging any such employee who responds to any general public solicitation of employment opportunities or from employing or otherwise engaging any such employee of the Purchaser terminated by the Purchaser after the Closing. Notwithstanding the foregoing, nothing in this Section 5.12 or elsewhere in this Agreement shall prevent the Seller from utilizing the CLASS or IT-CAP software for the purpose of delivering leasing or other asset management services. Section 5.13 Post Transition Support by Purchaser. During the term of any Customer Contract and after the Closing Date, the Purchaser shall provide to the Seller timely file outputs from the CLASS, IT-CAP or equivalent software as are necessary to facilitate billing and financial reporting under the equipment leasing portions of such Customer Contract. During the Evaluation Period and the one (1) year period after the Closing Date, following the Seller's request a reasonable time in advance, including a statement of the extent of the access desired and its purpose, and subject to the Purchaser's reasonable requirements to protect confidential information, the Purchaser shall allow the Seller and any of its directors, officers, employees, counsel, representatives, accountants and auditors timely access to all Employees and all business records relating to the Customer Contracts or the Acquired Assets as are needed by the Seller for any reasonable purpose. Section 5.14 Insurance. In the case of any damage to, or destruction of, the Acquired Assets occurring prior to the Closing Date that is covered by insurance maintained by the Seller or an affiliate, the Seller shall deliver all insurance proceeds realized therefrom to the Purchaser at Closing or as soon thereafter as collected by the Seller or such affiliate. ARTICLE VI CONDITIONS PRECEDENT Section 6.1 Conditions Precedent to Obligation of the Seller and the Purchaser. The respective obligations of each party to effect the transactions contemplated by this Agreement shall be subject to the satisfaction of the following condition: (a) the Section 363/365 Order, substantially in the form of Exhibit E attached hereto, shall have been entered by the Bankruptcy Court and such order shall not have been stayed, modified, reversed or amended. Section 6.2 Conditions Precedent to Obligation of the Seller. The obligation of the Seller to effect the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver at or prior to the Closing Date of the following additional conditions: (a) the Purchaser shall have performed in all material respects its obligations under this Agreement required to be performed by the Purchaser at or prior to the Closing Date; and (b) each of the representations and warranties of the Purchaser contained in this Agreement shall be true and correct as of the Closing Date as if made at and as of such date (other than representations and warranties that are made as of a specific date, which need be true and correct as of such date), except where the failure of such representation and warranty to be true and correct would not have a material adverse effect on the Purchaser or on the ability of the Purchaser to consummate the Acquisition. Section 6.3 Conditions Precedent to Obligation of the Purchaser. The obligation of the Purchaser to effect the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver at or prior to the Closing Date of the following additional conditions: (a) the Seller shall have performed in all material respects its obligations under this Agreement required to be performed by the Seller at or prior to the Closing Date; (b) except as would not reasonably be likely to have a Material Adverse Effect, there shall have been no change to the terms of the Customer Contracts; and (c) each of the representations and warranties of the Seller contained in this Agreement shall be true and correct as of the Closing Date as if made at and as of such date (other than representations and warranties that are made as of a specific date, which need to be true and correct as of such date), except where the failure of such representation and warranty to be true and correct would not have a Material Adverse Effect. ARTICLE VII TERMINATION, AMENDMENT, AND WAIVER Section 7.1 Termination by Mutual Consent. This Agreement may be terminated at any time prior to the Closing Date by mutual written agreement of the Purchaser and the Seller. Section 7.2 Termination by Either the Purchaser or the Seller. This Agreement may be terminated at any time prior to the Closing Date by either the Purchaser or the Seller if the Closing Date shall not have occurred on or before March 15, 2002; provided, however, that the right to terminate this Agreement pursuant to this Section 7.2 shall not be available to any party whose failure to fulfill any obligation under this Agreement shall have been the cause of the failure of the Closing Date to have occurred on or prior to such date. Section 7.3 Effect of Termination and Abandonment. In the event of termination of this Agreement pursuant to this Article VII, written notice thereof shall as promptly as practicable be given to the other party to this Agreement and this Agreement shall terminate and the transactions contemplated hereby shall be abandoned, without further action by any of the parties hereto. If this Agreement is terminated as provided herein, (a) there shall be no liability or obligation on the part of the Seller, the Purchaser or their respective officers, directors and affiliates, and all obligations of the parties shall terminate, except for (i) the obligations of the parties pursuant to Sections 7.3, 9.6, 9.7 and 9.11, (ii) that a party that is in material breach of its representations, warranties, covenants or agreements set forth in this Agreement shall be liable for damages occasioned by such breach, including, without limitation, any expenses, including the reasonable fees and expenses of attorneys, accountants and other agents incurred by the other party in connection with this Agreement and the transactions contemplated hereby, and (b) all filings, applications and other submissions made pursuant to the transactions contemplated by this Agreement shall, to the extent practicable, be withdrawn from the agency or person to which made. ARTICLE VIII SURVIVAL AND INDEMNIFICATION Section 8.1 Survival. All representations, warranties, covenants and agreements contained in this Agreement or in any document delivered pursuant hereto shall be deemed to be material and to have been relied upon by the parties hereto. All covenants and agreements shall survive the Closing and shall be fully effective and enforceable until the covenant or agreement has been fully performed in all material respects. All representations and warranties shall survive the Closing for a period of nine (9) months after Closing, at which time such representations and warranties shall cease to have any further force and effect, and any claims to be made by Purchaser hereunder for a breach of any such representations or warranties must be made prior to any such expiration. Notwithstanding anything to the contrary contained herein, the representations and warranties made by any party to this Agreement shall not be affected by any investigation, verification or examination by any other party or by anyone on behalf of any such party in connection with their due diligence review or otherwise. Section 8.2 Indemnification by Purchaser. Subject to the provisions of Section 7.3, the Purchaser shall indemnify and hold the Seller harmless from and against any and all loss, cost, damage, expense (including court costs and reasonable attorneys' fees), suit, action, claim, deficiency, liability or obligation related to, caused by or arising from (i) any breach of any representation or warranty or failure to fulfill any covenant or agreement of Purchaser contained herein or (ii) the Assumed Liabilities. Section 8.3 Indemnification by the Seller. The Seller shall indemnify and hold the Purchaser harmless from and against any and all loss, cost, damage, diminution of value, expense (including court costs and reasonable attorneys' fees) suit, action, claim, deficiency, liability or obligation related to, caused by or arising from (i) any breach of representation or warranty or failure to fulfill any covenant or agreement of the Seller contained in this Agreement or any agreement, instrument or document contemplated hereby, or (ii) the Excluded Liabilities. Section 8.4 Notice and Defense of Claims. Each indemnified party agrees to give the indemnifying party prompt written notice of any event or matter for which such indemnified party intends to assert a right of indemnification under this Agreement; provided that any failure to provide such notice shall not reduce the amount of indemnification to which the indemnified party is otherwise entitled, except to the extent that such failure prejudices the indemnifying party. If a third party claim is made for which an indemnified party is entitled to indemnification pursuant to this Article VIII, then the indemnifying party shall be entitled to participate in the defense of such claim and the indemnifying party may assume primary responsibility for the defense of such claim with counsel selected by the indemnifying party and not reasonably objected to by the indemnified party. If the indemnifying party assumes the defense of a third party claim as set forth in this paragraph, then (i) in no event shall the indemnified party admit any liability with respect to, or settle, compromise or discharge, any such claim without the indemnifying party's prior written consent, which shall not be unreasonably withheld, (ii) the indemnified party shall be entitled to participate in, but not control, the defense of such claim with its own counsel at its own expense, and (iii) in no event shall the indemnifying party enter into any settlement or compromise without the written consent of the indemnified party, which shall not be unreasonably withheld. If the indemnifying party does not assume the defense of any such claim, the indemnified party may defend such claim in a manner as it may deem appropriate (including, but not limited to, settling such claim on such terms as the indemnified party may deem appropriate). Any claim by either party for indemnification hereunder must be asserted in writing prior to the expiration of the survival period set forth in Section 8.1. Section 8.5 Liability Minimum and Limit on Liability. Notwithstanding anything to the contrary in this Agreement, the Purchaser will not have the right to receive any compensation for any claims, losses or damages suffered by the Purchaser due to breaches by the Seller of any representations or warranties or covenants under this Agreement, which are, in the aggregate, less than the sum of One Hundred Thousand Dollars ($100,000.00). Notwithstanding anything to the contrary in this Agreement, the Seller's total liability to the Purchaser for all claims, losses or damages of any kind under this Agreement, the Transition Services Agreement and the Software License Agreement will not exceed the sum of One Million Five Hundred Thousand Dollars ($1,500,000.00); provided, however, that the Seller's liability to the Purchaser for any claims, losses or damages related to the Excluded Liabilities shall not be subject to such sum. Section 8.6 Exclusive Remedy. The indemnification provided for in this Article VIII shall be the exclusive remedy for the Purchaser to assert monetary claims for any and all losses, costs, damages, diminution in value, expenses (including court costs and reasonable attorneys' fees), suits, actions, claims, deficiencies, liabilities or obligations related to, caused by or arising from, (i) the breach of any representation or warranty made by the Seller in this Agreement, the Transition Services Agreement or the Software License Agreement, (ii) the failure to perform any covenant, agreement or undertaking contained in this Agreement, the Transition Services Agreement or the Software License Agreement on the part of the Seller or (iii) the Excluded Liabilities; provided, however, that the foregoing shall not prohibit or restrict the Purchaser from pursuing any additional remedies that are expressly provided to the Purchaser under the Software License Agreement or seeking or being granted equitable relief under this Agreement, the Transition Services Agreement or the Software License Agreement. ARTICLE IX GENERAL PROVISIONS Section 9.1 Taxes. The Seller and the Purchaser shall use commercially reasonable efforts and cooperate in good faith to exempt the sale, conveyance, assignments, transfers and deliveries to be made to the Purchaser hereunder from any sales, use, transfer and documentary taxes or fees (collectively, "Transfer Taxes"), payable in connection with such sale, conveyance, assignments, transfers and deliveries, to the extent provided by Section 1146(c) of the Bankruptcy Code. In the event that any Transfer Taxes are payable with respect to such sale, conveyance, assignments, transfers or deliveries, such Transfer Taxes shall be equally shared by the Seller and the Purchaser. Section 9.2 Notices. All notices, claims, demands, and other communications hereunder shall be in writing and shall be deemed given upon (a) confirmation of receipt of a facsimile transmission, (b) confirmed delivery by a standard overnight carrier or when delivered by hand, or (c) the expiration of five (5) business days after the day when mailed by registered or certified mail (postage prepaid, return receipt requested), addressed to the respective parties at the following addresses (or such other address for a party as shall be specified by like notice): (a) If to the Purchaser, to T-Systems Inc. 701 Warrenville Road Lisle, Illinois 60532 Telecopy: (630) 493-6135 Attention: Corporate Counsel with copies to T-Systems Inc. 701 Warrenville Road Lisle, Illinois 60532 Telecopy: (630) 493-6135 Attention: Chief Financial Officer and Gordon & Glickson LLC Suite 3600 444 N. Michigan Avenue Chicago, Illinois 60611 Telecopy: (312) 321-9324 Attention: Scott L. Glickson, Esq. Mark L. Gordon, Esq. If to the Seller, to Comdisco, Inc. 6111 North River Road Rosemont, Illinois 60018 Telecopy: (847) 518-5088 Attention: Robert Lackey, Esq. Senior Vice President and Chief Legal Officer with a copy to Skadden, Arps, Slate, Meagher & Flom (Illinois) 333 West Wacker Drive, Suite 2100 Chicago, Illinois 60606 Telecopy: (312) 407-0411 Attention: John Wm. Butler, Jr., Esq. Charles W. Mulaney, Jr., Esq. Section 9.3 Descriptive Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Section 9.4 Entire Agreement; Assignment. Except for the Confidentiality Agreement, dated September 28, 2001, between the Purchaser and the Seller, this Agreement (including the Exhibits, Schedules and the other documents and instruments referred to herein) (a) constitutes the entire agreement and supersedes all other prior agreements and understandings, both written and oral, among the parties or any of them, with respect to the subject matter hereof, including, without limitation, any transaction between or among the parties hereto and (b) shall not be assigned by operation of law or otherwise. Section 9.5 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Illinois without regard to the rules of conflict of laws of the State of Illinois or any other jurisdiction. For so long as the Chapter 11 Case is pending, each of the parties hereto irrevocably and unconditionally consents to submit to the jurisdiction of the Bankruptcy Court for any litigation arising out of or relating to this Agreement and the transactions contemplated thereby (and agrees not to commence any litigation relating thereto except in such court) and waives any objection to the laying of venue of any such litigation in the Bankruptcy Court. Section 9.6 Expenses. Whether or not the transactions contemplated by this Agreement are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated thereby shall be paid by the party incurring such expenses. Section 9.7 Amendment. This Agreement may not be amended except by an instrument in writing signed on behalf of all the parties hereto and approved, if necessary, by the Bankruptcy Court. Section 9.8 Waiver. At any time prior to the Closing Date, the parties hereto may (a) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (c) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. Section 9.9 Counterparts; Effectiveness. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which shall constitute one and the same agreement. This Agreement shall become effective when each party hereto shall have received counterparts thereof signed by all the other parties hereto. Section 9.10 Severability; Validity; Parties in Interest. If any provision of this Agreement or the application thereof to any person or circumstance is held invalid or unenforceable, the remainder of this Agreement, and the application of such provision to other persons or circumstances, shall not be affected thereby, and to such end, the provisions of this Agreement are agreed to be severable. Nothing in this Agreement, express or implied, is intended to confer upon any person not a party to this Agreement any rights or remedies of any nature whatsoever under or by reason of this Agreement. Section 9.11 Payments Received. The Seller and the Purchaser each agree that after the Closing they will hold and will promptly transfer and deliver to the other, from time to time as and when received by them, any cash, checks with appropriate endorsements (using their best efforts not to convert such checks into cash) or other property that they may receive on or after the Closing which properly belongs to the other party and will account to the other for all such receipts. From and after the Closing, the Purchaser shall have the right and authority to endorse without recourse the name of Seller on any check or any other evidences of indebtedness received by the Purchaser on account of the Acquired Assets transferred to Purchaser hereunder. ARTICLE X DEFINITIONS As used herein, the terms below shall have the following meanings: "AAA" has the meaning set forth in Section 1.6(c)(vi). "Acquired Assets" has the meaning set forth in Section 1.1. "Acquired Contracts" has the meaning set forth in Section 3.12(a)(i). "Acquisition" has the meaning set forth in the Recitals. "Additional Revenue" has the meaning set forth in Section 1.7(b). "Adjustment Period" has the meaning set forth in Section 1.7(c). "Adjustments" has the meaning set forth in Section 1.7(b). "Agreement" has the meaning set forth in the Preamble. "Assumed Liabilities" has the meaning set forth in Section 1.3. "Assumption Agreement" has the meaning set forth in Section 2.2(a)(iv). "Bankruptcy Code" has the meaning set forth in the Recitals. "Bankruptcy Court" has the meaning set forth in the Recitals. "Business" has the meaning set forth in the Recitals. "Bid Deposit Payment" has the meaning set forth in Section 1.6(a)(i). "Cash Payment" has the meaning set forth in Section 1.6(a)(ii). "Chapter 11 Case" has the meaning set forth in the Recitals. "Closing" has the meaning set forth in Section 2.1. "Closing Date" has the meaning set forth in Section 2.1. "COBRA" has the meaning set forth in Section 3.14(f). "Code" has the meaning set forth in Section 3.13(a)(iii). "Customer Contracts" has the meaning set forth in Section 1.1(b)(i). "Deluxe Agreement" has the meaning set forth in Section 2.2(a)(vii). "Employees" has the meaning set forth in Section 1.1(b)(iii). "ERISA" has the meaning set forth in Section 3.14(a). "Evaluation Period" has the meaning set forth in Section 1.6(b)(ii). "Excluded Assets" has the meaning set forth in Section 1.2. "Excluded Contracts" has the meaning set forth in Section 1.2(d). "Excluded Liabilities" has the meaning set forth in Section 1.4. "Evaluation Period" has the meaning set forth in Section 1.6(c)(ii). "First Payment" has the meaning set forth in Section 1.6(a)(ii). "Governmental Entity" means any domestic federal, state, provincial, local, county or municipal government, governmental, judicial, regulatory or administrative agency, commission, board, bureau or other authority or instrumentality. "Holdback" has the meaning set forth in Section 1.6(c). "Holdback Notice" has the meaning set forth in Section 1.6(c)(v). "Holdback Notice Date" has the meaning set forth in Section 1.6(c)(v). "Holdback Payment" has the meaning set forth in Section 1.6(c)(iii). "Holdback Period" has the meaning set forth in Section 1.6(c)(vi). "Legal Requirements" has the meaning set forth in Section 3.4. "Material Adverse Effect" means any event, condition, or matter in respect of the operation of the Acquired Assets or the Assumed Liabilities that in the aggregate results in or has a material adverse effect on the financial condition or operation of the Acquired Assets taken as a whole; provided, however, that, the effects of changes that (i) are generally applicable to (A) the industries and markets in which the Business operates or (B) the United States and global economies or (ii) relate to foreign currency exchange rate fluctuations, shall in each case be excluded from the determination of Material Adverse Effect; and provided, further, that any adverse effect on the Business, taken as a whole, resulting from the execution of this Agreement and the announcement of this Agreement, the Chapter 11 Case and the other transactions contemplated by this Agreement shall also be excluded from the determination of Material Adverse Effect. "Permits" has the meaning set forth in Section 3.8(b). "Petitions" has the meaning set forth in the Recitals. "Projected Comdisco Cost Only" has the meaning set forth in Section 1.6(c)(ii). "Projected Gross Profits" has the meaning set forth in Section 1.6(b)(i). "Projected Revenue" has the meaning set forth in Section 1.7(a). "Purchase Price" has the meaning set forth in Section 1.5. "Purchaser" has the meaning set forth in the Preamble. "Runoff Term" has the meaning set forth in Section 1.6(b)(i). "Section 363/365 Order" means an order of the Bankruptcy Court, in substantially the form attached hereto as Exhibit E, approving the sale of the Acquired Assets and assumption/assignment of the executory contracts and Assumed Liabilities under this Agreement pursuant to Sections 105, 363 and 365 of the Bankruptcy Code, that has not been reversed, stayed, modified or amended in any material respects prior to the Closing Date. "Seller" has the meaning set forth in the Preamble. "Seller Benefit Plans" has the meaning set forth in Section 3.14(a). "Seller Disclosure Schedule" has the meaning set forth in the introductory paragraph to Article III. "Seller SEC Documents" means all forms, reports, schedules, statements and other documents required to be filed by the Seller since September 30, 2000 under the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended (as such documents have been amended since the time of their filing). "Software License Agreement" has the meaning set forth in Section 2.2(a)(v). "Tangible Personal Property" has the meaning set forth in Section 1.1(b)(v). "Tax" has the meaning set forth in Section 3.13(a)(i). "Tax Returns" has the meaning set forth in Section 3.13(a)(ii). "Trademarks" means all trademarks, logos, service marks, trade names, trade dress and other source indicators. "Transfer Taxes" has the meaning set forth in Section 9.2. "Transition Services Agreement" has the meaning set forth in Section 2.2(a)(vi). "Transitioned Employee" has the meaning set forth in Section 1.1(b)(iii). "Verified Projected Gross Profits" has the meaning set forth in Section 1.6(b)(ii). "WARN" has the meaning set forth in Section 3.14(g). IN WITNESS WHEREOF, the Seller and the Purchaser have caused this Agreement to be executed on their behalf by their officers thereunto duly authorized, as of the date first above written. COMDISCO, INC. By: /s/ Michael A. Fazio ---------------------------- Name: Michael A. Fazio Title: President and Chief Operating Officer T-SYSTEMS INC. By: /s/ Gregory W. Therkatsen ---------------------------- Name: Gregory W. Therkatsen Title: Senior Vice President TABLE OF SCHEDULES Schedule 1.1(b)(i) Customer Contracts Schedule 1.1(b)(ii) Vendor and/or Service Contracts Schedule 1.1(b)(iii) Employees Schedule 1.1(b)(v) Tangible Personal Property Schedule 1.1(b)(viii) Books and Records Schedule 1.1(b)(ix) Other Acquired Assets Schedule 1.2(d) Excluded Contracts Schedule 1.2(j) Other Excluded Assets Schedule 1.6 Gross Profit Projections Schedule 1.8 Allocation of Purchase Price for Tax Purposes Schedule 3.9(c) Historical Data Schedule 3.12(a)(i) Enforceability of Customer Contracts Schedule 3.12(a)(v) Disclosures Regarding Acquired Contracts Schedule 3.14 Disclosures Regarding Seller Benefit Plans Schedule 3.14(a) Seller Benefit Plans Schedule 5.8 Employee Benefits and Related Obligations TABLE OF EXHIBITS Exhibit A Form of Bill of Sale and Assignment Exhibit B Form of Assumption Agreement Exhibit C Form of Software License Agreement Exhibit D Form of Transition Services Agreement Exhibit E Form of Section 363/365 Order Schedule 5.8 Employee Benefits and Related Obligations A. The Purchaser shall provide the following with respect to all Employees: 1. No later than five (5) days prior to the Closing Date, the Purchaser shall make offers of employment to, effective as of the Closing, the twenty-eight (28) Employees of the Seller identified in Schedule 1.1(b)(iii) in accordance with the terms set forth below. 2. The Purchaser shall offer to each Transitioned Employee a base salary equal to or better than the base salary such Transitioned Employee was earning on December 15, 2001. In addition, Purchaser will offer each Transitioned Employee a performance bonus in accordance with the Purchaser's general policies relating to such bonuses. Each Transitioned Employee shall be qualified for all benefits provided to the Purchaser's employees, in accordance with the Purchaser's policies. Each Transitioned Employee shall be given full service credit for the purpose of eligibility, vesting and accruals in the Purchaser's benefits programs, including, but not limited to, vacation and 401(k). 3. As of the Closing Date, the Transitioned Employees and their respective eligible dependents shall be fully covered under the Purchaser's health, dental, vision and other medical benefits plans as of the first day of the month following the day on which such Transitioned Employees become employees of the Purchaser; provided, however, that such coverage under the Purchaser's health, dental, vision and other medical benefits plans shall be conditioned on the timely completion by the Transitioned Employee of any forms or other documentation as required under such of the Purchaser's benefits plans. If necessary, in order to ensure that no lapse in coverage occurs for any Transitioned Employee, the Purchaser shall pay for COBRA coverage for the period following the Closing until such date that the Transitioned Employees are covered under the Purchaser's health, dental, vision and other medical benefits plans. 4. As of the Closing Date, the Purchaser shall take all steps reasonably necessary to allow the Transitioned Employees currently located in Seller's Rosemont, Illinois office to transfer their work location to Purchaser's offices in Lisle, Illinois at a time to be determined by Purchaser, which shall be no later than sixty (60) calendar days after the Closing Date. 5. As of the Closing Date, Purchaser shall guarantee each Transitioned Employee continued employment with Purchaser for a period of six (6) months after the Closing Date, in accordance with the following terms. In the event that Purchaser terminates any Transitioned Employee other than for cause during such six-month period, Purchaser shall pay such Transitioned Employee, within 30 days of the employee's termination date (or earlier if required by law), the greater of: (i) a lump sum payment amount equivalent to the salary or wages and retention bonuses that the Transitioned Employee would have been entitled to receive had he or she been employed throughout the remainder of the six-month period; or (ii) an amount equal to two (2) months of salary or wages (in the form of salary continuation), and two months of health benefits (including Purchaser's health, dental, vision and other medical benefits plans, in the form of a lump sum payment equal to two months' COBRA payments), at the monthly rates in effect in the two-month period immediately prior to such Transitioned Employee's termination date; provided, further, that the payment obligations set forth in this paragraph 5 shall not apply to any Transitioned Employee who voluntarily terminates his or her employment with the Purchaser during such six-month period. Notwithstanding the foregoing, the Purchaser reserves the right to terminate any Transitioned Employee at any time for cause. 6. (a) Effective as of the Closing, each Transitioned Employee shall be eligible to receive from the Seller a payment in an amount equal to the unused vacation days/hours that were accrued with the Seller as of the Closing Date. Notwithstanding any provision to the contrary in this Agreement or the Schedules thereunder, within five (5) days of the Closing Date, the Purchaser shall reimburse the Seller for half of the aggregate amount of any such vacation benefit payments made by the Seller to the Transitioned Employees; provided, however, that such reimbursement shall not exceed Thirty Five Thousand Dollars ($35,000.00). (b) Following the Closing Date, upon the request of the Purchaser, the Seller shall provide to the Purchaser within five (5) days of such request, for each Transitioned Employee, the number of accrued but unused vacation days/hours as of the Closing Date under the Seller's vacation benefit policy. All accrued vacation time for all Employees who do not accept Purchaser's offer of employment will be Excluded Liabilities. B. Purchaser may request that each Transitioned Employee submit to a background check and drug test, in accordance with the Purchaser's policy of requiring such verifications from all new employees. Purchaser's obligation to employ any Transitioned Employee will be subject to the results of such check and test. C. The Seller shall provide the following with respect to all Employees: 1. The Seller shall be solely responsible for the payment, in accordance with the Seller's policies and plans, of all employee incentive bonuses of any kind that are attributable to service by the Employees to the Seller before the Closing Date, and/or that accrue and vest prior to the Closing Date. The Seller shall be solely responsible for the payment, in accordance with the Seller's policies and plans, of all retention bonuses that are attributable to the Employees' service with the Seller prior to the Closing Date, and/or that accrue and vest prior to the Closing Date, and the Purchaser shall be solely responsible for the payment, in accordance with the Seller's policies and plans, of all retention bonuses that are attributable to the Transitioned Employees' service with the Purchaser as of and following the Closing Date. Notwithstanding any provision in the Agreement or this Schedule 5.8, the Seller shall not be liable for or responsible for the payment of any benefits (including, without limitation, disability benefits and unemployment benefits) that may be payable to any Transitioned Employee as of or following the Closing Date and, for the avoidance of doubt, the Purchaser shall be liable for and solely responsible for the payment of any benefits (including without limitation, disability benefits and unemployment benefits) that may be payable to any Transitioned Employee as of and following the Closing Date. Further, the Purchaser shall indemnify and hold the Seller, its affiliates and their respective employees, officers directors, agents successors and assigns, harmless from and against any and all losses, liabilities, obligations or damages (including without limitation, any penalties or assessments imposed by any governmental agency) with respect to the Transitioned Employees arising or occurring after the Closing Date. 2. The Seller shall assist in providing a COBRA election for any Transitioned Employee and his or her eligible dependents for whom such election is requested by the Purchaser, provided that the Purchaser shall remain responsible for all costs thereof, and the Purchaser shall indemnify and reimburse the Seller for all costs and liabilities associated with such COBRA coverage for the entire period elected by such Transitioned Employee and his or her eligible dependents. 3. The Seller shall allow the Transitioned Employees to work from the Seller's offices in Rosemont, Illinois for up to sixty (60) calendar days after the Closing Date. 4. The Seller shall take all steps reasonably necessary to allow the Transitioned Employees currently located in the Seller's Rosemont, Illinois office to transfer their work location to the Purchaser's offices in Lisle, Illinois no later than sixty (60) calendar days after the Closing Date. EX-10 18 ch339751.txt EXHIBIT 10.14 Exhibit 10.14 AMENDMENT TO ASSET ACQUISITION AGREEMENT THIS AMENDMENT TO ASSET ACQUISITION AGREEMENT, dated as of February 13, 2002 (this "Amendment"), is entered into by and between Comdisco, Inc., a Delaware corporation (the "Seller"), and T-Systems Inc., a Delaware corporation (the "Purchaser"). WHEREAS, the Seller and the Purchaser are parties to that certain Asset Acquisition Agreement, dated as of January 31, 2002 (the "Acquisition Agreement") (capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Acquisition Agreement); and WHEREAS, the Seller and the Purchaser desire to make certain amendments to the Acquisition Agreement on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing, and intending to be legally bound hereby, the Seller and the Purchaser hereby agree as follows: ARTICLE I SCHEDULES 1.1 Schedule 1.1(b)(i) of the Acquisition Agreement shall be amended by replacing item I in its entirety with the following: "I. Deluxe Corporation 1. Enterprise Master Agreement, dated September 30, 1999, between Deluxe Corporation and Comdisco, Inc. (a) Addendum, dated June 8, 2001, to the Enterprise Master Agreement, dated September 30, 1999. (b) Schedule No. 1, dated September 30, 1999. (c) Statement of Work, dated February 7, 2000. (d) Schedule No. 2, dated September 30, 1999. (e) Amendment, dated June 30, 2000. (f) Amendment, dated January 24, 2001. (g) Amendment, dated July 1, 2001. (h) Amendment, dated January 30, 2002." ARTICLE II GENERAL 2.1 Counterparts. This Amendment may be executed in any number of counterparts and either party hereto may execute any counterpart, each of which when executed and delivered will be deemed to be an original and all of which, when taken together, will be deemed to be one and the same Amendment. 2.2 References. Upon the effectiveness of this Amendment, all references in the Acquisition Agreement and in all other agreements, documents, certificates, schedules and instruments executed pursuant thereto to the Acquisition Agreement including, without limitation, references to "this Agreement," "hereunder," "hereof," "herein" and words of like import contained in the Acquisition Agreement shall, except where the context otherwise requires, mean and be a reference to the Acquisition Agreement, as amended hereby. 2.3 Ratification. Except as expressly amended hereby, all of the provisions of the Acquisition Agreement, as amended hereby, shall remain unaltered and in full force and effect, and, as amended hereby, the Acquisition Agreement is in all respects agreed to and ratified and confirmed by the parties hereto. 2.4 Severability. If any provision of this Amendment shall be declared by any court of competent jurisdiction to be illegal, void or unenforceable, all other provisions of this Amendment shall not be affected and shall remain in full force and effect. 2.5 Headings. The headings of the articles and paragraphs of this Amendment are inserted for convenience only and shall not constitute a part hereof or affect in any way the meaning or interpretation of this Amendment. 2.6 Binding Agreement. This Amendment shall be binding upon the Seller and the Purchaser and their respective successors and assigns. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written. COMDISCO, INC. By: /s/ Michael A. Fazio -------------------------------- Name: Michael A. Fazio Title: President and Chief Operating Officer T-SYSTEMS INC. By: /s/ Brian J. Miller ------------------------------------ Name: Brian J. Miller Title: Chief Financial Officer EX-10 19 ch339752.txt EXHIBIT 10.15 EXHIBIT 10.15 SECOND AMENDMENT TO ASSET ACQUISITION AGREEMENT THIS SECOND AMENDMENT TO ASSET ACQUISITION AGREEMENT, dated as of February 27, 2002 (this "Amendment"), is entered into by and between Comdisco, Inc., a Delaware corporation (the "Seller"), and T-Systems Inc., a Delaware corporation (the "Purchaser"). WHEREAS, the Seller and the Purchaser are parties to that certain Asset Acquisition Agreement, dated as of January 31, 2002, as amended by that certain Amendment to Asset Acquisition Agreement, dated as of February 13, 2002 (collectively, the "Acquisition Agreement") (capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Acquisition Agreement); and WHEREAS, the Seller and the Purchaser desire to make certain additional amendments to the Acquisition Agreement on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing, and intending to be legally bound hereby, the Seller and the Purchaser hereby agree as follows: ARTICLE I SCHEDULES 1.1 Schedule 1.1(b)(ii) of the Acquisition Agreement shall be amended by replacing item A in its entirety with the following: "A. Global Master Services Agreement, dated September 30, 1999, between Unisys Corporation and Comdisco, Inc. 1. Statement of Work and Subcontract Schedule, dated February 11, 2000, to the Global Master Services Agreement, dated September 30, 1999, between Unisys Corporation and Comdisco, Inc. 2. Statement of Work and Subcontract Schedule, dated January 1, 2001, to the Global Master Services Agreement, dated September 30, 1999, between Unisys Corporation and Comdisco, Inc. (a) Amendment, dated January 31, 2002. 3. Statement of Work and Subcontract Schedule, dated February 7, 2001, to the Global Master Services Agreement, dated September 30, 1999, between Unisys Corporation and Comdisco, Inc. 4. Schedule No. 1, dated [March 6, 1996], between Unisys Corporation and Comdisco, Inc. [unsigned] (a) Extension, dated May 10, 1999. (b) Extension, dated June 29, 2001. (c) Amendment No. 2, dated June 20, 1997." 1.2 Schedule 1.1(b)(ii) of the Acquisition Agreement shall be amended by replacing item F in its entirety with the following: "F. Cap Gemini America LLC 1. Help Desk Services Agreement, dated January 20, 2000, between Cap Gemini America, Inc. and Comdisco, Inc. (a) Amendment, dated April 1, 2000. (b) Statement of Work Help Desk Services Version 1.6, dated January 18, 2000. (1) Pennzoil Project Impact Reports (PIR) PZLQS.001, PZLQS.002, PZLQS.003, PZLQS.004, PZLQS.005. (2) PharMerica PIR PHM-0001, PHM-0002, PHM-0003, PHM-0004, PHM-0005, PHM-0006, PHM-0007, PHM-0007a, PHM-0008. (c) Statement of Work for Devon Energy Corporation Help Desk Services, dated December 20, 2000. (1) Devon PIR DVN-0001, DVN-0002, DVN-0003, DVN-0004, DVN-0005v2, DVN-0006, DVN-0007, DVN-0008, DVN-0009, DVN-00010, DVN-00011, DVN-00012." 1.3 Schedule 1.1(b)(ix) of the Acquisition Agreement shall be replaced in its entirety with Exhibit 1 hereto. ARTICLE II GENERAL 2.1 Counterparts. This Amendment may be executed in any number of counterparts and either party hereto may execute any counterpart, each of which when executed and delivered will be deemed to be an original and all of which, when taken together, will be deemed to be one and the same Amendment. 2.2 References. Upon the effectiveness of this Amendment, all references in the Acquisition Agreement and in all other agreements, documents, certificates, schedules and instruments executed pursuant thereto to the Acquisition Agreement including, without limitation, references to "this Agreement," "hereunder," "hereof," "herein" and words of like import contained in the Acquisition Agreement shall, except where the context otherwise requires, mean and be a reference to the Acquisition Agreement, as amended hereby. 2.3 Ratification. Except as expressly amended hereby, all of the provisions of the Acquisition Agreement, as amended hereby, shall remain unaltered and in full force and effect, and, as amended hereby, the Acquisition Agreement is in all respects agreed to and ratified and confirmed by the parties hereto. 2.4 Severability. If any provision of this Amendment shall be declared by any court of competent jurisdiction to be illegal, void or unenforceable, all other provisions of this Amendment shall not be affected and shall remain in full force and effect. 2.5 Headings. The headings of the articles and paragraphs of this Amendment are inserted for convenience only and shall not constitute a part hereof or affect in any way the meaning or interpretation of this Amendment. 2.6 Binding Agreement. This Amendment shall be binding upon the Seller and the Purchaser and their respective successors and assigns. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written. COMDISCO, INC. By: /s/ Frank J. Cirone ----------------------------- Name: Frank J. Cirone Title: Vice President T-SYSTEMS INC. By: /s/ Gregory W. Therkatsen -------------------------------- Name: Gregory W. Therkatsen Title: Senior Vice President, Consulting Exhibit 1 Schedule 1.1(b)(ix) Other Acquired Assets To the extent transferable, all right, title and interest of the Seller in the following: 1. The following computer servers and hardware of the Seller located in Minnetonka, Minnesota, including all object code, source code, operating software and application software (including, but not limited to Remedy and Cold Fusion) located thereon: (a). Grinder Server Purpose: Remedy Application and Database Server Model: Compaq Proliant 2500 Memory: 512MB Drives: 5 (9.1 GB drives Raid 5) Processor: Pentium 333MHZ Serial Number: d647hwa30159 IP Address: 192.168.5.249 Software: - Microsoft Windows NT 4 - Peregrine Systems Remedy Action Request System version 4.0 - Microsoft SQL Server 7.0 - Symantec PC Anywhere version 9 - Computer Associates ARCServe client for Windows NT version 6.61 (b). Spacecraft Server Purpose: Custom written web based front end to Remedy application Model: Compaq Proliant 1500 Memory: 128MB Drives: 9.1 GB Processor: 166MHZ Serial Number: D621HUJ10294 IP Address: 192.168.5.104 Software: - Microsoft Windows NT 4 - MacroMedia Cold Fusion version 4 - Seagate Crystal Reports Version 7 - Computer Associates ARCServe for Windows NT Advanced Version 6.6.1 (c). Slate Server Purpose: Repository for data base dumps and logs. Serves as Primary Domain controller. Model: Compaq Proliant 2500 Memory: 128Mb Processor: Pentium 200Mhz Drives: 5 (9.1 GB -Drives Raid 5) Serial Numbers: D647HWA30256 (Server) D721BHM20818 (Disk Array) IP Address: 192.168.5.105 Software: - Microsoft Windows NT Server 4 (d). Grinder2 Server Purpose: Standby Server for Grinder (Not running - offline). This system is intended to be used in case of hardware problems with Grinder. Model: Compaq Proliant 2500 Memory: 512Mb Drives: 5 (9.1 GB drives Raid 5) Processor: Pentium 333Mhz Software: - Microsoft Windows NT 4 - Uses same licenses as Grinder. (e). Capvpn Server Purpose: Provide secure access to other systems from the Internet Model: Compaq Proliant 1850R Memory: 512Mb Drives: 9.1 GB Processor: Pentium 500mhz Serial Number: D920CNH10749 IP Address: 206.145.252.38 (external), 192.168.5.102 (internal) Software: - Microsoft Windows 2000 Server - Microsoft Windows 2000 Terminal Services (5 user license) (f). Cisco Router Purpose: Internet connectivity Model: Cisco 2524 Router Serial Number: 25816534 (g). 3Com Hub Purpose: Network connectivity Ports: 8 Serial Number: Unknown 2. All software licenses for the operating software and application software (including, but not limited to Remedy and Cold Fusion) located on the computer servers and hardware listed on this Schedule 1.1(b)(ix) in item 1. 3. All configuration and computer code generated by the Seller using the Cold Fusion software application. EX-10 20 chi339509.txt EXHIBIT 10.16 EXHIBIT 10.16 - ------------------------------------------------------------------------------- ASSET PURCHASE AGREEMENT (HEALTHCARE) among GENERAL ELECTRIC CAPITAL CORPORATION, Comdisco, Inc. and COMDISCO HEALTHCARE GROUP, INC. Dated as of April 2, 2002 - --------------------------------------------------------------------------------
TABLE OF CONTENTS Page ARTICLE I DEFINITIONS................................................................................1 1.1 Definitions.......................................................................1 ARTICLE II PURCHASE OF ASSETS........................................................................19 2.1 Purchased Assets.................................................................19 2.2 The Purchase Price...............................................................20 2.3 Initial Payment..................................................................21 2.4 Settlement Payments..............................................................21 2.5 Prorations.......................................................................21 2.6 Tax Escrow.......................................................................22 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER..................................................22 3.1 Organization and Good Standing...................................................22 3.2 Corporate Authority..............................................................23 3.3 No Conflicts.....................................................................23 3.4 Consents.........................................................................23 3.5 No Violations of Law.............................................................24 3.6 Financial Statements; Reports....................................................24 3.7 Absence of Certain Changes.......................................................25 3.8 [Intentionally Omitted.].........................................................26 3.9 Taxes............................................................................26 3.10 [Intentionally Omitted.].........................................................29 3.11 [Intentionally Omitted.].........................................................29 3.12 Purchased Other Contracts........................................................29 3.13 Litigation and Liabilities.......................................................30 3.14 [Intentionally Omitted.].........................................................30 3.15 [Intentionally Omitted.].........................................................30 3.16 Brokers' or Finders' Fees, etc...................................................30 3.17 Conduct of Business..............................................................30 3.18 Purchased Financing Contracts....................................................31 3.19 Portfolio Property...............................................................32 3.20 Environmental Matters............................................................33 3.21 Transactions With State and Local Governments....................................33 3.22 [Intentionally Omitted.].........................................................34 3.23 [Intentionally Omitted.].........................................................34 3.24 [Intentionally Omitted.].........................................................34 3.25 [Intentionally Omitted.].........................................................34 3.26 Purchased Discounted Financing Agreements........................................34 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER...............................................34 4.1 Organization and Good Standing...................................................34 4.2 Corporate Authority..............................................................35 4.3 No Conflicts.....................................................................35 4.4 Consents.........................................................................35 4.5 Brokers' or Finders' Fees, etc...................................................35 4.6 Financing........................................................................36 ARTICLE V CONDUCT AND TRANSACTIONS PRIOR TO CLOSING; COVENANTS; INDEMNITIES.........................36 5.1 Investigations; Certain Covenants................................................36 5.2 Pending or Threatened Litigation.................................................42 5.3 Tax Matters/Allocation of Purchase Price.........................................42 5.4 Indemnifications, Assumptions of Liability and Related Matters...................44 5.5 Preparation of Closing Date Schedule of Assets Acquired and Liabilities Assumed; Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed; Special Procedures Report of Assets Acquired and Liabilities Assumed; and Purchase Price Certificate......................................................................55 5.6 Insurance; Risk of Loss..........................................................58 5.7 Further Assurances...............................................................58 5.8 Payment of Broker's or Finder's Fees.............................................59 5.9 Supplements to Schedules; Post-Signing Information...............................59 5.10 [Intentionally Omitted.].........................................................60 5.11 [Intentionally Omitted.].........................................................60 5.12 Certain Bankruptcy Matters.......................................................60 5.13 Tax Payments.....................................................................60 5.14 Confirmations....................................................................61 5.15 [Intentionally Omitted.].........................................................61 5.16 [Intentionally Omitted.].........................................................61 5.17 [Intentionally Omitted.].........................................................61 5.18 [Intentionally Omitted.].........................................................61 5.19 Schedule of Credit Enhancements..................................................61 5.20 [Intentionally Omitted.].........................................................61 5.21 [Intentionally Omitted.].........................................................61 5.22 Original Master Leases...........................................................62 5.23 Purchased Discounted Financing Agreements........................................62 5.24 Closing Date Portfolio Information...............................................62 5.25 Administrative Claims............................................................62 ARTICLE VI CONDITIONS TO CLOSING; ABANDONMENT OF THE TRANSACTION.....................................62 6.1 The Closing......................................................................62 6.2 Conditions to Purchaser's Obligations to Close...................................63 6.3 Conditions to Sellers' Obligations to Close......................................66 ARTICLE VII TERMINATION...............................................................................68 7.1 Termination......................................................................68 7.2 Procedure and Effect of Termination..............................................68 ARTICLE VIII GENERAL...................................................................................69 8.1 Amendments.......................................................................69 8.2 Integrated Contract..............................................................69 8.3 Governing Law....................................................................69 8.4 Notices..........................................................................69 8.5 No Assignment....................................................................70 8.6 Headings.........................................................................70 8.7 Counterparts.....................................................................70 8.8 Announcements....................................................................71 8.9 Severability.....................................................................71 8.10 Binding Effect...................................................................71 8.11 Waiver of Jury Trial.............................................................71 8.12 No Third Party Beneficiary.......................................................71 8.13 Conveyancing Documents...........................................................72 8.14 Expenses.........................................................................72 8.15 Currency.........................................................................72
ASSET PURCHASE AGREEMENT (Healthcare) This is an Agreement dated as of April 2, 2002 among General Electric Capital Corporation, a Delaware corporation ("Purchaser"), among Comdisco, Inc., a Delaware corporation ("Comdisco") and Comdisco Healthcare Group, Inc., a Delaware corporation ("CHG", each of CHG and Comdisco, a "Seller" and collectively, the "Sellers"), each of which agrees as follows: Recitals WHEREAS, the Sellers and certain of their affiliates, have filed voluntary petitions (the "Petitions") for relief commencing cases (the "Chapter 11 Cases") under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Northern District of Illinois (the "Bankruptcy Court"); WHEREAS, Purchaser and the Purchaser Affiliates (as hereinafter defined) desire to purchase and acquire, and the Sellers desire to sell, convey, assign and transfer to Purchaser and the Purchaser Affiliates, the Purchased Assets (as hereinafter defined), and Purchaser and the Purchaser Affiliates are willing to assume, and the Sellers desire to assign and delegate to Purchaser and the Purchaser Affiliates, the Assumed Liabilities (as hereinafter defined), all in the manner and subject to the terms and conditions set forth herein and in accordance with Sections 105, 363 and 365 of the Bankruptcy Code, where applicable. NOW THEREFORE, in consideration of the mutual promises and covenants contained herein and intending to be legally bound, Purchaser and the Sellers do hereby agree as follows: Agreement ARTICLE I DEFINITIONS Capitalized terms used in this Agreement shall have the following meanings: 1.1 Definitions. "Accounting Principles" shall mean the accounting principles (including accounting methods, practices and procedures) set forth on Schedule 1.1A. When the accounting principles (including accounting methods, practices and procedures) set forth on Schedule 1.1A do not specifically address a particular matter necessary to prepare the Closing Date Schedule of Assets Acquired and Liabilities Assumed, then the accounting principles (including accounting methods, practices and procedures) set forth on Schedule 1.1A shall be supplemented in accordance with United States generally accepted accounting principles applied consistently with the past practices and procedures of the applicable Seller in connection with the Purchased Assets or the Assumed Liabilities (as applicable), but only to the extent necessary to address such matter. To the extent that an accounting principle, method, practice or procedure set forth on Schedule 1.1A is not in accordance with generally accepted accounting principles as applicable in the United States, such accounting principle, method, practice or procedure set forth on Schedule 1.1A shall be disregarded for purposes of preparing the Closing Date Schedule of Assets Acquired and Liabilities Assumed but shall be treated as a Special Adjustment. "Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed" shall mean a schedule of assets acquired and liabilities assumed, prepared by adjusting the Closing Date Schedule of Assets Acquired and Liabilities Assumed to the Special Adjustments, which shall be described in reasonable detail therein. "Advance Payment" shall mean, in respect of any Purchased Financing Contract, any security deposit or other payment that was received as collateral or security, or any advance rent received that would be reflected as "deferred income" on a balance sheet of each Seller prepared in accordance with the Accounting Principles by any Seller on or prior to the Closing Date in respect of such Purchased Financing Contract. "Affiliate" shall mean, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. With respect to Purchaser, Affiliate shall include, without limitation, General Electric Capital Services, Inc. and any Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, General Electric Capital Services, Inc. "Agreement" shall mean this Asset Purchase Agreement, including the Schedules attached hereto and made a part hereof, as the same may be amended from time to time in accordance with the provisions hereof. "Allocation Statement" shall have the meaning given to such term in Section 5.3(a). "Approval Order" shall have the meaning given to such term in Section 5.12(a). "Assumed Liabilities" shall mean, solely with respect to each Seller, (i) all liabilities and obligations relating to Credit Enhancements, excluding any Credit Enhancements that are Advance Payments, required to be paid or performed from and after the applicable Closing, (ii) all obligations under the Purchased Other Contracts arising from and after the applicable Closing, (iii) all obligations under the Purchased Discounted Financing Agreements required to be paid or performed from and after the applicable Closing and any such obligations required to be paid prior to the applicable Closing, to the extent such obligation relates to a rental payment that is past due with respect to a Purchased Financing Contract, except obligations arising out of a breach by any Seller thereunder, (iv) all accounts payable related to the Purchased Financing Contracts required to be paid from and after the applicable Closing, and (v) all obligations (including, without limitation, residual sharing obligations) under the Purchased Financing Contract required to be paid or performed from and after the applicable Closing. For the avoidance of doubt, Assumed Liabilities shall not include any other obligations or liabilities of any Seller (including, without limitation, any cure amounts payable to other parties to the agreements, contracts, and commitments referenced in this definition of Assumed Liabilities). "Authorization" shall mean any domestic or foreign, federal, state, provincial, local or other governmental or other quasi-governmental consent, license, permit, grant, authorization or approval, including but not limited to any consent, license, permit, grant, authorization or approval of any agency, instrumentality or subdivision of the foregoing, which is used in or necessary (i) to the ownership, use, lease or operation of any of the Purchased Assets or (ii) to permit each Seller to own or lease the Purchased Assets. "Bankruptcy Code" shall have the meaning given to such term in the Recitals of this Agreement. "Bankruptcy Court" shall have the meaning given to such term in the Recitals of this Agreement. "Bankruptcy Exception" shall mean, in respect of any agreement, contract or commitment, any limitation thereon imposed by any bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar law affecting creditors' rights and remedies generally and, with respect to the enforceability of any agreement, contract or commitment, by general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity). "Bundled Contracts" shall mean Financing Contracts that contain service, warranty or similar obligations (except remarketing obligations) of any Seller or any of their Affiliates. "Business Days" shall mean a day other than a Saturday, Sunday or other day on which commercial banks in New York City, New York are authorized or required by law to close. "Chapter 11 Cases" shall have the meaning given to such term in the Recitals of this Agreement. "Closing" shall mean 11:59 p.m. local time in Chicago, Illinois, on the day on which the Sellers transfer the Purchased Assets to Purchaser or any of the Purchaser Affiliates pursuant to the terms of this Agreement, and "day of the Closing" and "Closing Date" shall be deemed to mean such day and for the avoidance of doubt the term Closing shall refer to the initial Closing and any subsequent Closings permitted pursuant to the terms of this Agreement. The initial Closing Date is expected to occur on May 31, 2002 or such later date as shall be fixed by agreement among the parties hereto. The Second Closing is expected to occur on June 30, 2002 or such later date as shall be fixed by agreement among the parties hereto. "Closing Date Portfolio Tape" shall mean the computer disk, computer tape or other computer format delivered to Purchaser pursuant to Section 5.24 setting forth, as of the Closing Date, the Portfolio Information set forth in the same level of detail for each Purchased Financing Contract, and with the same column headings, as is set forth in the December Portfolio Tape. "Closing Date Schedule of Assets Acquired and Liabilities Assumed" shall mean the schedule of assets acquired and liabilities assumed reflecting the Purchased Assets and the Assumed Liabilities, and the respective amounts thereof, in each case determined as of the Closing Date, and the notes and schedules, if any, thereto, and which shall be prepared in accordance with the provisions of Section 5.5. "Code" shall mean the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder. "CPR" shall have the meaning given to such term in Section 5.4(q)(ii). "Credit Enhancement" shall mean any (i) Advance Payment, (ii) investment certificate, certificate of deposit, authorization to hold funds, hypothecation, pledge or charge of account or like instrument, (iii) letter of credit, repurchase agreement, agreement of indemnity, guarantee, lease guarantee bond or postponement agreement, (iv) recourse agreement, (v) security agreement, (vi) Property, (vii) certificate representing shares or the right to purchase capital of or interests in, any Person, (viii) agreement, contract or arrangement designed to enhance the creditworthiness of an Obligor, or (ix) bond or debenture, in each case pledged, assigned, mortgaged, charged, hypothecated, made, delivered or transferred as security for the performance of any obligation under or with respect to any Purchased Financing Contract. "Cut-Off Date" shall mean with respect to any Financing Contract, the later of either the date the Approval Order is entered and the date on which Purchaser has completed its review of the Lease File related to any Financing Contract and has irrevocably notified Comdisco in writing that Purchaser has committed to purchase such Financing Contract and that such Financing Contract shall be deemed a Purchased Financing Contract, provided, however, that in each case, prior to the Closing Date, Purchaser receives, to the extent required, all requisite consents and novations set forth in clause (E) of the definition of "Purchased Financing Contracts" and Lease Confirmations set forth in clause (H)(y) of the definition of "Purchased Financing Contracts"; provided, further, (i) in the event such notice is given with respect to a Financing Contract with an Obligor that has multiple Financing Contracts with the Sellers, such notice shall be given with respect to all such Financing Contracts; and (ii) that such notice shall not be deemed a waiver of any conditions set forth in Section 6.2 (except that conditions set forth in Section 6.2(d)(i)(1) shall be deemed satisfied with respect to a particular Purchased Financing Contract on the applicable Cut-Off Date). "Damages" shall mean any and all losses, claims, damages, liabilities, obligations, judgments, equitable relief granted, settlements, awards (including back pay awards), demands, offsets, defenses, counterclaims, actions or proceedings, reasonable out-of-pocket costs, reasonable expenses and reasonable legal or attorneys' fees (including any such reasonable costs, reasonable expenses and reasonable legal or attorneys' fees incurred in enforcing any right of indemnification against any Indemnitor or with respect to any appeal), interest and penalties, if any. With respect to Purchaser or any of its Affiliates, Damages shall also be deemed to include, without limitation, any and all losses resulting from the failure of Purchaser or any of its Affiliates to receive any amounts payable with respect to any Purchased Financing Contract. For the avoidance of doubt, nothing in this definition shall be deemed to entitle Purchaser, any Purchaser Affiliate or any other Purchaser Indemnified Party or any Seller or any other Seller Indemnified Party to recover any amounts that it is not otherwise entitled to under Section 5.4. "December Portfolio Tape" shall mean the computer disk, computer tape or other computer format delivered to Purchaser prior to the date hereof containing certain information as of December 31, 2001 (it being agreed and understood that any amounts reflected on the December Portfolio Tape that are denominated in a currency other than U.S. dollars have been deemed to be converted into U.S. dollars as of December 31, 2001 in accordance with SFAS No. 52). "Delinquency Contracts" shall mean all Financing Contracts for healthcare equipment (i) under which any interim or periodic rental payment due thereunder for equipment, including, without limitation, any deferred maintenance costs and prepaid sales tax, is outstanding 60 days or more after the first date on which payment of such amount was required pursuant to the terms of such Financing Contract or (ii) under which there exists a default (other than a payment default) of the Obligor or any provider of a Credit Enhancement relating thereto that would give the lessor a right of acceleration thereunder. "Discounted Financing Agreements" shall mean all agreements, instruments, certificates and other documents, which are listed on Schedule 1.1O to the extent related to the Purchased Financing Contracts, relating to the issuance of non-recourse loans to any Seller, as borrower, whether or not the borrower grants, pursuant thereto, a security interest in the Financing Contract or underlying Portfolio Property related to the specified Financing Contract owned by such borrower. "Disposition Agreement" shall mean any agreement, contract or other arrangement (other than this Agreement) pursuant to which any interest in any Purchased Financing Contract or any payment due under any Purchased Financing Contract or related Credit Enhancement or with respect to any Portfolio Property has been sold, used as collateral, transferred to or otherwise disposed of to any Person or Persons by any Seller. "Dispute" shall have the meaning given to such term in Section 5.4(q). "Document" shall mean any book, record, file, paper, computer tape, computer disk, microfilm, information storage device of any type and any other document. "Documentation" shall mean forms of leases, sales and conditional sales contracts, notes, security agreements, guarantees, financing statements, purchase agreements, purchase orders and other documents or instruments necessary for, or used in connection with, the conduct of the business of any Seller. "Encumbrance" shall mean any title defect, conflicting or adverse claim of ownership, mortgage, hypothecation, security interest, lien, pledge, claim, right of first refusal, option, charge, covenant, reservation, lease, order, decree, judgment, stipulation, settlement, attachment, restriction, objection or any other encumbrance of any nature whatsoever, whether or not perfected. "Environmental Costs and Liabilities" means, with respect to any Person, all liabilities, obligations, responsibilities, Remedial Actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including, but not limited to, all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigation), fines, penalties, sanctions and interest incurred as a result of any claim or demand by any other Person, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, including any thereof arising under any Environmental Law, Environmental Permit, order or agreement with any Governmental Entity or other Person, which relate to any environmental, health or safety condition or a Release or threatened Release. "Environmental Law" means any applicable federal, state, provincial, local, or foreign law (including common law), statute, code, ordinance, rule, regulation or other legal requirement relating to the environment, natural resources, or public or employee health and safety. "Environmental Permit" shall mean, with respect to each Seller, all Authorizations required by Environmental Laws to use the Purchased Assets. "Environmental Report" shall have the meaning given to such term in Section 3.20. "Estimated Closing Date" shall mean the date mutually agreed upon by the Sellers and Purchaser immediately following the hearing seeking entry of the Approval Order, which date the Sellers and Purchaser reasonably believe to be the date on which the Closing shall occur. "Estimated Payment" shall mean a dollar amount equal to the estimated Purchase Price mutually agreed to between Purchaser and the Sellers calculated as of the end of the month preceding, the Closing Date using the methodology set forth in Section 2.2 and adjusted for estimated Purchased Financing Contract payments, estimated early terminations of the Purchased Financing Contracts, and estimated Line Adds for the Purchased Financing Contracts after the end of such month through the Closing. "Excluded Assets" shall mean all assets of any Seller other than those included in the definition of Purchased Assets. Excluded Assets shall include, without limitation, (i) any interest in owned or leased real property, (ii) equipment (other than equipment described in Section 2.1(a)(vii)); (iii) any Intellectual Property of any Seller, (iv) any assets that would be reflected on a balance sheet of any Seller prepared in accordance with the Accounting Principles as "deferred commissions," (v) any assets that would be reflected on a balance sheet of any Seller prepared in accordance with the Accounting Principles as "deferred lease costs" or "deferred costs" except assets that would be reflected on such balance sheet as (1) "deferred maintenance costs," (2) "prepaid sales tax", (3) "loan and lease balloon rentals and residuals" listed or identified on Schedule 1.1B or (4) any other accounts to which payments owed by an Obligor under a Purchased Financing Contract are associated, (vi) cash associated with Advance Payments, (vii) all capital stock, partnership interests, and other equity interests owned by any Seller, (viii) any assets that would be reflected on a balance sheet of any Seller prepared in accordance with the Accounting Principles as "ventures settled equity" or "income taxes", (ix) all rights arising under contracts, arrangements or agreements to the extent that such contracts, arrangements or agreements are Excluded Liabilities, (x) [Intentionally Omitted], (xi) any contracts of insurance, except (A) the rights of any Seller as an additional insured or loss payee on any insurance contract of an Obligor under a Purchased Financing Contract, and (B) residual value insurance covering Portfolio Property subject to any Purchased Financing Contract, if any, (xii) any intercompany agreements, contracts or commitments, including agreements in respect of intercompany indebtedness and including, without limitation, those agreements, contracts, and commitments listed on Schedule 1.1D, (xiii) any claim, right or cause of action arising under Sections 544 through 553, inclusive, of the Bankruptcy Code, (xiv) company seal, minute books, charter documents, stock or equity record books of any Seller and such other books and records as pertain to the organization, existence or capitalization of such Seller as well as any other records or materials relating to such Seller and not involving or related to any of the Purchased Assets or Assumed Liabilities, (xv) any right that any Seller has with respect to Tax refunds, claims for Tax refunds and Tax attributes, (xvi) any Portfolio Property or Financing Contract that any Seller has sold, transferred, assigned or otherwise disposed of or has entered into an agreement to sell, transfer, assign or dispose in accordance with Section 5.1(e)(i) and (xvii) any Portfolio Property or Financing Contract that any Seller has sold, transferred, assigned, or otherwise disposed of or has entered into an agreement to sell, transfer, assign or dispose in accordance with Section 5.1(e)(ii). "Excluded Liabilities" shall mean any liability or obligation (whether known or unknown, contingent or absolute, or arising before, on or after the Closing Date) of any Seller other than the Assumed Liabilities. Excluded Liabilities shall include, without limitation, (i) any Environmental Costs and Liabilities arising from, related to or otherwise attributable to (A) the operation by any Seller or any of its Affiliates or any predecessors thereof of any real property owned, operated or leased by any Seller or any of its Affiliates prior to the Closing Date, including, without limitation, noncompliance with or liability under Environmental Laws and Remedial Action obligations, (B) any Excluded Asset, or (C) the operations of any Seller or any of its Affiliates after the Closing Date, (ii) any obligation under this Agreement of any Seller, (iii) any rights or obligations under any agreements, contracts, commitments or guaranties in respect of any indebtedness for borrowed money other than the Purchased Discounted Financing Agreements, (iv) any liability with respect to employees of any Seller, (v) any liability or obligation of any Seller or any Affiliate thereof (or any predecessor thereto) relating to Taxes (including with respect to the Purchased Assets or otherwise) for all periods, or portions thereof, ending on or prior to the Closing Date (or the Second Closing in the case of Purchased Financing Contracts acquired at the Second Closing), and (vi) any liability of any Seller related to any Excluded Asset. "Exemption Certificate" shall mean a form or statement from an Obligor indicating that the transaction covered by a Financing Contract is exempt from any sales, use or similar Tax. "Final Order" shall mean an order or judgment the operation or effect of which is not stayed, and as to which order or judgment (or any revision, modification or amendment thereof), the time to appeal or seek review or rehearing has expired, and as to which no appeal or petition for review or motion for rehearing or reargument has been taken or made. "Final Tax Determination" shall mean (i)(A) a decision, judgment, decree or other order by any court of competent jurisdiction, which decision, judgment, decree or other order has become final after all allowable appeals by either party to the action have been exhausted or the time for filing such appeals has expired or, (B) in any case where judicial review shall at the time be unavailable, a decision, judgment, decree or other order of an administrative official or agency of competent jurisdiction, which decision, judgment, decree or other order has become final after all allowable appeals by either party to the action have been exhausted or the time for filing such appeals has expired; (ii) a closing agreement entered into pursuant to Section 7121 of the Code or any other settlement agreement entered into in connection with an administrative or judicial proceeding which settlement agreement is final and binding on the parties thereto; (iii) the expiration of the time for instituting a claim for refund, or if such a claim was filed, the expiration of the time for instituting suit with respect thereto; or (iv) the expiration of the time for instituting suit with respect to the claimed deficiency. "Financial Statements" shall mean (i) the audited consolidated balance sheets of the Sellers as of September 30, 2000 and September 30, 2001 and the related consolidated statements of income, stockholders' equity and cash flows of the Sellers for the fiscal years ended September 30, 2000 and September 30, 2001 and (ii) the items listed on Schedule 1.1M to this Agreement. "Financing Contract" shall mean any contract, including any schedule or amendment thereto or assignment, assumption, renewal or novation thereof (and delivery, acceptance or installation certificates, landlord or mortgagee waivers, intercreditor or subordination agreements, incumbency certificates, purchase orders, purchase order assignments, and sale and leaseback agreements, each relating thereto), in the form of (i) a lease of or rental agreement with respect to Property, (ii) a sale contract (including an installment sale contract or conditional sale agreement) arising out of the sale of Property, or (iii) a secured financing of Property, and in each case, which with respect thereto: (A) any Seller is the lessor, seller, secured party or obligee (whether initially or as an assignee), or (B) is between an Obligor, on the one hand, and a lessor, seller, obligee, secured party or assignee of any of the foregoing, on the other hand, and (1) which would be a Financing Contract if any Seller were the lessor, seller, obligee, secured party or assignee of any of the foregoing thereunder and (2) with respect to which any Seller is an assignee of the revenues or claims with respect thereto. "Governmental Entity" shall mean a federal, state, provincial, local, county or municipal government, governmental, regulatory or administrative agency, department, commission board, bureau, court or other authority or instrumentality, domestic or foreign. "Hazardous Material" shall mean any material, substance or waste that is classified, regulated or otherwise characterized under any Environmental Law as hazardous, toxic, a contaminant or a pollutant or by other words of similar meaning or regulatory effect, including any petroleum or petroleum-derived substance or waste, asbestos and polychlorinated biphenyls. "Healthcare Segment" shall mean the segment of any Seller's equipment solutions business known as the "Healthcare" segment, which primarily engages in the business of leasing healthcare equipment within the United States. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "Indemnifiable Loss" shall have the meaning given to such term in Section 5.4(p). "Indemnification Event" shall mean any event, action, proceeding or claim for which a Person is entitled to indemnification under this Agreement. "Indemnification Rate" as of any date shall mean an interest rate equal to the LIBOR Rate on such date, plus 50 basis points, compounded annually. "Indemnitor" shall mean the indemnifying person in the case of any obligation to indemnify pursuant to the terms of this Agreement. "Indemnity Payment" shall have the meaning given to such term in Section 5.4(p). "Information" shall have the meaning given to such term in Section 5.1(g). "Initial Payment" shall mean an amount equal to 90% of the Estimated Payment. "Intellectual Property" shall mean any customer lists, vendor lists, patents, patent applications, trade names, trademarks, service marks, trade dress, logos, domain names, symbols slogans and other source identifiers, together with the goodwill associated therewith, including trademark registrations and applications, service mark registrations and applications, trade secrets, know-how, data and other confidential or proprietary technical, business and other information, copyrights, computer software, including source codes and documentation related thereto, copyright registrations and applications, and rights to any of the foregoing under license. "IRS" shall mean the United States Internal Revenue Service. "Lease Confirmation" shall have the meaning given to such term in Section 5.14. "Lease File" shall have the meaning given to such term in Section 5.1(a). "LIBOR Rate" on any date shall mean the rate of interest identified as the three month "London Interbank Offered Rate (LIBOR)" in the "Money Rate" section of the Wall Street Journal published on such date (or, if such publication is not published on such date, as published on the most recently preceding date). "Line Adds" shall mean an addition of equipment to a Financing Contract that results in an increase in the periodic rental payment due thereunder without extending the term of the Financing Contract. "Material Adverse Effect" shall mean a material adverse effect on the ownership, collection, enforcement, value or administration of the Purchased Assets taken as a whole; provided, however, a Material Adverse Effect shall not include (i) the filing of the Chapter 11 Cases, (ii) any event, condition or matter that is generally applicable to the industries and markets in which any Seller operates with respect to the Purchased Assets or (iii) any event, condition or matter that relates to interest rate fluctuations. "Material Contract" shall mean any agreement, contract or commitment (other than a Financing Contract) which calls for the payment by or on behalf of any Seller of $500,000 or more, or the delivery by any Seller of goods or services with a fair market value of $500,000 or more, or provides for any Seller to receive any payments of, or any Property (other than Portfolio Property) with a fair market value of, $500,000 or more, or which otherwise is material to the Purchased Assets. "Modification" shall have the meaning given to such term in Section 5.1(e)(i)(A). "Net Book Value" with regard to any Purchased Financing Contract shall be determined as follows: (i) for each such Purchased Financing Contract treated in accordance with the Accounting Principles as a finance lease for U.S. accounting purposes, Net Book Value of such Purchased Financing Contract at any date shall be equal to (A) the sum of (1) gross receivables with respect to such Purchased Financing Contract at such date and (2) the Residual, if any, at such date less (B) unearned income with respect to such Purchased Financing Contract at such date; (ii) for each Purchased Financing Contract treated in accordance with the Accounting Principles as a loan or conditional sales contract for U.S. accounting purposes, Net Book Value of such Purchased Financing Contract at any date shall be equal to (A) gross receivables with respect to such Purchased Financing Contract at such date less (B) unearned income with respect to such Purchased Financing Contract at such date; and (iii) for each Purchased Financing Contract treated in accordance with the Accounting Principles as an operating lease for U.S. accounting purposes, Net Book Value of such Purchased Financing Contract at any date shall be equal to (A) the Original Equipment Cost of the Portfolio Property subject to such Purchased Financing Contract at such date less (B) accumulated depreciation with respect to such Purchased Financing Contract at such date. In each case above, gross receivables, unearned income and accumulated depreciation shall be determined in accordance with the Accounting Principles. With regard to all Purchased Assets other than Purchased Financing Contracts, "Net Book Value" shall mean the net book value of such Purchased Assets determined in accordance with the Accounting Principles. "Non-Assumable Claim" shall mean any claim, action or proceeding (i) involving any Governmental Entity, (ii) seeking injunctive relief, (iii) involving a class action, (iv) involving allegations of criminal activities or (v) involving allegations of violations of any domestic, foreign or state law governing the extension of credit or of RICO, any domestic or foreign federal or state securities laws or regulations, any domestic or foreign federal or state antitrust laws or any laws pertaining to usury, installment or conditional sales and financing, truth in lending, equal opportunity, credit reporting or debt collection. "Non-Terminable or Modifiable Financing Contracts" shall have the meaning given to such term in Section 5.1(d)(K). "Obligor" shall mean any Person that is an obligor, borrower or lessee under any Financing Contract. "Original Equipment Cost" shall mean, with respect to any item of Portfolio Property, the original cost of such Portfolio Property as recorded in the books and records of any Seller in accordance with the Accounting Principles. "Permitted Encumbrance" shall mean (i) any Encumbrance for Taxes not yet due and payable, (ii) any mechanic's or materialmen's lien, which an Obligor under a Financing Contract is required to remove and which does not materially affect the value of the Portfolio Property subject to such lien, (iii) any Encumbrance pursuant to the Purchased Discounted Financing Agreements, (iv) any Encumbrance on any Portfolio Property which is specifically permitted in accordance with the terms of the related Financing Contract and which does not materially affect the value of the Portfolio Property subject to such Encumbrance, or (v) any Encumbrance resulting from the terms of the applicable Financing Contract that is reflected on the books and records of any Seller in accordance with the Accounting Principles. "Person" shall mean any individual, partnership, corporation, trust, limited liability company, unincorporated organization, government or department or agency thereof and any other entity. "Petitions" shall have the meaning given to such term in the Recitals of this Agreement. "Portfolio Information" shall mean, with respect to any Purchased Financing Contract, the following information (which information is required to appear, and which appears, on the December Portfolio Tape, and, which will appear, on the Closing Date Portfolio Tape): (i) the name of the Obligor under such Purchased Financing Contract, (ii) the account schedule number of such Purchased Financing Contract, (iii) a description of each item of Portfolio Property relating to such Purchased Financing Contract, (iv) the Original Equipment Cost for each item of Portfolio Property relating to such Purchased Financing Contract, which is referred to by any Seller as the "inception cost", (v) the stated contractual end of term thereof, (vi) the date of the last scheduled payment under such Purchased Financing Contract, (vii) all scheduled payments due under such Purchased Financing Contract set forth on a quarterly basis, whether billed or unbilled, (viii) the terms of any purchase options in favor of the Obligor or any other Person, (ix) the proper accounting classification thereof on the books of the applicable Seller, (x) the "leasing corp code" of such Purchased Financing Contract, (xi) the billing frequency of such Purchased Financing Contract, (xii) the Residual amount of such Purchased Financing Contract, (xiii) the country in which the Portfolio Property of such Financing Contract is currently located, (xiv) the net present value of such Purchased Financing Contract, which is referred to by the applicable Seller as the "net book value", and (xv) whether such Purchased Financing Contract is a month-to-month Financing Contract. Portfolio Information shall also include the following information which is not required to appear on the December Portfolio Tape, and which will not be required to appear on the Closing Date Portfolio Tape: (A) the amount of any Advance Payment thereunder, (B) to the extent available, the tax basis, remaining tax depreciation term and tax depreciation method elected by the applicable Seller in the case of any Purchased Financing Contract under which any Seller is treated as the owner of the Portfolio Property subject to or governed by such Purchased Financing Contract, for Tax purposes (other than Federal income Tax) relevant for any Seller, (C) any type of service, and payment terms for such service, required to be performed in connection with such Purchased Financing Contract, (D) whether such Purchased Financing Contract is subject to a Discounted Financing Agreement, and, if so, the lender for such financing, the interest rate for such financing, and whether or not the applicable lender is currently located in the United States, and (E) a delinquency report in the form attached as Schedule 1.1I. "Portfolio Property" shall mean Property with respect to which any Seller is the lessor, seller or secured party, as the case may be, pursuant to the terms of a Purchased Financing Contract (whether initially or as an assignee) or Property which is intended to be the subject of a Purchased Financing Contract. "Proceedings" shall have the meaning given to such term in Section 3.13. "Property" shall mean all property and assets of whatsoever nature including but not limited to personal property, whether tangible or intangible, and whether leased or owned, and claims, rights and choses in action. "Public Sector Financing Contract" shall mean any Purchased Financing Contract (including any amendment thereto or any renewal, assignment, assumption or novation thereof) to which any Governmental Entity is a party. "Purchase Price" shall mean the amount to be paid by Purchaser or a Purchaser Affiliate to any Seller in accordance with Section 2.2. "Purchase Price Certificate" shall have the meaning given to such term in Section 5.5(a)(iv). "Purchased Assets" shall have the meaning given to such term in Section 2.1. "Purchased Discounted Financing Agreements" shall mean the Discounted Financing Agreements which are secured by any Purchased Financing Contracts. "Purchased Financing Contracts" shall mean all Financing Contracts listed on the December Portfolio Tape for the Healthcare Segment (including Financing Contracts securing Discounted Financing Agreements), together with (x) any Portfolio Property owned in connection with such Financing Contracts, (y) all rights of any Seller with respect to Portfolio Property and (z) all payments due or to become due thereunder (including, without limitation, all accounts receivable attributable thereto), in each case to the extent that both the Obligor is domiciled, and the Portfolio Property relating to such Financing Contracts are located, in the United States; provided, however, that Purchased Financing Contracts shall not include any Financing Contract (or the Portfolio Property related thereto) (A) [Intentionally Omitted] (B) with any Obligor, or a provider of a Credit Enhancement, that is subject to a United States or foreign bankruptcy, insolvency or similar proceeding, (C) [Intentionally Omitted], (D) with any Obligor, or a provider of a Credit Enhancement, that is in litigation (whether as a plaintiff or defendant) with any Seller, (E) that is a Required Consent Financing Contract of any Seller for which the requisite third party consent, and novation, if required, has not been obtained prior to the Closing so as to permit the applicable Seller to assign such Required Consent Financing Contract to Purchaser or the applicable Purchaser Affiliate, (F) that is a Delinquency Contract, (G) [Intentionally Omitted], (H) as to which Purchaser has (x) not received at the Closing the original master lease, applicable schedules and Credit Enhancements thereto (excluding, for purposes of receiving such original master leases, any Financing Contract which is the subject of a Purchased Discounted Financing Agreement, copies of which, certified as true, correct and complete by an officer of the applicable Seller, may be provided in lieu of original master leases and for purposes of receiving all other original master leases, if original master leases are not in possession of Sellers, copies of master leases, certified as true, correct and complete by the applicable Obligor may be provided in lieu of original master leases; provided, however, that such exclusion shall not apply to the original schedules and Credit Enhancement related to such master lease), (y) solely with respect to the Financing Contracts with a Top 30 Obligor and subject to the provisions of Section 5.14, not received at the Closing a Lease Confirmation or a facsimile copy thereof from such Obligor (confirming the validity of information set forth on such Lease Confirmation), or (z) reasonably determined, applying the standard with respect to a given jurisdiction that a prudent purchaser would customarily apply, that the representations and warranties contained in this Agreement with respect to such Financing Contract are not true and correct in all respects and as to which Purchaser has provided written notice at or prior to Closing; (I) [Intentionally Omitted]; (J) [Intentionally Omitted] or (K) that are Bundled Contracts; provided, however, that if there are multiple Financing Contracts (without giving effect to clauses (B), (D), (E), (F), (H) or (K)), with an Obligor and its Affiliates and one or more, but not all, of such Financing Contracts are Financing Contracts that fall into the category of Financing Contracts listed in clauses (B), (D), (E), (F), (H) or (K) ("Rejectable Contracts"), Purchaser shall have the option of either (x) purchasing all of the Financing Contracts (including the Rejectable Contracts) with such Obligor and its Affiliates or (y) excluding all of the Financing Contracts (including the Financing Contracts that are not Rejectable Contracts) with such Obligor and its Affiliate from the Purchased Assets. "Purchased Other Contracts" shall have the meaning given to such term in Section 2.1. "Purchaser" shall have the meaning given to such term in the Recitals. "Purchaser Affiliates" means any one or more Affiliates of Purchaser that Purchaser may permit (i) to purchase all or certain Purchased Assets, (ii) to assume all or certain Assumed Liabilities or (iii) to exercise any of Purchaser's rights under Section 8.5, subject to satisfaction of the requirements of Section 365 of the Bankruptcy Code including the provision of adequate assurances for future performance; provided, that Purchaser shall not be relieved of its obligations under this Agreement; provided, further, that nothing in this Agreement shall require Purchaser, on its own behalf in lieu of a Purchaser Affiliate, to assume any Discounted Financing Agreements or purchase any Portfolio Property or Financing Contracts securing any Discounted Financing Agreements. "Purchaser Indemnified Parties" shall have the meaning given to such term in Section 5.4(a). "Purchaser Related Documents" shall have the meaning given to such term in Section 5.4(h). "Purchaser's Accountants" shall mean Price WaterhouseCoopers or any public accounting firm with nationally recognized auditing expertise, as selected by Purchaser. "Release" means, with respect to any Person, any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration of Hazardous Material through or in the air, soil, surface water, ground water or property. "Remedial Action" means all actions required to (a) clean up, remove, treat or in any other way address any Hazardous Material in the indoor or outdoor environment, (b) prevent the Release or threat of Release or minimize the further Release so that a Hazardous Material does not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment or (c) perform pre-remedial studies and investigations and post-remedial monitoring and care. "Repurchase Amount" with respect to any Purchased Financing Contract, shall mean an amount equal to 96% of the original Net Book Value of such Purchased Financing Contract or such other Purchased Asset as of the applicable Closing Date, plus an amount equal to the interest on such Net Book Value at the rate of ten percent per annum from the applicable Closing Date, through and including the date of transfer thereof pursuant to Section 5.4(b)(iii), minus all proceeds received by Purchaser or any Purchaser Affiliate with respect to such Purchased Financing Contract or such other Purchased Asset from the applicable Closing Date through and including the date of such transfer. "Required Consent Financing Contract" shall mean any Financing Contract which requires consent (by contract or applicable law), or novation, of the Obligor or another third party to be transferred by any Seller to Purchaser or any Purchaser Affiliate; provided, however, that Required Consent Financing Contracts shall not include (i) Financing Contracts that are excluded from the definition of Purchased Financing Contracts for a reason other than the fact that they would be Required Consent Financing Contracts and (ii) Financing Contracts which may be transferred pursuant to this Agreement without such consent under Section 365 of the Bankruptcy Code as provided for in the Approval Order. "Residual" shall mean, with respect to any item of Portfolio Property, its estimated value upon expiration of the Financing Contract to which it is subject, as determined by the applicable Seller, established on its books and records at the inception of such Financing Contract and referred to by such Sellers on such books and records as "NBV at Term." "Sale" shall have the meaning given to such term in Section 5.1(e)(i)(A). "Second Closing" shall have the meaning given to such term in Section 6.1(b). "Selected Accounting Firm" shall mean a public accounting firm with nationally recognized auditing expertise, which shall be selected by Purchaser's Accountants and Seller's Accountants to resolve a dispute arising pursuant to Section 5.3 or 5.5 hereof. "Seller" shall have the meaning given to such term in the Recitals. "Seller Claims" shall have the meaning given to such term in Section 5.6(a). "Seller Indemnified Parties" shall have the meaning given to such term in Section 5.4(h). "Seller Related Documents" shall have the meaning given to such term in Section 5.4(a). "Seller's Accountants" shall mean KPMG LLP or any public accounting firm with nationally recognized auditing expertise, as selected by Comdisco. "Seller's Insurance Policies" shall have the meaning given to such term in Section 5.6(a). "Seller's Knowledge" or any similar expression shall mean the knowledge which any individual set forth on Schedule 1.1G has or should reasonably be expected to have in the prudent exercise of that individual's duties, after inquiry. "Settlement Date" shall mean the fifth Business Day following the date of delivery of the final Special Procedures Report of Assets Acquired and Liabilities Assumed and final Purchase Price Certificate as provided in Section 5.5(a)(vi). "Settlement Interest" shall mean the amount of accrued interest on the Settlement Payment calculated at the Settlement Rate, as in effect on the Settlement Date for the period from the Closing Date to, but not including, the date upon which the Settlement Payment is made (calculated on the basis of the actual number of days elapsed in a year of 365 or 366 days, as the case may be). "Settlement Payment" shall mean an amount, which shall be expressed as a positive amount, equal to the difference between (i) the Initial Payment and (ii) the Purchase Price. "Settlement Rate" shall mean, on any date, the "Target" federal funds rate reported in the "Money Rates" Section of the eastern edition of The Wall Street Journal published for such date. In the event The Wall Street Journal ceases publication of the federal funds rate or fails on any particular date to publish the federal funds rate, the federal funds rate shall refer to the rate for the last transaction in overnight federal funds arranged prior to such date by The Chase Manhattan Bank (National Association). "Special Adjustments" shall mean such adjustments to the Closing Date Schedule of Assets Acquired and Liabilities Assumed as shall be necessary to (i) reflect all assets or liabilities, which, as of the Closing Date, were assets or liabilities (as the case may be) of any Seller of a type properly to have been reflected on the Closing Date Schedule of Assets Acquired and Liabilities Assumed, but which were not in fact reflected on the Closing Date Schedule of Assets Acquired and Liabilities Assumed, including any asset or liability which was not reflected on the Closing Date Schedule of Assets Acquired and Liabilities Assumed because such asset or liability was not deemed to be material, (ii) remove any asset or liability which should not have been reflected on the Closing Date Schedule of Assets Acquired and Liabilities Assumed but was in fact reflected thereon irrespective of whether such asset or liability is deemed not to be material, (iii) give effect to each accounting principle, method, practice or procedure that is to be treated as a Special Adjustment pursuant to the last sentence of the definition of "Accounting Principles," and (iv) eliminate any Excluded Assets and any Excluded Liabilities reflected on the Closing Date Schedule of Assets Acquired and Liabilities Assumed. In addition, the Special Adjustments shall include the following (a) the Net Book Value of Financing Contracts with associated Advance Payments which are flagged as "Z" in the "Billing Frequency" column of the December Portfolio Tape, shall be equal to the net present value of the Residual and the discount rate used in determining the net present value is 12%, and (b) the Net Book Value of Financing Contracts with associated Advance Payments which are not flagged as "Z" in the "Billing Frequency" column of the December Portfolio Tape, shall be equal to the Net Book Value minus the amount of any "deferred income" with respect to such Financing Contract. "Special Procedures Report of Assets Acquired and Liabilities Assumed" shall mean the Closing Date Schedule of Assets Acquired and Liabilities Assumed and the Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed, as to which the special procedures have been performed in the manner provided for in Section 5.5(a)(iii). "Special Representations" shall mean the representations or warranties in Sections 3.6(c), 3.9, 3.18, 3.19 and 3.20. "State and Local Governmental Entity" shall mean a state, province, territory or possession of the United States or a foreign country, or fully constituted political subdivision or agency of any of the foregoing, or the District of Columbia. "Subsidiary" shall mean a Person (other than an individual) of which another Person owns or controls directly or indirectly more than 50% of the stock, capital or other equity interests or more than 50% of the voting power providing the holders thereof, ordinarily and generally in the absence of contingencies, the right to vote for the election of directors, managers or Persons having similar rights and duties. "Tax" (and, in the plural, "Taxes") shall mean any domestic or foreign federal, state, provincial or local taxes, charges, fees, levies, imposts, duties and governmental fees or other like assessments or charges of any kind whatsoever, together with any interest or penalty, addition to Tax or additional amount imposed with respect thereto or any Tax Return, whether payable by reason of contract, assumption, transferee liability, operation of law or otherwise (including, but not limited to, any income, net income, gross income, receipts, windfall profit, severance, property, inventory and merchandise, business privilege, production, sales, use, license, excise, registration, franchise, employment, payroll, withholding, alternative or add-on minimum, intangibles, ad valorem, transfer, gains, stamp, estimated, transaction, title, capital, paid-up capital, profits, occupation, premium, value-added, recording, real property, personal property, federal highway use, commercial rent or environmental tax). "Tax Benefit" shall have the meaning given to such term in Section 5.4(p). "Tax-Exempt Public Sector Financing Contract" shall mean a Public Sector Financing Contract in respect of which the interest income received by any Seller is treated on its books and records as exempt from federal income tax pursuant to Section 103 of the Code or any predecessor thereof. "Tax Liability" shall have the meaning given to such term in Section 5.4(p). "Tax Return" shall mean any return, report or statement required to be filed with respect to any Tax (including any attachments thereto, and any amendment thereof) including, but not limited to, any information return, claim for refund, amended return or declaration of estimated Tax, and including, where permitted or required, combined, unitary or consolidated returns for any group of entities that includes any Seller or their Affiliates. "Third Party Beneficiary" shall have the meaning given to such term in Section 8.12. "Top 30 Obligor" shall mean any Obligor listed on Schedule 5.14(2). "Transfer Agreement" shall mean the transfer agreement or other transfer documents between each Seller and Purchaser or a Purchaser Affiliate, as applicable, in the form mutually agreed to between Purchaser and Sellers for the transfer of Purchased Assets between any Seller and Purchaser Affiliate, containing such provisions as may be required or necessary under applicable law to transfer such Purchased Assets. "Transfer Taxes" shall have the meaning given such term in Section 5.3(c). "Transitional Services Agreement" shall mean an agreement among Purchaser, Sellers and each Purchaser Affiliate, whereby Sellers provide certain services to Purchaser and each Purchaser Affiliate from and after the Closing with respect to the Purchased Assets, substantially in the form attached hereto as Exhibit B. ARTICLE II PURCHASE OF ASSETS 2.1 Purchased Assets. (a) Purchased Assets. Upon the terms and subject to the conditions of this Agreement, at the Closing, Purchaser, or any Purchaser Affiliate, shall purchase from the Sellers, and each Seller shall sell, assign, transfer and convey to Purchaser, or any Purchaser Affiliate, good, valid and marketable title (free and clear of all Encumbrances other than Permitted Encumbrances) to the following in existence on the Closing Date (subject to Sections 5.1(j) and 6.2(c), the "Purchased Assets"): (i) all Purchased Financing Contracts; (ii) all Credit Enhancements (except cash associated with Advance Payments) related to the Purchased Financing Contracts; (iii) (x) (A) all alliance agreements, service provider agreements, consulting agreements, purchase orders, residual value insurance covering Portfolio Property or Purchased Financing Contracts, if any, and other agreements, contracts or commitments, in each case in this clause (x) (A) listed on Schedule 2.1(a)(iii) or (B) listed in the supplemental Schedules delivered by the Sellers pursuant to Section 5.9 and identified by Purchaser in writing as a Purchased Other Contract, in each case among any Seller and an Obligor of, or otherwise related to, a Purchased Financing Contract, and (y) all remarketing agreements from the Healthcare Segment with an Obligor of any Purchased Financing Contract if Purchaser or a Purchaser Affiliate acquires such of the Financing Contracts of such Obligor pursuant to the terms of this Agreement that, in the aggregate, have a Net Book Value which is greater than one-half of the Net Book Value of all of the Financing Contracts in the Healthcare Segment of such Obligor (each agreement and commitment referred to in clauses (x) and (y) above being referred to as a "Purchased Other Contract") and all accounts receivable attributable thereto; (iv) to the extent transferable, all rights under manufacturers' and vendors' warranties relating to the Purchased Assets and all similar rights against third parties relating to the Purchased Assets; (v) all Authorizations, to the extent transferable, related to the Purchased Assets; (vi) copies of all the books and records of each Seller relating to any of the Purchased Assets and Assumed Liabilities, including, without limitation, all books and records relating to the purchase of materials, supplies and services, all financial, accounting and operational matters relating to any of the Purchased Assets and Assumed Liabilities, all customer and vendor lists relating to the Purchased Assets and Assumed Liabilities and all files and documents (including credit information) relating to customers and vendors relating to any of the Purchased Assets and Assumed Liabilities, and all manuals, handbooks and Documents relating to policies and/or procedures related to any of the Purchased Assets or Assumed Liabilities; (vii) equipment and inventory of the Healthcare Segment consisting of healthcare equipment as to which any Seller either (A) holds for sale or lease or (B) has a right to possession (x) as a result of the expiration of the term or early termination of a related Financing Contract, or (y) as a result of the exercise by any Seller of its rights under a related Financing Contract following a default by the Obligor thereunder; and (viii) any assets related to the Purchased Financing Contract that would be reflected on a balance sheet of any Seller prepared in accordance with generally accepted accounting principles as "deferred maintenance costs" or "prepaid sales taxes" and any other accounts to which payments owed by an Obligor under a Purchased Financing Contract are associated. (b) Excluded Assets. No Seller shall sell, assign, transfer or convey to Purchaser or any Purchaser Affiliate, nor shall Purchaser or any Purchaser Affiliate purchase any Seller's right, title or interest in and to any Excluded Assets. (c) Liabilities Assumed by Purchaser. Upon the terms and subject to the conditions of this Agreement, effective as of the Closing, Purchaser or any Purchaser Affiliate shall assume and be obligated to pay when due, perform, or discharge only the Assumed Liabilities. (d) Excluded Liabilities. Neither Purchaser nor any Purchaser Affiliate shall assume or otherwise become liable for any Excluded Liabilities. 2.2 The Purchase Price. The aggregate purchase price to be paid by Purchaser and Purchaser Affiliates (provided that Purchaser shall not be relieved of its obligation to pay the Purchase Price hereunder to the extent any Purchaser Affiliate fails to pay its allocable portion of the Purchase Price pursuant to this Agreement) for the Purchased Assets (the "Purchase Price") shall be an amount equal to, in the case of clauses (a) and (b) below, as reflected on the Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed, (a) 96% of the Net Book Value of all Purchased Assets, including, without limitation, (i) the Purchased Financing Contracts assigned to Purchaser or any Purchaser Affiliate by any Seller, (ii) the Purchased Assets described in Section 2.1(a)(vii), and (iii) assets related to the Purchased Financing Contracts that would be reflected on a balance sheet of any Seller prepared in accordance with the Accounting Principles as (1) "deferred maintenance costs," (2) "prepaid sales taxes," (3) "loan and lease balloon rentals and residuals" listed or identified on Schedule 1.1B and (4) any other account to which payments owed by an Obligor under a Purchased Financing Contract are associated, minus (b) 100% of the Assumed Liabilities. 2.3 Initial Payment. Subject to Section 2.6 hereof, at the Closing, Purchaser or a Purchaser Affiliate shall pay to the Sellers an aggregate amount equal to the Initial Payment, by wire transfer or transfers of immediately available funds to accounts designated to Purchaser in writing by Comdisco prior to the Closing Date. Prior to Closing, Purchaser and Sellers shall mutually agree upon an allocation of the Purchase Price for the Purchased Assets between the Sellers, and the amount payable at the Closing pursuant to this Section 2.3 and pursuant to Sections 2.4, 2.5 and 2.6 shall be allocated and paid accordingly by Purchaser and the Purchaser Affiliates, respectively; provided, however, that Purchaser shall not be relieved of its obligation to pay the Purchase Price hereunder to the extent any Purchaser Affiliate fails to pay its allocable portion of the Purchase Price pursuant hereto. Each Seller shall be paid a portion of the aggregate Purchase Price equal to the Purchase Price of the Purchased Assets transferred by such Seller. 2.4 Settlement Payments. On the Settlement Date, the following amounts shall be paid, by wire transfer of immediately available funds to an account designated in writing by the recipient thereof to the other party prior to the Settlement Date, as follows: (i) if the Purchase Price exceeds the Initial Payment, Purchaser shall pay, or cause any Purchaser Affiliate to pay, to Sellers an aggregate amount equal to the sum of (A) the Settlement Payment, and (B) the Settlement Interest; or (ii) if the Initial Payment exceeds the Purchase Price, the Sellers shall pay to Purchaser or Purchaser Affiliate, as applicable, an aggregate amount equal to the sum of (A) the Settlement Payment, and (B) the Settlement Interest. 2.5 Prorations. Each Seller shall bear all property and ad valorem tax liability with respect to the Purchased Assets if the lien or assessment date (the date on which the liability becomes fixed or assignable to the Purchased Assets) arises on or prior to the Closing Date (or the date of the Second Closing with respect to Purchased Financing Contracts transferred at the Second Closing) irrespective of the reporting and payment dates of such Taxes. Each Seller shall be responsible for all other Taxes as levied by any foreign, federal, state or local taxing authority in any jurisdiction with respect to the ownership, use or leasing of the Purchased Assets for all periods (or portions thereof) on or prior to the Closing Date (or the date of the Second Closing with respect to Purchased Financing Contracts transferred at the Second Closing), and Purchaser shall be responsible for all such Taxes with respect to the ownership, use or leasing of the Purchased Assets for all periods (or portions thereof) after the Closing Date (or the date of the Second Closing with respect to Purchased Financing Contracts transferred at the Second Closing). All payments to be made by Sellers in accordance with this Section 2.5 shall be made, to the extent then determinable, at the Closing (or the date of the Second Closing with respect to Purchased Financing Contracts transferred at the Second Closing) with such payments deposited into escrow until due, or, to the extent not determinable as of the Closing (or the date of the Second Closing with respect to Purchased Financing Contracts transferred at the Second Closing), promptly following the determination thereof, with such payments deposited into escrow pursuant to Section 2.6 until due. Purchaser shall have the right of review and approval of each Seller's property Tax Returns and assessments and the right to contest any assessment for which Purchaser may be adversely affected. Each Seller shall cooperate with Purchaser to advance any contest. 2.6 Tax Escrow. The amount of any personal property, ad valorem, sales, use, transfer, recording or similar Tax liability, or any other Taxes required to be withheld by any taxing authority, relating to the Purchased Assets for which the Sellers are responsible pursuant to Section 2.5 and Section 5.3(c) and which are unpaid or not yet due and payable as of the Closing (or the date of the Second Closing with respect to Purchased Financing Contracts transferred at the Second Closing) shall be estimated in good faith by the mutual agreement of Comdisco and Purchaser and a portion of the Purchase Price which is no less than such amount shall be put by the Sellers into escrow at Closing (or at the Second Closing with respect to Purchased Financing Contracts transferred at the Second Closing) and such amount shall be held and used for the sole purpose of discharging and releasing any such Taxes with respect to the Purchased Assets pursuant to Section 5.13; provided, however that if Purchaser and the Sellers have not agreed on the portion of the Purchase Price to be deposited into escrow pursuant to this Section 2.6 at least 20 days prior to the Closing (or 20 days prior to the Second Closing with respect to the Purchased Financing Contracts to be transferred at the Second Closing), such dispute will be resolved by KPMG LLP or any other public accounting firm with nationally accepted auditing experience as mutually agreed upon by Purchaser and Comdisco. The escrow to be established pursuant to this Section 2.6 shall be established pursuant to, an escrow agreement mutually acceptable to Purchaser and Comdisco or such other arrangement as may be mutually agreed by Purchaser and Comdisco prior to the Closing. The escrow shall not include any unpaid Taxes which are reimbursable or payable by an Obligor under any Purchased Financing Contract except to the extent that the Sellers previously collected such Taxes from the Obligor. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER Each Seller hereby makes as of the date of this Agreement, and at the Closing (on a several basis, and solely to the extent applicable to such Seller), the following representations and warranties to Purchaser: 3.1 Organization and Good Standing. Each Seller (i) is duly organized, validly existing and in good standing (or its equivalent) under the laws of its state, province and country of incorporation or organization, (ii) has the corporate or other applicable power to own and lease the Purchased Assets owned or leased by it and to carry on its business as now being conducted and (iii) is duly qualified or authorized to conduct business and is in good standing (or its equivalent) as a foreign corporation in all jurisdictions in which the character or location of the Purchased Assets owned or leased by it requires such qualification or authorization, except, in the case of clause (iii), where the failure to be so qualified or authorized has not and would not have a Material Adverse Effect. 3.2 Corporate Authority. Each Seller has all requisite corporate or other applicable power and authority to execute and deliver, and to perform its obligations under, this Agreement, the Transitional Services Agreement and the other documents to be executed and delivered by such Seller party thereto pursuant hereto or thereto. Each of this Agreement, the Ancillary Agreements and the other documents to be executed and delivered by a Seller pursuant hereto or thereto has been or will be, as the case may be, duly authorized by all necessary corporate, stockholder or other required action on the part of such Seller and holders of voting interests of such member and has been (or, with respect to the documents to be executed and delivered after the date hereof, will be at the Closing) duly executed and delivered by such Seller party thereto and is (or, with respect to the documents to be executed and delivered after the date hereof, will be at the Closing), subject to the entry of the Approval Order, the valid and binding obligation of such Seller party thereto, enforceable against such Seller in accordance with its terms. (a) Notwithstanding anything to the contrary contained herein, no provision of this Agreement is binding upon any Seller unless and until this Agreement is approved by the Bankruptcy Court. 3.3 No Conflicts. Except as set forth on Schedule 3.3, neither the execution and delivery by any Seller of this Agreement, the Transitional Services Agreement or any other document to be executed and delivered by any Seller in connection herewith or therewith nor compliance by any Seller with the terms and provisions hereof or thereof nor the consummation by any Seller of the transactions contemplated hereby or thereby will conflict with or result in a breach of any of the terms, conditions or provisions of (i) the certificate of incorporation (or equivalent document) or by-laws (or equivalent document including articles of association) of any Seller, (ii) any judgment, order, injunction, decree or ruling of any court or of any other Governmental Entity or any law, statute or regulation to which any Seller or any of its Properties is subject and which is related to the Purchased Assets or the Assumed Liabilities or (iii) any agreement, contract or commitment to which any Seller is a party or to which any Seller or any of its Properties is subject and which is related to the Purchased Assets or the Assumed Liabilities (including, without limitation, any agreement, contract or commitment included in the Purchased Assets), except in the case of clause (ii) above, only as it relates to any law, statute or regulation, and clause (iii) above, for such conflicts or breaches that would not be likely to have a Material Adverse Effect; nor will such execution, delivery and compliance result in acceleration in the time for performance of any obligation of any Seller relating to or affecting any of the Purchased Assets or Assumed Liabilities or in the creation of any Encumbrance on any of the Purchased Assets. 3.4 Consents. Except as set forth on Schedule 3.4 and other than the filing of notifications pursuant to the HSR Act and any corresponding anti-trust, competition or similar legislation in any other jurisdictions, and the Approval Order issued or to be issued by the Bankruptcy Court, no material notices, reports or other filings are required to be made by any Seller with, nor are any material consents, licenses, permits, Authorizations or approvals required to be obtained by any Seller from, (i) any Governmental Entity or (ii) except where the failure to make such notices, reports or other filings or obtain such consents or approvals would not have a Material Adverse Effect, any other Person in connection with the execution and delivery by any Seller of this Agreement or the consummation by any Seller of the transactions contemplated hereby. 3.5 No Violations of Law. Except as set forth on Schedule 3.5 or as would not be likely to have a Material Adverse Effect, (i) each Seller owns and operates, and at all times has owned and operated, each of the Purchased Assets and acted with respect to the Assumed Liabilities in compliance with all laws enacted, and all regulations promulgated or issued, by any Governmental Entity, including, but not limited to, Environmental Laws and laws pertaining to usury, installment or conditional sales and sales financing, truth in lending, equal credit opportunity, credit reporting or debt collection, (ii) neither the billing and collection nor enforcement of any Purchased Financing Contract or Credit Enhancement in accordance with the terms thereof has resulted or will result in the violation of any laws enacted by or regulations promulgated or issued by any Governmental Entity, (iii) each Seller has had at all times all Authorizations required to own, operate, lease and/or service the Purchased Assets and has owned and operated its Properties at all times in compliance with all laws enacted by or regulations promulgated or issued by any Governmental Entity and all such Authorizations, and (iv) no Seller has received any written notice of violation of any law or regulation from any Governmental Entity relating to any of the Purchased Assets or the ownership or operation thereof. Except as set forth on Schedule 3.5, no Seller is subject to any judgment, writ, decree, injunction or order of any federal, state or local court (domestic or foreign) or Governmental Entity relating to the acquisition, collection, administration or enforcement of any Purchased Financing Contract or Credit Enhancement or the foreclosure, acquisition or disposition of any Portfolio Property or, in each case, any transactions or activities incidental thereto. 3.6 Financial Statements; Reports. (a) True and complete copies of the Financial Statements are set forth on Schedule 3.6(a). The Financial Statements were prepared from the books and records of each Seller, and the balance sheets included in the Financial Statements fairly present, in all material respects, the financial position, as it relates to the Purchased Assets and the Assumed Liabilities, of such Seller as of the dates thereof, and the statements of income and cash flows of such Seller included in the Financial Statements fairly present, in all material respects, the results of income and cash flows, as the case may be, as they relate to the Purchased Assets and Assumed Liabilities, of such Seller for the periods set forth therein (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material in amount or effect), in each case in accordance with generally accepted accounting principles applied on a basis consistent with the Accounting Principles, except as may be noted therein or as set forth on Schedule 3.6(a) and except that statutory financial statements are prepared in accordance with applicable statutory accounting principles. (b) Except in connection with debtor-in-possession financing, no Seller has indebtedness, obligations or liabilities of any kind (whether accrued, absolute, contingent or otherwise, and whether due or to become due) related to the Purchased Assets or Assumed Liabilities which are not reflected or adequately reserved against on the applicable balance sheet dated as of September 30, 2001 included in the Financial Statements other than such indebtedness, obligations or liabilities as were incurred in the ordinary course of business consistent with past practices since September 30, 2001 and which either will be repaid or discharged prior to the Closing or reflected on the Closing Date Schedule of Assets Acquired and Liabilities Assumed. (c) Except as set forth on Schedule 3.6(c), all of the Portfolio Information and other data set forth in the December Portfolio Tape with regard to the Purchased Financing Contracts and each Purchased Discounted Financing Agreement is true, correct, complete and accurate in all material respects as of December 31, 2001. All of the Portfolio Information delivered to Purchaser prior to, at or after Closing shall be true, correct, complete and accurate in all material respects as of its date. (d) With respect to each Purchased Financing Contract, the Portfolio Information described in clause (xiv) of such definition with respect to such Purchased Financing Contract that is set forth on the December Portfolio Tape and the Closing Date Portfolio Tape is the Net Book Value of such Purchased Financing Contract. 3.7 Absence of Certain Changes. (a) Except as set forth on Schedule 3.7(a), since December 31, 2001, there has not occurred any effect, result, occurrence, event, fact, set of facts or change that constitutes a Material Adverse Effect, or any development or combination of developments of which, to Seller's Knowledge, is reasonably likely to result in any Material Adverse Effect. (b) Except as set forth on Schedule 3.7(b) or as permitted pursuant to Section 5.1(e), since December 31, 2001, no Seller has in connection with the Purchased Assets (i) made or committed to make any capital expenditures (excluding the purchase of Portfolio Property in connection with the origination or funding of a Purchased Financing Contract or otherwise in the ordinary course of business) except for those not in excess of $500,000 per capital project, (ii) waived or committed to waive any rights which could have a Material Adverse Effect, (iii) directly or indirectly in any way extended or otherwise restructured the payment schedule, payment terms or any other term or condition of any Purchased Financing Contract, or made any advance, extension, novation, modification or other accommodation to any Obligor or provider of a Credit Enhancement thereunder (other than extensions of the time to pay an amount due under a Purchased Financing Contract, modification or accommodation that were granted in the ordinary course of business by such Seller consistent with its past practices and that, with respect to extensions of time to pay an amount due under a Purchased Financing Contract, did not extend the time for payment to 30 days or more after the first date on which payment of such amount was required pursuant to the terms of such Financing Contract), (iv) suffered any damage, destruction or casualty loss to any Purchased Assets, whether or not covered by insurance, in excess of $100,000 in the case of any individual loss or $500,000 with respect to the aggregate of all such losses, (v) except pursuant to any debtor-in-possession financing in the Chapter 11 Cases, permitted any Encumbrance on any of the Purchased Assets other than Permitted Encumbrances, or (vi) deviated from or changed in any material respect its Documentation except for deviations or changes made in the ordinary course of business and consistent with past practice. 3.8 [Intentionally Omitted.] 3.9 Taxes. (a) Except as set forth on Schedule 3.9(a), each Seller (i) has timely filed (or there has been timely filed on its behalf) with the appropriate Governmental Entities all Tax Returns required to be filed, and all such Tax Returns are true and correct in all material respects, and (ii) has paid (or there has been paid on its behalf) all Taxes due and payable or claimed or asserted by any Governmental Entity to be due from it or has provided for all such Taxes on its books and records and in accordance with the Accounting Principles, including without limitation in the Financial Statements. With respect to any period for which Tax Returns have not yet been filed, or for which Taxes are not yet due or owing, each Seller has made due and sufficient current accruals for such Taxes on its books and records and in accordance with the Accounting Principles, including without limitation the Financial Statements. (b) [Intentionally Omitted.] (c) Except as set forth on Schedule 3.9(c), no written claim has been made by a taxing authority in a jurisdiction where any Seller does not file Tax Returns to the effect that such Seller is or may be subject to taxation by that jurisdiction with respect to any Purchased Asset. (d) Except as set forth on Schedule 3.9(d), no audit report has been issued prior to the date of this Agreement (or otherwise with respect to any audit or investigation in progress) relating to Taxes due from or with respect to any Seller with respect to taxable years for which the statute of limitations remains open or with respect to which Taxes are not yet paid. All deficiencies asserted or assessments made as a result of any examinations by the IRS or any other Governmental Entity of the Tax Returns of, or covering or including any Seller, have been fully paid, and there are no other actions, suits, investigations, audits or claims by any Governmental Entity in progress relating to any Seller, nor has any Seller received any notice from any Governmental Entity that it intends to conduct such an audit or investigation. Except as set forth on Schedule 3.9(d), no issue has been raised by a Governmental Entity (i) in any examination with respect to federal income Taxes for Tax years of any Seller ended 1989 through 1999 which, by application of the same or similar principles, could reasonably be expected to result in a proposed deficiency for any subsequent taxable period or (ii) in any examination with respect to Taxes other than federal income Taxes of any Seller which, by application of the same or similar principles, could reasonably be expected to result in a proposed deficiency of at least $500,000 for any subsequent taxable period. Except as set forth on Schedule 3.9(d), no Seller is subject to any private letter ruling of the IRS or comparable rulings or closing agreements of other Governmental Entities. (e) Except as set forth on Schedule 3.9(e), each Seller has withheld and paid over to the appropriate Governmental Entity all material amounts of Taxes required to be withheld in connection with any amounts paid or owing to any employee, creditor, independent contractor or other third party. (f) There are no liens for Taxes upon the Purchased Assets except for liens arising as a matter of law relating to current Taxes not yet due and liens set forth on Schedule 3.9(f) for Taxes that are being contested in good faith and for which adequate reserves have been set aside. (g) (i) Except as set forth on Schedule 3.9(g), no property having an aggregate tax basis in excess of $5 million owned by any Seller that is a United States corporation is (i) property required to be treated as being owned by another Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1986, (ii) "tax-exempt use property" within the meaning of Section 168(h)(1) of the Code, (iii) "tax-exempt bond financed property" within the meaning of Section 168(g) of the Code, (iv) subject to Section 168(g)(1)(A) of the Code, or (v) "limited use property" (as the term is used in Rev. Proc. 2001-28). (h) No Purchased Asset is (i) a debt instrument, the interest on which is, or purports to be, excludable, in whole or in part, from gross income for federal income tax purposes, (ii) an interest in a taxable mortgage pool within the meaning of Section 7701(i) of the Code, or (iii) an interest in a partnership, trust or REMIC within the meaning of Section 7701(a) of the Code. (i) Each partnership interest which is a Purchased Asset has in effect a valid election pursuant to Section 754 of the Code, which election will remain in effect for the taxable year of such partnership in which the transactions contemplated by this Agreement occur. (j) For federal income tax purposes, none of the allocations of income, gain, loss or deductions in respect of any partnership interest which is a Purchased Asset for the respective partnership taxable years in which the transactions contemplated by this Agreement occur (or prior taxable years) are (or were) required to be determined under Section 704(c) of the Code or the principles thereof. (k) None of the contracts, agreements or other arrangements included in the Purchased Assets contains any tax sharing or similar agreement (whether or not written) which provides an obligation to make payments after the Closing. (l) None of the Purchased Assets is a "United States real property interest" within the meaning of Section 897(c)(i) of the Code. (m) [Intentionally Omitted.] (n) (i) The interest component of any payments required to be made under any Tax-Exempt Public Sector Financing Contracts which are Purchased Assets is specifically and separately stated in such Tax-Exempt Public Sector Financing Contract, (ii) such interest is not includable in the gross income of the recipient thereof for federal income tax purposes and (iii) all filings with the IRS or other taxing authority or Governmental Entity as are necessary to preserve the tax-exempt nature of such interest have been made, including but not limited to Form 8038-G or Form 8038-GC. (o) (i) Except as set forth on Schedule 3.9(o), the classification of each Financing Contract which constitutes a Purchased Asset reflected on the books and records of each Seller is consistent with the manner in which such Financing Contract has been classified on such Seller's Tax Returns (as a loan or as a lease for Tax purposes), (ii) such classification (as a loan or as a lease for Tax purposes) has not been challenged by the IRS or any other Governmental Entity in a notice of proposed adjustments or notice of deficiency and (iii) no Seller has reported its status under any Financing Contract which constitutes a Purchased Asset as that of a partner or member of any other association for Tax purposes. (p) No borrower on, co-lender under, or Person holding a participation in a Purchased Asset that is a debt obligation is other than a "United States person" as such term is defined in Section 7701(a)(30) of the Code. (q) All of the Financing Contracts which are Purchased Assets which are treated as true leases for federal income Tax purposes without regard to Section 7701(h) of the Code on the books and records of the Sellers are true leases for federal income Tax purposes without regard to Section 7701(h) of the Code. (r) All of the Financing Contracts which are Purchased Assets that contain terminal rental adjustment clauses are qualified motor vehicle operating agreements within the meaning of Section 7701(h) of the Code. (s) Each Seller has paid, or caused to be paid, any and all license fees, stamp taxes, excise, sales, use, transfer or property taxes or similar fees or taxes due and payable with respect to all Purchased Financing Contracts and Portfolio Property subject thereto to the state or other jurisdiction (or any political subdivision thereof) where required, arising out of, pursuant to or in connection with the Financing Contracts. (t) [Intentionally Omitted.] (u) There has been a Final Tax Determination with respect to each Seller's federal income Tax liability with respect to its taxable years ended 1989 through 1995, and any deficiencies have been paid by such Seller in full in cash (or by way of an offset against a refund otherwise owing to such Seller). (v) [Intentionally Omitted.] (w) [Intentionally Omitted.] (x) [Intentionally Omitted.] (y) Each Seller has served written notice of its motion seeking entry of the Auction Order (as defined in the Approval Order) on each applicable taxing authority in each jurisdiction in which such Seller is subject to Tax. 3.10 [Intentionally Omitted.] 3.11 [Intentionally Omitted.] 3.12 Purchased Other Contracts. (a) Except as set forth on Schedule 3.12(a), no Seller is, nor, to Seller's Knowledge, is any other party in material breach of or in material default under any Purchased Other Contract and no event has occurred which, with notice and/or lapse of time, would constitute a material default by such Seller or any other party thereto under any such contracts or agreements. No Seller has received any written notice from or given any written notice to any other party thereto indicating that it or such other party, as the case may be, is presently in default under or in breach or violation of any Purchased Other Contract in any material respect. (b) Except as set forth on Schedule 3.12(b) or as permitted in Section 5.1(d), as of the date hereof, no Seller is party to, bound by or subject to any Material Contract, or to any other agreement, contract or commitment of the following kinds related to the Purchased Assets: (i) any agreement, contract or commitment to which any Seller is a party relating to the disposition or acquisition of any material portion of the Purchased Assets, (ii) any guarantee or indemnification by any Seller included in any of the Purchased Other Contracts running to any Person which involves, individually or in the aggregate, a contingent liability of such Seller of $500,000 or more, (iii) any material agreement, contract or commitment providing for the collection, servicing or administration of leases, loans, conditional sales agreements or financial instruments of a type included in the Purchased Financing Contracts, by any Seller on behalf of any other Person, (iv) any agreement, contract or commitment providing for the collection, servicing or administration by any Person of any Purchased Financing Contract, (v) any agreement, contract or commitment by any Person to purchase Purchased Financing Contracts, or any interests or participations therein, or any material agreement, contract or commitment by any Seller to sell Purchased Financing Contracts, or any material interests or participations therein, (vi) any agreement, contract or commitment included in the Purchased Assets containing any covenant or provision limiting the freedom of any Seller to engage in any line of business or compete with any Person in any geographic area, (vii) any agreement, contract or commitment which would, if performed in accordance with its terms, have a Material Adverse Effect, or (viii) any commitment to do any of the foregoing. Each agreement, contract or commitment set forth on Schedule 3.12(b) (except those that may be referred to in clauses (i), (ii), (vi) and (vii) and, in respect of clauses (i), (ii), (vi) and (vii), clause (viii)) is valid, binding and enforceable against the parties thereto in accordance with its terms and is in full force and effect. 3.13 Litigation and Liabilities. Except as set forth on Schedule 3.13, there are no (i) civil, criminal or administrative actions, suits, claims, hearings, investigations or proceedings pending (including, but not limited to, any counterclaims and, collectively, "Proceedings") or, to Seller's Knowledge, threatened, against any Seller relating to or affecting any of the Purchased Assets or Assumed Liabilities or (ii) obligations or liabilities, whether or not accrued, contingent or otherwise, or any other fact or circumstance to Seller's Knowledge that forms a reasonable basis for any claim against or obligation or liability of any Seller relating to or affecting the Purchased Assets or Assumed Liabilities except in the case of clauses (i) and (ii) as would not be likely to have, individually or in the aggregate, a Material Adverse Effect. Since September 30, 2001, no Seller has been the subject of any Proceeding nor, to Seller's Knowledge, have there been any investigations by or before any Governmental Entity, in either case relating to any of the Purchased Assets or Assumed Liabilities or liabilities that will be transferred by operation of law to Purchaser or any Purchaser Affiliate as a result of the transactions contemplated by this Agreement, nor to Seller's Knowledge does any valid basis for any such investigation exist. 3.14 [Intentionally Omitted.] 3.15 [Intentionally Omitted.] 3.16 Brokers' or Finders' Fees, etc. No Person acting on behalf of any Seller or any of its Affiliates or under the authority of any of them is or will be entitled to any brokers' or finders' fee or any other commission or similar fee, directly or indirectly, from Purchaser or any of its Affiliates in connection with any of the transactions contemplated hereby. 3.17 Conduct of Business. (a) Since December 31, 2001, each Seller has with respect to the Purchased Assets used its commercially reasonable efforts to preserve substantially intact the business organizations of each Seller with each Person having any business relationships with any Seller relating to the Purchased Assets, except to the extent the discontinuance of such relationship would likely not have a Material Adverse Effect. (b) Except as set forth on Schedule 3.17(b), since December 31, 2001, or, if later, the date such assets and liabilities first became assets or liabilities, as the case may be, of a Seller, (i) each Seller has owned, operated and serviced the Purchased Assets and acted with respect to the Assumed Liabilities only in the ordinary course consistent with past practices and has not deviated from or changed in any respect its credit policy or collateral eligibility standards in any material respect; and (ii) to the extent that any Seller has approved credit applications with respect to Financing Contracts entered into after December 31, 2001, but prior to the date of this Agreement, such Seller has complied with standards of evaluating, originating, underwriting and funding new business which are in all respects consistent with its past practices. 3.18 Purchased Financing Contracts. (a) Except as set forth on Schedule 3.18(a), each Purchased Financing Contract and Credit Enhancement (i) is valid, binding and enforceable by the Seller party thereto against the Obligor or provider of such Credit Enhancement thereunder in accordance with its written terms, except as may be limited by the Bankruptcy Exception, and (ii) constitutes and arose out of a bona fide business transaction entered into in the ordinary and usual course of business of such Seller, consistent with its past practices. (b) Except as set forth on Schedule 3.18(b), (i) each Purchased Financing Contract and Credit Enhancement is, or as of the Closing Date will be, in full force and effect, free and clear of Encumbrances other than Permitted Encumbrances, and not subject to any defense, offset, claim, right of rescission or counterclaim by the Obligor or provider of such Credit Enhancement under such Purchased Financing Contract in the case of a Purchased Financing Contract or by the obligor thereunder in the case of a Credit Enhancement, or any Person claiming under any such right; (ii) no Seller is in breach of or default under any Purchased Financing Contract or Credit Enhancement, no other party is in payment breach thereof or payment default thereunder and, to Seller's Knowledge, no other event has occurred which, with notice and/or lapse of time, would constitute a default by any Seller or any other party thereunder; (iii) no Obligor under any Purchased Financing Contract (A) has acquired any Portfolio Property, any interest in any Portfolio Property or the use of any Portfolio Property pursuant to such Purchased Finance Contract for personal, family or household use or for agricultural purposes, or (B) is required under any applicable law to withhold from payments on any such Purchased Financing Contract any interest or other withholdings for the payment of Taxes to any Governmental Entity; (iv) each Seller has in its possession a fully executed original of any lease or note (and an executed original or a true and correct copy of all other documents) comprising each Purchased Financing Contract (except for Purchased Financing Contracts that are the subject of a Discounting Financing Agreement, copies of which shall be delivered to Purchaser at Closing) and Credit Enhancement and all other documents required by each Seller's credit or investment approval with respect to each Purchased Financing Contract; (v) no Purchased Financing Contract is terminable at the option of the Obligor thereunder except to the extent that such Obligor is required to pay to such Seller a termination fee in an amount which, together with the Residual and any payments from date of termination equals at least the Net Book Value at such time of such Purchased Financing Contract; (vi) each Seller has in its possession documents sufficient to establish the Original Equipment Cost of all Portfolio Property for purposes of determining personal property tax liability; (vii) all payments pursuant to each Purchased Financing Contract are made directly to the applicable Seller, except Purchased Financing Contracts subject to Discounted Financing Agreements; and (viii) each Seller has approved credit applications and otherwise entered into commitments with respect to Purchased Financing Contracts in a manner consistent with such Seller's credit policies, collateral eligibility standards and credit quality classifications in effect at the time and otherwise complied with standards of evaluating, originating, underwriting and funding new business which are in all respects consistent with its past practices. (c) Except as set forth on Schedule 3.18(c), no Purchased Financing Contract is subject to any debt subordination agreement, participation agreement, intercreditor agreement, owner trust agreement, purchase agreement, collateral sharing agreement, residual sharing agreement, remarketing agreement or vendor recourse agreement, and, except in connection with the debtor-in-possession financing under the Chapter 11 Cases and under any Purchased Discounted Financing Agreement, no Purchased Financing Contract is subject to any Disposition Agreement. (d) As of the date of this Agreement, Schedule 3.18(d) sets forth a list of each Credit Enhancement constituting a Purchased Asset that is a letter of credit, certificate of deposit or stock certificate, along with (i) the issuer thereof, (ii) the maximum amount drawable thereunder, principal amount thereof or number of shares represented thereby, (iii) the expiration or maturity date thereof, if applicable and (iv) the physical location thereof. (e) Each Seller owns and has good title to each of the Purchased Financing Contracts that will be transferred by such Seller to Purchaser and Purchaser Affiliates pursuant to this Agreement, free and clear of all Encumbrances other than Permitted Encumbrances and Encumbrances created pursuant to the Discounted Financing Agreements. (f) Schedule 3.18(f) sets forth all of the Required Consent Financing Contracts. 3.19 Portfolio Property. (a) (i) Each Seller has, with respect to each item of Portfolio Property that such Seller will be transferring to Purchaser and Purchaser Affiliates pursuant hereto, either (A) good and valid title to such Portfolio Property, free and clear of all Encumbrances other than Permitted Encumbrances and Encumbrances created pursuant to the Discounted Financing Agreements, or (B) a valid first priority security interest on such Portfolio Property that is governed by or subject to a Financing Contract which has been duly perfected (including but not limited to pursuant to all appropriate Uniform Commercial Code filings); (ii) with respect to each item of Portfolio Property, the amount of the Original Equipment Cost with respect thereto is described accurately in the files of each Seller that relate to such item of Portfolio Property in the same level of detail that such individual item of Portfolio Property is identified in the applicable Purchased Financing Contract; (iii) none of such Portfolio Property is a vessel, an aircraft or a vehicle; and (iv) no Person has an option to purchase any item of such Portfolio Property at the end of the lease term for a fixed amount less than the greater of (A) the Residual thereof or (B) the amount set forth in the Financing Contract covering such Portfolio Property. (b) Except as set forth on Schedule 3.19(b), to Seller's Knowledge, (i) all Portfolio Property has complied and now complies in all respects with all laws, statutes, ordinances, rules and regulations applicable to such Portfolio Property, except that the Sellers make no representation as to (i) whether the use of Portfolio Property by the Obligor complies with such laws, statutes, ordinances, rules and regulations or (ii) any defects, violations of law, regulations or similar requirements to the extent relating to Portfolio Property that is manufactured by Purchaser, a Purchaser Affiliate or an Affiliate of Purchaser; and (ii) each Financing Contract requires the Obligor thereunder (and not a Seller or any other Person) to provide insurance against loss or damage with respect to the Portfolio Property subject to or governed by such Financing Contract. (c) Each Seller owns and has (i) good title to all of the Portfolio Property related to the Purchased Financing Contracts that will be transferred to Purchaser and Purchaser Affiliates by such Seller, free and clear of all Encumbrances other than Permitted Encumbrances and Encumbrances created by the Discounted Financing Agreements or (ii) a valid first priority security interest on such Portfolio Property which has been duly perfected, including, but not limited to, pursuant to all appropriate Uniform Commercial Code filings. No Seller is in default in any agreement or arrangement with the third parties which own title to the Portfolio Property related to the Financing Contracts subject to Discounted Financing Agreements, which default would give rise to an acceleration of payments to become due thereunder. 3.20 Environmental Matters. Except as disclosed on Schedule 3.20 (i) each Seller and each of the Purchased Assets is in compliance with all Environmental Laws and Environmental Permits; (ii) there are no claims or proceedings pending or, to Seller's Knowledge, threatened against any Seller with respect to the Purchased Assets alleging the violation of or non-compliance with Environmental Laws; (iii) to Seller's Knowledge, there are no facts, circumstances or conditions that could result in the owner or operator of the Purchased Assets incurring liabilities under Environmental Laws; and (iv) each Seller has provided Purchaser with copies of all material environmental, health and safety assessments, audits, investigations, analyses and other such reports relating to the Purchased Assets (each, an "Environmental Report") that are, as of the date of this Agreement, in the possession, custody and control of such Seller, except, in respect of clauses (i), (ii) and (iii) hereof, that has not had or is reasonably likely to have a Material Adverse Effect. 3.21 Transactions With State and Local Governments. With respect to each Purchased Financing Contract for which the Obligor is a State and Local Governmental Entity, (i) the Seller party to such Financing Contract has complied with all bidding requirements applicable to such transaction and with all requirements of any applicable request for proposal, including, without limitation, those applicable to the Portfolio Property and all federal and state statutes and regulations governing equal employment opportunity, affirmative action and environmental protection; (ii) such Seller is the Person, or assignee of the Person, named in and subject to the request for proposal and will continue to perform or cause to be performed any obligations arising from such Financing Contract; and (iii) such Seller has given (or timely will give) notice to each applicable State and Local Governmental Entity of the assignment of the rights of such Seller in the Purchased Assets to Purchaser and has obtained the consent of such State and Local Governmental Entity if required by the terms of the Financing Contract. 3.22 [Intentionally Omitted.] 3.23 [Intentionally Omitted.] 3.24 [Intentionally Omitted.] 3.25 [Intentionally Omitted.] 3.26 Purchased Discounted Financing Agreements. No Purchased Discounted Financing Agreement (i) except as set forth on Schedule 3.26, provides that the lender thereunder has recourse against any person for the payment thereunder except the Obligor of the Financing Contract securing such indebtedness, (ii) except as set forth on Schedule 3.26, has an amount due in excess of the remaining rent payments under the Financing Contract securing such indebtedness, (iii) allows the lender to retain its security interest in the Financing Contract securing such indebtedness after the repayment of such indebtedness, (iv) is cross collateralized to any Property other than any Purchased Financing Contract which was discounted for such indebtedness and its underlying Portfolio Property, (v) except as set forth on Schedule 3.26 has a lender located, or payments due, outside of the United States, (vi) has a cross default to any other agreement, (vii) has a representation or covenant which has been breached by any Seller, which would give (with the giving of notice or passage of time or both) the lender thereunder the ability to accelerate payment to become due thereunder, (viii) would prohibit Purchaser or any Purchaser Affiliate from receiving payments on the Financing Contract securing such indebtedness after such indebtedness is paid in full, or (ix) gives a right of setoff to the lender for any amounts owed thereunder. Each Purchased Discounted Financing Agreement is substantially in the same form as the Discounted Financing Agreements set forth on Schedule 3.26. Schedule 3.26 sets forth all Discounted Financing Agreements to which any Seller is a party. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser makes, and at Closing will cause each Purchaser Affiliate to make, the following representations and warranties to the Sellers: 4.1 Organization and Good Standing. Purchaser is, and each Purchaser Affiliate will be at Closing, a duly organized entity, validly existing and in good standing under the laws of the state of its incorporation, and Purchaser has, and each Purchaser Affiliate will have at Closing, the corporate or other applicable power to own and lease its Property and to carry on its business as now being conducted. 4.2 Corporate Authority. Purchaser has, and each Purchaser Affiliate will have at Closing, all requisite corporate or other applicable power and authority to execute and deliver, and to perform its obligations under, this Agreement, the Transitional Services Agreement and the other documents to be executed and delivered by Purchaser or such Purchaser Affiliate pursuant hereto and thereto. Each of this Agreement, the Transitional Services Agreement and the other documents to be executed and delivered by Purchaser or any Purchaser Affiliate pursuant hereto and thereto has been, or will be, as the case may be, duly authorized by all necessary corporate action and has been (or, with respect to the documents to be executed and delivered after the date hereof, will be at the Closing) duly executed and delivered by Purchaser or such Purchaser Affiliate and is (or, with respect to the documents to be executed and delivered after the date hereof, will be at the Closing) the valid and binding obligation of Purchaser or such Purchaser Affiliate, enforceable against Purchaser or such Purchaser Affiliate in accordance with its terms, except as enforcement thereof may be limited by the Bankruptcy Exception. 4.3 No Conflicts. Neither the execution and delivery by Purchaser or any Purchaser Affiliate of this Agreement, the Transitional Services Agreement or any other document to be executed and delivered by Purchaser or such Purchaser Affiliate in connection herewith or therewith nor compliance by Purchaser or such Purchaser Affiliate with the terms and provisions hereof or thereof nor consummation of the transactions contemplated hereby or thereby will conflict with or result in a breach of any of the terms, conditions or provisions of (i) the articles of incorporation (or equivalent document) or by-laws (or equivalent document, including Articles of Association) of Purchaser or such Purchaser Affiliate, or (ii) any judgment, order, injunction, decree or ruling of any court or of any Governmental Entity or any law, statute or regulation to which Purchaser or such Purchaser Affiliate or any of its Properties is subject. 4.4 Consents. Other than the filing of notifications pursuant to the HSR Act and any other filings pursuant to any corresponding anti-trust, competition or similar legislation in any other jurisdictions, and the Approval Order issued by the Bankruptcy Court, no notices, reports or other filings are required to be made by Purchaser or any Purchaser Affiliate with, nor are any consents, licenses, permits, Authorizations or approvals required to be obtained by Purchaser or any Purchaser Affiliate from, any Governmental Entity or any other Person in connection with the execution and delivery by Purchaser or any Purchaser Affiliate of this Agreement, the Transitional Services Agreement or any other document to be executed and delivered by Purchaser pursuant hereto or thereto or the consummation by Purchaser or such Purchaser Affiliate of the transactions contemplated hereby or thereby. 4.5 Brokers' or Finders' Fees, etc. No Person acting on behalf of Purchaser or any Purchaser Affiliate or any of their Affiliates or under the authority of any of them is or will be entitled to any brokers' or finders' fee or any other commission or similar fee, directly or indirectly, from any Seller or any of its Affiliates in connection with any of the transactions contemplated herein. 4.6 Financing. As of the date hereof, Purchaser has, and on the Closing Date, Purchaser and each Purchaser Affiliate will have, sufficient funds available to deliver Purchase Price to the Sellers and consummate the transactions contemplated by this Agreement. Upon the Closing, (i) neither Purchaser nor any Purchaser Affiliate will be insolvent, (ii) neither Purchaser nor any Purchaser Affiliate will be left with unreasonably small capital, (iii) neither Purchaser nor any Purchaser Affiliate will have incurred debts beyond its ability to pay such debts as they mature and (iv) the capital of Purchaser and each Purchaser Affiliate will not be impaired. ARTICLE V CONDUCT AND TRANSACTIONS PRIOR TO CLOSING; COVENANTS; INDEMNITIES Each Seller agrees and covenants with Purchaser as follows: 5.1 Investigations; Certain Covenants. Between the date of the Approval Order and the Closing (or, with respect to Sections 5.1(a), 5.1(b), 5.1(c) and 5.1(d), during the period set forth therein): (a) Within six (6) Business Days after the date of this Agreement, the Sellers shall give or cause to be given to Purchaser and its representatives and agents reasonable access during normal business hours and upon reasonable prior notice to all the Sellers' premises in Rosemont, Illinois, personnel and books and records (located in Rosemont, Illinois) of each Seller, including, but not limited to, all accounting books and records, all financial records and statements, and all Tax Returns and Tax records, in each case pertaining to any Purchased Financing Contract, any Portfolio Property or any Assumed Liability, or any other Purchased Asset; provided, however, in the event any book and records of any Seller pertaining to any Purchased Asset or Assumed Liability is not located at Sellers' premises in Rosemont, Illinois, copies of such book and records shall be made available at Sellers' premises in Rosemont, Illinois. Within six (6) Business Days after the date of this Agreement but in no event earlier than April 10, 2002, the Sellers shall use their reasonable best efforts to assemble, and make available for Purchaser's review, at the Sellers' offices in Rosemont, Illinois, a lease file for each Purchased Financing Contract (each, a "Lease File"), which shall contain, to the extent in the possession of any Seller, the credit file, the correspondence file, the document file and the documents set forth on Schedule 5.1(a), each organized so that all such documents relating to a specific Purchased Financing Contract are located in a single Lease File. Each Seller shall use its reasonable best efforts to assemble originals or copies, to the extent in the possession of any Seller, in the Lease File for each Financing Contract intended to be included in the Purchased Financing Contracts, of the credit file, the correspondence file, the document file and the documents set forth on Schedule 5.1(a); provided, however, the Sellers shall deliver original master leases (or, if not in the Sellers' possession, copies of such master leases, if such master leases are the subject of a Purchased Discounted Financing Agreement, certified as true, correct and complete by an officer of the applicable Seller and in all other cases by the applicable Obligor), original applicable schedules, original Credit Enhancements and original confirmations of filings of all UCC financing statements (or if not in the Sellers' possession, a copy thereof). Purchaser and the Sellers shall use commercially reasonable efforts to observe and comply with the review procedures and processes set forth on Schedule 5.1(a). (b) As soon as practicable following the date of the Approval Order, each of Purchaser and each Seller shall make or cause to be made all filings required to be made by it or on its behalf under the HSR Act and any corresponding anti-trust, competition or similar legislation in any other jurisdictions relating to the transactions contemplated hereby and shall use its commercially reasonable efforts to cause an early termination under the waiting period under the HSR Act (and to obtain the requisite approvals or consents of Governmental Entities and to cause any applicable waiting periods to expire pursuant to the laws of any other jurisdictions) as soon as practicable. However, neither Purchaser nor any of its Affiliates shall have any obligation to dispose of, hold separate or otherwise restrict its enjoyment of any of its assets or properties (including, without limitation, after the Closing, the Purchased Assets). Purchaser shall pay the filing fees for all filings required pursuant to this Section 5.1(b). (c) Except as otherwise expressly provided in this Agreement, between the date of this Agreement and Closing, each Seller shall use commercially reasonable efforts under the circumstances to preserve substantially intact the Purchased Assets and shall use its commercially reasonable efforts under the circumstances to preserve its present business relationships, including, but not limited to, those with the Obligors under Financing Contracts, where the discontinuance of such relationships would have a Material Adverse Effect. (d) Except as otherwise expressly permitted by this Agreement or consented to in writing by Purchaser and except as prohibited by the Bankruptcy Code or the Bankruptcy Court in the Chapter 11 Cases prior to the date hereof, each Seller shall, between the date of this Agreement and Closing: (i) own, operate and service the Purchased Assets and act with respect to the Assumed Liabilities, in the ordinary and usual course consistent with past practices; provided, that, any Seller may prepay any of its indebtedness if such prepayment does not otherwise violate any provision of this Agreement except that no Seller shall prepay any Discounted Financing Agreement related to a Purchased Financing Contract; (ii) maintain its books, accounts and records relating to the Purchased Assets in the ordinary course of business consistent with past practices, and cause such books, accounts and records to be true and complete in all material respects; (iii) [Intentionally Omitted.] (iv) [Intentionally Omitted.] (v) use commercially reasonable efforts to keep available the services of the present employees necessary to maintain (without deterioration in any material respect) its business as such business relates to the Purchased Assets; and (vi) use commercially reasonable efforts to maintain the goodwill associated with its business, as such business relates to the Purchased Assets, including, without limitation, preserving the relationship of customers, suppliers and others having business dealings with any Seller. Except as otherwise expressly permitted by this Agreement, between the date of this Agreement and Closing, no Seller, without the written consent of Purchaser, shall, with respect to any of the Purchased Assets: (A) waive or commit to waive any right that could have, individually or in the aggregate, a Material Adverse Effect; (B) with respect to the Healthcare Segment, modify the policies or practices for (x) evaluating, originating, underwriting or funding business, (y) collection, or (z) valuing Portfolio Property; (C) [Intentionally Omitted]; (D) make any advance, novation, modification or other accommodation (other than those described in clause (A) above) to any Obligor or provider of a Credit Enhancement other than in the ordinary course of business consistent with past practices; (E) except as required by any debtor-in-possession financing in the Chapter 11 Cases, mortgage, pledge or otherwise encumber any assets; (F) sell, lease (other than leases or conditional sales of Portfolio Property pursuant to the Financing Contracts), transfer or otherwise dispose of any assets included in the Purchased Assets, except sales of inventory in the ordinary course of business consistent with past practices; (G) [Intentionally Omitted]; (H) make any change in financial or tax accounting methods, principles or practices applicable to the Purchased Assets or Assumed Liabilities unless permitted by the Accounting Principles; (I) [Intentionally Omitted]; (J) take any action that would breach any Seller's representations, warranties or covenants contained in this Agreement if such representation, warranty or covenant were made at the time of the action; (K) with respect to any Financing Contract of a type that would be included within the definition of Purchased Financing Contracts (without considering clauses (E) or (H) of the proviso thereof) (a "Non-Terminable or Modifiable Financing Contract"), (x) terminate, or permit the termination of such Financing Contract prior to the expiration of the scheduled term thereof (except for terminations, without a violation of clause (z) below, at the election of an Obligor as contractually permitted under such Financing Contract), (y) directly or indirectly extend or otherwise restructure the payment schedule or payment terms of any such Financing Contract beyond 30 days from the original due date of a payment, or extend or otherwise restructure any other term or condition of any such Financing Contract (except modifications or amendments to reflect equipment additions or upgrades and lease term extensions related to such additions or upgrades), or (z) encourage or induce an Obligor under such Financing Contract to elect to terminate such Financing Contract prior to the expiration of the scheduled term thereof; or (L) enter into an agreement, contract or commitment (other than this Agreement) to do any of the things prohibited by the foregoing clauses (A) through (K). (e) Notwithstanding anything to the contrary in Section 5.1(d), (i) (A) any Seller may, during the period from December 31, 2001 to but excluding April 1, 2002, (1) sell, transfer or otherwise dispose of, or enter into an agreement to sell, transfer or otherwise dispose of, any Portfolio Property or Financing Contract (selling, transferring, disposing of or entering into an agreement to sell, transfer or dispose of any Portfolio Property or Financing Contract being referred to as a "Sale") or (2) directly or indirectly extend or otherwise restructure the payment schedule, payment terms or any other terms or conditions of any Purchased Financing Contract, or make any other extension, modification or other accommodation to any Obligor (any such modification of a Purchased Financing Contract being referred to as a "Modification"); provided, however, that the sum of (x) the aggregate Net Book Value as of the date of this Agreement of Portfolio Property and Financing Contracts that are Sold pursuant to clause (1) above and (y) the aggregate Net Book Value as of the date of this Agreement of Purchased Financing Contracts that have been subject to Modification pursuant to clause (2) above shall not exceed $7,000,000. Sellers agree to deliver to Purchaser on or prior to April 30, 2002, a schedule containing a true, correct and complete list of all Sales and Modifications entered into by the Sellers from December 31, 2001 to but excluding April 1, 2002. (B) In the event any Seller Sells any Portfolio Property or any Financing Contract in accordance with clause (A) above, such Portfolio Property and/or Financing Contract shall constitute an Excluded Asset for purposes hereof (and consequently such Portfolio Property and Financing Contract shall be excluded from the Closing Date Portfolio Tape and the Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed and such Seller shall be entitled to the proceeds of such Sale (irrespective of whether such Sale is effected prior, on or after the Closing). (C) In the event any Modification is made to any Purchased Financing Contract in accordance with clause (A) above, the Net Book Value for such Purchased Financing Contract set forth on the Closing Date PortfolioTape shall give effect to such Modification. (ii) (A) Each Seller may, between April 1, 2002 and the applicable Cut-Off Date with respect to any Financing Contract, (1) Sell any Financing Contract or (2) make a Modification to any Purchased Financing Contract; provided, however, that a copy of a definitive agreement with respect to such Sale or Modification shall have been furnished to Purchaser on or prior to the Cut-Off Date; and, provided, further, that the sum of (x) the aggregate Net Book Value as of the date of this Agreement of Portfolio Property and Financing Contracts that are the subject of a Sale pursuant to clause (1) above and (y) the aggregate Net Book Value as of the date of this Agreement of Purchased Financing Contracts that have been subject to Modification pursuant to clause (2) above shall not, if taken together, exceed (i) $7,500,000 with respect to the Sales or Modifications that are effected pursuant to definitive agreements that are executed on or after April 1, 2002 but prior to May 31, 2002 and (ii) $10,000,000 with respect to Sales or Modifications that are effected pursuant to the definitive agreements that are executed on or after May 31, 2002 but prior to June 30, 2002 (minus the aggregate Net Book Value with respect to the Sales and Modifications that are effected pursuant to the definitive Agreements that are executed on or after April 1, 2002 but prior to May 31, 2002). (B) In the event any Seller Sells any Portfolio Property or any Financing Contract in accordance with clause (A) above, such Portfolio Property and/or Financing Contract shall constitute an Excluded Asset for purposes hereof (and consequently such Portfolio Property and Financing Contract shall be excluded from the Closing Date Portfolio Tape and the Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed and such Seller shall be entitled to the proceeds of such Sale (irrespective of whether such Sale is effected prior, on or after the Closing)). (C) In the event any Modification is made to any Purchased Financing Contract in accordance with clause (A) above, the Net Book Value for such Purchased Financing Contract set forth on the Closing Date Portfolio Tape shall give effect to such Modification. (iii) after the Cut-Off Date with respect to any Financing Contract, no Seller shall directly or indirectly in any way enter into any Sale or any Modification with respect any Purchased Financing Contract, or make any advance or novation to any Obligor or provider of a Credit Enhancement thereunder or issue any quotes for any Sale of any Portfolio Property subject to such Purchased Financing Contract without prior written consent of Purchaser. (f) Each Seller shall use commercially reasonable efforts to obtain (i) all Authorizations, consents and approvals referred to in Section 3.4 hereof and (ii) the written consent, and any required novation, of the required third parties to transfer the Required Consent Financing Contracts to Purchaser, or any Purchaser Affiliate designated by Purchaser, at the Closing. (g) Prior to Closing but after the signing of the Approval Order by the Bankruptcy Court, and for a period not to exceed four months following the Closing Date, each Seller shall, reasonably cooperate with Purchaser and each Purchaser Affiliate by providing reasonable access (during normal business hours) to (subject to a non-disclosure agreement), (i) available information regarding, and (ii) available personnel who are knowledgeable regarding, the systems, hardware and software used by the Seller to collect, service and operate the Purchased Assets as and to the extent reasonably requested by Purchaser solely in connection with the conversion of data with respect to the Purchased Financing Contracts onto the systems, hardware and software of the Purchaser or applicable Purchaser Affiliate. Effective as of the Closing Date, each Seller hereby grants to Purchaser and each Purchaser Affiliate, to the extent owned by any Seller, a perpetual, royalty free, non-transferable, non-exclusive license (in the jurisdictions in which the applicable grantor has such rights) to use all information provided under this Section 5.1(g) (the "Information") solely for their internal business purposes related to the Purchased Financing Contracts. "Information" shall not include any computer programs, including, but not limited to, any and all software implementations of algorithms, models and methodologies in source code or object code form, databases and compilations. Purchaser and the Purchaser Affiliates may not rent, lease, sublicense or otherwise transfer any of the Information or provide access to the Information to any third party. All rights in the Information not explicitly granted under this Section 5.1(g) are reserved. (h) (i) Approximately five Business Days prior to any Cut-Off Date intended to be established by Purchaser with respect to any Financing Contract, Purchaser shall provide a preliminary non-binding list of Financing Contracts with respect to which Purchaser has completed its review of the Lease Files and, subject to the conditions set forth in the definition of the "Cut-Off Date" and the receipt of the listing set forth in clause (ii) below, Purchaser proposes to issue a notice on the Cut-Off Date. (ii) Two Business Days prior to the proposed Cut-Off Date, each Seller shall deliver to Purchaser listings as of such date of all Financing Contracts identified by Purchaser pursuant to clause (i) above on a non-binding basis as proposed to be included in the notice to be issued on the Cut-Off Date that fall under the definition of Purchased Financing Contracts (without giving effect to clauses (B), (D), (E), (F), (H)(z) or (K) of the proviso in the definition thereof) and that either (x) fall under any of clauses (B), (D), (F) or (K) of the proviso in the definition of Purchased Financing Contracts, (y) fall under clause (i) of the definition of Delinquency Contracts or (z) to Seller's Knowledge, do not satisfy the representations and warranties of Article III (which listing shall identify the breach of such representations and warranties). (iii) Five Business Days prior to Closing, each Seller shall deliver to Purchaser a listing of all Financing Contracts with respect to which Purchaser has given a notice to Seller on the Cut-Off Date electing to deem such Financing Contract a "Purchased Financing Contract" that fall under clause (E) of the proviso in the definition of Purchased Financing Contracts. (i) Each Seller shall deliver to Purchaser, at least five Business Days prior to Closing, all Environmental Reports that come to its possession, custody or control between the date hereof and Closing. (j) Within 20 days after the date of the Approval Order, each Seller shall deliver to Purchaser or the applicable Purchaser Affiliate a list of all third party consents required to transfer each Purchased Other Contract. Each Seller shall use its commercially reasonable efforts to obtain such consents prior to Closing. To the extent that any Seller does not obtain such consents prior to Closing for a Purchased Other Contract, Purchaser may elect to exclude such Purchased Other Contract from the Purchased Assets notwithstanding that it is described as a Purchased Asset in Section 2.1. 5.2 Pending or Threatened Litigation. Between the date of this Agreement and the Closing, Sellers and Purchaser shall inform each other, promptly upon obtaining knowledge thereof, of any pending or threatened litigation which reasonably could be anticipated to (i) render inaccurate in any material respect any representation or warranty made by any Seller or Purchaser (as the case may be); or (ii) prohibit or restrain or materially and adversely affect the consummation of the transactions contemplated hereby or the performance by any Seller or Purchaser of their respective obligations hereunder. 5.3 Tax Matters/Allocation of Purchase Price. (a) Within 90 days after the completion of the final determination of the Special Procedures Report of Assets Acquired and Liabilities Assumed, Purchaser shall provide to Comdisco copies of a schedule allocating the Purchase Price (and any other items required to be treated as additional Purchase Price at such time) among the Sellers and the Purchased Assets (the "Allocation Statement"); provided, that the Allocation Statement shall not be inconsistent with the allocation of the Purchase Price agreed to by Purchaser and the Sellers pursuant to Section 2.3, except to the extent any inconsistencies relate to or arise out of the final determination of the Special Procedures Report of Assets Acquired and Liabilities Assumed. Within 60 days after the receipt of such Allocation Statement, Comdisco shall propose to Purchaser any changes to such Allocation Statement or shall indicate its concurrence therewith, which concurrence shall not be unreasonably withheld. The failure by Comdisco to propose any such change or to indicate its concurrence within such 60 days shall be deemed to be an indication of its concurrence with such Allocation Statement. Purchaser and each Seller shall file, and shall cause their Affiliates to file, all Tax Returns and statements (including Form 8594), forms and schedules in connection therewith in a manner consistent with such allocation of the Purchase Price and shall take no position contrary thereto unless required to do so by applicable Tax laws. Any disputes with respect to the items on the Allocation Statement which Purchaser and Comdisco, acting in good faith, are unable to resolve shall be resolved by the Selected Accounting Firm. Each of the parties to this Agreement shall be bound by the decision rendered by the Selected Accounting Firm. (b) Cooperation with Respect to Tax Returns. Purchaser and each Seller agree to furnish or cause to be furnished to each other, each at their own expense, as promptly as practicable, such information (including access to books and records) and assistance, including making employees available on a mutually convenient basis to provide additional information and explanations of any material provided relating to the Purchased Assets as is reasonably necessary for the filing of any Tax Return, for the preparation for any audit, and for the prosecution or defense of any claim, suit or proceeding relating to any adjustment or proposed adjustment with respect to Taxes or any appraisal of the Purchased Assets. Each Seller shall retain in its possession all Tax Returns and tax records relating to the Purchased Assets that might be relevant to any taxable period ending on or prior to the Closing Date (or the date of the Second Closing with respect to Purchased Financing Contracts transferred at the Second Closing) until the relevant statute of limitations has expired. After such time, each Seller may dispose of such materials, provided that prior to such disposition such Seller shall give Purchaser a reasonable opportunity to take possession of such materials. Purchaser shall retain in its possession, and shall provide the Sellers reasonable access to (including the right to make copies of), such supporting books and records and any other materials that the Sellers may specify with respect to Tax matters relating to any taxable period ending on or prior to the Closing Date (or the date of the Second Closing with respect to Purchased Financing Contracts transferred at the Second Closing) until 60 days after the relevant statute of limitations has expired. (c) Transfer Taxes. The Sellers shall be liable for and shall pay (and the Sellers shall indemnify and hold Purchaser and each Purchaser Affiliate harmless from and against) any sales, use, transfer, stamp duty, registration duty, recording or similar Taxes (collectively "Transfer Taxes") due as a result of the transactions provided herein and agrees to file all necessary documentation (including, but not limited to, all Tax Returns) with respect to all such Taxes in a timely manner. Purchaser shall co-operate with the Sellers and otherwise shall use its commercially reasonable efforts to obtain (at the Sellers' expense) any available refunds of, or credits for, any Transfer Taxes, and to the extent Purchaser or the applicable Purchaser Affiliate actually receives any such refunds or credits, net of any Taxes payable with respect thereto, Purchaser or the applicable Purchaser Affiliate shall remit to the applicable Seller the amount of such refund (to the extent such Seller previously paid such Transfer Taxes), promptly following receipt thereof (provided such Seller has otherwise complied with its obligations pursuant to the first sentence of this Section 5.3(c)). Notwithstanding the foregoing, the Approval Order shall contain a provision that the Sellers' sale, transfer, assignment and conveyance of the Purchased Assets to Purchaser hereunder shall be entitled to the protections afforded under Section 1146(c) of the Bankruptcy Code. Purchaser and the Sellers shall co-operate in providing each other any applicable resale exemption certificate. 5.4 Indemnifications, Assumptions of Liability and Related Matters. (a) Indemnification by Sellers for Breach. Each Seller shall indemnify and hold harmless to indemnify and hold harmless (provided, however, CHG shall indemnify and hold harmless solely to the extent applicable to CHG) any Purchaser and its Affiliates, and in each such case their respective directors, officers, employees and agents (collectively, the "Purchaser Indemnified Parties"), from and against and in respect of any and all Damages suffered or incurred by any of them resulting from, arising out of, based on or relating to, without duplication (i) any breach of any representation or warranty made by any Seller in this Agreement (without duplication as to matters indemnified pursuant to Section 5.4(d), Section 5.4(e) and Section 5.4(g)); or (ii) any failure to perform duly and punctually any covenant, agreement or undertaking on the part of any Seller contained in this Agreement (without duplication as to matters indemnified pursuant to Section 5.4(d), Section 5.4(e) and Section 5.4(g)); or (iii) any breach of a representation or warranty included in any certificate, Schedule or other agreement, instrument or document, in each case delivered by any Seller, or any of their respective Affiliates to Purchaser pursuant to the terms of this Agreement (collectively, the "Seller Related Documents") or (iv) any employees of any Seller or any benefit plans or payroll practices of any Seller; provided, however, that (A) in the event Purchaser waives in writing its condition to Closing pursuant to Section 6.2(a) as such condition relates to a breach of the representation and warranty contained in Section 3.7(a), Purchaser shall not be entitled after Closing to seek indemnification from any Seller in respect of such breach of the representation and warranty contained in Section 3.7(a), (B) Purchaser shall not be entitled to indemnification pursuant to clause (i) of this Section 5.4(a) as a result of any breach of any representation or warranty made by any Seller in Section 3.7(a) hereof to the extent, but solely to the extent, that a matter causing a breach of Section 3.7(a) is the subject of a specific representation or warranty in Article III made by such Seller breaching Section 3.7(a), and (C) in the event that a Seller notifies Purchaser pursuant to Section 5.1(h)(iii) that a Financing Contract does not satisfy the representations and warranties of Article III (a "Section 5.1(h)(iii) Notice") and Purchaser does not notify such Seller that it is excluding such Financing Contract from the Purchased Financing Contracts pursuant to clause (H)(z) of the proviso of the definition thereof, Purchaser shall not be entitled to indemnification for such Purchased Financing Contract pursuant to clause (i) of this Section 5.4(a) with regard to the circumstances giving rise to the breach of the representation and warranty identified in the Section 5.1(h)(iii) Notice. For purposes of this Section 5.4(a), a breach of a representation or warranty contained in this Agreement or a Seller Related Document shall be deemed to exist either if such representation or warranty is actually inaccurate or breached or if such representation or warranty would have been breached or would have been inaccurate if such representation or warranty had not contained any limitation or qualification as to materiality, Material Adverse Effect or Seller's Knowledge, it being the intention of the parties hereto that the Purchaser Indemnified Parties shall be indemnified and held harmless from and against any and all Damages suffered or incurred by any of them resulting from, arising out of, based upon or relating to the failure of any such representation or warranty, certificate, Schedule or other agreement, instrument or document to be true and correct in any respect, determined in each case without regard to any qualification as to materiality, Material Adverse Effect or Seller's Knowledge set forth with respect thereto; provided, however, that for the purposes of Section 5.4(a), the representations and warranties contained in Sections 3.7(a) and 3.13(ii) hereof shall not be without regard to any qualification as to materiality, Material Adverse Effect or Seller's Knowledge set forth with respect thereto and; provided further, however, that for the purposes of Section 5.4(a), the representation and warranty contained in Section 3.19(b) hereof shall not be without regard to any qualification as to Seller's Knowledge set forth with respect thereto. Notwithstanding anything to the contrary contained herein, neither Seller shall be liable in respect of any amounts or losses (of the type described in the definition of Damages) suffered or incurred by a Purchaser Indemnified Party resulting from, arising out of, based on or relating to breaches of representations or warranties made by any Seller to the extent that such amounts or losses are actually reflected in the calculation of the Purchase Price, as determined pursuant to Section 2.2 hereof (whether through a decrease in the amount of the Purchased Assets or an increase in the amount of Assumed Liabilities, in each case as reflected on the Special Procedures Report of Assets Acquired and Liabilities Assumed). (b) Limitation on Liability of Sellers. (i) Each Purchaser Indemnified Party entitled to indemnification for any Damages suffered or incurred by such Person resulting from, arising out of, based on or relating to a failure to perform any covenant, agreement or undertaking of any Seller shall be entitled to such indemnification for the full amount of such Damages regardless of the amount of the Damages. (ii) Each Purchaser Indemnified Party entitled to indemnification for any Damages suffered or incurred by such Person resulting from, arising out of, based on or relating to (A) a breach of any representation or warranty made by any Seller in this Agreement or (B) any breach of any representation or warranty in any Seller Related Document shall be entitled to indemnification from any Seller for the full amount of all such Damages which in the aggregate are in excess of an amount that equals to the greater of (1) 1.1 percent of the aggregate Purchase Price as of the Closing Date and (2) $1,000,000; provided, however, that no Seller will be liable for any such Damages to the extent, and only to the extent, of the excess of the aggregate amount thereof over an amount that equals to the lesser of (x) 12 percent of the aggregate Net Book Value of the Purchased Assets as of the Closing Date and (y) $20,000,000; provided, further that, without limiting the liability of Comdisco for such Damages, CHG will not be liable for any such Damages to the extent, and only to the extent, that the aggregate amount thereof exceeds the portion of the Purchase Price allocated to CHG pursuant to Section 2.3. (iii) (A) Subject at all times to the limitations of Section 5.4(b)(ii) and Section 5.4(c), any Seller may satisfy its obligations pursuant to Section 5.4(a) with respect to any claim by Purchaser or any Purchaser Affiliate for Damages by the payment to Purchaser or Purchaser Affiliate, as applicable, of the Repurchase Amount and the assumption of all rights and obligations of such Purchaser or Purchaser Affiliate under the applicable Purchased Financing Contract or with respect to other applicable Purchased Asset, as the case may be, as set forth in clause (B) below; provided, however, any obligation of any Seller pursuant to Section 5.4(a) with respect to any Purchased Financing Contract or other Purchased Asset with respect to which the Obligor or any other third party has asserted a written claim for Damages against any Purchaser Indemnified Party shall survive such repurchase and assumption. Notwithstanding anything contrary in this Agreement, (1) any obligation of Purchaser pursuant to Sections 5.4(h) and 5.4(k), with respect to the repurchased Purchased Financing Contract or other Purchased Asset, which obligation arises after the applicable Closing Date and prior to the repurchase, shall survive such repurchase and assumption and (2) Purchaser shall not have any further obligation under Sections 5.4(h) or 5.4(k) in respect of any repurchased Purchased Financing Contract or other Purchased Asset for Damages to the extent such Damages result from, arise out of, are based on or relate to, actions taken or failed to be taken after the date of such repurchase. Nothing set forth in this clause (A) shall be deemed a reaffirmation or revival of any claim for Damages of any Obligor or any other third party which has been barred or discharged against any Seller pursuant to the implementation of any provisions of the Bankruptcy Code and the applicable Seller and the Purchaser or Purchaser Affiliate shall be entitled to assert, to the fullest extent possible, such bar or discharge in connection with any claim asserted by such Obligor or third party. (B) Upon receipt of the Repurchase Amount by Purchaser or Purchaser Affiliate, as applicable, Purchaser or Purchaser Affiliate shall transfer and assign to the applicable Seller all of such Purchaser's or Purchaser Affiliate's rights and obligations with respect to such Purchased Financing Contract or such other Purchased Asset after the consummation of such transfer and assumption and such Seller shall assume all obligations of such Purchaser or Purchaser Affiliate arising after the consummation of such transfer and assumption except for obligations arising out of a breach by any Purchaser or Purchaser Affiliate prior to the consummation of such transfer and assumption. Purchaser shall and shall cause Purchaser Affiliate, as applicable, to remit all proceeds received by Purchaser or applicable Purchaser Affiliate to the applicable Seller with respect to such Purchased Financing Contract or such other Purchased Asset after such transfer. Sellers agree that Sellers shall indemnify and hold harmless Purchaser Indemnified Parties with respect to any Transfer Taxes arising out of or caused by such transfer. (c) Survival of Representations and Warranties of Sellers. (i) The Special Representations and indemnifications with respect to their breach shall survive until three months after the expiration of the applicable statute of limitations (including extensions) applicable to Purchaser and/or the Purchaser Indemnified Parties potentially incurring Damages arising from, or relating to, any circumstances giving rise to any breach thereof. (ii) The representations and warranties of each Seller in (A) this Agreement which are not Special Representations and (B) the Seller Related Documents shall survive the Closing until the expiration of 12 months after the Closing. (d) [Intentionally Omitted.] (e) Tax Indemnification. Each Seller shall indemnify and hold harmless, (provided, however, CHG shall indemnify and hold harmless solely to the extent applicable to CHG) all Purchaser Indemnified Parties from and against any and all Damages suffered or incurred by any of them resulting from, arising out of, based on or relating to: (A) any and all sales, use or other similar Taxes required to be collected in respect of any Purchased Financing Contract during the 12 months following the Closing Date if (i) such Tax is not being collected by Purchaser or the applicable Purchaser Affiliate in respect of the Purchased Financing Contract pursuant to (x) Purchaser's or the applicable Purchaser Affiliate's reliance on an applicable exemption from such Tax and (y) any Seller's reliance on such exemption for periods on or prior to the Closing Date, and (ii) such exemption from Tax is dependent upon receipt of a properly executed Exemption Certificate; provided, that in no event shall any Seller be required to indemnify Purchaser under this Section 5.4(e)(A) to the extent such Damage arises out of a change in law after the Closing Date affecting Purchaser's obligation to collect such Tax; (B) any liability for sales, use or other similar Taxes assessed in respect of any Purchased Financing Contract after the Closing where such Taxes were erroneously paid at the inception of such Purchased Financing Contract; (C) any claim by any Person in respect of sales, use or other similar Tax paid on or prior to the Closing Date (or the date of the Second Closing with respect to Purchased Financing Contracts transferred at the Second Closing); (D) any Taxes for which any Seller is liable pursuant to Section 2.5 or Section 5.3(c) hereof; and (E) any Taxes asserted against Purchaser or any of its Affiliates by operation of law, statute, common law or otherwise or under successor liability or similar theories that would impose liability on Purchaser as a result of its purchase of the Purchased Assets pursuant hereto. (f) [Intentionally Omitted.] (g) Additional Indemnification by Sellers. Each Seller shall indemnify and hold harmless, (provided, however, CHG shall indemnify and hold harmless solely to the extent applicable to CHG), all Purchaser Indemnified Parties from and against any and all Damages suffered or incurred by any of them resulting from, arising out of, based on or relating to: (i) any of the Excluded Assets or the ownership, operation, servicing, lease or use thereof, or any action taken with respect thereto, by any Seller or any other Person; (ii) the Excluded Liabilities (including, without limitation, any such liabilities arising by operation of law, statute, common law or otherwise or under successor liability or similar theories that would impose liability on Purchaser as a result of its purchase of the Purchased Assets pursuant hereto); or (iii) the failure to comply with any "bulk sales" or similar laws promulgated by any Governmental Entity. (h) Indemnification by Purchaser for Breach. Purchaser shall indemnify and hold harmless the Sellers and Sellers' Affiliates and their respective directors, officers, employees and agents (collectively, "Seller Indemnified Parties") from and against any and all Damages suffered or incurred by any of them resulting from, arising out of, based on or relating to (i) any breach of any representation or warranty made by Purchaser in this Agreement; or (ii) any failure to perform duly and punctually any covenant, agreement or undertaking on the part of Purchaser contained in this Agreement; or (iii) any breach of a representation or warranty included in any certificate, Schedule or other agreement, instrument or document, in each case delivered or to be delivered by Purchaser or any Purchaser Affiliate to the Sellers pursuant to the terms of this Agreement (collectively, the "Purchaser Related Documents"). For purposes of this Section 5.4(h), a breach of a representation or warranty contained in this Agreement or a Purchaser Related Document shall be deemed to exist either if such representation or warranty is actually inaccurate or breached or if such representation or warranty would have been breached or been inaccurate if such representation or warranty had not contained any limitation or qualification as to materiality, material adverse effect or knowledge, it being the intention of the parties hereto that the Seller Indemnified Parties shall be indemnified and held harmless from and against any and all Damages suffered or incurred by any of them resulting from, arising out of, based on or relating to the failure of any such representation, warranty, certificate, Schedule or other agreement, instrument or document to be true and correct in any respect, determined in each case without regard to any qualification as to materiality, material adverse effect or knowledge set forth with respect thereto. (i) [Intentionally Omitted.] (j) Survival of Representations and Warranties of Purchaser. The representations and warranties of Purchaser in this Agreement and the Purchaser Related Documents shall survive the Closing until the expiration of 24 months after the Closing. (k) Additional Indemnification by Purchaser. Purchaser shall indemnify and hold harmless all Seller Indemnified Parties from and against any and all Damages suffered or incurred by any of them resulting from, arising out of, based on or relating to: (i) the Purchased Assets or the ownership, operation, servicing, lease or use thereof, or any action taken with respect thereto after the Closing, by Purchaser or any Purchaser Affiliate or any other Person, other than with respect to any matter, circumstance Damage or event which is the subject of, or gives rise to, an indemnification, payment or similar obligation of any Seller pursuant to this Agreement; or (ii) the Assumed Liabilities. (l) Indemnification Procedure. For the purposes of administering the indemnification provisions of this Section 5.4, the following procedures shall apply from and after the Closing Date: (i) An indemnified party shall notify the Indemnitor of any Indemnification Event arising from an action or proceeding by a third party against such Indemnitor in writing within 15 days following the receipt by any officer or director of the indemnified party of notice of the commencement of such action or proceeding or within 30 days of the assertion of any claim against such indemnified party giving rise to indemnity pursuant to this Section 5.4 (any 15 or 30 day notification requirement shall begin to run, in the case of a claim which is amended so as to give rise to an amended Indemnification Event, from the first day such claim is amended to include any claim which is an Indemnification Event hereunder). Such notice shall describe in reasonable detail the basis of such Indemnification Event. Notwithstanding anything to the contrary, the failure to give notice in a timely fashion shall not result in a waiver of any right to indemnification hereunder except to the extent that the Indemnitor's ability to defend against the event with respect to which indemnification is sought is adversely affected by the failure of the indemnified party to give notice in a timely fashion. (ii) The Indemnitor shall be entitled (but not obligated) to assume the defense or settlement of any such action or proceeding, or to participate in any negotiations or proceedings to settle or otherwise eliminate any claim, if it shall provide the indemnified parties a written acknowledgement of its liability for the indemnity against Damages relating to such claim; provided, however, that, subject to clause (iv) hereof, Purchaser shall have the sole right, with counsel of its choice, to defend, settle or otherwise dispose of, in its sole discretion, any action, claim or proceeding that constitutes a Non-Assumable Claim, and the Sellers shall not be entitled to assume the defense thereof, except that the Sellers shall be entitled (but not obligated) to assume the defense, settlement or other disposition of any Non-Assumable Claim of the type described in clause (i) of the definition thereof that relates to Tax items of any Seller and does not involve Tax items of Purchaser or any Purchaser Affiliate. If the Indemnitor assumes any such defense or settlement or any such negotiations, it shall pursue such defense, settlement or negotiations in good faith. If the Indemnitor fails to elect in writing within 30 days of the notification referred to above to assume the defense, the indemnified party may engage counsel to defend, settle or otherwise dispose of such action or proceeding, which counsel shall be reasonably satisfactory to the Indemnitor; provided, however, that the indemnified party shall not settle or compromise any such action, proceeding or claim without the prior written consent or agreement of the Indemnitor (which consent shall not be unreasonably withheld or delayed). In the event the indemnified party elects to defend, settle or otherwise dispose of a Non-Assumable Claim, it shall pursue such defense, settlement or other disposition in good faith. Promptly upon the reasonable request of the Indemnitor the indemnified party shall provide the Indemnitor with information summarizing any material developments in any Non-Assumable Claim that is being defended by the indemnified party and shall make available a designated representative to consult with or otherwise discuss any such Non-Assumable Claim with the Indemnitor (at mutually convenient times). Nothing herein shall be deemed to require the indemnified party (A) to make any disclosure that, in its judgment, could prejudice its position or waive any privilege or (B) to take or refrain from taking any action; it being understood that, subject to clause (iv) hereof, the defense, settlement or other disposition of any Non-Assumable Claim shall be conducted in the indemnified party's sole discretion. An Indemnitor's liability for any costs and attorneys' fees and disbursements incurred by an indemnified party in respect of a Non-Assumable Claim shall be limited to the amount of such costs and attorneys' fees and disbursements incurred up to and including (i) entry of one or more judgments that, in the aggregate, resolve all issues, claims, counter-claims, actions or proceedings resulting from, arising out of, based on or relating to, such Non-Assumable Claim and (ii) if an indemnified party elects to appeal any portion of such judgment(s), the entry of one or more judgments, rulings, opinions or other orders (that, in the aggregate, resolve all issues, claims, counter-claims, actions or proceedings that are appealed) by the judicial forum that conducts the first level of appellate review of such issues, claims, counter-claims, actions or proceedings. (iii) In cases where the Indemnitor has assumed the defense or settlement with respect to an Indemnification Event, the Indemnitor shall be entitled to assume the defense or settlement thereof with counsel of its own choosing; provided, however, that: (A) the indemnified party (and its counsel) shall be entitled to continue to participate at its own cost (except as provided below) in any such action or proceeding or in any negotiations or proceedings to settle or otherwise eliminate any claim for which indemnification is being sought; (B) the Indemnitor shall not be entitled to settle or compromise any such action, proceeding or claim without the consent or agreement of the indemnified party (which consent will not be unreasonably withheld or delayed); provided, further, that if and only if such consent is withheld and the settlement or compromise involves only the payment of monetary damages (as to which the Indemnitor has established to the indemnified party, in the indemnified party's reasonable discretion, that such Indemnitor is capable of funding) and provides an unconditional release of the indemnified person, the Indemnitor's liability shall be limited to the amount for which the Indemnitor agreed with the claimant to settle and the Indemnitor shall remain responsible for its costs and attorneys' fees to the date such settlement was rejected by the indemnified party and the indemnified party shall be responsible for the attorneys' fees and disbursements in respect of such claim thereafter; and (C) after written notice by the Indemnitor to the indemnified party (as provided above) of its election to assume control of the defense of any claim, the Indemnitor shall not be liable to such indemnified party hereunder for any attorneys' fees and disbursements subsequently incurred by such indemnified party in connection therewith (except as provided below). (iv) In the event indemnification is requested, the relevant Indemnitor, its representatives and agents shall have access to the premises, books and records of the indemnified party or parties seeking such indemnification and their Affiliates to the extent reasonably necessary (A) for the Indemnitor to determine if the indemnification claim relates to an Indemnification Event and (B) to assist it in defending or settling any action, proceeding or claim; provided, however, that such access shall be conducted in such manner as not to interfere unreasonably with the operation of the business of the indemnified party or parties. Except as reasonably necessary (A) for the Indemnitor to determine if the indemnification claim relates to an Indemnification Event and (B) to assist it in defending or settling such action, proceeding or claim, the indemnified party shall not be required to disclose any information with respect to itself or any of its Affiliates (or former Affiliates), and the indemnified party shall not be required to participate in the defense of any claim to be indemnified hereunder (except as otherwise expressly set forth herein), unless otherwise required or reasonably necessary in the defense of any claim to be indemnified hereunder. (v) Notwithstanding anything to the contrary in this Section 5.4, the Indemnitor shall continue to pay the reasonable attorneys' fees and disbursements and other costs of separate legal counsel for the indemnified parties (as a group) (A) relating to their participation in the defense of any Indemnification Event (whether or not the Indemnitor shall have assumed the defense of such Indemnification Event) to the extent such participation relates to a claim or defense that the Indemnitor does not have, may not assert on behalf of the indemnified party or that the indemnified party shall have reasonably concluded (based on advice of outside counsel) relates to a claim or defense as to which the Indemnitor may have a conflict of interest, or (B) relating to discovery against or testimony of such indemnified party and for participation of such indemnified party's own counsel in such discovery and testimony. (vi) Any claim for indemnification hereunder that does not arise out of a third-party claim shall be asserted by the Purchaser Indemnified Party by delivering notice thereof to the Indemnitor. If the Indemnitor does not respond to such notice within 45 days after receipt of notice, it shall have no further right to contest the validity of such claim. (vii) With respect to any Non-Assumable Claim, upon the receipt by the indemnified party of an offer of compromise relating to such Non-Assumable Claim that includes an unconditional release of the indemnified party or upon entry of a final judgment with respect to such Non-Assumable Claim (and such offer to compromise or judgment requires only the payment of money), the Indemnitor shall have the right to terminate its liability for subsequent legal fees and disbursements in respect of such Non-Assumable Claim upon its irrevocable offer to the indemnified party to pay (and establishment of ability to pay as described in clause (iii) above) the amount contained in such offer to compromise or judgment; upon receipt, in the form of immediately available funds by the indemnified party of the amount contained in such offer to compromise or judgment and payment of all other Damages suffered or incurred by the indemnified party in respect of such Non-Assumable Claim, the Indemnitor shall have no further liability to the indemnified party in respect of such Non-Assumable Claim. (m) Any payments under Section 5.3 or 5.4 of this Agreement shall be treated by the parties hereto for federal, state and local income tax purposes (whether foreign or domestic) as a non-taxable reimbursement or purchase price adjustment, except to the extent that a contrary treatment is required by law. (n) [Intentionally Omitted.] (o) Purchaser may satisfy any claims for the payment of liabilities on behalf of any Seller for which Purchaser is entitled to indemnification pursuant to this Section 5.4 without being required to pursue a right of subrogation against such Seller in lieu of claiming indemnification therefor. (p) Notwithstanding anything to the contrary in this Agreement, the amount of Damages which an Indemnitor is required to pay to, for or on behalf of any indemnified party pursuant to this Section 5.4 shall be adjusted (including, without limitation, retroactively) (i) by any insurance proceeds actually recovered by such indemnified party in reduction of the related indemnifiable loss (the "Indemnifiable Loss"), (ii) to take account of any net actual reduction of Tax liability that is actually realized by such indemnified party as a result of any Indemnifiable Loss (a "Tax Benefit") and (iii) to take into account any actual increase in Tax liability that is imposed on the indemnified party as a result of the receipt of the Indemnity Payment (as defined below) pursuant to this Section 5.4 (a "Tax Liability"); provided that although an indemnified party shall be under no obligation to seek or pursue any such insurance recovery or Tax Benefit an Indemnitor shall be entitled to reduce payments otherwise required pursuant to this Section 5.4 (or, as the case may be, if such payments have been made, promptly receive reimbursement therefor) in respect of Indemnifiable Loss to the extent insurance proceeds actually are recovered, or a Tax Benefit is actually realized, by such indemnified party in reduction of such Indemnifiable Loss (but only to the extent that such insurance recovery or Tax Benefit was not already taken into account in determining the amount of such Indemnifiable Loss); and provided, further, that the determination as to whether an indemnified party has actually realized a Tax Benefit or a Tax Liability, and the amount thereof, shall be determined by such indemnified party in its sole discretion and the Indemnitor shall not have the right to review or comment thereon. Amounts required to be paid, as reduced or increased pursuant to this Section 5.4(p), are hereafter sometimes called an "Indemnity Payment." If an indemnified party shall have received or shall have had paid on its behalf an Indemnity Payment in respect of an Indemnifiable Loss and shall subsequently receive insurance proceeds in respect of such Indemnifiable Loss, or actually realize any Tax Benefit as a result of such Indemnifiable Loss as determined by such indemnified party as provided above, or actually realize any Tax Liability in respect of such Indemnity Payment, then the indemnified party shall pay to the Indemnitor the amount of such insurance proceeds or Tax Benefit or, if lesser, the amount of the Indemnity Payment or the Indemnitor shall pay to the indemnified party the amount of such Tax Liability, as the case may be. To the extent that Purchaser or any Purchaser Affiliate may obtain recovery from any insurance policy of an Obligor for any Damages incurred by Purchaser or any Purchaser Affiliate giving rise to an indemnity claim hereunder, Purchaser shall use its commercially reasonable efforts to, or to cause such Purchaser Affiliate to use its commercially reasonable efforts to, seek such recovery from such insurance policy. (q) Any dispute, controversy or claim arising out of or relating to this Section 5.4 (a "Dispute") shall be resolved in accordance with the procedure set forth herein. (i) All communications between the parties or their representatives in connection with the attempted resolution of any Dispute shall be deemed to have been delivered in furtherance of a Dispute settlement and shall be exempt from discovery and production, and shall not be admissible in evidence (whether as an admission or otherwise), in any arbitral or other proceeding for the resolution of the Dispute. (ii) After completion of any prior procedures required hereby, either party may submit the Dispute for resolution by arbitration pursuant to the Rules of the Center for Public Resources ("CPR") for Non-Administered Arbitration of Business Disputes as in effect at the time of the arbitration. The parties consent to a single, consolidated arbitration for all Disputes existing at the time such Dispute arises initially for which arbitration is permitted. (iii) The neutral organization for purposes of the CPR rules will be the CPR. The arbitral tribunal shall be composed of one arbitrator selected by agreement of the parties or, in the absence of such agreement within 60 days after either party first proposes an arbitrator, by the CPR. Any arbitration hereunder shall be conducted in Chicago, Illinois. Each party shall be permitted to present its case, witnesses and evidence, if any, in the presence of the other party. A written transcript of the proceedings shall be made and furnished to the parties. The arbitrator shall determine the Dispute in accordance with the law of Illinois, without giving effect to any conflict of law rules or other rules that might render such law inapplicable or unavailable, and shall apply this Agreement according to its terms. (iv) The parties agree to be bound by any award or order resulting from any arbitration conducted hereunder and further agree that: (A) any monetary award shall include preaward interest, to the extent appropriate, and shall be made and payable in U.S. dollars through a bank selected by the recipient of such award, free of any withholding tax or other deduction, together with interest thereon at the Indemnification Rate (as of the date of such award) from the date the award is granted to the date it is paid in full; (B) in the context of an attempt by either party to enforce an arbitral award or order, any defenses relating to the parties' capacity or the validity of this Agreement or any related agreement under any law are hereby waived; and (C) judgment on any award or order resulting from an arbitration conducted under this Section may be entered and enforced in any court, in any country, having jurisdiction thereof or having jurisdiction over any of the parties or any of their assets. (v) Except as expressly permitted by this Agreement, no party will commence or voluntarily participate in any court action or proceeding concerning a Dispute, except for enforcement as contemplated by Section 5.4(q)(iv)(C) above. For purposes of enforcement of any undisputed obligation, the parties hereto submit to the non-exclusive jurisdiction of the courts of the Northern District of Illinois. (vi) In addition to the authority otherwise conferred on the arbitral tribunal, the tribunal shall have the authority to make such orders for interim relief, including injunctive relief, as it may deem just and equitable. (r) The indemnification obligations of the Sellers pursuant to this Section 5.4 shall survive the confirmation of a plan in, or dismissal or conversion to a case under Chapter 7 of the Bankruptcy Code of, the Chapter 11 Cases. (s) Exclusive Remedy. The indemnification provided for in this Section 5.4 shall be the exclusive remedy for asserting claims for monetary Damages as a result of (i) the breach of any representation or warranty made by any Seller or Purchaser in this Agreement, the Seller Related Documents or the Purchaser Related Documents or (ii) the failure to perform any covenant, agreement or undertaking on the part of all such parties contained in this Agreement, the Seller Related Documents and the Purchaser Related Documents, in each case other than as a result of fraud or intentional misconduct. 5.5 Preparation of Closing Date Schedule of Assets Acquired and Liabilities Assumed; Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed; Special Procedures Report of Assets Acquired and Liabilities Assumed; and Purchase Price Certificate. (a) Preparation of Schedules of Assets Acquired and Liabilities Assumed. (i) As soon as practicable following each Closing, the Sellers shall prepare a draft of the Closing Date Schedule of Assets Acquired and Liabilities Assumed and a draft of the Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed with respect to the Purchased Assets acquired at such Closing. The draft Closing Date Schedule of Assets Acquired and Liabilities Assumed shall be prepared in accordance with the Accounting Principles and the draft Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed shall reflect the Special Adjustments. At a minimum, the Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed shall differentiate the assets among those described in Sections 2.2(a)(i), 2.2(a)(ii) and 2.2(b) for purposes of calculating the Purchase Price. The Sellers shall use their commercially reasonable efforts to cause the draft Closing Date Schedule of Assets Acquired and Liabilities Assumed and the draft Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed to be completed within 30 days following the applicable Closing Date and, upon completion, such draft schedules shall promptly be provided to Seller's Accountants. (ii) Within 30 days following the delivery of the draft Closing Date Schedule of Assets Acquired and Liabilities Assumed and the draft Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed to Seller's Accountants as set forth in clause (i) above, the Sellers will cause Seller's Accountants to inform Purchaser's Accountants of the scope and nature of the special procedures that will be performed by Seller's Accountants on the Closing Date Schedule of Assets Acquired and Liabilities Assumed and the Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed. (iii) Immediately following the delivery of the draft Closing Date Schedule of Assets Acquired and Liabilities Assumed and the draft Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed to Seller's Accountants, as set forth in clause (i) above, Sellers shall cause Seller's Accountants to perform the special procedures to review the draft Closing Date Schedule of Assets Acquired and Liabilities Assumed and the draft Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed, and such special procedures shall be sufficient to permit Seller's Accountants to state that the Closing Date Schedule of Assets Acquired and Liabilities Assumed fairly presents the Purchased Assets and Assumed Liabilities, as of the Closing Date in accordance with the Accounting Principles, and that the Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed accurately reflects the Special Adjustments. (iv) The Sellers shall use their commercially reasonable efforts to cause Seller's Accountants to deliver the Special Procedures Report of Assets Acquired and Liabilities Assumed, together with its report of the special procedures utilized to develop the Special Procedure Report of Assets Acquired and Liabilities Assumed, to each of the Sellers, Purchaser and Purchaser's Accountants within 60 days following the date of delivery of the draft Closing Date Schedule of Assets Acquired and Liabilities Assumed and the draft Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed to the Seller's Accountants as set forth in clause (i) above. Concurrent with the delivery to the Sellers, Purchaser and Purchaser's Accountants of the Special Procedures Report of Assets Acquired and Liabilities Assumed, the Sellers shall cause Seller's Accountants to deliver to the Sellers, Purchaser and Purchaser's Accountants a certificate (the "Purchase Price Certificate") showing in reasonable detail the calculations used to derive the Purchase Price. During the 30 days following their receipt of the Special Procedures Report of Assets Acquired and Liabilities Assumed and Purchase Price Certificate, the Sellers, Seller's Accountants, Purchaser and Purchaser's Accountants shall have the opportunity to review the Special Procedures Report of Assets Acquired and Liabilities Assumed and Purchase Price Certificate (together with Seller's Accountants' working papers) and, during such 30-day period, the Sellers, Seller's Accountants, Purchaser and Purchaser's Accountants shall have the right to propose those changes to the Special Procedures Report of Assets Acquired and Liabilities Assumed and Purchase Price Certificate, the Sellers, Seller's Accountants, Purchaser or Purchaser's Accountants determine to be appropriate in order to cause the Special Procedures Report of Assets Acquired and Liabilities Assumed to conform to clause (iii) above and the Purchase Price Certificate to reflect the calculation of the Purchase Price in accordance with to Section 2.2. Items, procedures and calculations associated with the Special Procedure Report of Assets Acquired and Liabilities Assumed and the Purchase Price Certificate as to which no change is proposed in the 30-day period will be deemed to have been accepted and become final. (v) Following the delivery of the Special Procedures Report of Assets Acquired and Liabilities Assumed referred to in clause (iv) above, Purchaser's Accountants shall be entitled to perform all procedures and take any other steps that Purchaser's Accountants, in the exercise of their professional judgment, deem appropriate to confirm that the Special Procedures Report of Assets Acquired and Liabilities Assumed has been prepared in accordance with clause (iii) above and the Purchase Price Certificate reflects the calculation of the Purchase Price in accordance with Section 2.2. (vi) In the event of any dispute between Purchaser and Purchaser's Accountants, on the one hand, and the Sellers and Seller's Accountants, on the other hand, regarding any of the adjustments proposed by Purchaser or Purchaser's Accountants, on the one hand, or the Sellers or Seller's Accountants, on the other hand, with respect to the Special Procedures Report of Assets Acquired and Liabilities Assumed or the Purchase Price Certificate, which Purchaser and Purchaser's Accountants, on the one hand, and the Sellers and Seller's Accountants, on the other hand, cannot resolve within 15 days after expiration of the 30-day period referred to in clause (iv) above, each of the Sellers or Purchaser shall have the right, upon delivery of written notice to the other party, to require that such dispute be resolved in accordance with the provisions set forth in Section 5.5(b). Promptly following the resolution of all disputes with respect to any proposed adjustments to the Special Procedures Report of Assets Acquired and Liabilities Assumed and Liabilities Assumed or the Purchase Price Certificate, the Sellers shall cause Seller's Accountants to prepare and deliver to the Sellers, Purchaser and Purchaser's Accountants the final Special Procedures Report of Assets Acquired and Liabilities Assumed and the final Purchase Price Certificate, each of which shall reflect all adjustments thereto which have been agreed upon by Purchaser and Purchaser's Accountants, on the one hand, and the Sellers and Seller's Accountants, on the other hand, and which have been resolved pursuant to Section 5.5(b). (vii) Each of the Sellers, Purchaser, Seller's Accountants and Purchaser's Accountants shall have full access to all relevant accounting, financial and other records reasonably requested by it in connection with the preparation, confirmation or review of the Special Procedures Report of Assets Acquired and Liabilities Assumed and the Purchase Price Certificate as well as Seller's Accountants' working papers with respect thereto, and each party shall make available to the other party and its accountants such personnel as they may reasonably request in connection with the preparation or confirmation of the Special Procedures Report of Assets Acquired and Liabilities Assumed and the Purchase Price Certificate or the review of Seller's Accountants' report of the special procedures utilized to develop the Special Procedure Report of Assets Acquired and Liabilities Assumed. (b) Conflict Resolution Mechanism. Any dispute involving any of the adjustments to the Special Procedures Report of Assets Acquired and Liabilities Assumed and the Purchase Price Certificate proposed by the Sellers, Seller's Accountants, Purchaser or Purchaser's Accountants including, without limitation, any interpretation or application of any provision of this Agreement affecting the preparation of the Special Procedures Report of Assets Acquired and Liabilities Assumed, and the Purchase Price Certificate, not resolved by the Sellers, Seller's Accountants, Purchaser and Purchaser's Accountants within 15 days after the expiration of the 30-day period referred to in clause (iv) above, upon the election of any Seller or Purchaser, shall be resolved by the Selected Accounting Firm. The Selected Accounting Firm shall resolve only issues upon which Purchaser, Purchaser's Accountants, the Sellers and Seller's Accountants have been unable to agree. The decision of such Selected Accounting Firm shall be rendered within 45 days after appointment of the Selected Accounting Firm. The decision of the Selected Accounting Firm shall be final and binding upon the parties. Notwithstanding the foregoing, if the aggregate of all amounts in dispute with respect to all disputes referred to in this Section 5.5(b) shall be less than $250,000, such disputes shall not be resolved by the Selected Accounting Firm but shall instead be resolved as follows: 50% of the aggregate of all amounts in dispute shall be deemed to have been resolved in Sellers' favor and 50% of the aggregate of all amounts in dispute shall be deemed to have been resolved in Purchaser's favor. (c) Payment of Fees. The Sellers shall pay all of the fees of Seller's Accountants and all expenses incurred by such firm, and Purchaser shall pay all of the fees of Purchaser's Accountants and all expenses incurred by such firm, and each of the Sellers and Purchaser shall pay one half of the fees of the Selected Accounting Firm and all expenses incurred by such firm, each in connection with the tasks outlined in this Section 5.5. (d) Cooperation. The Sellers and Purchaser shall use their respective commercially reasonable efforts to cause Purchaser's Accountants and Seller's Accountants to cooperate with each other in connection with all of their activities undertaken in connection with this Section 5.5. After delivery to Purchaser and the Purchaser's Accountants of the Special Procedures Report of Assets Acquired and Liabilities Assumed, the Sellers shall instruct Seller's Accountants to make available to Purchaser's Accountants their work papers from the special procedures performed on the Closing Date Schedule of Assets Acquired and Liabilities Assumed and Adjusted Closing Date Schedule of Assets Acquired and Liabilities Assumed. 5.6 Insurance; Risk of Loss. To the extent that any insurance policies owned or controlled by any Seller (collectively, the "Seller's Insurance Policies") (i) cover any Damages as to which the Purchaser Indemnified Parties are entitled to indemnification under Section 5.4 (subject to the limitations on indemnification contained in Section 5.4, including Section 5.4(s)) and (ii) permit claims to be made thereunder with respect to such Damages ("Seller Claims"), each Seller shall cooperate, and shall cause its Affiliates to cooperate, with Purchaser in submitting Seller Claims (or pursuing Seller Claims previously made) on behalf of Purchaser under the Seller's Insurance Policies (subject to the limitations on indemnification contained in Section 5.4, including Section 5.4(s)). Purchaser shall bear the out-of-pocket expenses of the Sellers and their respective Affiliates in the preparing, submitting or pursuing such Seller Claims. 5.7 Further Assurances. (a) All amounts which are received by any Seller in respect of the Purchased Assets (including, without limitation, account receivable and other payments) which are properly allocable to period after the Closing Date shall be received by each Seller as agent, in trust for and on behalf of Purchaser and Purchaser Affiliates, as applicable, and, following the Closing applicable to the Purchased Assets to which such amounts relate, the Sellers shall promptly pay or cause to be paid promptly all of such amounts over to Purchaser and shall provide to Purchaser information as to the nature, source and classification of such payments, including any invoice relating thereto. All amounts included in the Excluded Assets (or which are paid in respect of Excluded Assets) received by Purchaser or any Purchaser Affiliate following the Closing shall be received by Purchaser or such Purchaser Affiliate as agent, in trust for and on behalf of the applicable Seller, and Purchaser shall promptly pay or cause to be promptly paid all of such amounts over to such Seller and shall provide to such Seller information as to the nature, source and classification of such payments, including any invoice relating thereto. (b) In addition to the foregoing, after the Closing, each Seller will, whenever and as often as reasonably requested to do so by Purchaser, do, execute, acknowledge and deliver any and all such other and further acts, assignments, transfers and any instruments of further assurance, approvals and consents as are necessary or proper in order to complete, ensure and perfect the sale, transfer and conveyance to Purchaser contemplated hereby of the Purchased Assets and the consummation of the other transactions contemplated hereby. (c) Purchaser will, after the Closing, whenever and as often as reasonably requested to do so by any Seller, do, execute, acknowledge and deliver any and all such other and further acts, assignments, transfers and any instruments of further assurance, approvals and consents as are necessary or proper in order to complete, ensure and perfect the consummation of the transactions contemplated hereby. 5.8 Payment of Broker's or Finder's Fees. The Sellers shall pay any and all brokers' or finders' fees, and any other commissions or similar fees, payable to any Person acting on behalf of the Sellers or any of its Affiliates or under the authority of any of them, in connection with any of the transactions contemplated herein, and Purchaser shall pay any and all brokers' or finders' fees, and any other commissions or similar fees, payable to any Person acting on behalf of Purchaser or any of its Affiliates or under the authority of any of them, in connection with any of the transactions contemplated herein, in each case regardless of whether any claim for payment is asserted before or after the Closing or before or after any termination of this Agreement. 5.9 Supplements to Schedules; Post-Signing Information. Not earlier than ten nor later than five Business Days prior to the Closing, the Sellers and Purchaser will supplement or amend the schedules relating to such party's respective representations and warranties in this Agreement with respect to any matter, condition or occurrence hereafter arising which, if existing or occurring at the date of this Agreement, would have been required to be set forth or described in such schedules or would otherwise have been inconsistent with such party's representations herein. Each Seller shall deliver to Purchaser copies of any Environmental Reports prepared between the date of this Agreement and the Closing Date promptly following receipt thereof. No supplement or amendment to the schedules hereto by either party, and no information contained in any Environmental Report delivered pursuant hereto, shall be deemed to cure (or affect the rights of any party with respect to) any breach of any representation or warranty made in this Agreement or have any effect for the purpose of determining satisfaction of the conditions set forth in Sections 6.2 and 6.3. 5.10 [Intentionally Omitted.] 5.11 [Intentionally Omitted.] 5.12 Certain Bankruptcy Matters. (a) On or before three Business Days after the execution of this Agreement, the Sellers shall file a motion with the Bankruptcy Court seeking entry of an order in the form attached hereto as Exhibit A (with such changes thereto as Purchaser shall approve in its reasonable discretion, the "Approval Order"). Each Seller agrees to file an affidavit of service with the Bankruptcy Court within three days thereafter that indicates the name and address of each Person upon whom notice of the motions seeking entry of the Approval Order was served, the method of service and includes any and all proofs of such service. (b) [Intentionally Omitted.] (c) Purchaser and the Sellers agree to make promptly any filings, to take all actions and to use their reasonable best efforts to obtain entry of the Approval Order and any and all other approvals and orders necessary or appropriate for the consummation of the transactions contemplated hereby; provided, however neither Purchaser nor any Purchaser Affiliate shall be required to cease operating or divest itself of any of its businesses or assets. Each Seller shall provide each applicable taxing authority in each jurisdiction in which it is subject to Tax with copies of any motion for entry of the Approval Order or any other order relating to the transactions contemplated by this Agreement at least 10 days prior to the hearing on such motion. (d) If the Approval Order or any other orders of the Bankruptcy Court relating to this Agreement shall be appealed by any Person (or a petition for certiorari or motion for rehearing, reargument or stay shall be filed with respect thereto), each Seller agrees to take all steps as may be reasonable and appropriate to defend against such appeal, petition or motion, and Purchaser agrees to cooperate in such efforts. Each party hereto agrees to use its reasonable best efforts to obtain an expedited resolution of such appeal, provided that nothing herein shall preclude the parties hereto from consummating the transactions contemplated herein if the Approval Order shall have been entered and have not been stayed and Purchaser has waived in writing the requirement that the Approval Order be a Final Order in which event Purchaser shall be able to assert the benefits of Section 363(m) of the Bankruptcy Code as a consequence of which such appeal shall become moot. 5.13 Tax Payments. From and after the Closing Date, the Sellers shall use that portion of the Purchase Price placed in escrow pursuant to Section 2.6 to pay and discharge all personal property, ad valorem and other Tax payments for which any Seller is responsible pursuant to Section 2.5 and Section 5.3(c). 5.14 Confirmations. Between the date of this Agreement and the Closing, the Sellers shall engage an independent accounting firm, acceptable to Purchaser, that shall attempt to obtain from each of the Top 30 Obligors identified on Schedule 5.14(2) under the Financing Contracts of the type specified in the definition of Purchased Financing Contracts, without giving effect to clause (H)(y) of the proviso thereof, a confirmation in the form attached hereto as Schedule 5.14 (that has been completed with the appropriate data) (a "Lease Confirmation"), or a confirmation of such information by the Obligor verbally to the extent deemed satisfactory to Purchaser in its sole discretion, of the validity of the data set forth in such Lease Confirmation, and each Seller shall use its commercially reasonable efforts to cooperate with such accounting firm to obtain such Lease Confirmations; provided, however, the Sellers shall not be required to request or obtain a Lease Confirmation with respect to any Financing Contract that (i) has a remaining unexpired term of twelve (12) months or less from May 31, 2002, (ii) has reached the end of its original lease term and is being billed on a month-to-month basis or pursuant to an extension or renewal of the lease term which does not have a fixed renewal or extension term of more than twelve (12) months remaining from May 31, 2002. The Sellers' shall, or shall cause such accounting firm to, deliver to Purchaser, true and correct copies of the Lease Confirmations sent to and received from Top 30 Obligors. The Sellers and Purchaser hereby agree that the process of obtaining Lease Confirmations pursuant to this Section 5.14 with respect to the Top 30 Obligors shall be substantially similar to the process agreed to by the parties and in effect, as of the date of this Agreement, for the obtaining of Lease Confirmations pursuant to that certain Asset Purchase Agreement (Electronics), dated as of January 23, 2002 (as amended, restated or otherwise modified), between Purchaser and Comdisco and that certain Asset Purchase Agreement (Lab and Scientific), dated as of January 23, 2002 (as amended, restated or otherwise modified), between Purchaser and Comdisco. Purchaser acknowledges and agrees that the Sellers shall not be required to obtain Lease Confirmations with respect to any Financing Contracts between any Seller and any Obligor other than the Top 30 Obligors. 5.15 [Intentionally Omitted.] 5.16 [Intentionally Omitted.] 5.17 [Intentionally Omitted.] 5.18 [Intentionally Omitted.] 5.19 Schedule of Credit Enhancements. The Sellers shall have delivered an updated Schedule 3.18(d) (updated as of the date of delivery thereof) not more than 10 days and not less than 3 days prior to Closing. 5.20 [Intentionally Omitted.] 5.21 [Intentionally Omitted.] 5.22 Original Master Leases. From and after the Closing (or Second Closing, if applicable), Purchaser shall hold, and shall cause the applicable Purchaser Affiliate to hold, all original master lease agreements and applicable schedules and Credit Enhancements thereto delivered to Purchaser or the applicable Purchaser Affiliate at the Closing for the benefit of the applicable Sellers solely to the extent such original documents relate to a Financing Contract that is an Excluded Asset. Purchaser shall permit, and shall cause the applicable Purchaser Affiliate to permit, upon the written request of the Sellers, any Seller to use such original master lease agreements or applicable schedules and Credit Enhancements thereto for the purposes of enforcing such Seller's rights under any Financing Contract that is an Excluded Asset. Such Seller shall return to Purchaser or the applicable Purchaser Affiliate any original master lease or applicable schedules and Credit Enhancements thereto promptly following such time as such Seller no longer requires such master lease, schedule or Credit Enhancement for the purposes described herein. In the event Purchaser (or any Purchaser Affiliate) and any Seller require an original master lease agreement or schedule or Credit Enhancement thereto in order to commence, pursue or enforce concurrent actions against a particular Obligor or guarantor (or such Obligor's Affiliates or any provider of such Credit Enhancement) under a Financing Contract, Purchaser and shall cause its Purchaser Affiliates and the Sellers shall to cooperate with one another in connection with the use of such original documents pursuant to such concurrent actions. 5.23 Purchased Discounted Financing Agreements. At the Closing, the Sellers shall deliver to Purchaser all original documents evidencing the Purchased Discounted Financing Agreements. 5.24 Closing Date Portfolio Information. Within 30 days after each Closing Date, the Sellers shall deliver to Purchaser the Closing Date Portfolio Tape, and the Portfolio Information, as of the Closing Date, described in items (A) through (E) of the definition thereof. 5.25 Administrative Claims. All amounts to be paid to Purchaser pursuant to this Agreement shall constitute an allowed administrative expense claim with priority over any and all administrative expenses of the kind specified in Sections 503, 507 and 1114 of the Bankruptcy Code, and shall be, at Purchaser's option and as otherwise permitted by this Agreement, (i) immediately payable if and when any such obligation of any Seller arises under this Agreement or (ii) credited against any amounts owed by Purchaser to any Seller pursuant to this Agreement. ARTICLE VI CONDITIONS TO CLOSING; ABANDONMENT OF THE TRANSACTION 6.1 The Closing. (a) Unless this Agreement has been terminated and the transactions herein abandoned pursuant to Article 7, the Closing of the sale of the Purchased Assets hereunder shall (subject to Sections 6.2 and 6.3) be held at the offices of Skadden, Arps, Slate, Meagher & Flom (Illinois) or such other location as the parties may mutually agree upon, on the last Business Day in the month that the conditions to Closing have been satisfied or waived (other than those conditions that by their nature cannot be satisfied until the Closing, but subject to all such conditions having been satisfied or waived at the time of the Closing), or at such other times as the parties may mutually agree. If any of the conditions specified in Section 6.2 hereof have not been satisfied, Purchaser may nevertheless at its election waive such conditions and proceed with the transactions contemplated hereby, and, if any of the conditions specified in Section 6.3 hereof have not been satisfied, the Sellers may nevertheless at their election waive such conditions and proceed with the transactions contemplated hereby. Any such election to proceed shall be evidenced by a certificate executed on behalf of the electing party by its authorized representative. (b) Purchaser and the Sellers shall hold a second closing (the "Second Closing") on the last Business Day of the month immediately following the month in which the initial Closing occurs or at such other date as the parties may mutually agree. At the Second Closing, provided the conditions in Section 6.2 and 6.3 have been satisfied or waived, the Sellers shall transfer to Purchaser, or a Purchaser Affiliate, such Financing Contracts that did not meet the requirements of a Purchased Financing Contract on the Closing Date (and accordingly were not transferred on the Closing Date) but which do meet the requirements of a Purchased Financing Contract at such Second Closing. Notwithstanding anything to the contrary contained in this Section 6.1(b), in the event that the Second Closing shall not have occurred on or before June 30, 2002, either party hereto, by written notification to the other, may terminate the obligations hereunder to effect the Second Closing and the transactions contemplated thereby. In the event of the termination of such obligations pursuant to this Section 6.1(b), no party hereto shall have any liability or further obligation to any other party to this Agreement resulting from such termination except no party waives any claim or right against a breaching party to the extent that such termination results from the breach by a party hereto of any of its representations, warranties, covenants or agreements set forth in this Agreement. 6.2 Conditions to Purchaser's Obligations to Close. The obligations of Purchaser or the Purchaser Affiliates to purchase the Purchased Assets and to otherwise consummate the Closing shall be subject to the following conditions: (a) Except to the extent waived in writing by Purchaser hereunder, (i) the representations and warranties of each Seller contained herein (other than the representation and warranty contained in Section 3.7(a)) shall be true and correct in all respects at the Closing (without giving effect to any materiality, Seller's Knowledge or Material Adverse Effect qualifications or exceptions contained in such representations and warranties), in each case with the same effect as though made at and as of such time (other than representations and warranties that are made as of a specific date, which need be true and correct as of such date), except where the failure to be true and correct has not had, and is not likely to have, a Material Adverse Effect and (ii) there shall not have occurred any effect, result, occurrence, event, fact, set of facts or change that would constitute a Material Adverse Effect between the date of this Agreement and the Closing; each Seller shall have performed in all material respects all obligations and complied in all material respects with all covenants required by this Agreement to be performed or complied with by such Seller at or prior to the Closing (except to the extent waived hereunder in writing by Purchaser); and each Seller shall have delivered to Purchaser a certificate of such Seller in form and substance reasonably satisfactory to Purchaser, dated the Closing Date, and signed on behalf of such Seller by its authorized representative, in his (or her) respective representative capacity, and not individually, to all such effects and certifying the satisfaction of the conditions set forth in this Section 6.2 (except to the extent waived hereunder in writing by Purchaser). For the avoidance of doubt, the Sellers and Purchaser agree that for the purpose of determining whether representations and warranties are true and correct in all respects at Closing, any Purchased Assets transferred to Purchaser or any Purchaser Affiliate at a prior Closing shall not be deemed a Purchased Asset at a subsequent Closing. (b) (i) On the Closing Date, there shall be no injunction, writ, preliminary restraining order or other order in effect of any nature issued by a Governmental Entity of competent jurisdiction directing that the transactions provided for herein or any portion thereof not be consummated as provided herein. (ii) (A) No action or proceeding shall have been instituted and, at what would otherwise have been the Closing Date, remain pending before a Governmental Entity, (1) to restrain, prohibit or otherwise challenge the sale of the Purchased Assets to Purchaser or the performance of the material obligations of the parties hereto, or (2) seeking substantial damages from Purchaser or any of its Affiliates as a result of the sale of the Purchased Assets to the Purchaser or the performance of the material obligations of the parties hereto; provided, that, damages of $10 million or more with respect to Taxes or any indemnities with respect thereto shall be deemed substantial damages for purposes of this clause (2), and (B) and no Governmental Entity shall have notified either party to this Agreement that the consummation of the transactions contemplated hereby would constitute a violation of the laws of the United States or any State thereof or the laws of the jurisdiction to which such Governmental Entity is subject and that it intends to commence proceedings to restrain the consummation of such transactions, to force divestiture if the same are consummated or to materially modify the terms or results of such transactions unless such Governmental Entity shall have withdrawn such notice, or has otherwise indicated in writing that it will not take any action, prior to what would otherwise have been the Closing Date; provided, further, if any such action or proceeding shall have been instituted and, at what would otherwise have been the Closing Date, remain pending before a Governmental Entity, Purchaser may, at its option, elect to exclude such assets (and related liabilities) from the Purchased Assets and Assumed Liabilities notwithstanding the definitions thereof to the extent necessary to enable the conditions set forth in this subparagraph (b)(ii)(B) to be satisfied. (c) All Authorizations, consents and approvals referred to in Section 3.4 hereof (without giving effect to any qualifications for materiality with regard to Authorizations, consents or approvals from any Governmental Entity), shall have been obtained and all Authorizations required for the valid consummation by each Seller and Purchaser of the transactions contemplated by this Agreement (including, without limitation, the expiration of any applicable waiting period under the HSR Act and similar legislation in other jurisdictions shall have been obtained; provided, however, if any requisite Authorizations, consents and approvals of any Governmental Entity required for the acquisition by Purchaser or a Purchaser Affiliate of a portion of the Purchased Assets shall not have been obtained by the Closing, Purchaser may, at its option, elect to exclude such assets (and related liabilities) from the Purchased Assets and Assumed Liabilities notwithstanding the definitions thereof to the extent necessary to enable the conditions set forth in this subparagraph (c) to be satisfied. (d) On the Closing Date, the Seller shall have (i) delivered to Purchaser or any Purchaser Affiliate (1) the original master lease, original applicable schedules and original Credit Enhancements thereto (other than master leases, schedules and Credit Enhancements related to any Purchased Discounted Financing Agreement to the extent copies thereof certified as true, correct and complete by an officer of the applicable Seller, have been provided to Purchaser and in the case of master leases that are not the subject of any Purchased Discounted Financing Agreement, to the extent copies of master leases certified as true, correct and complete by the applicable Obligor have been provided to Purchaser, in all cases if such original master leases are not in Sellers' possession) and the documents, to the extent in the possession of any Seller described on Schedule 5.1(a) with respect to each Purchased Financing Contract that Seller has in its possession, and (2) any and all escrows, deposits, security, impounds, accounts or other or additional collateral relating to each Purchased Financing Contract (in each case that is a Purchased Asset); and (ii) executed, acknowledged and delivered to Purchaser or any Purchaser Affiliate the Transfer Agreements and such other transfer instruments or documents as may be necessary to transfer, or evidence the transfer, of each Purchased Financing Contract and each other Purchased Asset to Purchaser or any Purchaser Affiliate, all in such form as Purchaser or its counsel may reasonably request specifically identified to the Sellers by Purchaser at least 60 days prior to Closing; and (iii) executed and delivered to Purchaser or any Purchaser Affiliate UCC-1 financing statements naming Purchaser, and/or an applicable Purchaser Affiliate, as the "purchaser" and each Seller as the "seller" and describing the Purchased Assets in the United States, to be filed with the Secretary of State of the State of Illinois and the Secretary of State of the State of Delaware. Delivery to Purchaser of any document described on Schedule 5.1(a) other than the original master lease, applicable schedules and Credit Enhancements thereto described above shall not be a condition to Closing. (e) Since the date of the Approval Order, there shall not have occurred any effect, result, occurrence, event, fact, set of facts or change that constitutes a Material Adverse Effect. (f) Each Seller shall have executed the Transitional Services Agreement. (g) [Intentionally Omitted.] (h) [Intentionally Omitted.] (i) The Approval Order and any other orders of the Bankruptcy Court with respect to this Agreement shall have been entered, shall be in form and substance reasonably satisfactory to Purchaser, and shall have each become a Final Order. (j) Each Seller that is domiciled in the United States shall have delivered a certificate of non-foreign status in accordance with Section 1445 of the Code, and any similar state required documents requested by the Purchaser. (k) [Intentionally Omitted.] (l) At the Closing, the Sellers shall provide Purchaser with (i) a copy of the Approval Order that has been certified by the Clerk of the Bankruptcy Court and (ii) a copy of the Bankruptcy Court's docket for the eleven-day period subsequent to entry of the Approval Order that has been certified by the Clerk of the Bankruptcy Court or, if the Closing has not occurred on the thirteenth day following entry of the Approval Order on the Bankruptcy Court's docket, a copy of the Bankruptcy Court's docket certified by the Clerk of the Bankruptcy Court for the period commencing on and including the date of entry of the Approval Order through and including the date that is two days before the Closing. 6.3 Conditions to Sellers' Obligations to Close. The obligations of the Sellers to sell the Purchased Assets and to otherwise consummate the Closing shall be subject to the following conditions: (a) Except to the extent waived in writing by the Sellers hereunder, the representations and warranties of Purchaser contained herein shall be true and correct in all material respects at the Closing, in each case with the same effect as though made at and as of such time with the same effect as though made at and as of such time (without giving effect to any materiality or Material Adverse Effect qualifications or exceptions contained therein); Purchaser shall have performed in all material respects all obligations and complied in all material respects with all covenants required by this Agreement to be performed or complied with by it at or prior to the Closing (except to the extent waived hereunder in writing by the Sellers); and Purchaser shall have delivered to the Sellers a certificate of Purchaser in form and substance reasonably satisfactory to the Sellers, dated the Closing Date, and signed on its behalf by its authorized representative, in his (or her) representative capacity, and not individually, to all such effects and certifying the satisfaction of the conditions set forth in this Section 6.3 (except to the extent waived hereunder in writing by the Sellers). (b) (i) On the Closing Date, there shall be no injunction, writ, preliminary restraining order or other order in effect of any nature issued by a Governmental Entity of competent jurisdiction directing that the transactions provided for herein or any portion thereof not be consummated as provided herein. (ii) No action or proceeding shall have been instituted and, at what would otherwise have been the Closing Date, remain pending before a Governmental Entity to restrain, prohibit or otherwise challenge the sale of the Purchased Assets to Purchaser or the performance of the material obligations of the parties hereto. (iii) Except to the extent Purchaser elects to exercise its option set forth in Section 6.2(b)(ii), no Governmental Entity shall have notified either party to this Agreement that the consummation of the transactions contemplated hereby would constitute a violation of the laws of the United States or the laws of any state thereof or the laws of any foreign country, or the laws of the jurisdiction to which such Governmental Entity is subject and that it intends to commence proceedings to restrain the consummation of such transactions, to force divestiture if the same are consummated or to materially modify the terms or results of such transactions unless such Governmental Entity shall have withdrawn such notice, or has otherwise indicated in writing that it will not take any action, prior to what would otherwise have been the Closing Date. (c) Except to the extent Purchaser elects to exercise its option set forth in Section 6.2(c), all Authorizations, consents and approvals of any Governmental Entity required for the valid consummation by the Sellers and Purchaser of the transactions contemplated by this Agreement in respect of the Purchased Assets (including, without limitation, the expiration of any applicable waiting period under the HSR Act and similar legislation in other jurisdictions shall have been obtained, as determined after taking into account any exclusion by Purchaser, at its option, of assets or liabilities from the Purchased Assets and Assumed Liabilities pursuant to Section 6.2(c). (d) Purchaser shall have made the payments required by the provisions of Section 2.3 hereof. (e) [Intentionally Omitted.] (f) [Intentionally Omitted.] (g) Purchaser (or, as applicable, the Purchaser Affiliates) shall have executed the Transitional Services Agreement. (h) The Approval Order shall have been entered. (i) Purchaser and all Purchaser Affiliates shall have executed, acknowledged and delivered to the appropriate the Seller instruments of assumption and/or foreign instruments of assumption, as the case may be, as may be necessary to assume, or evidence the assumption of each Assumed Liability or other liability which Purchaser or Purchaser Affiliates have expressly agreed to assume or be responsible for pursuant to the terms of this Agreement, all in such form as the Sellers or their counsel may reasonably request. ARTICLE VII TERMINATION 7.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to any Closing: (a) by mutual consent of each of the Sellers and Purchaser; (b) by either of the Sellers or Purchaser: (i) if the Bankruptcy Court enters an order or orders approving a sale of Seller, all, substantially all or a material portion of the Purchased Assets to a Person (or group of Persons), other than Purchaser or an Affiliate of Purchaser, pursuant to a higher or otherwise better offer submitted by such Person (or group of Persons); (ii) if a Governmental Authority shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement and such order, decree, ruling or other action shall have become final and nonappealable; or (iii) if the initial Closing shall not have occurred on or before May 31, 2002; or (c) by Purchaser, if the Approval Order in the form attached hereto as Exhibit A (or if changes are made by the Bankruptcy Court to the Approval Order in the form attached hereto as Exhibit A, such changes shall be reasonably acceptable to Purchaser and Sellers) shall not have been entered by April 30, 2002. 7.2 Procedure and Effect of Termination. In the event of termination and abandonment of the transactions contemplated hereby pursuant to Section 7.1, written notice thereof shall forthwith be given to the other parties to this Agreement and this Agreement shall terminate (subject to the provisions of this Section 7.2) and the transactions contemplated hereby shall be abandoned, without further action by any of the parties hereto. If this Agreement is terminated as provided herein, no party hereto shall have any liability or further obligation to any other party to this Agreement resulting from such termination except (i) that the provisions of this Section 7.2, Section 5.8, and the provisions of Article 8 hereof shall remain in full force and effect and (ii) no party waives any claim or right against a breaching party to the extent that such termination results from the breach by a party hereto of any of its representations, warranties, covenants or agreements set forth in this Agreement. ARTICLE VIII GENERAL 8.1 Amendments. This Agreement may only be amended, modified, superseded or canceled and any of the terms, covenants, representations, warranties or conditions hereof may be waived only by an instrument in writing signed by each of the parties hereto or, in the case of a waiver, by or on behalf of the party waiving compliance. 8.2 Integrated Contract. Except for the Confidentiality Agreement dated October 5, 2001, as amended, between Purchaser and Comdisco, this Agreement and the Exhibits and Schedules hereto, and any written amendments to this Agreement satisfying the requirements of Section 8.1 hereof, together with the Transitional Services Agreement (i) constitute the entire agreement among the Sellers and Purchaser with respect to the subject matter hereof or thereof, and (ii) supersede and replace all correspondence, understandings and communications between the parties hereto with respect to the transactions contemplated by this Agreement. 8.3 Governing Law. This Agreement and the legal relations between the parties hereto arising thereunder shall be governed by and construed in accordance with the laws of the State of Illinois, without regard to the principles regarding the choice of law. The parties hereby agree that, without limitation of any party's right to appeal any order of the Bankruptcy Court, and except as provided in Section 5.4 hereof, (a) the Bankruptcy Court shall retain exclusive jurisdiction to enforce the terms of this Agreement and to decide any claims or disputes that may arise or result from, or be connected with, this Agreement, any breach or default hereunder, or the transactions contemplated herein, and (b) any and all claims, causes of action, suits and proceedings relating to the foregoing shall be filed and maintained only in the Bankruptcy Court, and the parties hereby consent and submit to the jurisdiction of the Bankruptcy Court. 8.4 Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if sent by registered mail or certified mail, postage prepaid, by overnight courier service, or by telecopy or other written form of electronic communication: If to the Sellers, to: Comdisco, Inc. 6111 North River Road Rosemont, Illinois 60018 Facsimile: (847) 518-5440 Attention: General Counsel with a copy to: Skadden, Arps, Slate, Meagher & Flom (Illinois) 333 West Wacker Drive, Suite 2100 Chicago, Illinois 60606 Facsimile: (312) 407-0411 Attention: John Wm. Butler, Jr., Esq. Charles W. Mulaney, Jr., Esq. and if to Purchaser, to: General Electric Capital Corporation - Commercial Equipment Financing 44 Old Ridgebury Road Danbury, Connecticut 06810 Facsimile: (203) 796-1313 Attention: General Counsel with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Facsimile: (212) 310-8000 Attention: Gary T. Holtzer, Esq. or to such other address as shall be furnished in writing by Purchaser or any Seller, as the case may be, to the other, and any such notice or communication shall be deemed to have been given as of the date so mailed, dispatched or transmitted (except that a notice of change of address shall not be deemed to have been given until received by the addressees). 8.5 No Assignment. This Agreement may not be assigned, except by operation of law; provided that (i) any obligations of Purchaser may be performed by a Purchaser Affiliate and any rights of Purchaser may be exercised by a Purchaser Affiliate, (ii) Purchaser may assign its rights, but not its obligations, hereunder to any Person in connection with (A) any securitization or assignment of the Financing Contracts or (B) any other transfer or sale of any of the Purchased Assets. Notwithstanding the foregoing, however, no assignment otherwise permitted hereunder shall, without the written consent of the Sellers, relieve Purchaser from any of its liabilities hereunder. References to Purchaser in this Agreement shall be deemed to include or refer to each Purchaser Affiliate, unless the context otherwise requires. 8.6 Headings. The descriptive headings of the several Articles and Sections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 8.7 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement, and shall become effective when such counterparts have been signed by each party hereto and delivered to the other party hereto. 8.8 Announcements. Purchaser and the Sellers agree to consult with each other prior to issuing any press release or otherwise making any public statement with respect to the transactions contemplated hereby, and shall not issue any such press release or make any such public statement in such regard prior to such consultation and without the prior consent of the other party (which consent shall not be unreasonably withheld or delayed), except as may be required by any law or pursuant to any listing agreement with any securities exchange or any stock exchange regulations. 8.9 Severability. If at any time subsequent to the date hereof, any provision of this Agreement shall be held by any court of competent jurisdiction to be illegal, void or unenforceable, such provision shall be of no force and effect, but the illegality or unenforceability of such provision shall have no effect upon and shall not impair the enforceability of any other provision of this Agreement. 8.10 Binding Effect. This Agreement and the covenants, terms and conditions set forth herein shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. 8.11 Waiver of Jury Trial. EACH OF THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY EXHIBIT HERETO, OR ANY COURSE OF CONDUCT, COURSE OF DEALING OR STATEMENTS (WHETHER VERBAL OR WRITTEN) RELATING TO THE FOREGOING. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT. 8.12 No Third Party Beneficiary. This Agreement is not intended and shall not be construed to confer upon any Person other than the parties hereto any rights or remedies hereunder except that the parties hereto agree and acknowledge that the agreements and covenants contained in Section 5.4 are, subject to Articles 7 and 8 hereof, intended for the benefit of the indemnified parties referred to therein (each such Person, a "Third Party Beneficiary"), and that, subject to Articles 7 and 8 hereof, each such indemnified party, although not a party to this Agreement, shall be and is hereby constituted a direct and irrevocable third-party beneficiary of the agreements and covenants contained in Section 5.4 and shall have the right to enforce such agreements and covenants against the applicable party thereto in all respects fully and to the same extent as if such Third Party Beneficiary were a party hereto. Notwithstanding the foregoing, this Agreement (including but not limited to Section 5.4 hereof) may be amended or waived by Purchaser and the Sellers at any time and from time to time in accordance with Section 8.1 hereof and any such amendment or waiver shall be fully effective with respect to the rights of the Third Party Beneficiaries under Section 5.4 hereof. 8.13 Conveyancing Documents. No provision contained in any conveyancing document delivered pursuant to this Agreement shall affect in any manner whatsoever any of the indemnification provisions contained herein. 8.14 Expenses. Except as otherwise specifically set forth in this Agreement, the Sellers and Purchaser will each be responsible for the payment of their own respective costs and expenses incurred in connection with the negotiations leading up to and the performance of their respective obligations pursuant to this Agreement. For the avoidance of doubt, Purchaser shall bear and be responsible for the payment of all filing fees pursuant to the HSR Act or any corresponding anti-trust, competition or similar legislation in any other jurisdictions. 8.15 Currency. All of the dollar amounts mentioned in this Agreement or in the Schedules or Exhibits annexed hereto shall be in U.S. funds. [THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.] IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed on its behalf by its officers or representatives thereunto duly authorized, as of the date first above written. COMDISCO, INC., a Delaware corporation By: /s/ Norman P. Blake, Jr. ------------------------------------ Name: Norman P. Blake, Jr. Title: Chairman and Chief Executive Officer COMDISCO HEALTHCARE GROUP, INC., a Delaware corporation By: /s/ Norman P. Blake, Jr. ---------------------------- Name: Norman P. Blake, Jr. Title: (HEALTHCARE) GENERAL ELECTRIC CAPITAL CORPORATION By: /s/ Joseph A. Nellis ----------------------- Name: Joseph A. Nellis Title: Attorney-in-Fact List of Schedules Schedule 1.1A Accounting Principles Schedule 1.1B Loan and Lease Balloon Rentals and Residuals Schedule 1.1D Excluded Intercompany Agreements, Contracts and Commitments Schedule 1.1G Individuals with Seller's Knowledge Schedule 1.1I Form of Delinquency Report Schedule 1.1M Financial Statements of Assigning Subsidiaries Schedule 1.1O Discounted Financing Agreements Schedule 2.1(a)(iii) Purchased Other Contracts Schedule 3.3 Conflicts Schedule 3.4 Required Consents Schedule 3.5 Violations of Law Schedule 3.6(a) Financial Statements Schedule 3.6(c) Portfolio Tape Information Schedule 3.7(a) Absence of Certain Changes Schedule 3.7(b) Capital Expenditures; Waivers; Modifications Schedule 3.9(a) Disclosures Regarding Tax Returns Schedule 3.9(c) Taxing Authority Claims Schedule 3.9(d) Audit Reports Schedule 3.9(e) Tax Withholdings Schedule 3.9(f) Tax Liens Schedule 3.9(g) Other Tax Disclosures Schedule 3.9(o) Consistent Tax Reporting Standards Schedule 3.12(a) Disclosures Regarding Purchased Other Contracts Schedule 3.12(b) Disclosures Regarding Material Contracts Schedule 3.13 Litigation Schedule 3.17(b) Conduct of Business Schedule 3.18(a) Purchased Financing Contracts and Credit Enhancements Schedule 3.18(b) Additional Disclosure Regarding Purchased Financing Contracts and Credit Enhancements Schedule 3.18(c) Purchased Financing Contracts subject to residual and other agreements Schedule 3.18(d) Certain Credit Enhancements Schedule 3.18(f) Required Consent Financing Contracts Schedule 3.19(b) Portfolio Property - Compliance with Laws Schedule 3.20 Environmental Matters Schedule 3.26 Disclosures Regarding Purchased Discounted Financing Agreements Schedule 5.1(a) Required Purchased Financing Documentation and Pre-Closing Procedures Schedule 5.14 Form of Lease Confirmation Schedule 5.14(2) Top 30 Obligors Exhibit A Approval Order [See Attached] Exhibit B Transitional Services Agreement [See Attached] EX-10 21 ch340971.txt EXHIBIT 10.17 Exhibit 10.17 Asset Sale Agreement between Comdisco Australia Pty Limited (ACN 002 997 453) and Comdisco New Zealand (AK/484103) and Nadlo Pty Limited (ACN 100 125 871) Codis Limited (AK/1202358) and Rellim Pty Limited (ACN 100 125 933) Baker & Mc.Kenzie Solicitors Level 26, AMP Centre Level 39, Rialto 50 Bridge Street 525 Collins Street SYDNEY NSW 2000 MELBOURNE VIC 3000 Tel: (02) 9225-0200 Tel: (03) 9617-4200 Fax: (02) 9225-1595 Fax: (03) 9614-2103 Contents Clause number Heading Page 1. Definitions & interpretation 1 1.1 Definitions 1 1.2 Interpretation 10 1.3 Payments 11 1.4 Amounts expressed in New Zealand dollars 11 2. Sale and purchase of Assets 12 2.1 Sale and purchase of Business Assets 12 2.2 Deleted 12 2.3 New Zealand goods and services tax 12 2.4 Australian goods and services tax 12 2.5 Reimbursement 13 3. Calculation and payment of the purchase price 13 3.1 Calculation of Business Purchase Price 13 3.2 Deleted 14 3.3 Deleted 14 3.4 Deleted 14 4. Condition 14 4.1 Condition 14 4.2 Termination for failure of condition 14 5. Pre-completion 15 5.1 Business to be conducted in ordinary course 15 5.2 Access by Purchaser and its representatives 16 5.3 Access by Vendor and its representatives 16 6. Completion 16 6.1 Time and place of completion 16 6.2 Property and risk to pass 17 6.3 Obligations of Purchasers on completion 17 6.4 Obligations of Vendors on Business Completion 17 6.5 Deleted 19 6.6 Late completion 19 6.7 Notice to complete 19 7. Completion Statement 20 7.1 Completion Statement 20 7.2 Auditor's certificate 20 7.3 Purchaser's obligation to disclose 20 7.4 Review by Purchaser of Completion Statement 20 7.5 Notification of disputes on Completion Statement 20 7.6 Dispute Resolution 21 7.7 Selection of Expert 21 7.8 Adjustment to Business Purchase Price 22 8. Employees 22 8.1 Offers of employment 22 8.2 Vendors' obligations to Transferred Employees 23 8.3 Purchaser's obligations to Transferred Employees 23 8.4 Vendor's Allowance for Accrued Entitlements 23 8.5 Employees not accepting Purchaser's Offer 23 9. Superannuation 23 9.1 Purchaser's plan 23 10. Accounts Receivable 24 10.1 General 24 10.2 Collection for limited period 24 10.3 Legal proceedings 24 10.4 Identification of payments 24 10.5 Reimbursement of sums received 24 11. Contracts and Miscellaneous Assets 25 11.1 Assignment and novation 25 11.2 Deleted 25 11.3 Purchaser's obligations after Business Completion 25 11.4 Deleted 25 11.5 Breaches prior to completion 25 11.6 Breaches after completion 26 12. Deleted 26 13. Deleted 26 14. Use of Intellectual Property 26 15. Confidentiality and announcements 28 15.1 Provisions to remain confidential 28 15.2 Permitted disclosures 28 15.3 Announcements 28 15.4 Return of information etc in the event of termination 28 15.5 Survival of obligation 28 16. Notices 29 16.1 Requirements 29 16.2 Receipt 30 17. General Provisions 30 17.1 Costs 30 17.2 Non-merger 30 17.3 Effect of termination 30 17.4 Indemnities 31 17.5 Waiver and exercise of rights 31 17.6 Amendment 31 17.7 Counterparts 31 17.8 Further assurances 31 17.9 Assignment 32 17.10 Deleted 32 17.11 Rights cumulative 32 17.12 Consents and Approvals 32 17.13 Jurisdiction 32 17.14 Service of process 32 17.15 Governing Law 32 Annexure 1 Deleted 35 Annexure 2 Deleted 36 Annexure 3 Part 1 37 First Vendor 37 Part 2 38 Second Vendor 38 Annexure 4 Business Purchase Price Allocation 39 Annexure 5 Real Properties and Property Leases 40 Annexure 6 Officers and employees 41 Annexure 7 Completion Agreements 42 Asset Sale Agreement This Agreement is made on 8 April 2002 Between Comdisco Australia Pty Limited (ACN 002 997 453) of 99 Walker Street, North Sydney NSW (the "First Vendor"); and Comdisco New Zealand (AK/48103) of 92-96 Albert Street, Auckland, New Zealand (the "Second Vendor"); and Nadlo Pty Limited (ACN 100 125 871) of Level 24, Gateway Building, 1 Macquarie Place, Sydney, NSW ("OpCo Aust"); and Codis Limited (AK/1202358) of Level 23-29 Albert Street, Auckland, New Zealand ("OpCo NZ"); and Rellim Pty Limited (ACN 100 125 933) of Level 24, Gateway Building, 1 Macquarie Place, Sydney, NSW ("InvestCo") Recitals A. The Vendors carry on the Business and own the Business Assets and Miscellaneous Assets. B. The Vendors wish to sell and the Purchasers wish to purchase the Business Assets and Miscellaneous Assets on the following terms and conditions. Operative provisions - ------------------------------------------------------------------------------- 1. Definitions & interpretation - ------------------------------------------------------------------------------- 1.1 Definitions In this Agreement, unless the context otherwise requires: "$" means Australian dollars; "Accounting Standards" means for the First Vendor: (a) the accounting standards applicable for the purposes of the Corporations Act 2001; (b) the requirements of the Corporations Act 2001 for the preparation and content of financial reports, director's reports and auditor's reports; and (c) generally accepted and consistently applied accounting principles and practices in Australia, except those inconsistent with the standards or requirements referred to in paragraphs (a) and (b); and for the Second Vendor the accounting standards required by the Financial Reporting Act 1993 and generally accepted accounting principles in New Zealand; "Accounts" means: (a) the First Vendor's: (i) unaudited profit and loss statement for the period of 12 months ending on 30 September 2001; and (ii) unaudited balance sheet and statement of cash flows as at 30 September 2001; and (b) the Second Vendor's: (i) unaudited profit and loss statement for the period of 12 months ending on 30 September 2001; and (ii) unaudited balance sheet and statement of cash flows as at 30 September 2001; "Accounts Receivable" means all trade debts and other rights to payment arising from the operation of the Business that are due before the Business Completion Date but not paid by the Business Completion Date; "Auditor's Certificate" means the certification by the Vendor's auditor that to the best or his or her knowledge, the Completion Statement is true and correct; "Aust Business Assets" means the Business Assets other than the NZ Business Assets. "Authorisation" means: (a) any authorisation, approval, licence, permit, consent, qualification, accreditation, filing, registration, certificate, resolution, direction, declaration, or exemption; and (b) for anything which a Government Agency may prohibit or restrict within a specified period after it is notified, the expiry of that period without intervention or action by that Government Agency; "Books and Records" means originals and copies in machine readable or printed form of all registers, books, reports, correspondence, files, records, accounts, documents and other material, in the possession or control of the Vendors, about or used in connection with the Business Assets, Miscellaneous Assets and/or the Transferred Employees; "Business" means the business carried on by the Vendors of computer brokerage, being the buying, selling and leasing of computer equipment (and associated hardware and equipment and software used by Lessees) in Australia and New Zealand, as at the date of this Agreement; "Business Accrual Amount" means the total of: (a) all deposits and prepayments (inclusive of GST) received by the Vendors up to and including the Business Completion Date, for the supply of products or services by the Business after the Business Completion Date and where the liability for the supply passes to the Purchaser under the Contracts; and (b) all expenses and outgoings of the Business (inclusive of GST) incurred but not paid by the Vendors for the period prior to the Business Completion Date, other than in respect of the Lease Assets, but excluding the Employee Entitlements Amount and the Lease Accrual Amount as at the Business Completion Date; "Business Assets" means: (a) the Inventory; (b) the Goodwill; (c) the Books and Records; (d) the Contracts; (e) the right, title and interest of the Vendors in the Property Leases; and (f) the Plant and Equipment, as at the Business Completion Date but does not include any Excluded Assets or Lease Assets or any Miscellaneous Assets referred to in paragraphs (a), (b) or (c) of the definition of Miscellaneous Assets; "Business Completion" means completion of the sale and purchase of the Business Assets and Miscellaneous Assets under clause 6 of this Agreement; "Business Completion Agreements" means those agreements set out in Annexure 7, Part A; "Business Completion Date" means the earlier of: (a) a date nominated by the Vendors by giving 5 Business Days' written notice to the Purchasers, which date must be between the fifth Business Day after which the Condition has been satisfied and 60 days after the date on which the Condition has been satisfied; and (b) the Business Day after 60 days after the date on which the Condition has been satisfied; or such other date as may be agreed by the parties where such agreement is made on or before 60 days after the date on which the Condition has been satisfied. "Business Day" means a day that is not a Saturday, Sunday or a public holiday or bank holiday in Sydney; "Business Purchase Price" means $721,200, subject to adjustments pursuant to clause 7.8; "Claim" means any claim, cost, damages, debt, expense, Tax, Liability, loss, allegation, suit, action, demand, cause of action or proceeding of any kind irrespective of: (a) how or when it arises; (b) whether it is actual or contingent; (c) whether or not it is in respect of legal or other costs, damages, expenses, fees or losses; (d) whether or not it is in respect of a breach of trust or of a fiduciary or other duty or obligation; and (e) whether or not it arises at law or in any other way; "Completion Statement" means a statement setting out each of the following amounts: (a) the Business Purchase Price; (b) the Prepayments Amount; (c) the Employee Entitlements Amount; (d) the Business Accrual Amount; (e) any adjustment necessary to the Business Purchase Price, under clause 7.8, and includes, where appropriate, an adjusted Completion Statement following a determination by the Expert under clause 7.6; "Computer Software" means all originals and copies of all computer software (together with all related source code, object code, manuals and documentation) owned by the Vendors and used in connection with the Business; "Condition" means the condition set out in clause 4.1; "Confidential Information" means all: (a) know-how, trade secrets, ideas, concepts, technical and operational information; (b) information concerning the affairs or property of the Business or any business, property or transaction in which the Business may be or may have been concerned or interested; (c) details of the customers of or suppliers to the Business; (d) information about the business methods of the Vendors in the conduct of the Business; and (e) information which by its nature or by the circumstances of its disclosure, is or could reasonably be expected to be regarded as confidential to: (i) the Vendors; or (ii) any third party with whose consent or approval an owner of the Business uses that information; "Contracts" means the contracts and agreements relating to the Business to which either of the Vendors is a party or by which either of the Vendors may be bound as at Business Completion, set out in Parts 1 and 2 of Annexure 3 and "Contract" means any one of them but excludes any Lease Account and any Miscellaneous Asset referred to in paragraphs (a), (b) or (c) of the definition of Miscellaneous Assets; "Debtor" means a debtor of the Business; "Disclosures" means the disclosures made by the Vendor under clause 13.4(a) contained in the separate letter initialled by the parties at the date of signing this Agreement; "Dispute Notice" means the written notice under clause 7.5(a) of any dispute about the Completion Statement; "Dollars" and "$" means the lawful currency of Australia; "Employees" means the employees of the Vendors engaged in the Business listed in Annexure 6; "Employee Entitlement Amount" means the total of: (a) all wages, salaries, bonuses, commissions and other entitlements and allowances of the Transferred Employees accrued but not payable, as at the Business Completion Date; (b) the aggregate monetary value of the annual leave entitlements of all Transferred Employees accrued but untaken or unpaid as at the Business Completion Date; and (c) the aggregate of the long service leave of the Transferred Employees actually accrued at the Business Completion Date; "Excluded Assets" means: (a) the Accounts Receivable; (b) cash deposits with banks or other financial institutions or on hand; (c) the Excluded Lease Accounts; (d) the Retained Books and Records; (e) any interest of the Vendors in the Intellectual Property Rights and the Software; and (f) any amount payable to the Vendors by a Related Body Corporate; "Excluded Lease Accounts" means the contracts set out in Annexure 8 and the assets in the possession of, owned by or in the control of and used by the Vendors in the Business which are the subject to those contracts; "Expert" means an independent firm of chartered accountants selected or nominated under clause 7.6; "Goodwill" means the goodwill of the Vendors in the Business including the exclusive right of the Purchaser to represent itself as carrying on the Business as the successor to the Vendors; "Government Agency" means: (a) a government, whether foreign, federal, state, territorial or local; (b) a department, office or minister of a government acting in that capacity; or (c) a commission, delegate, instrumentality, agency, board, or other governmental, semi-governmental, judicial, administrative, monetary or fiscal authority, whether statutory or not; "Income Tax Assessment Act" means the Income Tax Assessment Act, 1936 (Cth) and the Income Tax Assessment Act, 1997 (Cth) of Australia; "Insurance Contracts" means all contracts of insurance and indemnity in force for the Business and the Business Assets and Miscellaneous Assets to which either Vendor is a party obtained in the normal course of the Business; "Intellectual Property Rights" means all rights of the Vendors as at Business Completion in and to: (a) the Trade Mark Licence Agreements; and (b) all designs, patents, copyright, processes, methods, inventions, product formulations, plant variety rights, eligible layout rights and other intellectual property rights, owned or used by the Vendors in the Business as at Business Completion (whether within or outside Australia); "Interest Rate" means 5% per annum plus the rate charged by the Commonwealth Bank of Australia to its prime corporate customers on the relevant day; "Inventory" means the inventory listed or described in Annexure 3; "Lease Accounts" means the Lease Documents relating to the Business to which either of the Vendors is a party as set out in Annexure 2, or by which either of the Vendors may be bound as at the Business Completion Date, but excludes any contract or agreement included in the Excluded Assets or the Miscellaneous Assets referred to in paragraphs (a), (b) and (c) of the definition of Miscellaneous Assets; "Lease Accrual Amount" means the total of: (a) all deposits and prepayments (inclusive of GST) (including any pro-rated lease payments received under Lease Accounts that are referrable to periods after the Business Completion Date) received by the Vendors up to and including the Business Completion Date in respect of those Lease Accounts, for the supply of products or services by the business of the Vendors after the Business Completion Date and where the liability for the supply passes to the Purchaser under the Lease Accounts; and (b) all expenses and outgoings of the business of the Vendors (inclusive of GST) incurred but not paid by the Vendors for the period prior to the Business Completion Date, in respect of the relevant Lease Assets; "Lease Assets " means: (a) the Lease Accounts, Lease Documents and Lease Records; and (b) the Lease Property, as at the Business Completion Date, but does not include any Excluded Assets or Miscellaneous Assets referred to in paragraphs (a), (b) and (c) of the definition of Miscellaneous Assets; "Lease Documents" means the right, title and interest of each Vendor in and to each Lease Account as evidenced by each: (a) master lease agreement; (b) equipment schedule; (c) acceptance schedule; (d) vendor invoice; or (e) ancillary lease document; "Lease Property" means the assets (including without limitation, software comprised in a Lease Account) in the possession of, owned by, in the control of or to which the Vendors are entitled and used by the Vendors in the Business (other than the Real Properties and the Software) which are the subject of the Lease Accounts as at the Business Completion Date; "Lease Records" means instruments evidencing terms, title, files, receipts, insurance policies, insurance premium receipts, ledger sheets, payment records, correspondence, current and historical computerised data files and other papers and records of whatever kind or description in respect of a Lease Account; "Lessee" means all persons who are a lessee to a Vendor (as lessor or a successor assignee of the lessor) under a Lease Account; "Liabilities" means all liabilities, whether actual or contingent, present or future, quantified or unquantified or incurred jointly or severally with any other person; "Licence Agreement" means the licence agreement described in clause 14(b) in relation to the name "Comdisco"; "Licensed Software" means software used by the Vendors in the Business, but not owned by the Vendors; "Miscellaneous Assets" means all of the Vendor's right, title and interest in: (a) (Inertia leases / terminated leases) any asset leases to which either of the Vendors is a party as lessor (relating to the Business but excluding any Excluded Assets or Lease Accounts) where the term of the lease has expired or has terminated; (b) (Hire purchase agreements) hire purchase agreements to which either of the Vendors is a party in relation to the Business; (c) (Underlying assets) any assets which are the subject of leases referred to in (a) above, or hire purchase agreements referred to in (b) above; and (d) (Remainder) any other assets in the possession of, owned by, in the control of or to which the Vendors are entitled and used by the Vendors in the Business (other than the Real Properties, the Software, the Excluded Assets, the Business Assets and the Lease Assets); "NZ Business Assets" means such of the Business Assets as are owned, in the possession of, or controlled by the Second Vendor or to which the Second Vendor is entitled; "NZ GST" means goods and services tax or any like tax arising pursuant to the Goods and Services Tax Act 1985 in the New Zealand context and where the context is not expressly stated otherwise, GST shall be referred to in the New Zealand context; "Plant and Equipment" means the plant and equipment listed in Annexure 3; "Prepayments Amount" means the amount, equal to the total of: (a) prepaid expenses or outgoings of the Business (inclusive of GST) of a recurring or periodical nature, paid by the Vendors prior to the Business Completion Date, but relating to the period after the Business Completion Date; and (b) payments in advance and deposits (inclusive of GST) paid by the Vendors for: (i) goods ordered by the Business but not received prior to the Business Completion Date; or (ii) services contracted for but not provided to the Business prior to the Business Completion Date; the benefit of which will accrue to the Purchaser but which are not taken into account in the calculation of the Business Purchase Price; "Property Leases" means the real property leases and licences set out in Annexure 5; "Purchasers" means OpCo Aust, OpCo NZ and InvestCo, and "Purchaser" means any one of them; "Real Properties" means the properties the subject of the Property Leases; "Related Body Corporate" has the same meaning as in section 50 of the Corporations Act 2001 and in respect of New Zealand corporates means "Related Company" having the same meaning as in section 2 of the Companies Act 1993 of New Zealand; "Retained Books and Records" means all Books and Records which the Vendor is required to retain by law and any Books and Records relating to the items in paragraphs (a), (b), (c), (e) and (f) of the definition of Excluded Assets; "Security Interest" means an interest in an asset which provides security for, or protects against default by, a person for the payment or satisfaction of a debt, obligation or liability, including a mortgage, charge, bill of sale, pledge, deposit, lien, encumbrance, hypothecation, assignment by way of security, preferential right or trust arrangement, covenant, easement, profit a prendre, claim or arrangement for the retention of title or any other security arrangement having the same effect (other than an interest of a Vendor under a Lease Account); "Software" means the Computer Software and the Licensed Software other than software comprised in a Lease Account; "Tax" means a tax, levy, charge, impost, deduction, withholding or duty of any nature (including stamp and transaction duty and GST, value added or similar tax) at any time: (a) imposed or levied by any Government Agency; or (b) required to be remitted to, or collected, withheld or assessed by, any Government Agency; and any related interest, expense, fine, penalty or other charge on those amounts; "Trade Mark Licence Agreements" means those trade mark licence agreements, registered user agreements or appointments to which either of the Vendors is a party; "Transferred Employees" means Employees who accept the offer of employment from OpCo Australia, or OpCo New Zealand, and are to be engaged by OpCo Australia, or OpCo New Zealand (as appropriate) from the Business Completion Date; "Tyco Services Agreement" means Master Technology Services Agreement between the First Vendor and Tyco Australia Pty Limited dated 19 September 2000 and all schedules made under or associated with that agreement; "Vendors" means the First Vendor and the Second Vendor and "Vendor" means any one of them; and "Vendors' Plan" means Comdisco Australia Pty Limited Superannuation Plan. 1.2 Interpretation In this Agreement: (a) unless the context otherwise requires, a reference: (i) to the singular includes the plural and vice versa; (ii) to a gender includes all genders; (iii) to a document (including this Agreement) is a reference to that document (including any Schedules and Annexures) as amended, consolidated, supplemented, novated or replaced; (iv) to an agreement includes any deed, agreement or legally enforceable arrangement or understanding whether written or not; (v) to parties means the parties to this Agreement and to a party means a party to this Agreement; (vi) to a notice means all notices, approvals, demands, requests, nominations or other communications given by one party to another under or in connection with this Agreement; (vii) to a person (including a party) includes: (A) an individual, company, other body corporate, association, partnership, firm, joint venture, trust or Government Agency; and (B) the person's successors, permitted assigns, substitutes, executors and administrators; (viii) to a law: (A) includes a reference to any constitutional provision, subordinate legislation, treaty, decree, convention, statute, regulation, rule, ordinance, proclamation, by-law, judgment, rule of common law or equity or rule of any applicable stock exchange; (B) is a reference to that law as amended, consolidated, supplemented or replaced; and (C) is a reference to any regulation, rule, ordinance, proclamation, by-law or judgment made under that law; (ix) to proceedings includes litigation, arbitration and investigation; (x) to a judgement includes an order, injunction, decree, determination or award of any court or tribunal; (xi) to time is a reference to Sydney time; (b) headings are for convenience only and are ignored in interpreting this Agreement; (c) if a period of time is specified and dates from, after or before, a given day or the day of an act or event, it is to be calculated exclusive of that day; (d) if a payment or other act must (but for this clause) be made or done on a day which is not a Business Day, then it must be made or done on the next Business Day; (e) the word "including" or "includes" means "including but not limited to" or "including without limitation"; (f) where a word or phrase is defined, its other grammatical forms have a corresponding meaning; (g) where a Warranty or indemnity is given in favour of more than one person, it is given to each of them severally and where a Warranty or indemnity is given by more than one person, it is given by each of them severally; and (h) this Agreement must not be construed adversely to a party solely because that party or its solicitors were responsible for preparing it. 1.3 Payments Unless the context otherwise requires, where an amount is required to be paid to a party (the "Receiving Party") by another party (the "Paying Party") under this Agreement, that amount must be paid by bank cheque to the Receiving Party, or otherwise as set out in the written direction of the Receiving Party if that written direction is received by the Paying Party at least 2 Business Days before the date upon which payment of the amount is due. 1.4 Amounts expressed in New Zealand dollars Where an amount is required to be paid to a party (the "Receiving Party") by another party (the "Paying Party") in New Zealand dollars, the Paying Party may pay that amount to the Receiving Party in Australian Dollars calculated at the exchange rate determined as the Australian/New Zealand dollar exchange rate implied by the Australian/United States dollar exchange rate released by the Reserve Bank of Australia at approximately 9.55 am (Sydney time) daily and the New Zealand/United States dollar exchange rate released by the Reserve Bank of Australia at approximately 11.10 am (Sydney time) daily calculated 3 Business Days before the date of the relevant payment. - -------------------------------------------------------------------------------- 2. Sale and purchase of Assets - -------------------------------------------------------------------------------- 2.1 Sale and purchase of Business Assets The Vendors each agree to: (a) sell and deliver to OpCo Aust and OpCo Aust agrees to purchase and accept the Aust Business Assets; (b) sell and deliver to OpCo NZ and OpCo NZ agrees to purchase and accept the NZ Business Assets; and (c) sell and deliver to InvestCo and the InvestCo agrees to purchase and accept the Miscellaneous Assets. free from Security Interests, for the Business Purchase Price on the terms and conditions contained in this Agreement. 2.2 Deleted 2.3 New Zealand goods and services tax (a) In addition to any payments specified or determined under the provisions of this Agreement (including but not limited to payments under this clause 2.3) the Purchaser must pay to the Vendor at the same time and in the same manner as the Consideration to which it relates an amount equal to any New Zealand Goods and Services Tax ("NZ GST") which the Vendor is liable to pay in respect of payments made by the Purchaser under this Agreement (the "NZ GST Amount") provided that the Vendor has delivered to the Purchaser a tax invoice in relation to the purchase that complies with the New Zealand Goods and Services Tax Act 1985. (b) As between the Vendors and the Purchasers, the Vendors are not obliged to pay any GST or Default GST, or to take any other steps to minimise liability in respect of GST or Default GST, until the corresponding payment is received from the Purchasers. 2.4 Australian goods and services tax (a) If Australian GST is imposed or levied in respect of any supply by a party under or in accordance with this Agreement then the party making the supply may, subject to paragraph (c), recover the GST Amount from the party receiving the supply in addition to the Consideration for the supply referred to elsewhere in this Agreement, provided that the Supplier has delivered to the Recipient a tax invoice relating to the supply and complying with the requirements of the GST Law which GST Amount shall be paid at the same time and in the same manner as the Consideration to which it relates. (b) Any amount referred to in this Agreement in relation to a payment to be made under the Agreement shall be exclusive of Australian GST unless indicated otherwise. (c) In this Agreement: "Australian GST" has the same meaning as is accorded to the expression "GST" by the GST Law. "Consideration" means any amount or other consideration to be paid or provided in respect of a supply pursuant to this Agreement. "GST Amount" means the Consideration multiplied by the Rate. "GST Law" has the meaning given by the A New Tax System (Goods and Services Tax) Act 1999 (Cth). "Rate" means the rate at which the GST Law from time to time imposes GST on a supply made under or in accordance with this Agreement. "Recipient" means the party in receipt of a supply made under or in accordance with this Agreement. "Supplier" means the party making a supply made under or in accordance with this Agreement. 2.5 Reimbursement If either party becomes entitled to be reimbursed or indemnified by another party for a cost or expense incurred in connection with this Agreement, the amount of the cost or expense to be reimbursed or indemnified shall be reduced by the amount of any input tax credit to which that party is entitled in relation to the relevant cost or expense. - -------------------------------------------------------------------------------- 3. Calculation and payment of the purchase price - -------------------------------------------------------------------------------- 3.1 Calculation of Business Purchase Price (a) The Business Purchase Price is $721,200, subject to adjustments after the Business Completion Date pursuant to clause 7.8. (b) The Business Purchase Price will be paid on the Business Completion Date to the Vendors in the following proportions: (i) 60% to be paid by OpCo Aust to the First Vendor; (ii) 20% to be paid by OpCo NZ to the Second Vendor; and (iii) InvestCo to pay 10% to the First Vendor, and 10% to the Second Vendor. and will be adjusted in respect of a particular Vendor, in accordance with, and at the time determined under, clause 7.8. (c) The Business Purchase Price is allocated between the Business Assets of the First Vendor and the Second Vendor as shown in Annexure 4. (d) Any adjustments to the Business Purchase Price pursuant to clause 7.8 attributed to particular Business Assets (or groups of such assets) will automatically adjust the corresponding allocation of the Business Purchase Price to those Business Assets in the same proportions. Any adjustments to the Business Purchase Price pursuant to clause 7.8 not attributed to particular Business Assets will be apportioned to adjust the allocation of the Business Purchase Price across all the Business Assets, pro rata. (e) For the purpose of the accrual rules in the Income Tax Act 1994 of New Zealand the Business Purchase Price does not include any capitalised interest and the parties agree that the "lowest price" for the purposes of the definition of "consideration" when measured pursuant to Section EH48(3) of the Income Tax Act 1994 of New Zealand is equal to the Business Purchase Price of the Business Assets and the Business Purchase Price is the value of the Business Assets. (f) Should the Commissioner of Inland Revenue in New Zealand assess in accordance with Section EG19 of the Income Tax Act 1994 of New Zealand that any Asset has a market value greater than that attributed to such Asset as detailed in clause 3.1(c) and (d) the value of such Asset shall be such market value and the value of Goodwill as described in clause 3.1(c) and (d) shall be reduced accordingly. 3.2 Deleted 3.3 Deleted 3.4 Deleted - -------------------------------------------------------------------------------- 4. Condition - -------------------------------------------------------------------------------- 4.1 Condition Completion of the sale and purchase of the Business Assets and Miscellaneous Assets under clause 6 is conditional upon approval of this Agreement by the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division. 4.2 Termination for failure of condition (a) Each Vendor must use its reasonable endeavours to obtain the fulfilment of the Condition. The parties must keep each other informed of any circumstances which may result in the Condition not being satisfied. (b) If any of the Condition is not satisfied or waived upon or prior to 31 July 2002 or such later date as may be agreed between the parties then a party who has complied with its obligations under this Agreement may terminate this Agreement by notice to the other parties. - -------------------------------------------------------------------------------- 5. Pre-completion - -------------------------------------------------------------------------------- 5.1 Business to be conducted in ordinary course (a) Until Business Completion the Vendors will: (i) conduct the Business in the ordinary course, at arms' length, on usual commercial terms, and in the same manner as it was conducted prior to the date of this Agreement; (ii) regularly consult with the Purchasers on the manner of conduct of the Business; (iii) use its reasonable endeavours to preserve the relationship of the Business with customers, suppliers, lessees under the Lease Accounts, Employees, licensors, lessors under the Property Leases and other third parties; and (iv) carry out repairs and maintain the real property the subject of the Property Leases in accordance with usual commercial practice and standards of maintenance for the industry, and as required under the Property Leases. (b) Until Business Completion the Vendors must not (without the consent of the relevant Purchaser): (i) (Material Adverse Effect) enter into any abnormal or unusual transaction which has or would have a material adverse effect on the Business; (ii) (Executive) employ new executives or retrench existing executive Employees; (iii) (Leases) lease or hire (as lessee or hirer) an item having a value exceeding $10,000; (iv) (Salaries and bonuses) increase salaries or benefits to any Employee by more than 5% of their salary and remuneration, except in relation to any statutory or award increase, or grant or agree to grant to any Employee any bonus, severance, profit sharing, retirement, deferred compensation, insurance or other compensation or benefit or adopt or establish any new compensation or benefit plans or arrangements; (v) (Accounting principles) modify or alter the accounting principles used in relation to the Accounts, or the application of those accounting principles or adopt new accounting principles; (vi) (Revaluations) make any revaluation of any of the Business Assets or Miscellaneous Assets; (vii) (Contracts) enter into or amend any contract (including the Contracts and Lease Accounts) involving total expenditure in excess of $100,000 other than entering into an asset lease as lessor in respect of work in progress notified to any of the Purchasers prior to the date of this Agreement; (viii) (Assets) acquire any Asset for more than $100,000, or dispose of or enter into an agreement or arrangement to dispose of any of the Assets other than to the Purchasers; 5.2 Access by Purchaser and its representatives Until Business Completion the Vendors must: (a) ensure that each Purchaser and/or its authorised representatives has free and unrestricted access during normal business hours to the premises of the Business and of the Vendors and to the Assets, including the Books and Records; (b) answer any reasonable written enquiries or requisitions issued by any Purchaser; and (c) provide all information, assistance and facilities that any Purchaser reasonably requires. 5.3 Access by Vendor and its representatives After Business Completion, the Purchasers must: (a) ensure that each Vendor and/or its authorised representatives has free and unrestricted access during normal business hours to the premises of the Business and of the Purchasers to the Assets, including the Books and Records; (b) answer any reasonable written enquiries or requisitions issued by any Vendor; and (c) provide all information, assistance and facilities that any Vendor reasonably requires, in each case only relation to Lease Accounts which have not been the subject of a Lease Completion and the Books and Records which are required to manage the affairs of the Vendors after the sale reflected in this Agreement is completed. 6. Completion - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 6.1 Time and place of completion (a) Business Completion must take place at the offices of Baker & McKenzie, Level 26, AMP Centre, 50 Bridge Street, Sydney NSW 2000 at 2pm on the Business Completion Date, or at such other time and place as the parties may agree. 6.2 Property and risk to pass (a) Title to and risk in the Business Assets and Miscellaneous Assets will pass to the relevant Purchasers (as provided in this Agreement) on Business Completion. Until Business Completion, the Vendors remain the owners of and bear all risks in connection with the Business and the Business Assets and the Miscellaneous Assets. 6.3 Obligations of Purchasers on completion (a) At Business Completion, (i) OpCo Aust must pay to the First Vendor the percentage of the Business Purchase Price specified out in clause 3.1(b)(i); (ii) OpCo NZ must pay to the Second Vendor the percentage of the Business Purchase Price specified in clause 3.1(b)(ii); (iii) InvestCo must pay the Vendors, respectively, the percentages of the Business Purchase Price specified in clause 3.1(b)(iii); (iv) OpCo Aust, OpCo NZ and InvestCo, respectively must deliver to the Vendor as required counterparts of the Business Completion Agreements executed by the relevant Purchaser in each case; and (v) OpCo Aust, OpCo NZ and InvestCo, respectively must deliver to the Vendors a certified copy of an extract of the minutes of the meeting of the board of directors of each of the Purchasers, approving the terms of this Agreement and the relevant Business Completion Agreements and authorising each Purchasers representatives or attorneys to execute it for and on behalf of that Purchaser. 6.4 Obligations of Vendors on Business Completion (a) At Business Completion the First Vendor must deliver to OpCo Aust, OpCo NZ and InvestCo, as applicable: (i) a counterpart of each of the Business Completion Agreements to which the First Vendor and the relevant Purchaser is a party, executed by the First Vendor and the other parties to the agreement (other than the Purchasers); (ii) all documents of title, certificates of registration and other documents evidencing ownership of the Business Assets and the Miscellaneous Assets in the possession or control of the First Vendor; (iii) possession of any of the Inventory, Plant and Equipment, Books and Records and the Miscellaneous Assets held by it; (iv) possession of the Real Property (except insofar as it is occupied by the Second Vendor); (v) subject to clause 11.1, any consents of third parties necessary or appropriate to permit the sale by the First Vendor of all of the Business Assets and Miscellaneous Assets; and (vi) an extract of the minutes of the meeting of the boards of directors of the First Vendor approving the sale of the Business Assets and the Miscellaneous Assets on the terms of this Agreement, the execution and performance of this Agreement and of the Business Completion Agreements, and any other instruments or agreements contemplated by this Agreement to which the First Vendor is a party, and must do all other things which are required by this Agreement to be done by the First Vendor at Business Completion, or which are reasonably required by: (vii) OpCo Aust, to give to OpCo Aust the full possession and benefit of the Aust Business Assets; (viii) OpCo NZ, to give to OpCo NZ the full possession and benefit of the NZ Business Assets; and (ix) InvestCo, to give to InvestCo the full possession and benefit of the Miscellaneous Assets. (b) At Business Completion the Second Vendor must deliver to OpCo Aust, OpCo NZ and InvestCo, as applicable: (i) a counterpart of each of the Business Completion Agreements to which the Second Vendor and the relevant Purchaser is a party, executed by the Second Vendor and the other parties to the agreement (other than the Purchasers); (ii) all documents of title, certificates of registration and other documents evidencing ownership of the Business Assets and the Miscellaneous Assets in the possession or control of the First Vendor; (iii) possession of any of the Inventory, Plant and Equipment, Books and Records and the Miscellaneous Assets held by it; (iv) possession of the Real Property (except insofar as it is occupied by the First Vendor); (v) subject to clause 11.1 any consents of third parties necessary or appropriate to permit the sale by the Second Vendor of all of the Business Assets and Miscellaneous Assets; and (vi) an extract of the minutes of the meeting of the boards of directors of the Second Vendor approving the sale of the Business Assets and the Miscellaneous Assets on the terms of this Agreement, the execution and performance of this Agreement and of the Business Completion Agreements, and any other instruments or agreements contemplated by this Agreement to which the Second Vendor is a party; and must do all other things which are required by this Agreement to be done by the Second Vendor at Business Completion, or which are reasonably required by: (vii) OpCo Aust, to give to OpCo Aust the full possession and benefit of the Aust Business Assets; (viii) OpCo NZ, to give to OpCo NZ the full possession and benefit of the NZ Business Assets; and (ix) InvestCo, to give to InvestCo the full possession and benefit of the Miscellaneous Assets. 6.5 Deleted 6.6 Late completion Provided that the Vendors are ready and willing to complete on the Business Completion Date, if the entire Business Purchase Price (as adjusted pursuant to clause 7.8) is not paid by the Purchasers to the Vendors as provided by clause 6.3, the entire Business Purchase Price (plus all other moneys owing by that Purchaser under this Agreement except for interest under this clause) will bear interest calculated daily at the Interest Rate on that day computed from the Business Completion Date until the date on which completion for all the Business Assets occurs. 6.7 Notice to complete (a) If a party fails to comply with its obligations under this clause in any material respect, any other party which has complied with its obligations (to the extent possible having regard to the failure of that other party) is entitled to issue a notice to complete making the time for Business Completion of the essence. (b) A period of 14 days following the date of the service of that notice is deemed to be a reasonable time for requiring Business Completion. (c) If Business Completion has not occurred within the period specified, the party serving the notice may at its option: (i) proceed to Business Completion so far as is practical without affecting its rights under this Agreement; or (ii) terminate this Agreement, with respect to any further performance of this Agreement but without prejudice to any rights and entitlements of any party obtained through performance of this Agreement prior to that date, by notice in writing to the other parties. (d) Where the terms of a Business Completion Agreement have not been settled by the relevant Business Completion Date, the Vendors will not be taken to be ready and willing to complete on that date in respect of that agreement. - -------------------------------------------------------------------------------- 7. Completion Statement - -------------------------------------------------------------------------------- 7.1 Completion Statement (a) At Business Completion or as soon as possible thereafter the Vendors must prepare the Completion Statement and provide a copy to OpCo Aust, OpCo NZ and InvestCo. (b) The Completion Statement must be prepared by the Vendors in good faith in accordance with the Accounting Standards. 7.2 Auditor's certificate The Completion Statement must be accompanied by the Auditor's Certificate. 7.3 Purchaser's obligation to disclose On and from Business Completion OpCo Aust, OpCo NZ and InvestCo must make available to the Vendors and the Vendors' auditor all books, records and accounts required to enable the Vendors to prepare the Completion Statement. 7.4 Review by Purchaser of Completion Statement (a) The Vendors must ensure that OpCo Aust, OpCo NZ and InvestCo are given unrestricted access to all books, records, working papers and calculations referrable to the amounts included in the Completion Statement to verify the Completion Statement. (b) As part of each Purchaser's review each Purchaser's auditor is entitled to conduct any audit and/or other verification procedures it decides are reasonably necessary so that each of OpCo Aust, OpCo NZ and InvestCo can determine whether it accepts the Completion Statement. 7.5 Notification of disputes on Completion Statement (a) Each of OpCo Aust, OpCo NZ and InvestCo may issue a Dispute Notice to the Vendors within 10 Business Days after receipt of the Completion Statement. (b) The Completion Statement will (subject to the terms of any such agreement in writing) be final and binding on the relevant parties if: (i) a Purchaser does not issue a Dispute Notice within the required period; or (ii) a Dispute Notice is issued and the dispute is resolved by the relevant parties by agreement in writing (subject to the terms of that agreement). 7.6 Dispute Resolution (a) If a Dispute Notice is issued under clause 7.5(a) the relevant parties must use their best efforts in good faith to resolve the dispute. (b) If the dispute is not resolved within 30 Business Days after the issue of a Dispute Notice, the matters in dispute must be promptly referred by the party which issued the Dispute Notice to the Expert appointed under clause 7.7. (c) The Expert must be requested to: (i) resolve any matter in dispute within 15 Business Days of their appointment by: (A) applying the Accounting Standards and the Completion Accounts Principles and any principles set out in this Agreement relating to the matters in dispute; (B) having regard to any written submissions that the relevant parties or their representatives put before them within 10 Business Days of their appointment; and (C) making any enquiries or inspections as they in their absolute discretion consider necessary; and (ii) (unless all the relevant parties otherwise direct in writing) decide the form and content of the Completion Statement and provide notice of its determination to all relevant parties. (d) The decision of the Expert as to the matter in dispute and the form and content of the Completion Statement, will, in the absence of manifest error, be final and binding on the relevant parties. (e) The Expert will act as expert and not as arbitrator. (f) The costs of the Expert will be borne by the relevant parties in accordance with the Expert's determination. 7.7 Selection of Expert The Expert must be selected by: (a) agreement between the relevant parties within 2 Business Days after the end of the period set out in clause 7.4(a); or (b) if the relevant parties fail to agree, the President for the time being of the Institute of Chartered Accountants of Australia on the application of the party which issued the Dispute Notice. 7.8 Adjustment to Business Purchase Price (a) Following determination of the Completion Statement under clause 7.5(b) or 7.6, the Business Purchase Price will be adjusted for each Vendor. The adjusted Business Purchase Price will be calculated in the following manner: (i) the proportion of the Business Purchase Price payable to that Vendor under clause 3.1; (ii) less the Employee Entitlements Amount for that Vendor; (iii) less the Business Accrual Amount for that Vendor; (iv) plus the Prepayments Amount for that Vendor. (b) Where: (i) the proportion of the adjusted Business Purchase Price to which a Vendor is entitled is greater than the amount paid to the Vendor under clause 6.3 on Business Completion, a payment must be made to that Vendor of the difference within 2 Business Days of the determination of the Completion Statement under clause 7.5(b) or 7.6 by the Purchasers who have purchased the Business Assets to which the adjustments are attributable (pro rata in accordance with the proportions in which they may be attributed); and (ii) the proportion of the adjusted Business Purchase Price to which a Vendor is entitled is less than the amount paid to the Vendor under clause 6.3 on Business Completion, that Vendor must make a payment of the difference within 2 Business Days of the determination of the Completion Statement under clause 7.5(b) or 7.6, to the Purchasers who have purchased the Business Assets to which the adjustments are attributable (pro rata in accordance with the proportions in which they may be attributed). - -------------------------------------------------------------------------------- 8. Employees - -------------------------------------------------------------------------------- 8.1 Offers of employment (a) OpCo Aust must offer employment to all of the Employees of the First Vendor subject to and with effect from Business Completion no later than 10 Business Days after the date of this Agreement. (b) OpCo NZ must offer employment to all of the Employees of the Second Vendor subject to and with effect from Business Completion no later than 10 Business Days after the date of this Agreement. (c) The terms of the employment offered, in each case, must be on the same terms as the terms of employment (including those terms relating to notice and redundancy) of those Employees with the First Vendor or the Second Vendor (as the case may be). (d) OpCo Aust, OpCo NZ and the Vendors must use all reasonable efforts (other than revising the terms of an offer made in accordance with this clause 8.1) to encourage the Employees to whom offers are made to accept the offers. 8.2 Vendors' obligations to Transferred Employees At Business Completion the Vendors must: (a) terminate the employment of the Transferred Employees; and (b) pay (in accordance with the relevant agreements, statutes or awards) to each Transferred Employee the sum of all salary, wages, bonuses, allowances or commissions earned as at the Business Completion Date. 8.3 Purchaser's obligations to Transferred Employees OpCo Aust and OpCo NZ must, respectively: (a) treat the Transferred Employees as having continuity of service; and (b) assume the Vendors' liability for long service leave entitlements of the relevant Transferred Employees, and untaken leave entitlements for the relevant Transferred Employees. 8.4 Vendor's Allowance for Accrued Entitlements In consideration of OpCo Aust and OpCo NZ assuming liabilities under clause 8.3, respectively, the Employee Entitlements Amount will be allowed to OpCo Aust and OpCo NZ under clause 7. 8.5 Employees not accepting Purchaser's Offer The Vendors will remain liable for all amounts due on termination of any Employees who do not accept the offer of employment from OpCo Aust or OpCo NZ (as applicable). - ------------------------------------------------------------------------------- 9. Superannuation - ------------------------------------------------------------------------------- 9.1 Purchaser's plan At the request of the Purchaser, the First Vendor and the Second Vendor will do everything required to put OpCo Aust and OpCo NZ, respectively and as applicable, in the same position of control in relation to the Vendor's Fund from the Business Completion Date as the First Vendor and the Second Vendor were immediately before the Business Completion Date. - ------------------------------------------------------------------------------- 10. Accounts Receivable - ------------------------------------------------------------------------------- 10.1 General For a period of 6 months following Business Completion OpCo Aust and OpCo NZ (as the case may be) must at no cost to the Vendors: (a) on behalf of the Vendors use its reasonable endeavours to collect all the Accounts Receivable in accordance with the trade terms and customs of the Business (provided that the relevant Purchaser shall not be required to commence any legal action in respect of any Accounts Receivable); and (b) remit to the Vendors at the end of each week by transfer to a bank account nominated by the Vendors all amounts collected during that week for the Accounts Receivable. 10.2 Collection for limited period (a) The Vendors will be responsible for the collection of all Accounts Receivable which have not been collected within 6 months following Business Completion. (b) OpCo Aust and OpCo NZ (as the case may be) will, at the request of the Vendors, hand over to the Vendors all invoices, agreements and documents relating to the outstanding Accounts Receivable. (c) The Purchasers will not have authority to compromise, release or forgive any Accounts Receivable. 10.3 Legal proceedings Should the Vendors wish to take any steps to collect any of the Accounts Receivable, (including the commencement or continuation of any legal action for recovery) they must notify OpCo Aust or OpCo NZ (as the case may be) within 5 days. The relevant Purchaser must give the Vendors all reasonable assistance to enable the Vendors to recover the Accounts Receivable, at the Vendor's expense. 10.4 Identification of payments For the purpose of identifying whether an amount paid by a Debtor is for a debt owed to the Vendors as at the Business Completion Date or a debt owed to a Purchaser for the period after the Business Completion Date, amounts received from a Debtor will be applied against that Debtor's longest outstanding debt, unless the Debtor has notified the relevant Purchaser, in good faith, of a dispute in relation to that outstanding debt or debts. 10.5 Reimbursement of sums received (a) In the event that a Purchaser receives any Accounts Receivable after the period of 6 months following Business Completion, that Purchaser shall transfer such Accounts Receivable to a bank account nominated by the Vendors within 5 Business Days of receipt. (b) In the event that a Vendor receives any trade debt or other payment arising from the operation of the Business that is not an Accounts Receivable, that Vendor shall transfer such debt or payment to a bank account nominated by OpCo Aust and OpCo NZ (as the case may be) within 5 Business Days of receipt. - ------------------------------------------------------------------------------- 11. Contracts and Miscellaneous Assets - ------------------------------------------------------------------------------- 11.1 Assignment and novation (a) Unless Allco agrees otherwise, each Vendor must use all reasonable endeavours to obtain the novation or, with the consent of Allco, assignment of each of the Miscellaneous Assets required to be transferred by novation or assignment to or in favour of InvestCo before the Business Completion Date. (b) In respect of any Miscellaneous Assets required to be transferred by novation or assignment and not novated or assigned with the consent of InvestCo before the Business Completion Date, each Vendor and the Purchasers must use all reasonable endeavours to obtain the novation or, with the consent of InvestCo, assignment of each of those Miscellaneous Assets to InvestCo as soon as practicable on or after that date. 11.2 Deleted 11.3 Purchaser's obligations after Business Completion OpCo Aust, OpCo NZ and InvestCo (as the case may be) must assume: (a) the relevant Liabilities of the Vendors under the relevant Contracts and Miscellaneous Assets arising following Business Completion; and (b) the relevant Liabilities arising under the relevant Contracts and Miscellaneous Assets prior to Business Completion, to the extent that that Liability has been included in the calculation of the relevant Business Accrual Amount. 11.4 Deleted 11.5 Breaches prior to completion Each Vendor indemnifies each of the Purchasers from and against all actions, suits, claims, demands, losses, obligations, Liabilities and damages arising directly or indirectly from any breach of: (a) any Contract to which that Vendor is a party by that Vendor on or prior to Business Completion; and (b) any Miscellaneous Asset to which that Vendor is a party by that Vendor on or prior to Business Completion. 11.6 Breaches after completion (a) OpCo Aust and OpCo NZ, respectively, indemnify the Vendors from and against all actions, suits, claims, demands, losses, obligations, Liabilities and damages arising directly or indirectly from any breach by OpCo Aust or OpCo NZ, respectively, of a Contract novated or assigned to them, after Business Completion. (b) InvestCo indemnifies the Vendors from and against all actions, suits, claims, demands, losses, obligations, Liabilities and damages arising directly or indirectly from any breach by InvestCo of a Miscellaneous Asset transferred, novated or assigned to InvestCo, after Business Completion. - -------------------------------------------------------------------------------- 12. Deleted 13. Deleted 14. Use of Intellectual Property - -------------------------------------------------------------------------------- (a) The Purchasers covenant with the Vendors that from the Business Completion Date it will not use or register any name or trade mark which includes the word "Comdisco" or any word or words in any trade mark used by either of the Vendors under any of the Trade Mark Licence Agreements, or any confusingly similar words, except to the extent permitted under paragraph (b) below. (b) On Business Completion, the Vendors will enter into a licence agreement and will procure the entry into the licence agreement by the Licensors under the Trade Mark Licence Agreements, with OpCo Aust, OpCo NZ and InvestCo, to grant to OpCo Aust, OpCo NZ and InvestCo an irrevocable licence to use the name and any trade mark which includes the word "Comdisco" in Australia and New Zealand, for a period of one year from Business Completion, and to permit each of OpCo Aust, OpCo NZ and InvestCo to refer to itself as the Vendors' successor in relation to the Business. (c) On Business Completion, the Vendors must ensure that the Purchasers are licensed to use all Software required to support the Tyco Services Agreement. - ------------------------------------------------------------------------------- 14A. Restraint - ------------------------------------------------------------------------------- 14A.1 Restraint The Vendors undertake to each of the Purchasers that: (a) for 2 years from Business Completion, they will not, and will procure that Related Bodies Corporate of the Vendors will not: (i) be engaged or involved in any capacity in any business or activity which is the same as or similar to the Business or any material part of it. This restriction applies throughout Australia and New Zealand, and in each of the regions in which the Business is carried on in Australia and New Zealand; (ii) solicit the custom in Australia and New Zealand of anyone who was a customer of the Business at any time within 2 years before Business Completion; or (iii) entice away or endeavour to entice away from the Business any Transferring Employee; or (b) at any time after Business Completion, they will not use or disclose any of the Confidential Information, except as required by law; or (c) for a period of two years after Business Completion, they will not use a logo, symbol, trademark or business name including, substantially identical or deceptively similar to, the name "Comdisco" or any trade mark including the name "Comdisco" in Australia or New Zealand. 14A.2 Limitations of restraint (a) If any of the restraints in clause 14A.1 above are judged to go beyond what is reasonable in the circumstances and necessary to protect the interests of the Purchasers in the Business and the Business Assets and Miscellaneous Assets, but would be judged reasonable and necessary if any activity were deleted or a period or area were reduced, then the restraints apply with that activity deleted or period or area reduced by the minimum amount necessary to make the restraint reasonable in the circumstances. (b) Each of the restraints in clause 14A.1 above has effect as a separate and severable prohibition or restriction and is to be enforced accordingly. (c) Notwithstanding clause 14A.1, the Vendors or their Related Bodies Corporate may: (i) hold in aggregate up to 5% of the shares in any public company which is quoted on the Australian Stock Exchange or another recognised exchange, even though that company carries on any business that is similar to the Business in Australia or New Zealand. (ii) undertake such activities as are necessary or desirable to manage the future affairs of the Vendors after the sale reflected in this Agreement is completed under their corporate name; and (iii) perform their respective obligations under this Agreement under their corporate name. (d) The Vendors acknowledge that the restraints in clause 14A.1 are reasonable in the circumstances and necessary to protect the interests of the Purchasers in the Business and the Business Assets and Miscellaneous Assets. - ------------------------------------------------------------------------------- 15. Confidentiality and announcements - ------------------------------------------------------------------------------- 15.1 Provisions to remain confidential Subject to clauses 15.2 and 15.3, each party must not disclose without the prior written consent of the other parties: (a) the content of this Agreement; or (b) any Confidential Information. 15.2 Permitted disclosures A party may disclose matters referred to in clause 15.1: (a) to those of its employees, officers, professional or financial advisers and bankers as the party reasonably thinks necessary but only on a strictly confidential basis; or (b) if required by law, after the form and terms of that disclosure have been notified to the other parties and the other parties have had a reasonable opportunity to comment on the form and terms. 15.3 Announcements A party may make announcements or statements at any time in the form and on the terms previously agreed by the parties in writing. 15.4 Return of information etc in the event of termination If this Agreement is terminated prior to Business Completion: (a) each of the Purchasers must return to the Vendors or destroy: (i) all Confidential Information in written or deliverable form; and (ii) any other information obtained by that Purchaser in relation to the Business; (b) each party must do everything reasonably required by the other parties to reverse any action taken under this Agreement. 15.5 Survival of obligation This clause will survive the termination of this Agreement. - ------------------------------------------------------------------------------- 16. Notices - ------------------------------------------------------------------------------- 16.1 Requirements All notices must be: (a) in legible writing and in English; (b) addressed to the recipient at the address or facsimile number set out below or to such other address or facsimile number as that party may notify to the other parties: to the First Vendor: Comdisco, Inc Address: 6111 North River Road, Rosemont, Il 60018 United States of America Attention: Robert E.T. Lackey Facsimile no: 0011 1 847 518 5478 to the Second Vendor: Comdisco, Inc Address: 6111 North River Road, Rosemont, Il 60018 United States of America Attention: Robert E.T. Lackey Facsimile no: 0011 1 847 518 5478 to OpCo Aust: Address: Level 24 Gateway Building 1 Macquarie Place Sydney NSW 2000 Attention: Mr Chris West Facsimile no: 61 2 9241 2550 to OpCo NZ: Address: Level 24 Gateway Building 1 Macquarie Place Sydney NSW 2000 Attention: Mr Chris West Facsimile no: 61 2 9241 2550 to InvestCo: Address: Level 24 Gateway Building 1 Macquarie Place Sydney NSW 2000 Attention: Mr Chris West Facsimile no: 61 2 9241 2550 (c) signed by the party or where the sender is a company by an authorised person or officer of that company or under the common seal of that company; and (d) sent to the recipient by hand, prepaid post (airmail if to or from a place outside Australia or New Zealand or between the two countries) or facsimile. 16.2 Receipt Without limiting any other means by which a party may be able to prove that a notice has been received by another party, a notice will be deemed to be duly received: (a) if sent by hand when left at the address of the recipient; (b) if sent by pre-paid post, 3 days (if posted within Australia to an address in Australia) or 10 days (if posted from one country to another) after the date of posting; or (c) if sent by facsimile, upon receipt by the sender of an acknowledgment or transmission report generated by the machine from which the facsimile was sent indicating that the whole facsimile was sent to the recipient's facsimile number; but if a notice is served by hand, or is received by the recipient's facsimile on a day which is not a Business Day, or after 5:00 pm on a Business Day, recipient's local time the notice is deemed to be duly received by the recipient at 9.00 am on the first Business Day after that day. - ------------------------------------------------------------------------------- 17. General Provisions - ------------------------------------------------------------------------------- 17.1 Costs Each party must pay its own costs in respect of this Agreement and the documents contemplated by this Agreement except that (unless and to the extent that this Agreement expressly provides to the contrary) the Purchasers must pay all stamp duty and GST payable on this Agreement, the transfer of the Business Assets and the Miscellaneous Assets and any other documents contemplated by this Agreement. 17.2 Non-merger The warranties, other representations and covenants by the parties in this Agreement are continuing and will not merge or be extinguished on Business Completion. 17.3 Effect of termination If this Agreement is terminated under clause 4.2 or 6.7(c)(ii): (a) the parties are released from the obligation to continue to perform this Agreement except those obligations contained in clause 15 and any other obligations which by their nature survive termination; and (b) each party retains the rights it has against any other party for any past breach of the Agreement; and (c) to the extent that parts of this Agreement have been performed prior to the date of termination, the termination does not prejudice title, rights or entitlements arising out of such performance. 17.4 Indemnities The indemnities contained in this Agreement are: (a) continuing, separate and independent obligations of the parties from their other obligations, and survive the termination of this Agreement; and (b) absolute and unconditional and unaffected by anything which otherwise might have the effect of prejudicing, releasing, discharging or affecting the liability of the party giving the indemnity. 17.5 Waiver and exercise of rights (a) A waiver by a party of a provision or of a right under this Agreement is binding on the party granting the waiver only if it is given in writing and is signed by the party or an officer of the party granting the waiver. (b) A waiver is effective only in the specific instance and for the specific purpose for which it is given. (c) A single or partial exercise of a right by a party does not preclude another or further exercise of that right or the exercise of another right. (d) Failure by a party to exercise or delay in exercising a right does not prevent its exercise or operate as a waiver. 17.6 Amendment This Agreement may be amended only by a document signed by all parties. 17.7 Counterparts This Agreement may be signed in counterparts and all counterparts taken together constitute one document. 17.8 Further assurances Each party must, at its own expense, whenever requested by another party, promptly do or arrange for others to do everything reasonably necessary to give full effect to this Agreement and the transactions contemplated by this Agreement. 17.9 Assignment A party must not transfer, assign, create an interest in or deal in any other way with any of its rights under this Agreement without the prior written consent of the other parties. 17.10 Deleted 17.11 Rights cumulative The rights, remedies and powers of the parties under this Agreement are cumulative and not exclusive of any rights, remedies or powers provided to the parties by law. 17.12 Consents and Approvals A party may give its approval or consent conditionally or unconditionally or withhold its approval or consent in its absolute discretion unless this Agreement expressly provides otherwise. 17.13 Jurisdiction Each party irrevocably and unconditionally: (a) submits to the non-exclusive jurisdiction of the courts of New South Wales; and (b) waives any claim or objection based on absence of jurisdiction or inconvenient forum. 17.14 Service of process Each party agrees that a document required to be served in proceedings about this Agreement may be served: (a) if originating process or a subpoena to be served on a company or registered body by being sent by post to or left at its registered office, and in all other cases at its address for service of notices under clause 16; or (b) in any other way permitted by law, 17.15 Governing Law This Agreement is governed by the laws of New South Wales. Executed as an agreement.
Signed for and on behalf of ) Comdisco Australia Pty Limited: ) ) ) /s/ D. Corrigan /s/ Robert E. T. Lackey - -------------------------------------------------- --------------------------------------------------- Signature of director Signature of director D. Corrigan Robert E. T. Lackey - --------------------------------------------------- --------------------------------------------------- Name of director (please print) Name of director (please print) Signed for and on behalf of ) Comdisco New Zealand: ) ) ) /s/ D. Corrigan /s/ Robert E. T. Lackey - -------------------------------------------------- --------------------------------------------------- Signature of director Signature of director D. Corrigan Robert E. T. Lackey - -------------------------------------------------- --------------------------------------------------- Name of director (please print) Name of director (please print) SIGNED by Christopher John West as attorney ) for NADLO PTY LIMITED under power of attorney ) dated 8 April 2002 in the presence of: ) ) ) /s/ Brian Murphy ) - ----------------------------------------------- ) Signature of witness ) ) Brian Murphy ) /s/ Christopher John West - ---------------------------------------------- ) ---------------------------------------------------- Name of witness (block letters) ) By executing this Agreement the attorney ) states that the attorney has received no ) notice of revocation of the power of ) attorney SIGNED by Christopher John West as attorney ) for CODIS LIMITED under power of attorney ) dated 8 April 2002 in the presence of: ) ) ) /s/ Brian Murphy ) - --------------------------------------------- ) Signature of witness ) ) Brian Murphy ) /s/ Christopher John West - -------------------------------------------- ) ---------------------------------------------------- Name of witness (block letters) ) By executing this Agreement the attorney ) states that the attorney has received no ) notice of revocation of the power of ) attorney SIGNED by Christopher John West as attorney ) for RELLIM PTY LIMITED under power of ) attorney dated 8 April 2002 in the presence ) of: ) ) ) /s/ Brian Murphy ) - -------------------------------------------- ) Signature of witness ) ) /s/ Christopher John West ) -------------------------------------------------- Brian Murphy ) By executing this Agreement the attorney - -------------------------------------------- ) states that the attorney has received no Name of witness (block letters) ) notice of revocation of the power of ) attorney )
Annexure 1 Deleted Annexure 2 Deleted Annexure 3 Part 1 First Vendor A. Australia Inventory: Stock on Hand to be remarketed Plant and Equipment: Fixed Assets - Lvl 12, 99 Walker Street. North Sydney Furniture and Fittings Computers and Telecommunications equipment Leasehold Improvements Part 2 Second Vendor Assets B. New Zealand Inventory: Stock on Hand to be remarketed Plant and Equipment: Fixed Assets - ASB Building, Lvl 16, 135 Albert Street Auckland New Zealand Computers and Telecommunications equipment
Annexure 4 Business Purchase Price Allocation - --------------------------------------------------------------------------------------------------------------------------- Jurisdiction Goodwill Books and Records Contracts Plant and Inventory Property and Vendor Equipment Leases (% and $) (% and $) (% and $) (% and $) (% and $) (% and $) - --------------------------------------------------------------------------------------------------------------------------- New Zealand $101,905 $1 $1 $8,366 $52,142 $1 Second Vendor 14.13% 0% 0% 1.16% 7.23% 0% - --------------------------------------------------------------------------------------------------------------------------- New South Wales $149,072 $1 $1 $173,881 $185,781 $1 First Vendor 20.67% 0% 0% 24.11% 25.76% 0% - --------------------------------------------------------------------------------------------------------------------------- Victoria $49,979 0 0 0 0 0 First vendor 6.93% - ---------------------------------------------------------------------------------------------------------------------------
Annexure 5 Real Properties and Property Leases 1. The lease of 99 Walker Street, North Sydney, NSW between the First Vendor as lessee and Yamamoto Realty Co. Ltd as lessor commencing on 1 May 1999 and expiring on 30 April 2005. 2. The lease at 135 Albert Street, Level 16 & 20, Auckland, New Zealand between First Vendor as lessee and Servcorp New Zealand Ltd as lessor commencing 11 December 2000 and expiring on a month to month basis. Annexure 6 Officers and employees As per attached Annexure 7 Completion Agreements Part A Business Completion Agreements (a) An assignment of the Property Lease between the First Vendor and OpCo Aust in the agreed form. (b) An assignment of the Property Lease between the Second Vendor and OpCo NZ in the agreed form. (c) Licence Agreements in favour of each of OpCo NZ, OpCo Aust and Allco in respect of the name "Comdisco" in terms acceptable to OpCo NZ, OpCo Aust and Allco. (d) Novations or assignments of the Contracts to OpCo Aust or OpCo NZ (as the case may be), in terms acceptable to OpCo Aust or OpCo NZ (as the case may be). (e) Sufficient transfers, novations or assignments in respect of all of the Vendor's right, title and interest in the Miscellaneous Assets, in favour of InvestCo. (f) Such agreements, transfer instruments or other documents as may be necessary or appropriate to ensure that all the Vendors' right, title and interest in the Business Assets are properly vested in the relevant Purchasers. Annexure 8 Deleted Annexure 9 Deleted EX-10 22 ch340586.txt EXHIBIT 10.18 Exhibit 10.18 =============================================================================== SHARE PURCHASE AGREEMENT between COMDISCO, INC. and PH HOLDING GMBH Dated as of August 14, 2002 =============================================================================== ARTICLE I DEFINITIONS.............................................2 1.1 Definitions.................................................2 ARTICLE II SALE AND PURCHASE OF THE SHARE Quota....................4 2.1 Sale and Purchase...........................................4 2.2 Excluded Contracts..........................................4 2.3 Purchase Price..............................................5 2.4 Payment of Purchase Price...................................5 2.5 Holdback....................................................5 2.6 Inter-Company Accounts......................................7 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER................7 3.1 Due Incorporation and Ownership.............................8 3.2 Authority; Consents and Approvals...........................8 3.3 No Other Representations and Warranties.....................8 3.4 Seller's Limitation on Liability............................8 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER.............9 4.1 Power, Authority and Consents...............................9 4.2 Familiarity with the Company's Business.....................9 4.3 Financial Capacity of Purchaser.............................9 ARTICLE V COVENANTS AND FURTHER OBLIGATIONS.......................9 5.1 Funds for Liquidation of Czech Subsidiary...................9 5.2 Cooperation after Closing..................................10 5.3 Comdisco Trademark ........................................11 5.4 Confidentiality ...........................................11 ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.......11 ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER..........11 7.1 Warranties True as of Closing Date.........................12 7.2 Compliance with Agreements and Covenants...................12 7.3 No Injunctions or Restraints...............................12 7.4 Board Approval.............................................12 7.5 Payment of the Purchase Price..............................12 ARTICLE VIII REMEDIES, INDEMNIFICATION..............................12 8.1 Indemnification by Purchaser...............................13 ARTICLE IX MISCELLANEOUS..........................................13 9.1 Expenses...................................................13 9.2 Amendment..................................................13 9.3 Notices....................................................13 9.4 Waivers....................................................14 9.5 Counterparts...............................................14 9.6 Interpretation.............................................14 9.7 Governing Law..............................................15 9.8 Assignment.................................................15 9.9 No Third Party Beneficiaries...............................15 9.10 Calculation of Time Periods................................15 9.11 Further Assurances.........................................15 9.12 Severability...............................................15 9.13 Entire Understanding.......................................16 SHARE PURCHASE AGREEMENT THIS SHARE PURCHASE AGREEMENT is made by and between COMDISCO, INC., a corporation duly established and validly existing under the laws of Delaware with its corporate seat in Illinois, 60018 Rosemont, 6111 North River Road, USA (the "Seller") and PH HOLDING GmbH, a limited liability company duly established and validly existing under the laws of Austria with its corporate seat in 1010 Vienna, Reischachstrasse 3/12A and registered with the commercial register at the Commercial Court Vienna under FN 224852s (the "Purchaser"). Certain capitalized terms used herein are defined in Article I. W I T N E S S E T H: WHEREAS, the Seller and all of its group entities are engaged in the business of leasing and providing remarketing services for distributed computing systems (servers, workstations, personal computers, local area networks and other high technology equipment), (the "Business"); WHEREAS, Computer Discount GmbH ( the "Company") is an Austrian company with limited liability with its corporate seat in 1010 Vienna, Mahlerstrasse 7/22 and registered with the commercial register at the Commercial Court Vienna under FN 81059f. The stated share capital of the Company amounts to ATS 40,550,000 (Austrian Schilling forty million five hundred and fifty thousand); WHEREAS, Seller is the legal and beneficial owner of a share quota with a nominal value of ATS 40,550,000 (Austrian Schilling forty million five hundred and fifty thousand) representing 100% of the stated share capital of the Company (the "Share Quota"). The stated share capital of the Company has been fully paid up in cash; WHEREAS, Peter Huber, an Austrian citizen, born on the 8th (eighth) day of April 1963 (one thousand nine hundred and sixty three), resident in 1236 Vienna, Schreckgasse 13, managing director and sole shareholder of Purchaser, has been employed by the Company for the last 6 (six) years in a senior position; WHEREAS, subject to the terms and conditions set forth in this Agreement, Seller desires to sell all of its right, title and interest in the Share Quota and Purchaser desires to purchase such Share Quota from Seller. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, agreements and warranties herein contained, the parties agree as follows: ARTICLE I DEFINITIONS 1.1 Definitions. The following terms shall have the following meanings for the purposes of this Agreement: "Accounts Payable shall have the meaning set forth in Section 2.5; Holdback" "Agreement" shall mean this Share Purchase Agreement, including all schedules hereto; "Bond" shall have the meaning set forth in Section 2.5(a); "Business" shall have the meaning set forth in the recitals to this Agreement; "Business Day" shall mean any day of the year other than (i) any Saturday or Sunday or (ii) any other day on which banks located in Austria are closed for business; "Chapter 11 Case" shall mean that Seller, along with certain of its affiliates, has filed a voluntary petition for relief commencing a case under Chapter 11 of Title 11 of the United States Code, 11 U.S.C.ss.ss.101 et seq., as amended, in the United States Bankruptcy Court for the Northern District of Illinois. "Closing Date" shall mean the date of execution of this Agreement; "Comdisco Trademark" shall have the meaning as set forth in Section 5.3; "Company" shall have the meaning set forth in the recitals to this Agreement; "Czech Subsidiary" shall have the meaning as set forth in Section 5.1; "Duty Claim" shall have the meaning set forth in Section 2.5(c); Numbers preceded by the shall mean amounts in Euros; symbol "(euro)" "Excluded Contracts" shall mean those contracts described in Schedule A as defined in Section 2.2; "Governmental Authority" shall mean the government of the United States or any foreign country or any state or political subdivision thereof and any entity, body or authority exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including quasi-governmental entities established to perform such functions; "Holdback" shall have the meaning set forth in Section 2.5; "Limitation Period" shall have the meaning set forth in Section 8.1; "Liquidation" shall have the meaning set forth in Section 5.1; "Material Adverse Effect" means any event, condition, or matter in respect of the operation of the Business or the Share Quota that results in or has a material adverse effect on the business, financial condition or operations of the Business taken as a whole; provided, however, that, the effects of changes that (i) are generally applicable to (A) the industries and markets in which the Business operates or (B) the United States and global economies or (ii) relate to foreign currency exchange rate fluctuations, shall in each case be excluded from the determination of Material Adverse Effect; and provided, further, that any adverse effect on the Business, taken as a whole, resulting from the execution of this Agreement and the announcement of this Agreement, the Chapter 11 Case and the announcement of the Chapter 11 Case and the other transactions contemplated by this Agreement shall also be excluded from the determination of Material Adverse Effect; "Non-Recourse Note" shall mean the note attached as Schedule B as defined in Section 2.2; "Purchase Price" shall have the meaning set forth in Section 2.3; "Purchaser" shall have the meaning set forth in the recitals to this Agreement; "Seller" shall have the meaning set forth in the recitals to this Agreement; "Share Quota" shall have the meaning set forth in the recitals to this Agreement; "Signing" means the signing of this Agreement; "Tax Holdback" shall have the meaning set forth in Section 2.5; "Tax Investigation" shall have the meaning set forth in Section 2.5(b); "Trademark" shall mean U.S. and foreign registered and unregistered trademarks, service marks, logos, trade names, corporate names and all registrations and applications to register the same; "Trustee" shall have the meaning as set forth in Section 2.5. The contact person at the Trustee is Dr. Rudolf Kaindl, (address: 1220 Vienna, Donaustadtstrasse 1, phone number: +43 1 203 35 05, facsimile number: +43 1 203 35 05 14); ARTICLE II SALE AND PURCHASE OF the SHARE QUOTA 2.1 Sale and Purchase. Effective as of the Closing Date and subject to the terms and conditions set forth herein, in particular, but without limitation to Articles VI and VII, and pursuant to Sections 105 and 363 of the Bankruptcy Code, Seller shall sell and transfer and Purchaser shall purchase and accept from the Seller all rights, title and interest in the Share Quota with all the rights attached or accruing to them at the Closing Date. 2.2 Excluded Contracts. Notwithstanding anything contained in this Agreement to the contrary, all contracts concluded by the Company set forth in Schedule A (collectively, the "Excluded Contracts") shall be transferred from the Company to any other entity within the Seller's group at the sole discretion of Seller. Should Seller - in its sole discretion - choose to not transfer any or all of the Excluded Contracts, Purchaser shall or shall cause the Company to continue to complete such contracts on Seller's behalf. In this context, the Purchaser shall or shall cause the Company to collect any and all claims the Company may have under such contracts, including, without limitation, any receivables on behalf of the Seller, and shall or shall cause the Company to remit such collected claims and/or amounts within 10 (ten) Business Days to a bank account to be designated by the Seller. Purchaser shall or shall cause the Company to diligently seek to collect all such claims and/or amounts as and when due. As soon as and to the extent that Seller desires to have the Excluded Contracts transferred to any entity of the Seller's group at its sole discretion, Purchaser will immediately take or cause the Company to take all steps necessary or desirable to complete the transfer of any Excluded Contracts remaining within the Company after the Closing Date in accordance with the instructions of Seller. In addition to the aforesaid, Seller and the Company will enter into a non-recourse note agreement in the form attached hereto as Schedule B (the "Non-Recourse Note"). Purchaser hereby acknowledges and agrees that this Agreement shall be null and void and the transfer of the Share Quota shall be deemed not to have occurred if Purchaser fails to cause the Company to duly sign and deliver the Non-Recourse Note by noon on the day following the Closing Date. Should Purchaser fail to deliver the Non-Recourse Note duly signed by the Company by noon on the day following the Closing Date, Purchaser shall immediately re-transfer the Share Quota to Seller; if Purchaser fails to timely re-transfer the Share Quota, the Trustee shall, upon Seller's request, immediately disburse the Holdback to Seller, and Seller shall only be obligated to transfer to Purchaser the Holdback and the Purchaser Price, less any damages and costs directly or indirectly incurred by Seller as a result of Purchaser's failure to act in accordance with this provision, upon the re-entry, in the commercial register, of Seller as owner of the Share Quota. 2.3 Purchase Price. At the Closing Date and in consideration for the Share Quota, the Purchaser shall pay (euro) 8,733,200.71 (eight million seven hundred thirty-three thousand two hundred 71/100) by transfer of immediately available funds to the Seller's account at Bank of America, Amsterdam, account number 600415869015, bank sort code BOFANLNX and the amount of (euro) 633,424.73 (six hundred thirty-three thousand four hundred twenty four 73/100) to the Trustee (the " Purchase Price"). Purchaser acknowledges and agrees that the Purchase Price - as determined by the Company's auditors - is fair and based on the book value of the Company's net assets under US GAAP as of the Closing Date in accordance with the method of determination proposed by the Purchaser. Purchaser hereby expressly waives any and all claims he may have, including, without limitation, any claims under ss.ss. 869-877 ABGB (Allgemeines Burgerliches Gesetzbuch, RGBl 1859/217, as amended), relating to the determination, the amount and the payment of the Purchase Price. 2.4 Payment of Purchase Price. Purchaser acknowledges and agrees that the effectiveness of this Agreement and the Seller's obligation to transfer the Share Quota is contingent upon the Seller's receipt of the Purchase Price. Purchaser shall transfer the Purchase Price in a manner that puts Seller in a position to get written confirmation of receipt of the funds on the account set forth in Section 2.3 and from the Trustee at the time of execution of this Agreement. 2.5 Holdback. Seller and Purchaser acknowledge and agree that Dr. Rudolf Kaindl, notary public, 1220 Vienna, Donaustadtstrasse 1, shall act as trustee (the "Trustee") and clearing agent for purposes of holding a portion of the Purchase Price in the amount of (euro) 633,424.73 (six hundred thirty three and four hundred twenty-four 73/100) which shall be designated as the "Holdback". The Trustee shall hold the Holdback plus any interest accrued thereon in an escrow account until a date to be agreed upon by Seller and Purchaser. Notwithstanding the foregoing, (euro) 580,000 (five hundred and eighty thousand) thereof (the "Tax Holdback") plus any interest accrued shall be disbursed to the Seller no later than the last day of the statute of limitations for the stamp duties on the Austrobond (see (a) below), if any, i.e., December 31, 2004, and (euro) 53,424.73 (fifty-three thousand four hundred and twenty-four 73/100) thereof (the "Accounts Payable Holdback") plus any interest accrued shall be disbursed to the Seller no later than the last day of the statute of limitations governing the underlying accounts payable (invoices to be received) (see (d) below). Seller and Purchaser acknowledge that the Trustee (i) is acting solely at their request and for their convenience and (ii) shall not be deemed to be the agent of either of the parties. The fees and expenses shall be paid one-half by the Seller and one-half by the Purchaser. Seller, Purchaser and Trustee shall enter into a separate agreement governing the trusteeship which is an integral part of this Agreement. (a) The Tax Holdback or an appropriate portion thereof, as the case may be, shall be disbursed to the Company only upon presentation of a final decree issued by the Austrian tax authorities which decree is not subject to appeal and states (i) that the issuance of a bond in the amount of ATS 500,000,000 (Austrian Schilling five hundred million) by the Company on February 11 (eleven), 1999 (one thousand nine hundred ninety-nine) (the "Bond") triggered stamp duties under the Austrian Gebuhrengesetz (BGBl 1957/267, as amended) and (ii) the amount of stamp duties resulting from the issuance of the Bond and to be paid by the Company. (b) Upon the expiration of the period provided for in Section 2.5, i.e. on January 1, 2005, or at any time prior to this date when an investigation of the Bond by the Austrian tax authorities (a "Tax Investigation") ends (i) without the issuance of a decree requesting payment of stamp duties in connection with the Bond, or (ii) with the issuance of a decree levying stamp duty in connection with the Bond in an amount of less than (euro) 580,000 (five hundred eighty thousand), the Trustee shall disburse the Tax Holdback or the remainder thereof, as the case may be, plus accrued interest and other income to an account designated by the Seller. The Purchaser shall keep the Trustee fully informed about any Tax Investigation of the Company and the results thereof. (c) Defense. In the event that the Purchaser or the Company learns that any tax authority is taking steps towards the collection or levying of a stamp duty relating to the Bond (a "Duty Claim") or notice thereof is delivered, sent, commenced or initiated against the Company by any taxing authority after the date hereof, Purchaser shall give Seller prompt notice of such Duty Claim, and Seller shall have the right to assume the defense (at Seller's expense) of any such Duty Claim through counsel of Seller's own choice by so notifying Purchaser within 30 (thirty) days of the first receipt by Seller of such notice from Purchaser; provided, however, that any such counsel shall be reasonably satisfactory to Purchaser. If, under applicable standards of professional conduct, a conflict with respect to any significant issue between the Purchaser and/or the Company and Seller exists in respect of such Duty Claim, Seller shall pay the reasonable fees and expenses of such additional counsel as may be required to be retained in order to eliminate such conflict. Seller shall be liable for the fees and expenses of counsel employed by Purchaser or the Company for any period during which Seller has not assumed the defense of any such Duty Claim (other than during any period in which Purchaser and/or the Company will have failed to give notice of the Duty Claim, as provided above). If Seller assumes such defense, Purchaser and/or the Company shall have the right to participate in the defense thereof and to employ counsel, at their own expense, separate from the counsel employed by Seller, it being understood that Seller shall control such defense. If Seller chooses to defend such Duty Claim, Purchaser shall and/or shall cause the Company to cooperate in the defense thereof, which cooperation shall include, to the extent reasonably requested by Seller, the retention, and the provision to Seller, of records and information reasonably relevant to such Duty Claim, and making employees of the Company available on a mutually convenient basis to provide additional information and explanation. If Seller chooses to defend or prosecute any Duty Claim, Purchaser shall and/or shall cause the Company to agree to any settlement, compromise or discharge of such Duty Claim that Seller may recommend and that, by its terms, discharges Purchaser and the Purchaser Affiliates from the full amount of liability in connection with such Duty Claim; provided, however, that, Seller shall not consent to, and Purchaser shall not be required to agree to, the entry of any judgment or enter into any settlement that (i) provides for injunctive or other non-monetary relief affecting Purchaser or any Affiliate of Purchaser or (ii) does not include as an unconditional term thereof the giving of a release from all liability with respect to such Duty Claim. For the avoidance of doubt, Purchaser may in no event frustrate or cause the Company to frustrate the efforts of Seller to defend the Duty Claim, including, without limitation, by paying any amounts to the Austrian tax authorities or otherwise settling a dispute. (d) The Accounts Payable Holdback or an appropriate portion thereof, as the case may be, shall be disbursed to the Company only upon presentation of appropriate invoices in connection with the accounts payable (invoices to be received) related to customer accounts listed in Schedule C, provided however, that such invoices shall not have been objected to by the Seller. For the avoidance of doubt, Purchaser acknowledges that such accounts payable (invoices to be received) have been allocated for liabilities for which, as of the Closing Date, Company has not received any invoices, and the Purchaser agrees that the respective amounts shall be disbursed to Seller as soon as the applicable statute of limitations has expired. (e) In no event shall the Purchaser or the Company be entitled to claim an amount in excess of (euro) 633,424.73 (six hundred thirty-three thousand four hundred and twenty-four 73/100). Interest accruing on the Holdback shall always be for the benefit of the Seller and may not be claimed by or paid to the Purchaser or the Company. 2.6 Inter-Company Accounts. Seller and Purchaser acknowledge and agree that the Company has inter-company accounts receivable owed by several entities in Seller's group in the amount of (euro) 1,397,637.98 (one million three hundred ninety-seven thousand six hundred and thirty-seven 98/100) and inter-company accounts payable owing to several entities in Seller's group in the amount of (euro) 1,729,229.58 (one million seven hundred twenty-nine and two hundred and twenty-nine 58/100). Both parties hereby agree that Seller shall and shall cause its group entities, as the case may be, and Purchaser shall cause Company to settle all inter-company accounts by the close of business on August 19 (nineteen), 2002 (two thousand two). If at the close of business on August 19 (nineteen), 2002 (two thousand and two), Purchaser has failed to cause the Company to fulfill its payment obligations, as set forth in this Section 2.6 (i.e. by causing the Company to transfer (euro) 331,591.60 (three hundred thirty-one thousand five hundred and ninty-one 60/100) to the bank account of Seller (Section 2.1)), Purchaser hereby acknowledges and agrees that this agreement shall be null and void and the transfer of the Share Quota shall be deemed not to have occurred. In such case Purchaser shall immediately re-transfer the Share Quota to Seller; if Purchaser fails to timely re-transfer the Share Quota, the Trustee shall, upon Seller's request, immediately disburse the Holdback to Seller (and the Holdback shall be deemed to be forfeited by the Purchaser), and Seller shall only be obligated to transfer to Purchaser the Holdback and the Purchaser Price, less any damages and costs directly or indirectly incurred by Seller as a result of Purchaser's failure to act in accordance with this provision, upon the re-entry, in the commercial register, of Seller as owner of the Share Quota. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER The parties acknowledge that Purchaser has been employed by the Company for 6 (six) years in a senior position and therefore has comprehensive and detailed insider knowledge of the Business and the legal and commercial condition of the Company. The Seller represents and warrants to Purchaser, as of the date of this Agreement and as of the Closing Date (as if such representations and warranties were remade on the Closing Date), as follows: 3.1 Due Incorporation and Ownership. (a) Seller is duly organized, validly existing and in good standing under the laws of the State of Delaware, with all requisite power and authority to own foreign investments and to carry on its respective businesses as it is now being owned and conducted. The Company is duly organized and validly existing under the laws of Austria. (b) Seller is the beneficial and of record owner of the Share Quota. The Share Quota is clear and free of any liens or similar encumbrances. 3.2 Authority; Consents and Approvals. (a) The Seller has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement by the Seller and the consummation by the Seller of the transactions contemplated hereby have been duly authorized by its Board of Directors. This Agreement has been duly and validly executed and delivered by the Seller and (assuming this Agreement constitutes a valid and binding obligation of the Purchaser) constitutes a valid and binding agreement of the Seller, enforceable against the Seller in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors' rights generally from time to time in effect and to general equitable principles. (b) No consent, approval, or authorization of, or declaration, filing or registration with, any Governmental Entity is required to be made or obtained by the Seller in connection with the execution, delivery and performance of this Agreement and the consummation of the transaction, except (a) for consents, approvals or authorizations of the Seller's Board of Directors, and (b) for consents, approvals, authorizations, declarations, filings or registrations, which, if not obtained, would not, individually or in the aggregate, have a Material Adverse Effect. 3.3 No Other Representations or Warranties. Except as specifically and expressly set forth in this Article III, (i) the Seller makes no representation or warranty, express or implied, in law or in equity, relating to the transferred Share Quota or otherwise, including, without limitation, any representation or warranty as to value, merchantability, fitness for a particular purpose or for ordinary purposes, or any other matter, (ii) the Seller makes no, and hereby disclaims any, other representation and warranty regarding the transferred Share Quota and (iii) the transferred Share Quota being transferred to the Purchaser is conveyed on an "as is, where is" basis as of the Closing, and the Purchaser shall rely upon its own examination thereof, in particular its long lasting experience as employee of the Company. Without limiting the generality of the foregoing, the Seller makes no representation or warranty regarding any assets other than expressly set forth above, and none shall be implied by law or in equity. 3.4 Seller's Limitation on Liability. The Purchaser shall not be entitled in any event to any lost profits, indirect, consequential, liquidated or other damages in respect of any claim or claims, including, without limitation, any claim or claims under the Seller's representations and warranties. Purchaser hereby expressly waives any entitlements or claims to damages other than direct damages directly resulting from an intentional breach by Seller of the Seller's representations and warranties. No claim shall be brought against the Seller in respect of any of the Seller's representations and warranties unless the Purchaser shall have given to the Seller written notice of such claim specifying in detail the matter which gives rise to the claim, the nature of the claim and the amount claimed in respect thereof on or before the date which is one month after the Closing Date. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser represents and warrants to Seller, as of the date of this Agreement and as of the Closing Date (as if such representations and warranties were remade on the Closing Date), as follows: 4.1 Power, Authority and Consents. Purchaser has the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by Purchaser and constitutes a valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with and subject to its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors' rights and general principles of equity and by equitable limitations on the availability of specific remedies. 4.2 Familiarity with the Company's Business. Due to his long term top level employment with the Company, Purchaser is familiar and has in depth-insider knowledge of every aspect of the Company's business and the Business. 4.3 Financial Capacity of Purchaser. Purchaser has the financial capacity to pay the Purchase Price and the Adjusted Purchase Price when due and payable. ARTICLE V COVENANTS AND FURTHER OBLIGATIONS 5.1 Funds for Liquidation of Czech Subsidiary. Comdisco Ceska republika s.r.o. is a Czech company with limited liability with its corporate seat in 11000 Prague 1, Klimentska 46 and registered with the commercial register at the commercial court in Prague under register number 25 74 17 81. Comdisco Ceska republika s.r.o. is a fully owned subsidiary of the Company (the "Czech Subsidiary"). It is the intention of both parties to wind-up and de-register (the "Liquidation") the Czech Subsidiary. Seller and Purchaser acknowledge that at the Closing Date, the liquid funds available to the Czech Subsidiary amount to (euro) 65,000 (sixty five thousand) and that the costs the Liquidation of the business of the Czech Subsidiary (including de-registration) will not exceed (euro) 60,000 (sixty thousand). Purchaser shall be responsible to take all steps necessary or desirable to ensure a quick and cost-efficient Liquidation of the Czech Subsidiary's business by no later than June 30, 2003. Upon completion of such Liquidation, Purchaser will present to Seller documentation evidencing in reasonable detail the steps taken and costs incurred by the Purchaser. Any positive difference between the anticipated costs of Liquidation (see above, (euro) 60,000 (sixty thousand)) and the actual costs of Liquidation shall be shared on a 70 (seventy) (Seller) : 30 (thirty) (Purchaser) basis and paid to the Seller together with any additional funds available to the Czech Subsidiary (i.e. the difference between (euro) 60,000 and the liquid funds available to the Czech Subsidiary as of Closing Date) without delay. Purchaser shall pay the entire (euro) 65,000 (sixty five thousand) back to the Seller if it has not received a final decree confirming the successful completion of the liquidation of the Czech Subsidiary by July 1, 2003. 5.2 Cooperation after Closing. Seller and Purchaser agree to use commercially reasonable efforts in continuing their cooperation after Closing. In particular, but without limitation: (a) For a period of 3 (three) months following the Closing Date, Seller shall allow the Company to access and use the Seller's information technology systems, for the limited purpose of accessing and processing the Company's financial accounts, to the extent they are currently stored in Seller's information technology system. Seller and Purchaser have entered into a separate agreement concerning the fees and cost during this period. Thereafter, Seller is willing to grant Company read-only access to such information until December 31(thirty-first), 2002 (two thousand and two), whereas Purchaser acknowledges and agrees that the Company shall no longer be entitled to use such information for processing the Company's accounts. Seller and the Company will enter into a separate agreement with respect to this read-only access. Seller shall use commercially reasonable efforts to provide access to its information technology system and shall in no event be liable for any damage caused to the Company as a result of such access. Purchaser shall indemnify and hold Seller harmless for any damage and cost caused by its or the Company's access or use of the Seller's information technology. Purchaser shall further reimburse Seller for all costs incurred by Seller as a result of such access. Purchaser and the Company will not allow any third party access to Seller's information technology systems and will treat all information obtained through their access strictly confidential. Purchaser and the Company may not use any information obtained through their access for any purpose other than the processing of the Company's accounts. Purchaser and the Company acknowledge and agree that access to the Seller's information technology systems remains subject to the policies and instructions of the Seller which Purchaser and the Company will comply with at all times. (b) Upon Seller's request, Purchaser shall assist Seller in the winding-up and de-registration of Seller's group subsidiaries in Poland, Hungary and Italy, and Purchaser shall be obligated, upon Seller's request, to assist with the administration of lease agreements of these subsidiaries, if any, for a period of at least three months following a respective request by Seller. Seller shall, upon the presentation of appropriate invoices, reimburse Purchaser for any reasonable out-of-pocket expenses reasonably incurred by Purchaser in the course of providing such services. Further, Purchaser shall or shall cause the Company to fully cooperate and assist Seller and/or any third parties and third party advisors nominated by Seller in the supervision of and preparation of financials and year end closing for Switzerland for a period of at least three months following a respective request by Seller. (c) Seller shall use commercially reasonable efforts to provide Purchaser or the Company with electronic copies of the Company's financial accounts and certain information relating thereto in connection with the business years 2000 (two thousand), 2001 (two thousand and one) and 2002 (two thousand and two), which are in the possession of Seller. 5.3 Comdisco Trademark. Notwithstanding anything contained in this Agreement to the contrary, it is expressly agreed that Purchaser is not purchasing, acquiring or otherwise obtaining any right, title or interest in any Trademark employing Seller's name or any part or variation of such name or anything confusingly similar thereto (the "Comdisco Trademark"). Neither Purchaser, Company nor any of their affiliates shall be entitled to retain nor to make any use of the Comdisco Trademark. Purchaser will hold Seller fully harmless from damages of whatever nature resulting from the use of the Comdisco Trademark after the Closing Date. 5.4 Confidentiality. Each party to this Agreement will not intentionally disclose, and will use its best efforts to prohibit the unintentional disclosure, to any third party except to its employees, advisers and/or Governmental Authorities, or otherwise required by any applicable law, of any confidential or proprietary information concerning the other party or its processes, inventions, formulae, customers, suppliers, or any trade secret, unless the disclosure is expressly assented to in writing. This obligation will survive termination of this Agreement for a period of 3 (three) years. All information furnished to one party by the other party will be considered confidential or proprietary information, unless otherwise so indicated by the party furnishing the information. For the avoidance of doubt, Seller may also disclose information which would otherwise be deemed confidential to the extent it is required to do so under the rules or regulations of any stock exchange or governmental body. ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER The obligations of Purchaser under Article II of this Agreement are subject to the satisfaction or waiver by Purchaser of the following conditions precedent on or before the Closing Date: Board Approval. Seller shall confirm that prior to the Closing Date, its Board of Directors has voted in favor of the sale of the Share Quota as contemplated hereunder. ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER The obligations of Seller under Article II of this Agreement are subject to the satisfaction or waiver by Seller of the following conditions precedent on or before the Closing Date: 7.1 Warranties True as of Closing Date. Each of the representations and warranties of Purchaser set forth in this Agreement, disregarding all qualifications and exceptions contained therein relating to materiality or Material Adverse Effect, shall be true and correct in all material respects as of the date of this Agreement (except to the extent that such representations and warranties are expressly limited by their terms to another date, in which case such representations and warranties shall be true and correct as of such other date), and Seller shall have received a certificate (which certificate may be qualified by "knowledge" to the same extent as the representations and warranties of Purchaser contained herein are so qualified) signed on behalf of Purchaser by an authorized officer of Purchaser, in such capacity, to such effect. 7.2 Compliance with Agreements and Covenants. Purchaser shall have performed and complied in all material respects with all of its covenants, obligations and agreements required to be performed by it under this Agreement at or prior to the Closing Date. 7.3 No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other order issued by any Governmental Authority of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement shall be in effect. 7.4 Board Approval. Seller shall confirm that prior to the Closing Date, its Board of Directors has voted in favor of the sale of the Share Quota as contemplated hereunder. 7.5 Payment of the Purchase Price. Purchaser shall have transferred the amount of (euro) 8,733,200.71 (eight million seven hundred thirty-three thousand and two hundred 71/100) to the Seller's account at Bank of America, Amsterdam, account number 600415869015, bank sort code BOFANLNX and the amount of (euro) 633,424.73 (six hundred thirty-three thousand and four hundred twenty-four 73/100) to the Trustee and both Bank of America and Trustee shall have confirmed to Seller in writing that the Purchase Price has been transferred in immediately available funds and received by Bank of America and Trustee. For the avoidance of doubt the Seller shall not be obligated to transfer the Share Quota and the Share Quota shall not be transferred to Purchaser prior to the receipt of the confirmations described above. ARTICLE VIII REMEDIES, INDEMNIFICATION The Purchaser shall be entitled to claim direct damages directly resulting from an intentional breach by the Seller of the Seller's representations and warranties subject to the limitations set forth in Section 3.4. If the Purchaser becomes aware that there has been a material breach of the Seller's warranties or any other term of this Agreement, the Purchaser shall not be entitled to rescind or avoid this Agreement or treat this Agreement as terminated but shall only be entitled to claim damages or exercise any other right, power or remedy under this Agreement. 8.1 Indemnification by Purchaser. Purchaser agrees to indemnify Seller and each of its respective officers, directors, employees, agents and representatives against, and agrees to hold each of them harmless from, any and all losses incurred or suffered by them and discovered during a period of 36 (thirty sixt) months following the Closing Date (the "Limitation Period") relating to or arising out of or in connection with any of the following: (a) any breach of or any inaccuracy in any representation or warranty made by Purchaser in this Agreement or any document delivered at the Closing Date; provided, however, that a notice of the claim by Seller shall have been given to Purchaser not later than the close of business on the last day of the applicable Limitation Period; or (b) any breach of or failure by Purchaser to perform any covenant or obligation of Purchaser set out or contemplated in this Agreement or any document delivered at the Closing Date; provided, however, that a notice of the claim by Seller shall have been given to Purchaser not later than the close of business on the last day of the applicable Limitation Period. ARTICLE IX MISCELLANEOUS 9.1 Expenses. Each party hereto shall bear its own expenses with respect to the transactions contemplated hereby, provided, however, that Purchaser shall pay all sales, use, stamp, transfer, service and like taxes or fees, if any, imposed by any Governmental Authority in connection with the transfer and assignment of the Share Quota or other transactions contemplated by this Agreement. 9.2 Amendment. This Agreement may be amended or supplemented only by an instrument in writing executed by the party against whom enforcement is sought. 9.3 Notices. Any notice, request, instruction or other document to be given hereunder by a party hereto shall be in writing and shall be deemed to have been given, (a) when received if given in person or by courier or a courier service, or (b) on the date of transmission if sent by telex, facsimile or other wire transmission so long as a copy is delivered by overnight courier the next Business Day: (a) If to Seller, addressed as follows: Comdisco Inc. 6111 North River Road Rosemont, Illinois 60018 Attention: Robert E.T. Lackey Telephone: +1 847 518 5208 Facsimile: +1 847 518 5088 with a copy (which shall not constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP Schwarzenbergplatz 6 A-1030 Vienna Attention: Albert Adametz and Andreas Frohner Telephone: +43 1 710 77 300 Facsimile: +43 1 710 77 303 (b) If to Purchaser, addressed as follows: PH Holding GmbH Reischachstrasse 3/12A A-1010 Vienna Attention: Peter Huber Telephone: +43 1 512 89 90 Facsimile: + 43 1 512 94 09 or to such other individual or address as a party hereto may designate for itself by notice given as herein provided. 9.4 Waivers. The failure of a party hereto at any time or times to require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same. No waiver by a party of any condition or of any breach of any term, covenant, representation or warranty contained in this Agreement shall be effective unless in writing, and no waiver in any one or more instances shall be deemed to be a further or continuing waiver of any such condition or breach in other instances or a waiver of any other condition or breach of any other term, covenant, representation or warranty. 9.5 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 9.6 Interpretation. The headings preceding the text of Articles and Sections included in this Agreement and the headings to Schedules attached to this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in interpreting this Agreement. The use of the masculine, feminine or neuter gender herein shall not limit any provision of this Agreement. The use of the terms "including" or "include" shall in all cases herein mean "including, without limitation" or "include, without limitation," respectively. Underscored references to Articles, Sections, Subsections or Schedules shall refer to those portions of this Agreement. Consummation of the transactions contemplated herein shall not be deemed a waiver of a breach of or inaccuracy in any representation, warranty or covenant or of any party's rights and remedies with regard thereto. No specific representation, warranty or covenant contained herein shall limit the generality or applicability of a more general representation, warranty or covenant contained herein. A breach of or inaccuracy in any representation, warranty or covenant shall not be affected by the fact that any more general or less general representation, warranty or covenant was not also breached or inaccurate. 9.7 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Illinois without regard to the rules of conflict of laws of the State of Illinois or any other jurisdiction. Each of the parties hereto irrevocably and unconditionally consents to submit to the jurisdiction of the Courts of Illinois for any litigation arising out of or relating to this Agreement and the transactions contemplated hereby (and agrees not to commence any litigation relating thereto except in such court), waives any objection to the laying of venue of any such litigation in the Courts of Illinois. Notwithstanding the aforesaid, local laws shall be applicable where mandatory. 9.8 Assignment. Purchaser must not assign this Agreement without the prior written consent of the Seller, and any such prohibited assignment shall be void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the respective legal representatives, successors, assigns, heirs, and devisees of the parties. 9.9 No Third Party Beneficiaries. This Agreement is solely for the benefit of the parties hereto and, to the extent provided herein, their respective affiliates, directors, officers, employees, agents and representatives, and no provision of this Agreement shall be deemed to confer upon other third parties any remedy, claim, liability, reimbursement, cause of action or other right. 9.10 Calculation of Time Periods. Unless otherwise specified, in computing any period of time described herein, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is a Saturday, Sunday or legal holiday, in which event the period shall run until the end of the next day which is neither a Saturday, Sunday or legal holiday. The last day of any period of time described herein shall be deemed to end at 5:00 p.m., local time (Austria). 9.11 Further Assurances. Upon the reasonable request of Purchaser, Seller shall on and after the Closing Date execute and deliver to Purchaser such other documents, releases, assignments and other instruments as may be required to effectuate completely the transfer and assignment to Purchaser of, and to vest fully in Purchaser title to, the Share Quota, and to otherwise carry out the purposes of this Agreement. 9.12 Severability. If any provision of this Agreement shall be held invalid, illegal or unenforceable, the validity, legality or enforceability of the other provisions hereof shall not be affected thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue. 9.13 Entire Understanding. This Agreement embodies the entire agreement between the parties and supersedes all prior agreements, arrangements and understandings between the parties. Vienna, August 14, 2002 COMDISCO, INC. By: /s/ Bing Chen --------------------- Name: Bing Chen Title: Attorney-in-Fact PH HOLDING GMBH By: /s/ Peter Huber -------------------- Name: Peter Huber Title: Managing Director Signed pursuant to Sections 54 et sequ. Notaries Act: /s/ Dr. Rudolf Kaindl - ------------------------- Offentl. Notar. Civil Law Notary Schedule A Excluded Contracts 1. Amendment No. 1 to Equipment Schedule No. 1 between Comdisco Austria GmbH and Celestica Italia S.r.l. 2. Amendment No. 1 to Equipment Schedule No. 2 between Comdisco Austria GmbH and Celestica Italia S.r.l. 3. Amendment No. 1 to Equipment Schedule No. 3 between Comdisco Austria GmbH and Celestica Italia S.r.l. 4. Amendment No. 1 to Equipment Schedule No. 5 between Comdisco Austria GmbH and Celestica Italia S.r.l. 5. Amendment No. 1 to Equipment Schedule No. 10 between Comdisco Austria GmbH and Celestica Italia S.r.l. 6. Amendment No. 1 to Equipment Schedule No. 11 between Comdisco Austria GmbH and Celestica Italia S.r.l. 7. Amendment No. 2 to Equipment Schedule No. 24 between Comdisco Austria GmbH and Celestica Italia S.r.l. Schedule B N O N - R E C O U R S E N O T E (SCHULDVERSCHREIBUNG) August 14, 2002 For value received, Computer Discount GmbH, an Austrian Limited Liability Company ("Payor"), registered under FN 81059f with the Commercial Court in Vienna, promises to pay to Comdisco, Inc. or its assigns ("Holder"), the principal sum of seven hundred eighty-five thousand two hundred and fourteen Euros and fifty-seven Eurocents ((euro) 785,214.57). As security for the prompt and complete payment of all indebtedness evidenced by this Note and for certain other obligations of Payor set forth below, Payor has agreed to grant Holder a security interest in the property hereinafter described. NOW THEREFORE, in consideration of the foregoing and the mutual promises and other agreements hereinafter contained, Payor hereby agrees with Holder for its benefit as follows: 1. Payment. (a) Upon the receipt by Payor of any payment related to the contracts as set forth in Schedule 1 (each of them the "Contract" and collectively the "Contracts"), notwithstanding whether such payment is an ordinary rental/lease payment under the Contract or a purchase price payment for the lease equipment related to the Contract, Payor shall within ten (10) business days transfer such amount to a bank account to be designated by Holder ("Cash Receipt Payments"). Payor and Holder acknowledge and agree that the Cash Receipt Payments shall be secured by all assets of Payor and the limitation set forth in Section 5 shall not apply. (b) Upon the expiration of any Contract, or Holder's demand for early return of title, Payor shall within ten (10) business days transfer title in any equipment related to such Contract to Holder ("In Kind Payment"). (c) All such Cash Receipt Payments or In Kind Payments shall be deemed to be payments under this Note. 2. Default by Payor. The entire unpaid principal balance of this Note shall become immediately due and payable upon the failure of Payor to make any Cash Receipt or In Kind Payment in accordance with Section 1. 3. Waiver of Demand Etc. Payor hereby waives demand, presentment, protest, notice of nonpayment, notice of protest and any and all lack of diligence or delays which may occur in collection of this Note, if any. 4. Security. Payor hereby grants to Holder a continuing exclusive first priority security interest (ausschlie(beta)liches Pfandrecht) in the property of Payor related to the Contracts (as listed in the equipment schedules) set forth in Schedule A hereof, wherever located, whether the same is now owned or hereafter acquired as a collateral for this Note (the "Collateral"). Payor acknowledges and agrees that it has the sole responsibility of information and other steps required and desirable in order to comply with legal publicity and announcement standards under the applicable laws in connection with this security interest. Payor and Holder acknowledge and agree that the Collateral is collateral security for the prompt payment or performance in full when due, whether at stated maturity, by acceleration or otherwise of all obligations now or hereafter arising under this Note. 5. Non-Recourse. This Note is secured by the Collateral in favor of the Holder. Except as expressly provided in Section 1 (a) , and except as hereinafter provided, in any action commenced to enforce the obligations of the Payor created or arising hereunder, the judgment shall not be enforceable personally against the Payor or against any assets of the Payor other than the Collateral conveyed or encumbered in or otherwise covered by the security interest. Recourse for any violation or breach of the terms of this Note shall be only against the Collateral and any such judgment shall not be subject to execution on, nor be a lien on, any other assets of the Payor. Notwithstanding the foregoing, however, the Payor would be liable absent the foregoing nonrecourse provisions: (i) for any intentional fraud or misrepresentation by the Payor in connection with the delivery or performance of this Note (ii) for the retention in violation of this Note of any payments, income or other property or proceeds arising with respect to the Collateral; (iii) for the fair market value of any other rights, interests or property comprising the Collateral removed or disposed of by the Payor (iv) for the retention or misapplication of any proceeds under any insurance policies or awards resulting from condemnation or the exercise of the power of eminent domain, or by reason of damage, loss, or destruction of any portion of the Collateral; (v) for damage to the Collateral from waste or the failure of the Payor to maintain, repair, protect and preserve the Collateral. The holder hereof shall have the right to recover its damages hereunder in a separate proceeding brought for that purpose, or in any foreclosure action under this Note and the Payor's liability under this paragraph shall survive foreclosure under this Note and the holder hereof may pursue against the Payor all of such holder's rights and remedies thereunder or at law or equity, notwithstanding any such foreclosure. 6. Miscellaneous. (a) Binding Agreement. The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors and assigns of Payor and Holder. Nothing in this Note, express or implied, is intended to confer upon any third party any rights, remedies, obligations, or liabilities under or by reason of this Note, except as expressly provided in this Note. (b) Governing Law. This Note shall be governed by and construed under the laws of Austria. (c) Construction. The titles and subtitles used in this Note are used for convenience only and are not to be considered in construing or interpreting this Note. The language of this Note shall be construed according to its fair meaning and not strictly for or against any party. (d) Notices. All notices, requests, demands and other communications under this Note shall be in writing and shall be deemed to have been duly given on the date of service if served personally or by facsimile (with electronically verified receipt) on the party to whom notice is to be given, or on the third day after mailing if mailed to the party to whom notice is to be given by registered or certified mail, postage prepaid, and properly addressed as follows: To Payor: COMPUTER DISCOUNT GMBH Mahlerstrasse 7/22 A-1010 Vienna Austria Attn: Peter Huber To Holder: COMDISCO INC. 6111 North River Road 60018 Rosemont, Illinois U.S.A. Attn: Kathryn Chapman With a copy to: Skadden Arps Schwarzenbergplatz 6 A-1030 Vienna Austria Attn: Albert Adametz Andreas Frohner Any party may change its address for purposes of this Section by giving the other parties written notice of the new address in the manner set forth above. (e) Modification; Waiver. No modification to this Note, nor any waiver of any rights, shall be effective unless assented to in writing by the party to be charged, and the waiver of any breach or default shall not constitute a waiver of any other right or any subsequent breach or default. (f) Severability. If any of the provisions of this Note are determined to be invalid, illegal, or unenforceable, such provisions shall be modified to the minimum extent necessary to make such provisions enforceable, and the validity, legality, and enforceability of the remaining provisions of this Note shall continue in full force and effect to the extent the economic benefits conferred upon Payor and Holder by this Note remain substantially unimpaired. (g) Non-Payment. If this Note or any installment of principal or interest is not paid when due, whether at maturity or by acceleration, the Payor promises to pay all costs of collection, including, without limitation, actual attorney's fees, and all expenses in connection with the protection or realization of the Collateral securing this Note or the enforcement of any guaranty hereof incurred by the holder hereof on account of such collection, whether or not suit is filed hereon or thereon; such costs and expenses shall include, without limitation, all costs, expenses and attorney's fees actually incurred by the holder hereof in connection with any insolvency, bankruptcy, arrangement or other similar proceedings involving the Payor, which in any way affects the exercise by the Holder hereof of its rights and remedies under this Note. As used herein, "actual attorney's fees" or "attorney's fees actually incurred" means the full and actual cost of any legal services actually performed in connection with the matter for which such fees are sought calculated on the basis of the usual fees charged by the attorneys performing such services, and shall not be limited to "reasonable attorneys' fees" as that term may be defined in statutory or decisional authority. (h) Assignment. Purchaser must not assign this Note without the prior written consent of the Seller, and any such prohibited assignment shall be void. Subject to the foregoing, this Note shall be binding upon and inure to the benefit of the respective legal representatives, successors, assigns, heirs, and devisees of the parties. (i) Entire Agreement. This Note constitutes the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein. In Witness Whereof, both parties have caused this Note to be executed by its duly authorized officers or attorneys-in-fact as of the date first written above. COMPUTER DISCOUNT GMBH By: /s/ Peter Haber --------------------------------- Peter Huber, Managing Director COMDISCO, INC. By: /s/ Bing Chen --------------------------------- Bing Chen, Attorney-in-Fact Schedule 1 1. Amendment No. 1 to Equipment Schedule No. 1 between Comdisco Austria GmbH and Celestica Italia S.r.l. 2. Amendment No. 1 to Equipment Schedule No. 2 between Comdisco Austria GmbH and Celestica Italia S.r.l. 3. Amendment No. 1 to Equipment Schedule No. 3 between Comdisco Austria GmbH and Celestica Italia S.r.l. 4. Amendment No. 1 to Equipment Schedule No. 5 between Comdisco Austria GmbH and Celestica Italia S.r.l. 5. Amendment No. 1 to Equipment Schedule No. 10 between Comdisco Austria GmbH and Celestica Italia S.r.l. 6. Amendment No. 1 to Equipment Schedule No. 11 between Comdisco Austria GmbH and Celestica Italia S.r.l. 7. Amendment No. 2 to Equipment Schedule No. 24 between Comdisco Austria GmbH and Celestica Italia S.r.l. Schedule C List of invoices to be received in the escrow account the statute of limitation has not yet run
1998/1999 Wango lease assets Wango ReifenvertriebsgmbH, Linz 1.453,46 EMC ITA lease assets PFH Computers, Cork, Ireland 35.002,87 - ----------------- -------------------------- ---------------------------- ------------------------------------- --------------- 36.456,33 1999/2000 Datacontact lease assets B.O.T Datacontact / Metro GmbH, Wien 12.516,83 OMV lease assets Support EDV GmbH, Wien 2.138,76 Naintsch lease assets Computercenter France SA, Paris 1.380,55 missing credit note JET missing credit note to be GE Capital GmbH, Wien -2.176,69 received - ----------------- -------------------------- ---------------------------- ------------------------------------- --------------- 13.859,45 2000/2001 IT Austria missing credit note to be IT Austria GmbH, Wien 545,05 issued 2000/2001 OMV lease assets Support EDV GmbH, Wien 2.563,90 - ----------------- -------------------------- ---------------------------- ------------------------------------- --------------- 3108,95 TOTAL 53.424,73 ==========
EX-10 23 chi340587.txt EXHIBIT 10.19 Exhibit 10.19 =============================================================================== SHARE PURCHASE AGREEMENT between COMDISCO GLOBAL HOLDING COMPANY, INC. and COMPRENDIUM INVESTMENT SA Dated as of October 10, 2002 ================================================================================ ARTICLE I DEFINITIONS.........................................................2 1.1 Definitions.......................................................2 ARTICLE II SALE AND PURCHASE OF THE SHARES....................................3 2.1 Sale and Purchase.................................................3 2.2 Purchase Price....................................................3 ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER..........................5 3.1 Due Incorporation and Ownership...................................5 3.2 Authority; Consents and Approvals.................................5 3.3 Ordinary Business.................................................6 3.4 No Other Representations or Warranties............................6 3.5 Seller's Limitation on Liability..................................6 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER........................6 4.1 Power, Authority and Consents.....................................6 4.2 Familiarity with the Company's Business...........................7 ARTICLE V COVENANTS...........................................................7 5.1 Cooperation after Closing.........................................7 5.2 Reasonable Inspection after Closing...............................7 5.3 Comdisco Trademark................................................8 5.4 Confidentiality...................................................8 ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER......................8 6.1 Warranties True as of Closing Date................................8 6.2 Compliance with Agreements and Covenants..........................8 6.3 No Injunctions or Restraints......................................8 6.4 Board Approval....................................................9 6.5 Payment of the Purchase Price.....................................9 ARTICLE VII INDEMNIFICATION...................................................9 7.1 Purchaser's Indemnification.......................................9 7.2 Release...........................................................9 ARTICLE VIII MISCELLANEOUS...................................................10 8.1 Expenses.........................................................10 8.2 Amendment........................................................10 8.3 Notices..........................................................10 8.4 Waivers..........................................................11 8.5 Counterparts.....................................................11 8.6 Interpretation...................................................11 8.7 Governing Law, Arbitration.......................................12 8.8 Assignment.......................................................12 8.9 No Third Party Beneficiaries.....................................12 8.10 Calculation of Time Periods......................................12 8.11 Further Assurances...............................................12 8.12 Severability.....................................................12 8.13 Entire Understanding.............................................13 SHARE PURCHASE AGREEMENT THIS SHARE PURCHASE AGREEMENT is made by and between COMDISCO GLOBAL HOLDING COMPANY, INC., a corporation duly established and validly existing under the laws of the State of Delaware, USA, with its corporate seat in 60018 Rosemont, 6111 North River Road, Illinois, USA (the "Seller") and COMPRENDIUM INVESTMENT SA, a corporation duly established and validly existing under the laws of Switzerland, with its corporate seat in 6341 Baar, Zugerstrasse 50, Switzerland (the "Purchaser"). Certain capitalized terms used herein are defined in Article I. W I T N E S S E T H: WHEREAS, the Seller's group is engaged in the business of leasing and providing remarketing services for distributed computing systems (servers, workstations, personal computers, local area networks and other high technology equipment), (the "Business"); WHEREAS, COMPRENDIUM FINANCE SA (the "Company"), formerly known as Comdisco (Switzerland) SA, is a corporation duly established and validly existing under the laws of Switzerland with its corporate seat in Zugerstrasse 50, 6341 Baar, Switzerland and registered with the commercial register of the Canton of Zug under CH-170.3.017.551-7. The stated share capital of the Company amounts to CHF 2,100,000 (two million one hundred thousand Swiss Francs); WHEREAS, Seller is the legal and beneficial owner of 2,100 (two thousand one hundred) registered shares with restricted transferability and with an aggregate nominal value of CHF 2,100,000 (two million one hundred thousand Swiss Francs) representing 100% of the stated share capital of the Company (the "Shares"). The stated share capital of the Company has been fully paid up in cash; WHEREAS, Thomas Flohr, a Swiss citizen, born on the 17 th day of March, 1960, resident in London, managing director and sole shareholder of Purchaser, has effectively been working for the Seller's group and the Company until January 6, 2001 in a senior position and - until that date - has thereby been engaged in the Business of the Company; WHEREAS, subject to the terms and conditions set forth in this Agreement, Seller desires to sell all of its right, title and interest in the Shares and Purchaser desires to purchase such rights, title and interest in the Shares from Seller. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, agreements and warranties herein contained, the parties agree as follows: ARTICLE I DEFINITIONS 1.1 Definitions. The following terms shall have the following meanings for the purposes of this Agreement: "Agreement" Shall mean this Share Purchase Agreement, including all Schedules hereto; "Business" Shall have the meaning set forth in the recitals to this Agreement; "Business Day" Shall mean any day of the year other than (i) any Saturday or Sunday or (ii) any other day on which banks located in Switzerland generally are closed for business; "Closing Date" Shall mean the date on which the Closing occurs or is to occur; "Chapter 11 Case" Shall mean that Seller's parent company, along with certain of its affiliates, has filed a voluntary petition for relief commencing a case under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. ss.ss. 101 et seq., as amended, in the United States Bankruptcy Court for the Northern District of Illinois; "Comdisco Trademark" Shall have the meaning set forth in Section 5.3; "Company" Shall have the meaning set forth in the recitals to this Agreement; Numbers preceded by the Shall mean amounts in Swiss Francs; symbol "CHF" Numbers preceded by the Shall mean amounts in Euros; symbol "(euro)" "Governmental Authority" Shall mean the government of the United States or any foreign country or any state or political subdivision thereof and any entity, body or authority exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including quasi-governmental entities established to perform such functions; "Material Adverse Effect" means any event, condition, or matter in respect of the operation of the Business or the Shares that results in or has a material adverse effect on the business, financial condition or operations of the Business taken as a whole; provided, however, that, the effects of changes that (i) are generally applicable to (A) the industries and markets in which the Business operates or (B) the United States and global economies or (ii) relate to foreign currency exchange rate fluctuations, shall in each case be excluded from the determination of Material Adverse Effect; and provided, further, that any adverse effect on the Business, taken as a whole, resulting from the execution of this Agreement and the announcement of this Agreement, the Chapter 11 Case and the announcement of the Chapter 11 Case and the other transactions contemplated by this Agreement shall also be excluded from the determination of Material Adverse Effect; "Petition" Shall have the meaning set forth in the recitals to this Agreement; "Purchase Price" Shall have the meaning set forth in Section 2.2; "Purchaser" Shall have the meaning set forth in the recitals to this Agreement; "Seller" Shall have the meaning set forth in the recitals to this Agreement; "Shares" Shall have the meaning set forth in the recitals to this Agreement; "Trademark" Shall mean U.S. and foreign registered and unregistered trademarks, service marks, logos, trade names, corporate names and all registrations and applications to register the same; ARTICLE II SALE AND PURCHASE OF THE SHARES 2.1 Sale and Purchase. Effective as of the Closing Date and subject to the terms and conditions set forth herein, Seller sells and transfers and Purchaser purchases and accepts from the Seller all rights, title and interest in the Shares with all the rights attached or accruing to them at the Closing Date. 2.2 Purchase Price. At the Closing Date and in consideration for the Shares, Purchaser shall pay CHF 814.312 (eight hundred fourteen thousand three hundred twelve) (i.e., the amount of CHF 3,700.312 (three million seven hundred thousand three hundred twelve) less the amount of USD 1,450,000 (one million four hundred fifty thousand), which has been credited to Purchaser in accordance with the terms set forth in the first paragraph under the heading "Resolution/Status of Claims" in the letter summarizing the terms of the settlement between Comdisco, Inc. et al and Thomas Flohr dated July 29, 2002 less the amount of USD 500,000 (five hundred thousand) Comdisco, Inc. et al and Thomas Flohr have agreed upon as a final settlement of Thomas Flohr's claim for commission in the amount of USD 1.75 mio. in connection with the signing of a technology refreshment option agreement between COMDISCO Deutschland GmbH and Deutsche Telekom Computer Services Management AG in April 2000 which was filed by Thomas Flohr with the Kantonsgericht Zug (Schlichtungsstelle fur arbeitsrechtliche Streitigkeiten) on June 3, 2002 and with the Courts of the Sate of Illinois, USA (the "Commission Claim")) by transfer of immediately available funds to the Seller's account at Bank of America, Amsterdam, account number 600415869023, bank sort code BOFANLNX (the "Purchase Price"). The parties acknowledge and agree that the Purchase Price - as determined by the Company's auditors - is fair and determined on the basis of the book value of the Company's net assets - as determined by the Company's auditors - under Swiss statutory accounting principles as of September 30, 2002 in accordance with the method of determination (e.g. adjustments) accepted by the parties. Purchaser hereby expressly waives any and all claims he may have relating to the determination of the Purchase Price. Seller shall not be obligated to sell and transfer the Shares unless it receives written confirmation from Bank of America that the Purchase Price has been received and credited to its account. Purchaser acknowledges and agrees that if Seller provides a letter of credit (guarantee on the full amount of outstanding rents as of September 30, 2002) until the end of October, 2002 for Swissport outstanding rents, Purchaser shall be obligated to transfer within 3 Business Days from receipt of the letter of credit the difference between the 80% of the book value paid by it for these receivables and an amount equal to 96% of the book value of the Swissport receivables guaranteed by such letter of credit. (b) At the Closing Date and immediately following the signing of this Agreement, Purchaser shall cause the Company to transfer to the Seller's account (as specified in the preceding paragraph) the amount of CHF 12,178.874 (twelve million one hundred seventy eight eight hundred seventy four), i.e. retained earnings stemming from the time period ending September 30, 2002 belonging to the Seller, minus 5% withholding tax minus inter-company receivables. Purchaser acknowledges and agrees that these retained earnings exclusively belong to Seller and that the immediate transfer of the amount of CHF 12,178.874 (twelve million one hundred seventy eight eight hundred seventy four) to the Seller's account shall be a condition subsequent to the sale and transfer of the Shares to Purchaser. Should the Company fail to transfer the amount of CHF 12,178.874 (twelve million one hundred seventy eight eight hundred seventy four) to the Seller's account in a manner that allows Seller's bank to confirm to Seller in writing on the Closing Date that the full amount has been received and credited to Seller's bank account, this Agreement shall be null and void. Thomas Flohr and Purchaser assume personal liability for the fact that the amount of CHF 12,178.874 (twelve million one hundred seventy eight eight hundred seventy four) will not be spent by Purchaser, the Company or any other person for any purpose other than a timely transfer of the full amount to the Seller's account. ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER The parties acknowledge that Thomas Flohr, managing director and sole shareholder of Purchaser, has effectively been working for the Company and the Seller's group until January 6, 2001 in a senior position and therefore has comprehensive knowledge of the Business and the legal and commercial condition of the Company until that date. In addition, Purchaser has been provided with all the information requested by him regarding the time period January 6, 2001 up to the Closing Date. The Seller represents and warrants to Purchaser, as of the Closing Date (as if such representations and warranties were remade on the Closing Date), as follows: 3.1 Due Incorporation and OwnershipSeller is duly organized and validly existing under the laws of the State of Delaware, with all requisite power and authority to own foreign investments and to carry on its respective businesses as it is now being owned and conducted. The Company is duly organized and validly existing under the laws of Switzerland and has full right and authority to own and to operate their properties. (b) Seller is the sole legal, beneficial and of record owner of and has good and valid title to the Shares. The Shares are clear and free of any liens, similar encumbrances, options, and claims arising from any privilege, pledge or security arrangement. Seller has full right and capacity to sell and transfer complete title to the Shares. Upon delivery to Purchaser of the Shares endorsed in blank, the original copy of the share registry book, if any, of the Company showing that the Shares have been recorded in the name of the Purchaser, the original copy of the resolution of the Company's board of directors consenting to the transfer of the Shares to Purchaser, Purchaser will receive good and valid title to the Shares, clear and free of all liens, encumbrances or similar rights of third parties. 3.2 Authority; Consents and Approvals (a) The Seller has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution, delivery and performance of this Agreement by the Seller and the consummation by the Seller of the transactions contemplated hereby have been duly authorized by all requisite corporate action. This Agreement has been duly and validly executed and delivered by the Seller and (assuming this Agreement constitutes a valid and binding obligation of the Purchaser) constitutes a valid and binding agreement of the Seller, enforceable against the Seller in accordance with its terms. (b) No consent, approval, or authorization of, or declaration, filing or registration with, any Governmental Entity is required to be made or obtained by the Seller in connection with the execution, delivery and performance of this Agreement and the consummation of the transaction, except (i) for consents, approvals or authorizations of the Seller's board of directors or Company's board of directors (Verwaltungsrat), and (ii) for consents, approvals, authorizations, declarations, filings or registrations, which, if not obtained, would not, individually or in the aggregate, have a Material Adverse Effect. 3.3 Ordinary Business. In the time period between September 30, 2002 and the Closing Date, the Company has abstained from any transaction (e.g., the entering into new contractual arrangements) outside the ordinary course of business. With the exception of office and payroll related expenses, the Company has not made any payments exceeding in a single case CHF 10,000 without the prior approval of Purchaser. 3.4 No Other Representations or Warranties. Except as specifically and expressly set forth in this Article III, (i) the Seller makes no representation or warranty, express or implied, in law or in equity, relating to the transferred Shares or otherwise, including without limitation, any representation or warranty as to value, merchantability, fitness for a particular purpose or for ordinary purposes, or any other matter, (ii) the Seller makes no, and hereby disclaims any, other representation and warranty regarding the transferred Shares and (iii) the transferred Shares being transferred to the Purchaser is conveyed on an "as is, where is" basis as of the Closing, and the Purchaser shall rely upon its own examination thereof, in particular its long lasting experience as employee of the Company. Without limiting the generality of the foregoing, the Seller makes no representation or warranty regarding any assets other than expressly set forth above, and none shall be implied by law or in equity. 3.5 Seller's Limitation on Liability. The Purchaser shall not be entitled in any event to any lost profits, indirect, consequential, liquidated or other damages in respect of any claim or claims, including, without limitation, any claim or claims under the Seller's representations and warranties. Purchaser hereby expressly waives any entitlements or claims to damages other than direct damages directly resulting from an intentional breach by Seller of the Seller's representations and warranties with the exception of the representations and warranties provided for in Sections 3.1 and 3.2. Only in the case Seller breaches the representations and warranties provided for in Sections 3.1 and 3.2, Purchaser may claim lost profits up to an amount of 50% of the Purchase Price, if Purchaser can prove that it actually incurred these damages. With the exception of claims in respect of the representations and warranties provided for in Sections 3.1 and 3.2, no claim shall be brought against the Seller in respect of any of the Seller's representations and warranties unless the Purchaser shall have given to the Seller written notice of such claim specifying in detail the matter which gives rise to the claim, the nature of the claim and the amount claimed in respect thereof on or before the date which is one month after the Closing Date. With respect to the Seller's warranties provided for in Sections 3.1 and 3.2, the statutory limitation period shall apply. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser represents and warrants to Seller, as of the Closing Date (as if such representations and warranties were remade on the Closing Date), as follows: 4.1 Power, Authority and Consents. Purchaser has the requisite power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. This Agreement has been duly executed and delivered by Purchaser and constitutes a valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with and subject to its terms. 4.2 Familiarity with the Company's Business. Due to the long term top level employment of Thomas Flohr with the Seller's group and the Company, Purchaser (i) is familiar with and has comprehensive knowledge of every aspect of the Company's Business until January 6, 2001 and (ii) has been provided with all the information requested by him regarding the time period January 6, 2001 up to the Closing Date. ARTICLE V COVENANTS 5.1 Cooperation after Closing. Seller and Purchaser agree to use commercially reasonable efforts in continuing their cooperation after Closing. In particular, but without limitation: (a) For a period of 3 (three) months following the Closing Date, Seller shall allow Company to access and use the Seller's information technology systems, for the limited purpose of accessing and processing the Company's financial accounts, to the extent they are currently stored in Seller's information technology system. Thereafter, until December 31 (thirty- first), 2002 (two thousand and two), Seller shall grant Company read-only access to such information technology systems, and the Company shall no longer be entitled to use such information technology system for processing the Company's accounts. Seller shall use commercially reasonable efforts to provide this access and shall in no event be liable for any damage caused to the Company as a result of such access. Purchaser shall indemnify and hold Seller harmless for any damage and cost caused by this information technology access. Purchaser shall not and shall cause the Company to not allow any third party access to Seller's information technology systems and will treat all information obtained through their access strictly confidential. Purchaser and the Company may not use any information obtained through their access for any purpose other than the processing of the Company's accounts. Purchaser and the Company acknowledge and agree that access to the Seller's information technology systems remains subject to the policies and instructions of the Seller which Purchaser and the Company will fully comply with at all times. (b) Seller shall use commercially reasonable efforts to provide Purchaser or the Company with electronic and hard copies of the Company's financial accounts and certain information relating thereto in connection with the last 10 (ten) business years preceding the Closing Date, if and to the extent such information is in the possession of Seller. 5.2 Reasonable Inspection after Closing. Purchaser shall afford Seller and its agents such as, but not limited to, its lawyers and certified accountants, reasonable access to the Company's books of account, financial and other records, information, employees and auditors to the extent such items and contact with such persons is required in connection with Seller's defense against a claim brought by Purchaser under Article III of this Agreement. 5.3 Comdisco Trademark. Notwithstanding anything contained in this Agreement to the contrary, it is expressly agreed that Purchaser is not purchasing, acquiring or otherwise obtaining any right, title or interest in any Trademark employing Seller's name or any part or variation of such name or anything confusingly similar thereto (the "Comdisco Trademark"). Neither Purchaser, Company nor any of their affiliates shall be entitled to retain nor to make any use of the Comdisco Trademark after the Closing Date. Purchaser will hold Seller fully harmless from any and all damages of whatever nature resulting from the use by Purchaser, the Company or any of their respective affiliates of the Comdisco Trademark after the Closing Date. 5.4 Confidentiality. Each party to this Agreement will not intentionally disclose, and will use its best efforts to prohibit the unintentional disclosure, to any third party except to its employees, advisers and/or Governmental Authorities, or otherwise required by any applicable law, of any confidential or proprietary information concerning the other party or the Company or its processes, inventions, formulae, customers, suppliers, or any trade secret, unless the disclosure is expressly assented to in writing. This obligation will survive termination of this Agreement for a period of 3 (three) years. All information furnished to one party by the other party and all information furnished to either party by the Company will be considered confidential or proprietary information, unless otherwise indicated by the party furnishing the information or the Company, as the case may be. Purchaser acknowledges in its own capacity and on behalf of the company that Seller may also disclose information which would otherwise be deemed confidential to the extent it is required to do so under the rules or regulations of any stock exchange or governmental body. ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER The obligations of Seller under Article II of this Agreement are subject to the satisfaction or waiver by Seller of the following conditions precedent on or before the Closing Date: 6.1 Warranties True as of Closing Date. Each of the representations and warranties of Purchaser set forth in this Agreement, disregarding all qualifications and exceptions contained therein relating to materiality or Material Adverse Effect, shall be true and correct in all material respects as of the Closing Date as though made on and as of the Closing Date (except to the extent that such representations and warranties are expressly limited by their terms to another date, in which case such representations and warranties shall be true and correct as of such other date), and Seller shall have received a certificate (which certificate may be qualified by "knowledge" to the same extent as the representations and warranties of Purchaser contained herein are so qualified) signed on behalf of Purchaser by an authorized officer of Purchaser, in such capacity, to such effect. 6.2 Compliance with Agreements and Covenants. Purchaser shall have performed and complied in all material respects with all of its covenants, obligations and agreements required to be performed by it under this Agreement at or prior to the Closing Date. 6.3 No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction or other order issued by any Governmental Authority of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the transactions contemplated by this Agreement shall be in effect. 6.4 Board Approval. Seller shall confirm that prior to the Closing Date, its board of directors and the board of directors (Verwaltungsrat) of the Company have voted in favor of the sale of the Shares as contemplated hereunder. 6.5 Payment of the Purchase Price. Purchaser shall have transferred the amount of CHF 814.312 (eight hundred fourteen thousand three hundred twelve) to the Seller's account at Bank of America, Amsterdam, account number 600415869023, bank sort code BOFANLNX and Bank of America shall have confirmed to Seller in writing that the Purchase Price has been transferred in immediately available funds and received by Bank of America. For the avoidance of doubt, the Seller shall not be obligated to transfer the Shares and the Shares shall not be transferred to Purchaser prior to the receipt of the confirmation described above. The timely transfer (i.e., received by Seller on the Closing Date) by the Company of CHF 12,178.874 (twelve million one hundred seventy eight eight hundred seventy four) to the Seller's account shall be a condition subsequent to the effectiveness of this Agreement. ARTICLE VII INDEMNIFICATION 7.1 Purchaser's Indemnification. The Purchaser shall be entitled to claim damages resulting from a breach by the Seller of the Seller's representations and warranties subject to the limitations set forth in Sections 3.4 and 3.5. If the Purchaser becomes aware that there has been a material breach of the Seller's warranties or any other term of this Agreement, the Purchaser shall - except in the case of a breach of Sections 3.1 and 3.2 - not be entitled to rescind or avoid this Agreement or treat this Agreement as terminated but shall only be entitled to claim damages or exercise any other right, power or remedy under this Agreement. 7.2 Release. Thomas Flohr, acting on behalf of himself, Purchaser and any other entity directly or indirectly controlled by him, generally releases and forever discharges Seller and any of its affiliates and Seller and its affiliates generally release and forever discharge Thomas Flohr, from any and all claims, demands, liabilities, suits, damages, losses, expenses, attorneys' fees and costs, obligations or causes of action, known or unknown, of any kind and any nature whatsoever, fixed or contingent, and whether or not accrued or matured, which Seller or Thomas Flohr or their respective affiliates and entities, ever had or may have in or under any jurisdiction whatsoever arising out of or in connection with (i) Thomas Flohr's former employment with Seller and its respective affiliates or (ii) Thomas Flohr's activities for Seller and its respective affiliates or any other activities of Thomas Flohr, in each case including but not limited to any claim against Seller or its respective affiliates or Thomas Flohr based on or relating to breach of contract (whether oral or written), tort, fraud, defamation, negligence, promissory estoppel or otherwise. Further, following the execution of this Agreement, each of Thomas Flohr and Seller covenant on their own behalf and on behalf of their respective affiliates and entities, to cease, terminate and forego, and forever not to assert, file, prosecute, maintain, commence, institute or sponsor (or purposely facilitate any person in connection with the foregoing), any complaint, arbitration or lawsuit or any legal, equitable or administrative proceeding of any nature, against the other in connection with any matter released hereby. This Section 7.2 shall not be deemed a release of any claim Seller and/or Purchaser may have under the terms of this Agreement and shall not in any way affect the rights of Comdisco, Inc. et al and Thomas Flohr as set forth in the letter of George Panagakis (Skadden, Arps) to Clifford Thau (Vinson & Elkins) dated July 29, 2002 under the heading "SIP Claim". Thomas Flohr agrees to stop and withdraw any legal proceedings against Comdisco, Inc. and its affiliates immediately and not to commence any legal action against Comdisco, Inc. and its affiliates to the extent the underlying claims have been waived under this Section 7.2. ARTICLE VIII MISCELLANEOUS 8.1 Expenses. Each party hereto shall bear its own expenses with respect to the transactions contemplated hereby, provided, however, that Purchaser shall pay all value added, sales, use, stamp, transfer, service and like taxes or fees, if any, imposed by any Governmental Authority in connection with the transfer and assignment of the Shares or other transaction contemplated by this Agreement with the exception of any direct taxes imposed on the Seller in connection with the sale and transfer of the Shares. 8.2 Amendment. This Agreement may be amended or supplemented only by an instrument in writing executed by the party against whom enforcement is sought. 8.3 Notices. Any notice, request, instruction or other document to be given hereunder by a party hereto shall be in writing and shall be deemed to have been given, (a) when received if given in person or by courier or a courier service, or (b) on the date of transmission if sent by telex, facsimile or other wire transmission so long as a copy is delivered by overnight courier the next Business Day: (a) If to Seller, addressed as follows: Comdisco Global Holding Company, Inc. 6111 North River Road Rosemont, Illinois 60018 Attention: Robert E.T. Lackey Telephone: +1 847 518 5208 Facsimile: +1 847 518 5088 with a copy (which shall not constitute notice) to: Skadden, Arps, Slate, Meagher & Flom LLP Schwarzenbergplatz 6 A-1030 Vienna Attention: Albert Adametz Andreas Frohner Telephone: +43 1 710 77 300 Facsimile: +43 1 710 77 303 (b) If to Purchaser, addressed as follows: COMPRENDIUM INVESTMENT SA c/o Dr. Paul Thalmann Reichlin & Hess Hofstrasse 1a CH-6300 Zug Telephone: +41 41 729 10 70 Facsimile: +41 41 729 10 80 or to such other individual or address as a party hereto may designate for itself by notice given as herein provided. 8.4 Waivers. The failure of a party hereto at any time or times to require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same. No waiver by a party of any condition or of any breach of any term, covenant, representation or warranty contained in this Agreement shall be effective unless in writing, and no waiver in any one or more instances shall be deemed to be a further or continuing waiver of any such condition or breach in other instances or a waiver of any other condition or breach of any other term, covenant, representation or warranty. 8.5 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 8.6 Interpretation. The headings preceding the text of Articles and Sections included in this Agreement and the headings to Schedules attached to this Agreement are for convenience only and shall not be deemed part of this Agreement or be given any effect in interpreting this Agreement. The use of the masculine, feminine or neuter gender herein shall not limit any provision of this Agreement. The use of the terms "including" or "include" shall in all cases herein mean "including, without limitation" or "include, without limitation," respectively. Underscored references to Articles, Sections, Subsections or Schedules shall refer to those portions of this Agreement. Consummation of the transactions contemplated herein shall not be deemed a waiver of a breach of or inaccuracy in any representation, warranty or covenant or of any party's rights and remedies with regard thereto. No specific representation, warranty or covenant contained herein shall limit the generality or applicability of a more general representation, warranty or covenant contained herein. A breach of or inaccuracy in any representation, warranty or covenant shall not be affected by the fact that any more general or less general representation, warranty or covenant was not also breached or inaccurate. 8.7 Governing Law, Arbitration. Notwithstanding anything to the contrary contained in this Agreement, this Agreement shall be governed by and construed and enforced in accordance with the laws of Switzerland without regard to the rules and principles of conflict of laws. Any dispute, controversy or claim arising out of or in connection with this Agreement shall be referred to and finally settled by arbitration under and in accordance with the Rules of Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with those rules. The place of arbitration shall be Paris, France. The arbitration proceedings shall be conducted, and the award shall be rendered, in the English language. 8.8 Assignment. Each party must not assign this Agreement without the prior written consent of the other party, with the exception of intra-group transfers to entities which are at least 90 % controlled by the party making the transfer and any such prohibited assignment shall be void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the respective legal representatives, successors, assigns, heirs, and devisees of the parties. 8.9 No Third Party Beneficiaries. This Agreement is solely for the benefit of the parties hereto and, to the extent provided herein, their respective affiliates, directors, officers, employees, agents and representatives, and no provision of this Agreement shall be deemed to confer upon other third parties any remedy, claim, liability, reimbursement, cause of action or other right. 8.10 Calculation of Time Periods. Unless otherwise specified, in computing any period of time described herein, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is a Saturday, Sunday or legal holiday (in Switzerland), in which event the period shall run until the end of the next day which is neither a Saturday, Sunday or legal holiday (in Switzerland). The last day of any period of time described herein shall be deemed to end at 5:00 p.m., local time (Switzerland). 8.11 Further Assurances. Upon the reasonable request of Purchaser, Seller shall on and after the Closing Date execute and deliver to Purchaser such other documents, releases, assignments and other instruments as may be required to effectuate completely the transfer and assignment to Purchaser of, and to vest fully in Purchaser title to, the Shares, and to otherwise carry out the purposes of this Agreement. 8.12 Severability. If any provision of this Agreement shall be held invalid, illegal or unenforceable, the validity, legality or enforceability of the other provisions hereof shall not be affected thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue. 8.13 Entire Understanding. This Agreement embodies the entire agreement between the parties and supersedes all prior agreements, arrangements and understandings between the parties. COMDISCO GLOBAL HOLDING COMPANY, INC. By: /s/ Bing Chen --------------------------- Name: Bing Chen Title: Attorney-in-Fact COMPRENDIUM INVESTMENT SA By: /s/ Thomas Flohr --------------------------- Name: Thomas Flohr Title: Managing Director THOMAS FLOHR /s/ Thomas Flor ------------------------------- EX-10 24 ch339563.txt EXHIBIT 10.20 Exhibit 10.20 ______________________________________________ SHARE PURCHASE AGREEMENT relating to the acquisition of COMDISCO FRANCE SA and PROMODATA SNC ______________________________________________ Dated 1st October 2002 Entered into between (1) ECONOCOM AND (2) COMDISCO GLOBAL HOLDING COMPANY, Inc. (3) COMDISCO HOLDING COMPANY, Inc. ________________________________________________
TABLE OF CONTENTS 1. DEFINITIONS AND INTERPRETATION..........................................................................2 2. PURCHASE OF SHARES AND OF THE INTERCOMPANY AMOUNT RECEIVABLES...........................................6 3. PURCHASE PRICE - PAYMENT................................................................................6 3.1 PURCHASE PRICE.................................................................................6 3.2 PAYMENT AND ADJUSTMENT TO THE PURCHASE PRICE...................................................6 4. PRE-COMPLETION AND POST-COMPLETION COVENANTS............................................................7 4.1 ORDINARY COURSE OF BUSINESS....................................................................7 4.2 ACCESS AND INFORMATION.........................................................................9 4.3 ACTIONS WITH A VIEW TO COMPLETION..............................................................9 4.4 THE SELLER'S TRADEMARKS AND LOGOS.............................................................10 4.5 COMPANY NAME CHANGE...........................................................................10 4.6 GUARANTEE.....................................................................................11 4.7 INSURANCE POLICIES............................................................................11 4.8 GE RECEIVABLE.................................................................................11 4.9 TRANSITIONAL SERVICES AGREEMENT...............................................................11 4.10 EUROPEAN MICHELIN ASSETS......................................................................12 4.11 MODIFICATION OF THE SCHEDULES.................................................................12 4.12 GOVERNMENTAL APPROVALS........................................................................12 5. CONDITIONS PRECEDENT...................................................................................12 5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRER AND THE SELLER............................12 5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRER...........................................12 5.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER.............................................13 5.4 BEST ENDEAVOURS TO FULFIL CONDITIONS PRECEDENT................................................13 5.5 CONDITIONS PRECEDENT NOT FULFILLED AT COMPLETION..............................................13 5.6 WAIVER OF CONDITIONS PRECEDENT................................................................13 5.7 TERMINATION OF THE AGREEMENT..................................................................14 6. COMPLETION.............................................................................................14 6.1 COMPLETION DATE...............................................................................14 6.2 DELIVERIES TO THE ACQUIRER....................................................................14 6.3 EXECUTION OF ANCILLARY AGREEMENTS.............................................................15 6.4 ACTIONS OR DELIVERIES BY ACQUIRER.............................................................15 7. REPRESENTATIONS AND WARRANTIES OF THE PARTIES..........................................................16 7.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER..................................................16 8. INDEMNIFICATION OBLIGATIONS............................................................................18 8.1 INDEMNIFICATION OBLIGATIONS OF THE SELLER.....................................................18 9. CONFIDENTIALITY........................................................................................18 10. NON-COMPETITION.......................................................................................19 11. ANNOUNCEMENTS.........................................................................................20 12. OTHER POST COMPLETION COVENANTS AND OTHER COVENANTS...................................................20 13. MISCELLANEOUS.........................................................................................20 14. GOVERNING LAW AND JURISDICTION........................................................................22 14.1 GOVERNING LAW.................................................................................22 14.2 ARBITRATION...................................................................................23
SHARE PURCHASE AGREEMENT This share purchase agreement (the "Agreement") is made on this 1st day of October 2002, by and between: 1. ECONOCOM Group SA / NV, a company whose registered office is at Chaussee de Louvain 510, Parc Horizon 2000, 1930 Zaventem, Belgium (the "Acquirer" or "ECONOCOM"); 2. COMDISCO GLOBAL HOLDING COMPANY, Inc., a Delaware company, whose registered office is at 6111 North River Road, Rosemont, Illinois, USA ("COMDISCO GLOBAL HOLDING COMPANY, Inc." or the "Seller"); 3. COMDISCO HOLDING COMPANY, Inc., a Delaware Company, whose registered office is at 6111 North River Road, Rosemont, Illinois, USA ("COMDISCO HOLDING COMPANY, Inc." or the "Guarantor"); The Acquirer and the Seller shall be hereinafter collectively referred to as the "Parties" or individually as a "Party". whereas: A. The Seller holds 117,638 shares of COMDISCO FRANCE S.A., representing 99.9% of the issued share capital of COMDISCO FRANCE S.A. on the date hereof. Six other individuals each hold individually 1 share of COMDISCO FRANCE S.A., representing 0.1% of the issued share capital of COMDISCO FRANCE S.A. on the date hereof. As a result, the Seller and the six individuals hold together 100% of the issued share capital of COMDISCO FRANCE S.A. on the date hereof. COMDISCO FRANCE S.A. is a company with a share capital of Euro 1,793,471, registered in France with the Register of Trade and Companies of Nanterre with number 311 463 277, whose registered office is at 176 avenue Charles de Gaulle, 92200 Neuilly-sur-Seine ("COMDISCO FRANCE" or the "Company"). B. The Company holds 218,448 shares of PROMODATA SNC representing 99.18% of the issued share capital of PROMODATA SNC on the date hereof. CDS Foreign Holdings, Inc. holds 1,802 shares of PROMODATA SNC representing 0.82% of the issued share capital of PROMODATA SNC on the date hereof. As a result, the Company and CDS Foreign Holdings, Inc. hold together 100% of the issued share capital of PROMODATA SNC on the date hereof. PROMODATA SNC is a company with a share capital of Euro 3,357,689, registered with the Trade and Company Register of Nanterre with number 392 945 358, whose registered office is at 176 avenue Charles de Gaulle, 92200 Neuilly-sur-Seine, France ("PROMODATA" or the "Subsidiary"). C. The Acquirer is willing to purchase from the Seller and the Seller is willing to sell to the Acquirer the 117,644 shares comprising the share capital of the Company (hereinafter the "Shares"). D. Prior to Completion, CDS Foreign Holdings, Inc. shall transfer to the Company all of its shares in the Subsidiary. E. Prior to Completion, each of the six individuals of the Company shall transfer to the Seller, the one share they hold in the Company. F. On Completion date, the Acquirer shall fund the Company in order to enable the latter to fully reimburse the Spiritus loan (the "Loan") due to Citibank, principal and interests included, such loan amounting to Euro 69,403,475 as of 31 August 2002. 1. DEFINITIONS and interpretation In this Agreement (including in the recitals thereto), unless the context otherwise requires or unless otherwise specified hereinafter, the following words shall have the following meaning: "Affiliate" of any corporate Person means any other person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with the first mentioned Person. A person shall be deemed to control another Person if such first mentioned Person owns, directly or indirectly, 50% or more of the voting rights of the second mentioned Person; "Agreed Form" means in relation to any document, the draft of such document which is either annexed to this Agreement and which has been initialled by the Parties by way of their agreement in relation to such draft document or is agreed later in writing between the Parties; "Agreement" has the meaning set forth in the Preamble; "Ancillary Agreements" means, the Trademark and Software License Agreement, the German License Agreement, the CEG Asset Sale Agreement and the Transitional Services Agreement; "Assignment of Receivables Agreement" means the agreement to be entered into on the Completion Date between the Seller and the Acquirer whereby the Seller shall irrevocably assign to the Acquirer its right to the Intercompany Amount; "Balance" has the meaning set forth in Clause 4.8; "Business" means the business carried out by the Company and the Subsidiary. The Subsidiary is engaged in the business of leasing and providing remarketing services for distributed computing systems, acquisition management and expenditure tracking and other services that facilitate equipment procurement and expense tracking. The Company is engaged in the business of leasing electronics equipment; "Business Day" means any day other than a Saturday, a Sunday or a legal holiday in France (within the meaning of Clause L. 222-1 of the French Labour Code); "CEG Asset Sale Agreement" shall have the meaning ascribed to it in Clause 4.1; "Company" shall mean COMDISCO FRANCE; "Completion Date" shall have the meaning ascribed to it in Clause 6.1; "Completion" means the transfer to the Acquirer by the Seller of the shares of COMDISCO FRANCE; "Computer Systems" means the computer systems used by the Company and the Subsidiary in the conduct of the Business, but excluding Portfolio Property; "Damages" means direct damages, penalties, assessments, losses, costs and expenses (including, but not limited to, reasonable attorneys' fees) to the exclusion of indirect and consequential damages (which indirect and consequential damages include for the avoidance of doubt damage to reputation); "Employee(s)" means the managing individuals, whether or not employed by the Company or the Subsidiary, and all persons employed by the Company and the Subsidiary as at the Completion Date; "Encumbrance" means any encumbrance or security interest whatsoever including (without limitation) any charge, mortgage, floating charge, pledge, security, lien, right of pre-emption, option, right to acquire, conversion right, third party right, interest and claim, right of set-off, right of counterclaim, title retention, conditional sale arrangement, and any other preferential right, agreement or arrangement having similar effect except for any Permitted Lien; "Governmental Approval" means each consent, waiver, authorisation, approval, exemption, expiration or termination of a mandatory waiting period or declaration of or by, or filing with, any Governmental Authority that is reasonably required to be obtained or made by the Parties in connection with the execution and delivery of this Agreement by the Parties or the performance by such Parties of their obligations hereunder, including (without limitation) such approvals or consents be required on account of change of control provisions contained in any Licence; "Governmental Authority" means the government of any nation, state, city, locality or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing; "Intercompany Agreements" means all the agreements existing between the Company and/or the Subsidiary and any member of the Comdisco group, in particular the agreements listed in Schedule A; "Intercompany Amount" shall have the meaning ascribed to it in Clause 3.2.2. "Know How" means all confidential and proprietary information, research in progress, algorithms, processes, formulaes, models, methodologies and techniques which are used by the Company and/or the Subsidiary in connection with the Business; "Licence" means, in relation to the Company and the Subsidiary, any licence, consent, permit, certificate, exemption, permission, concession or other approval, filing of notification or return, report and assessment, registration or authorisation required for, or in connection with, any part of the Business of the Company and the Subsidiary, or its ownership, use, possession of any of its assets or occupation of one or more of the properties (where relevant); "Permitted Lien" means (i) any mechanic's or material men's lien, which an obligor, borrower or lessee under a lease agreement is required to remove and which does not affect the value of the portfolio property subject to such lien, (ii) any Encumbrance pursuant to the refinanced lease agreements, (iii) any Encumbrance on any portfolio property which is specifically permitted in accordance with the terms of the related lease agreement and which does not materially affect the value of the portfolio property subject to such Encumbrance, or (iv) any Encumbrance resulting from the terms of the applicable lease agreement that is reflected on the books and records of the Company or the Subsidiary; "Person" shall mean any individual, firm, company, government, state or agency of a state or any joint venture, association or partnership (whether or not being a separate legal entity) and shall include any successor (by merger or otherwise) of such entity; "Purchase Price" has the meaning ascribed to it in Clause 3.1.1; "Restricted Period" has the meaning ascribed to it in Clause 10; "Schedules" shall mean the disclosure schedules prepared by the Seller and delivered to the Acquirer simultaneously with the execution hereof, as amended or supplemented by the Seller pursuant to the terms hereof; "Securities" means any rights or securities giving their holder a right (whether immediate or deferred in time, contingent or actual) to subscribe for, convert, exchange or otherwise acquire shares or giving access, immediately or not, to any share(s) or portion of the share capital or the voting rights (including, for the avoidance of doubt, warrants, stock options - whether vested or not -, options over shares, convertible bonds, bonds redeemable or exchangeable in shares and share subscription rights); "Shares" means the 117,644 shares of the Company; "Subsidiary" means PROMODATA SNC; "Territory" means the territory of the European Union; "Third Party Consent" means each consent, waiver, authorisation or approval of any person other than a Governmental Authority that is reasonably required to be obtained by the Parties in connection with the execution and delivery of this Agreement by the Parties or the performance by such Parties of their obligations hereunder, including (without limitation) (i) such approvals or consents as may be required on account of change of control provisions contained in any agreement entered into by any of the Company (ii) any consents of customers of the Company as may be required pursuant to the stipulations of lease agreements entered into with such customers (iii) the approval of the Transaction by any relevant bankruptcy court; "Trademark and Software License Agreement" means the license agreement, including terms and conditions, which shall be entered into between the Subsidiary and the Seller regarding in particular the "Class" software and the "IT CAP", "IT Trak" and "TRO" Trademarks substantially in the Agreed Form attached hereto as Schedule B; "Trademarks" shall have the meaning set forth in Clause 4.4 of this Agreement; "Transaction" means the sale and purchase of the Shares and the purchase of the Intercompany Amount and the advance by the Acquirer to the Company pursuant to Section 6.4.3 of this Agreement to be made on the Completion Date for purposes of the reimbursement of the Loan in principal and interest to Citibank; "Transitional Services Agreement" shall have the meaning set forth in Clause 4.9 of this Agreement in the Agreed Form attached hereto as Schedule C. In this Agreement (including in the recitals thereto), unless otherwise specified hereinafter: 1.1.1 references to Clauses, Schedules and Annexes to Schedules are references to clauses (including all sub-clauses) of, schedules to and annexes to schedules to this Agreement; 1.1.2 a reference to any statute or statutory provision shall be construed as a reference to such statute or statutory provision in effect on the date hereof; 1.1.3 references to times of the day are to Paris time; 1.1.4 headings to Clauses and Schedules are for convenience only and do not affect in any way the interpretation thereof; 1.1.5 the Schedules, Annexes to Schedules and any other attachments to this Agreement form an integral part of this Agreement and shall have the same force and effect as if expressly set out in the body of this Agreement and any reference to this Agreement shall include the Schedules, Annexes to Schedules and any other attachments to this Agreement; 1.1.6 in case of conflict between the provisions of this Agreement and those of any of the Ancillary Agreements, the provisions of this Agreement shall prevail; 1.1.7 whenever the words "include", "includes" or "including" are used in this Agreement they shall be deemed to be followed by the words "without limitation"; 1.1.8 the words "hereof", "herein" and "herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph, exhibit and schedule references are to the articles, sections, paragraphs, exhibits and schedules of this Agreement unless otherwise specified; 1.1.9 the meaning assigned to each term defined herein shall be equally applicable to both the singular and the plural forms of such term, and words denoting any gender shall include all genders. Where a word or phrase is defined herein, each of its other grammatical forms shall have a corresponding meaning; 1.1.10 a reference to any party to this Agreement or any other agreement or document shall include such party's successors and permitted assigns; 1.1.11 a reference to any legislation or to any provision of any legislation shall include any amendment to, and any modification or re-enactment thereof, any legislative provision substituted therefor and all regulations and statutory instruments issued thereunder or pursuant thereto. 2. PURCHASE OF SHARES and of the Intercompany amount receivables Upon the terms and conditions set forth in this Agreement and subject to the satisfaction of the conditions precedent mentioned in Clause 5, the Seller hereby agrees to sell and transfer on the Completion Date to the Acquirer and the Acquirer hereby agrees to purchase on the Completion Date, the Shares, free and clear of any Encumbrance and the Intercompany Amount. 3. Purchase price - payment 3.1 Purchase Price The purchase price for the Shares and the Intercompany Amount (the "Purchase Price") shall be equal to five hundred and ninety six thousand five hundred and twenty six Euro (596,526), on the basis of the Intercompany Amount as of 31 August 2002 allocated as follows: - Euro 1 for the Shares; - Euro 596,525 for the Intercompany Amount. 3.2 Payment and adjustment to the Purchase Price 3.2.1 On the Completion Date, the Purchase Price shall be paid in Euro by wire transfer of immediately available funds to the account of the Seller as notified by the Seller to the Acquirer no less than five days prior to the Completion Date. 3.2.2 Schedule 3.2.2 contains a complete list of any and all payables to the Company and the Subsidiary by any member of the Comdisco Group (other than the Company and the Subsidiary) and a list of any and all receivables owed by the Company and the Subsidiary to any member of the Comdisco Group (other than the Company and the Subsidiary), in both cases as of 31 August 2002. The net amount corresponding to the difference between the above receivables and payables is referred to herein as the "Intercompany Amount". The Intercompany Amount as of August 31, 2002 amounts to Euro 1,409,122 (one million four hundred and nine thousands and one hundred and twenty two). Five Business Days prior to the Completion Date, the Seller shall provide the Acquirer with the final Intercompany Amount, which cannot be less than Euro 812,597, certified by the statutory auditors of the Company together with all documentation evidencing the proper transfer of the receivables to the Seller. If the final Intercompany Amount is lower than the Intercompany Amount as of August 31, 2002, (i.e. Euro 1,409,122), the part of the Purchase Price allocated to the Intercompany Amount will be reduced accordingly on an euro per euro basis and such adjusted Purchase Price will become the final Purchase Price. If the final Intercompany Amount is higher than the Intercompany Amount as of August 31, 2002 (i.e. Euro 1,409,122), the part of the Purchase Price allocated to the Intercompany Amount will be increased accordingly on an Euro by Euro basis. Such adjusted Purchase Price will become the final Purchase Price. Upon payment and assignment of the final Intercompany Amount, neither the Company, the Subsidiary, nor any other member of the Comdisco Group shall have any remaining reciprocal claim for repayment of any receivables and payables. The final Purchase Price shall bear interest at an annual rate equal to 4.183% and accruing during the period from the date hereof until the final Purchase Price is paid in full by the Acquirer to the Seller. 4. Pre-Completion and post-completion Covenants 4.1 Ordinary Course of Business Except as otherwise specified herein, after the date hereof and until Completion, the Seller shall cause the Company and the Subsidiary to operate and carry on the Business in the ordinary course and consistent with past practices. Without limiting the generality of the foregoing, the Seller shall procure that the Company and the Subsidiary shall not take any of the following actions (except, and to the extent, required to do so by (i) mandatory provisions of any applicable laws or regulations, or (ii) by the terms of legally binding obligations in existence on the date hereof, and, in each such case, which has been specifically disclosed to the Acquirer in this Agreement as giving rise to such an obligation), without the prior written consent of the Acquirer: (a) enter into any material contract or commitment outside the ordinary course of business; (b) dispose of an asset or supply any service or business facility of any kind not on arm's length terms; (c) acquire fixed assets in an overall amount exceeding Euro 50,000 other than those specifically included in the list attached hereto as Schedule 4.1 (c) or sell, transfer, lease or otherwise dispose of, or subject to any Encumbrance, any assets (including any Intellectual Property Right), other than the sale of inventory or services in such volumes and prices as are consistent with past practices and the sale of assets with an individual value of less than Euro 50,000 sold for fair or reasonable value in the ordinary course of business and consistent with past practices; (d) make any capital expenditure or capital addition or improvement in an overall amount exceeding Euro 50,000 other than those specifically included in the list attached hereto as Schedule 4.1 (d); (e) take any action or fail to take any action that would result in the occurrence of an event of default entitling any third party (with or without the giving of notice) to call for the repayment of indebtedness of the Company or the Subsidiary prior to the normal maturity date; (f) amend their articles of association, by-laws or equivalent organizational documents except as may be required by the transactions contemplated herein; (g) alter their issued share capital, or declare, set aside, make or pay any dividend or other distribution in respect of their share capital (in cash or otherwise), or purchase or redeem any interests in their share capital, or issue or grant any Securities; (h) merge or consolidate with, purchase substantially all of the assets of, or otherwise acquire any equity interest in any business or any corporation, partnership, association or other business organisation or division thereof, regardless of whether such interest involves limited, unlimited or joint liability; (i) enter into any joint venture, partnership, co-operation or similar arrangement; (j) make any changes in their accounting methods, principles or practices (unless required by a concurrent change in applicable law); (k) except as set forth in Schedule 4.1(k), cancel, terminate or fail to maintain any material insurance policy comparable in amount and scope to current coverage, except if replaced by a new insurance policy providing for at least the same coverage at premiums not materially higher than the insurance policy being replaced; (l) enter into any material contract or agreement, or amend, cancel, terminate, relinquish, waive, release or fail to perform any contract referred to in Schedule 4.1 (l), other than in the ordinary course of business; or alter the terms and conditions of any intra-group agreement or arrangement which may impact the sums paid by the Company or the Subsidiary to the Seller or any of its Affiliates; (m) incur, assume or guarantee any loans, borrowings, indebtedness or other form of funding or credits or assistance, or enter into any foreign exchange contracts, interest rate swaps, financial futures, guarantees or agreements or other interest rate instruments; (n) repay or discharge any obligations or liabilities to creditors (including trade creditors and including any receivables owed to any member of the Comdisco Group), demand or collect payment of trade receivables, write down the value of any inventory or asset or write off as uncollectible any accounts receivable, or otherwise manage debtors, creditors and inventory, other than in the ordinary course of business; (o) commence, compromise, settle or discontinue any proceedings or litigation (other than routine debt collection); (p) except as disclosed in Schedule 4.1 (p), pass any shareholders' resolution in a general meeting of shareholders, except in connection with the transactions contemplated herein; (q) commit itself to do any of the foregoing. The Seller will purchase from the Company at Completion, at their net statutory book value as at August 31, 2002, the CEG assets as defined in Schedule 4.1 pursuant to the draft agreement (the "CEG Asset Sale Agreement") substantially in the form attached as Schedule 4.1 (r). The Seller will bear all costs and taxes induced by such transfer. Upon request of the Seller, the Acquirer shall cause the Company and the Subsidiary to reasonably assist the Seller after Completion for purposes of repossessing the CEG assets, which were leased by the company ASAT currently under bankruptcy proceedings. 4.2 Access and Information 4.2.1 The Seller shall procure that between the date hereof and the Completion Date, the Acquirer and its advisers are promptly given such information regarding the business, assets, liabilities, agreements and affairs of the Company and the Subsidiary as the Acquirer or its advisers may reasonably require in order to prepare an orderly transition following the Completion Date, provided, however, that any such access shall be conducted at the Acquirer's expense, at a reasonable time, under the supervision of the Seller's, the Company's or the Subsidiary's personnel and in such a manner as to maintain the confidentiality of the terms of this Agreement and of the Transaction and not to interfere with the normal operation of the business of the Seller, the Company or the Subsidiary. 4.2.2 The Seller shall make its best efforts to procure that between the date hereof and the Completion Date, the Company shall timely provide the Acquirer with the reports listed in Schedule 4.2.2. 4.3 Actions with a view to Completion Each Party shall (at its own expense) do or procure to be done all acts and things and/or execute or procure the execution of all documents, as is or may be reasonably required to complete all transactions contemplated by this Agreement. In particular (and without limiting the generality of the foregoing): (a) the Seller shall cause special meetings of the relevant corporate bodies of the Company to be validly convened for a date not later than the Completion Date, the agenda of which shall include the passing of all decisions required for Completion; (b) the Seller shall procure that all Intercompany Agreements shall be terminated on the Completion Date. 4.4 The Seller's Trademarks and Logos 4.4.1 The Acquirer expressly agrees that (a) it is not purchasing, acquiring or otherwise obtaining, and the Acquirer, the Company and the Subsidiary will not, following the Completion Date, obtain or be entitled to retain any right, title or interest in the COMDISCO Trademark; use or otherwise employ the Seller's "COMDISCO" name or any part or variation of such name or anything confusingly similar thereto or suggesting that there is a relationship or affiliation between the Seller and the Acquirer, and between the Seller and the Company and the Subsidiary from and after the Completion, (b) none of the Company, the Subsidiary or the Acquirer or its affiliates shall make any use of such COMDISCO Trademark from and after the Completion and (c) each of the Acquirer and its affiliates shall not, directly or indirectly, attack the Seller's or its affiliates' rights or ownership in and to any of the Trademarks, including, without limitation, any registrations, or the validity of the Trademarks. All rights in the Trademarks other than those as may be specifically granted in the Ancillary Agreements are reserved to the Seller for its own use, benefit and disposition. For purposes of this Clause 4.4, "Trademarks" means any Seller registered and unregistered trademarks, service marks, tradenames and business names (including rights in any trade dress) and applications for registration thereof, together with the goodwill symbolized thereby and associated therewith, including, without limitation, "IT CAP", "IT Trak" and "TRO". 4.4.2 The Seller shall grant the Company and the Subsidiary the right to use in the Territory the IT CAP, IT Trak and TRO Trademarks, as well as the CLASS software, after Completion pursuant to the terms of a Trademark and Software License Agreement substantially in the Agreed Form attached hereto as Schedule B which shall be entered into on the Completion Date. The Seller shall cause the Subsidiary to enter into a license agreement with Comdisco Deutschland regarding the use after Completion of certain softwares substantially in the Agreed Form attached hereto as Schedule D (the "German License Agreement"). 4.5 Company Name Change. Between the date hereof and the Completion Date, the Seller and the Acquirer shall cooperate and use their commercially best efforts to cause the Company to change its corporate name from "COMDISCO FRANCE S.A." to a name not using the COMDISCO name as designated by the Acquirer in writing, to become effective on the Completion Date (the "Name Change"). The Acquirer shall communicate to the Seller the new name of the Company no more than five (5) Business Days prior to Completion so as to enable the Seller to effect the Name Change promptly after Completion. The Name Change shall be deemed effected upon filing for registration, with the Companies Register, corresponding to the Company's corporate domicile, of minutes of the extraordinary general shareholders' meeting of the Company. 4.6 Guarantee Comdisco Holding Company, Inc. jointly and severally guarantees the performance of this Agreement by the Seller, in compliance with its terms. 4.7 Insurance Policies The Seller shall have no obligation to continue the insurance coverage for the Company and the Subsidiary after the Completion Date and will no longer be responsible for any risks of the Company and the Subsidiary after the Completion Date. The Acquirer shall be responsible for arranging new insurance coverage effective from the Completion Date at its own risk and expense. The Seller and its affiliates shall retain the right to any credit or return premiums due, paid or payable in connection with the termination thereof. Consequently, in the event that the Company and/or the Subsidiary would receive after the Completion Date any payment in connection with the termination of the insurance coverage by the Seller, the Acquirer undertakes to cause the Company and/or the Subsidiary to pay promptly to the Seller the sum received from the insurers. 4.8 GE receivable The Seller represents and warrants that General Electric (GE) owes to the Company an amount of 3.2 million (three million and two hundred thousand) Euros pursuant to the sale of assets described in Schedule 4.8. If on Completion Date GE has not paid that entire sum, a sum equal to 3.2 million Euros less what has already being paid to the Company by GE pursuant to the sale of assets described in Schedule 4.8, (hereafter the "Balance"), shall be paid, Euro by Euro, by Seller to the Company on the same date. In the event that the Company would receive, prior to the Completion Date, from GE in total an amount exceeding 3.2 million Euros in relation to the sale of assets described in Schedule 4.8, the Company shall pay to the Seller the difference between the amount paid by GE and 3.2 million Euros. If the Seller pays to the Company any amount pursuant to the first paragraph above, it shall cause the Company to execute the corresponding transfer of receivable. In the event that the Company would receive, after the Completion Date, from GE, a payment in relation to the sale of assets described in Schedule 4.8, the Acquirer undertakes to cause the Company to pay promptly to the Seller the sum received by GE after the Completion Date. 4.9 Transitional Services Agreement On the Completion Date, the Seller and the Acquirer shall execute a Transitional Services Agreement substantially in the Agreed Form attached hereto as Schedule C, in relation with certain services which shall be provided by the Subsidiary and the Company to the Seller or its affiliates after the Completion Date. 4.10 European Michelin assets On the Completion Date or as soon as practicable after the Completion Date, the Parties shall execute (or will cause their respective relevant group companies to execute) a master agreement and local transfer agreements in connection with the acquisition by the Acquirer (or any of its group companies) of the other European Michelin assets and contracts, which shall be listed in a Schedule 4.10 to be provided by the Seller as soon as possible after the date hereof and prior to the Completion Date, at the applicable NPV ("net present value") in each country (as at 31 August 2002) x 90%, minus corresponding rentals received up to their transfer. The Parties agree that the Acquirer shall not be obligated to purchase or cause its relevant group companies to purchase any Michelin assets or contracts in countries where the applicable NPV would not be calculated on the basis of a satisfactory discount rate as determined in the Acquirer's sole discretion. Taxes and costs directly associated with that transfer are for the account of the Acquirer. Assets funded after 31 August 2002 will be purchased at acquisition cost plus funding costs, minus corresponding rentals received up to their transfer. 4.11 Modification of the Schedules The Seller will be authorized to modify (in connection with minor changes) the Schedules to this Agreement on the Completion Date with the prior consent of the Acquirer which shall not be unreasonably withheld and provided that such changes are notified to the Acquirer at least five Business Days prior to Completion Date. 4.12 Governmental Approvals Immediately after the execution of this Agreement, the Acquirer shall apply its best efforts to obtain as soon as possible all the European Governmental Approvals required prior to Completion and shall handle all necessary filings and formalities related thereto. 5. CONDITIONS PRECEDENT 5.1 Conditions Precedent to Obligations of the Acquirer and the Seller The obligations of the Acquirer and the Seller to complete the Transaction is subject to the satisfaction, at or prior to Completion, of the condition that all necessary Governmental Approvals which are required to be obtained prior to the Completion Date (including any approval required from local or European antitrust authorities) shall have been duly obtained and shall be in full force and effect on the Completion Date. 5.2 Conditions Precedent to Obligations of the Acquirer The obligations of the Acquirer to complete the Transaction is subject to the satisfaction, at or prior to Completion, of each of the following conditions (unless satisfaction of any such condition is waived by the Acquirer): (a) the representations and warranties of the Seller contained in this Agreement shall be accurate in all material respects as of the date hereof and as of the Completion Date, as if such representations and warranties were restated on and as of the Completion Date; and (b) the Seller shall have performed and complied with, in all material respects, all agreements and undertakings required by this Agreement and any Ancillary Agreement to be performed or complied with by the Seller prior to or at Completion. 5.3 Conditions Precedent to Obligations of the Seller The obligations of the Seller to complete the Transaction is subject to the satisfaction, at or prior to the Completion, of each of the following conditions (unless satisfaction of any such condition is waived by the Seller): (a) the representations and warranties of the Acquirer contained in this Agreement shall be accurate in all material respects as of the date hereof and as of the Completion Date, as if such representations and warranties were restated on and as of the Completion Date; (b) the Acquirer shall have performed and complied with, in all material respects, all agreements and undertakings required by this Agreement to be performed or complied with by it prior to or at the Completion. 5.4 Best Endeavours to Fulfil Conditions Precedent The Parties shall use their best endeavours to ensure fulfilment of each of the conditions precedent set out in Clauses 5.1, 5.2 and 5.3 on or before Completion Date. If any of the Parties becomes aware of any event, circumstance or fact that prevents or might prevent a condition contained in Clause 5.1, 5.2 or 5.3 from being fulfilled, it shall immediately notify all other Parties. 5.5 Conditions Precedent Not Fulfilled at Completion If any condition set out in Clause 5.1, 5.2 or 5.3 has neither been waived by the appropriate Party nor satisfied on 31 March 2003, such appropriate Party may in its absolute discretion and without prejudice to any other right or remedy available to it: (a) waive the condition (to the extent such waiver is permitted by law), in which event the provisions of Clause 5.6 shall apply; or (b) terminate this Agreement, in which event the provisions of Clause 5.7 shall apply. 5.6 Waiver of Conditions Precedent Waiver in whole or in part of compliance with any condition set out in Clause 5.2 or 5.3 shall not prejudice to any other right or remedy available to the relevant Party (or group of Parties). In particular, unless otherwise expressly agreed in writing between the Parties concerned, any waiver in whole or in part of compliance with the conditions set out in Clause 5.2 or 5.3, shall not prejudice to any indemnification rights granted under this Agreement to any Party in case of breach of the representations and warranties in question. 5.7 Termination of the Agreement If any Party terminates this Agreement pursuant to the provisions of Clause 5.5 (b) then: (a) the further rights and obligations of the Parties shall cease immediately upon such termination, save for the provisions of this Clause 5.7, and Clauses 9, 11, 13 and 14 which shall remain in full force and effect; (b) all actions already taken shall be deemed not to have been taken and shall remain without effect or, as may be appropriate, shall be reversed, unless the Parties agree otherwise. The Parties shall provide their full co-operation to the reversal of any actions hereunder should such reversal be required. In the event that all the Conditions Precedent set out in Clause 5.1, 5.2 and 5.3 are satisfied or waived (when permitted by law) by the relevant Party (or group of Parties), the sale of the Shares and of the Intercompany Amount shall be effective pursuant to Article 1583 of the French Civil Code, it being agreed that the advance to be made by the Acquirer to the Company under Clause 6.4.3 of this Agreement is considered an essential term of the sale of the Shares to the Acquirer. Should either Party nevertheless refuse or fail to comply with its obligations under this Agreement, the other Party shall request the defaulting Party to perform its obligations under this Agreement by registered letter with acknowledgment of receipt, while undertaking to simultaneously perform its own obligations under the Agreement. If the defaulting Party does not comply with its obligations under this Agreement within 30 days from receipt of the other Party's notification, the other Party shall be entitled to (i) request full performance (execution forcee) of the obligations of the defaulting Party in accordance with Clause 14 of this Agreement, and (ii) receive a lump sum of Euro 5,000,000 without prejudice of its right to obtain additional compensation for the damage suffered by it as a result of such breach of contract. Should the defaulting Party perform its obligations under this Agreement after the one month period referred to above, the other Party shall simultaneously perform its own obligations under this Agreement and shall be entitled to receive the lump sum of Euro 5,000,000. 6. Completion 6.1 Completion Date Completion shall take place within thirty (30) Business Days from the date on which all the conditions precedent set forth in Clause 5 will have been satisfied and no later than 31 March 2003, unless the Parties agree otherwise. 6.2 Deliveries to the Acquirer The Seller shall deliver, or procure the delivery to the Acquirer, of the following documents: (a) copies of the minutes of the meetings of the Workers Committee of the Subsidiary (if applicable) regarding the Transaction; (b) duly executed transfer forms ("ordres de mouvement") relating to the Shares; (c) if applicable, an authenticated version of the minutes of the meeting of the Board of Directors of the Company approving the transfer to the Acquirer of the Shares; (d) the accounts (bilans, comptes de resultat et annexes) of the Company and of the Subsidiary as at August 31, 2002, as well as their consolidated accounts at the same date, certified by the statutory auditors are attached as Schedule 6.2 (e), it being specified that the delivery of these accounts by the Seller will not induce any specific representations and warranties in relation thereof other than the applicable statutory warranty ("garantie legale"); and (e) the minutes of the board of directors of the Seller authorizing the Transaction. 6.3 Execution of Ancillary Agreements (a) The Acquirer and the Seller shall execute the Trademark and Software License Agreement, the CEG Asset Sale Agreement and the Transitional Services Agreement; and (b) The Seller and the Acquirer shall execute the Assignment of Receivables Agreement pertaining to the final Intercompany Amount referred to in Clause 3.2.2; (c) If applicable, the Seller and the Acquirer shall execute the assignment of receivable agreement pertaining to the Balance referred to in Clause 4.8; (d) The Subsidiary and Comdisco Deutschland shall execute the German License Agreement. 6.4 Actions or Deliveries by Acquirer 6.4.1 The Acquirer shall deliver or procure the delivery to the Seller of the following documents: Documentary evidence that the Acquirer has obtained all necessary European Governmental Approvals. 6.4.2 The Acquirer shall pay the final Purchase Price as provided in Clause 3.2.2. 6.4.3 The Acquirer shall advance, or cause to be advanced, sufficient cash to the Company in order to enable the latter to repay in full (i.e. in principal and interest at the rate specified in the Loan documentation ) the Loan on the Completion Date, such Loan amounting to Euro 69,403,475 as of 31 August 2002. 7. Representations and warranties of the parties 7.1 Representations and warranties of the Seller 7.1.1 As an inducement to the Acquirer to enter into this Agreement and the Ancillary Agreements, the Seller hereby represents and warrants to the Acquirer that each of the following representations and warranties is on the date hereof (and will be on the Completion Date) true and accurate unless the statement refers to only one such date, in which case it is made solely at such specified date. 7.1.2 The Seller (a) is duly organised and validly existing and in good standing under the laws of Delaware and has all necessary power and authority to enter into this Agreement and each Ancillary Agreement to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, and (b) the execution and delivery by the Seller of this Agreement and each Ancillary Agreement to which it is a party, the performance by the Seller of its obligations hereunder and thereunder and the consummation by the Seller of the transactions contemplated hereby and thereby have been duly authorized in accordance with all applicable laws. This Agreement constitutes, and upon its execution each of the Ancillary Agreements will constitute, a legal, valid and binding obligation of the Seller enforceable against the Seller in accordance with their terms. 7.1.3 The execution, delivery and performance of this Agreement and the Ancillary Agreements by the Seller do not and will not (a) violate, conflict with or result in the breach of any provision of the charter or by-laws (or similar organisational documents) of the Seller, (b) conflict with or violate (or cause an event which could have a material adverse effect as a result of) any law, regulation, decree, judgement or governmental order applicable to the Seller, or (c) result in the creation of any encumbrance on any shares or securities pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Seller is a party. 7.1.4 The Seller will own immediately prior to their transfer to the Acquirer pursuant to clause 2.1 of this Agreement, free and clear of any Encumbrance, the Shares. The Seller will on the Completion Date have the right and the authority to transfer to the Acquirer on the terms and conditions set out in this Agreement, the full legal title to and the full beneficial interest in the Shares. no person has any right (including, without limitation, a pre-emptive right, a tag along right or a call or put option right on any shares or securities) that would preclude, or conflict with, the transfer to the Acquirer of the Shares. 7.1.5 The authorized share capital of the Company consists of 117,644 shares with a nominal value of Euro 15.24 per share, of which 117,644 shares are issued and outstanding, all of which are validly issued and fully paid (including any share premium). None of the Shares was issued in violation of any pre-emptive rights or other third party's rights. All Shares are ordinary shares, all of the same class bearing the same rights and obligations, and there are no preference shares in existence on the date hereof. Schedule 7.1.5 sets forth the name of the Persons holding Shares on the date hereof and the number of Shares held by each such Person, together with the percentage of the issued share capital which such Shares represent. There are no Securities, or other rights, agreements, arrangements or commitments of any character relating to the capital stock of the Company or obligating any Person holding Shares or Securities or the Company to grant, issue or sell any shares or any other interest in the share capital or voting rights of the Company. The Shares represent 100% of the fully diluted share capital of the Company. At Completion, full legal title to the Shares will be validly conveyed to the Acquirer, free and clear of any Encumbrance, in accordance with the terms of this Agreement, and recorded in the name of the Acquirer in the Company's share register. There is no Encumbrance on, over or affecting any of the Shares nor is there any commitment to give or create such Encumbrance and no Person has claimed to be entitled to such Encumbrance. 7.1.6 The authorized share capital of the Subsidiary consists of 220,250 shares with a nominal value of 15.24 euro per share, of which 220,250 shares are issued and outstanding, all of which are validly issued and fully paid (including any share premium). None of the Subsidiary shares was issued in violation of any pre-emptive rights or other third party's rights. All Subsidiary shares are of the same class bearing the same rights and obligations, and there are no preference shares in existence on the date hereof. Schedule 7.1.6 sets forth the name of the Persons holding Subsidiary shares on the date hereof and the number of Subsidiary shares held by each such Person, together with the percentage of the issued share capital which such Subsidiary shares represent). There are no Securities, or other rights, agreements, arrangements or commitments of any character relating to the capital stock of the Subsidiary or obligating any Person holding Subsidiary shares or Securities or the Subsidiary to grant, issue or sell any shares or any other interest in the share capital or voting rights of the Subsidiary. The Subsidiary shares represent 100% of the fully diluted share capital of the Subsidiary. At Completion, full legal title to the Subsidiary shares will be validly held by the Company, free and clear of any Encumbrance and recorded in the name of the Company in the Subsidiary's share register. There is no Encumbrance on, over or affecting any of the Subsidiary shares nor is there any commitment to give or create such Encumbrance and no Person has claimed to be entitled to such Encumbrance. 7.2 Representations and warranties of the Acquirer The Acquirer is duly organized and validly existing and in good standing under the laws of Belgium and has all necessary power and authority to enter into this Agreement and each Ancillary Agreement to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, and (b) the execution and delivery of this Agreement and each Ancillary Agreement to which the Acquirer is a party by the Acquirer, the performance by the Acquirer of its obligations hereunder and thereunder and the consummation by the Acquirer of the transactions contemplated hereby and thereby have been duly authorised in accordance with Belgium law and all requisite action on the part of the Acquirer have been taken. This Agreement has been, and upon execution, each of the Ancillary Agreements to which Acquirer is a party shall have been, duly executed and delivered by the Acquirer, and (assuming due authorisation, execution and delivery by the other Parties) this Agreement constitutes, and upon its execution, each of such Ancillary Agreements will constitute, a legal, valid and binding obligation of the Acquirer, enforceable against it in accordance with their terms. 8. indemnification obligations 8.1 Indemnification Obligations of the Seller From and after Completion, and without prejudice to any other rights and remedies available to the Acquirer, the Seller shall indemnify and hold harmless the Acquirer from and against any Damages suffered by the Acquirer as a result of any breach of any representation or warranty or covenant contained in this Agreement. 8.2 Indemnification Obligation of the Acquirer From and after Completion, and without prejudice to any other rights and remedies available to the other Parties, the Acquirer shall indemnify and hold harmless the Seller from and against any Damages suffered by the Seller as a result of any breach of any representation or warranty or covenant of Acquirer contained in this Agreement. 9. CONFIDENTIALITY 9.1 Subject to Clause 9.5 and Clause 11, the Parties shall treat as strictly confidential all information (the "Confidential Information") received or obtained for the purpose of entering into or performing this Agreement which relates to: (a) the negotiations relating to this Agreement or any document referred to in this Agreement; or (b) the provisions or subject matter of this Agreement or any information delivered hereto or any document referred to in this Agreement. 9.2 The provisions of the Confidentiality Agreement shall remain binding and in full force and effect until the Completion. 9.3 Subject to Clause 9.5 and Clause 11 of this Agreement, prior to Completion or if Completion does not take place, the Acquirer will maintain in confidence, and will cause its directors, officers, employees, agents and advisors to maintain in confidence all Confidential Information. If Completion does not take place, the Acquirer shall not make use of or disclose any Confidential Information or Know How to any third party and will return or destroy as much of such Confidential Information as the Seller may reasonably request. 9.4 Subject to Clause 9.5 and Clause 11 of this Agreement, after Completion, the Seller will maintain in confidence, and will cause its directors, officers, employees, agents and advisors to maintain in confidence all confidential information relating to the Company and the Subsidiary. In addition, after Completion, the Seller shall not, without the prior written consent of the Acquirer, make use of or disclose any confidential information relating to the Company and the Subsidiary to any third party, provided, however, that nothing in this Clause 9.4 shall be construed to limit the right of the Seller and its affiliates to use any confidential information which is not the exclusive property of the Company or the Subsidiary. 9.5 The Parties may disclose information to a third party which would otherwise be confidential if and to the extent: (a) required by the law of any relevant jurisdiction or for the purposes of any legal proceedings; or (b) required by any recognized securities exchange or by any regulatory or governmental body; or (c) such information is disclosed on a strictly confidential basis to that third party's professional advisers, auditors or bankers for the purpose of advising that third party in connection with this Agreement provided that such disclosure shall be made subject to the terms set out in Clause 9.3 and 9.4; or (d) the information has come into the public domain otherwise than through a breach of a Party; or (e) prior written consent to the disclosure has been given by all Parties; or (f) required to enable a Party to enforce its rights or remedies under this Agreement; provided that any such information disclosed pursuant to Clause 9.5 (a) and Clause 9.5 (b) shall be disclosed only after consultation (where practicable) with the other Party (-ies). 10. Non-competition The Seller covenants and agrees, in favour of the Acquirer, for a period of three (3) years from the Completion Date (the "Restricted Period") that neither the Seller nor any of its Affiliates, which now exists or comes into existence during the Restricted Period shall directly or indirectly, either individually, through any person, in partnership (except as a passive partner) or in association or jointly or in conjunction with any person or persons, firm, association, partnership, syndicate, trust, company, corporation, legal person or other juridical entity, as owner, principal, mandatory, agent, vendor within the territory of France: (i) compete with the Business on the territory of France; (ii) communicate with, solicit, interfere with or endeavour to direct or entice away from the Acquirer any Employee. (iii) it being understood that any lease agreement with French clients presently administered by a member of the Comdisco Group other than the Company or the Subsidiary shall not constitute competition for the purposes of this Clause 10. the Seller warrants the performance by each of its Affiliates of their obligations under the present Clause 10. 11. announcements 11.1 Subject to Clause 11.2, no Party shall make or issue at any time (whether before or after Completion) any announcement, circular or other publicity relating to any matter referred to in this Agreement without the other Parties' prior written approval of the form and content of such announcement. 11.2 Clause 11.1 does not apply to any announcement, circular or other publicity: (a) required by the law of any relevant jurisdiction or by the rules or regulations of any recognized securities exchange or of any regulatory or governmental body. In such an event, the Party making or sending the announcement, circular or other publicity shall, as far as practicable, consult with the other Parties as to the form and content of such announcement; or (b) which is in the Agreed Form made or sent by or on behalf of the Acquirer after Completion advising the press, employees, customers, suppliers or agents of each of the Companies of the change in control of the Companies. 12. Other Post Completion Covenants and other covenants 12.1 After Completion, the Seller shall at its own cost and expense execute and do (or procure to be executed and done by any other relevant person) all such deeds, documents, acts and things as the Acquirer may from time to time require in order to vest any of the Shares in the Acquirer or its assignee or as otherwise may be necessary to give full effect to this Agreement. The Acquirer shall be responsible for the registration formalities and duties in connection with the transfer of the Shares. 12.2 On and if necessary after Completion, the Seller shall at its own cost and expense provide or procure to be provided to the Acquirer all such information relating to the Business and the affairs of the Company and the Subsidiary as the Seller may have in its possession or under its control. 13. Miscellaneous 13.1 All communications, notices and disclosures required or permitted by this Agreement shall be in writing and shall be given by hand delivery, by prepaid registered or certified mail (with return receipt requested), by an established overnight courier providing proof of delivery or by facsimile, addressed as follows, unless and until any Party notifies each other Party in accordance with this Clause 13.1 of a change of address: - - If to the Seller: Comdisco Global Holding Company, Inc. 6111 North River Road, Rosemont, Illinois, USA Attention: General Counsel Fax: +1 847 518 54 40 With a copy (which shall not constitute notice under this Clause 13.1) to: Skadden, Arps, Slate, Meagher & Flom LLP (Illinois) 333 West Wacker Drive, Suite 2100, Chicago, Illinois 60606 USA Attention: John Wm. Butler - - If to Comdisco Holding Company, Inc.: Comdisco Holding Company, Inc. 6111 North River Road, Rosemont, Illinois, USA Attention: General Counsel Fax: +1 847 518 54 40 With a copy (which shall not constitute notice under this Clause 13.1) to: Skadden, Arps, Slate, Meagher & Flom LLP (Illinois) 333 West Wacker Drive, Suite 2100, Chicago, Illinois 60606 USA Attention: John Wm. Butler - - If to the Acquirer: Econocom Group SA Chaussee de Louvain 510 Parc Horizon 2000 1930 Zaventem Belgique Attention: Jean-Philippe Roesch With a copy (which shall not constitute notice under this Clause 13.1) to: Gide Loyrette Nouel 26, cours Albert 1er - 75008 Paris Attention: Christophe Eck 13.2 The Acquirer may assign or transfer all or any part of its rights and obligations arising under this Agreement solely to an entity which is for the time being a member of the same group of companies as the Acquirer; provided, however that the Acquirer shall not be relieved of its obligations so assigned. None of the other Parties shall assign or transfer, or purport to assign or transfer, any of their rights or obligations arising under this Agreement without the prior written consent of the Acquirer, provided, however, that without such consent, such other Parties shall have the right to assign all or any part of their rights and obligations arising under this Agreement to an entity of their group but shall nevertheless not be relieved of their obligations hereunder. 13.3 Without prejudice to Clause 13.2, this Agreement and all the provisions hereof shall be binding and inure to the benefit of the Parties and their respective successors and permitted assigns. 13.4 The Parties shall each pay their own costs, charges and expenses in relation to the negotiation, preparation, execution and implementation of this Agreement and the Seller covenants and agrees that it will shall pay all fees and expenses incurred by the Company or the Subsidiary in connection with the transactions contemplated hereunder, including, without limitation, filing fees and fees and expenses of attorneys, accountants, financial advisors, lenders or brokers, unless such fees have been provided for in the net equity of the Company. It is understood that the Acquirer's counsel shall be responsible for preparing and submitting any filing with the DGCCRF and that the Acquirer shall be responsible for such fees. 13.5 This Agreement (together with all documents executed at Completion) constitutes the entire agreement and understanding between the parties with respect to its subject matter and replaces and supersedes all prior agreements, arrangements, undertakings or statements regarding such subject matter. 13.6 This Agreement may be amended, modified and supplemented in any and all respects, but only by a written instrument signed by all of the parties hereto expressly stating that such instrument is intended to amend, modify or supplement this Agreement. 13.7 If part of this Agreement is or becomes invalid or non-binding, the Parties shall remain bound to the remaining part. The relevant Parties shall in that event replace the invalid on non-binding part by provisions which are valid and binding and the effect of which, given the contents and purpose of this agreement, is to the greatest extent possible similar to the invalid or non-binding part. 13.8 No failure to exercise, and no delay in exercising, any right or remedy in connection with this Agreement by the Acquirer shall operate as a waiver or a forfeiture of that right or remedy. No single or partial exercise of any right or remedy under this agreement by the Acquirer shall preclude any other or further exercise of that right or remedy or the exercise of any other right or remedy. A waiver of any breach of this Agreement by the Acquirer shall not be deemed to be a waiver of any subsequent breach. Notwithstanding any rule of law to the contrary, a release, waiver or compromise or other arrangement or indulgence which the Acquirer agrees to or effects in relation to one of the Parties other than the Acquirer under or in connection with this Agreement shall not affect the Acquirer's rights or remedies as regards any of the other Parties. 13.9 This Agreement may be entered into any number of counterparts and by each of the Parties on separate counterparts, but shall not be effective until each Party has executed at least one counterpart. Each counterpart, when executed, shall constitute an original, but all the counterparts shall together constitute one and the same instrument. 14. Governing Law and Jurisdiction 14.1 Governing Law This Agreement shall be governed by, and construed in all respects in accordance with French law. 14.2 Arbitration The Parties expressly agree that all disputes and claims arising from or in connection with this Agreement, including failure to comply, its termination or nullification, shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce then in effect including its Article 10 governing multi-party arbitration, by three arbitrators appointed in accordance with the said Rules, which shall have exclusive jurisdiction to decide any such disputes and claims. The award of the arbitrators shall be final and binding upon the parties. The expenses of the arbitral proceeding and the fees of the arbitrators shall be advanced equally by the parties. The arbitral award shall state which party shall ultimately bear the expenses and fees, or in what proportion such expenses and fees shall be borne by each of the parties. If a party fails to comply with the arbitral award, such party shall be liable for the payment of any resulting costs, including attorneys' fees, incurred by the other party in a proceeding to enforce the award. The arbitration proceedings shall be held in the city of Paris. The arbitration proceedings shall be conducted in English. ECONOCOM GROUP SA / NV COMDISCO GLOBAL HOLDING COMPANY, INC. By: /s/ Jean-Louis Bouchard By: /s/ Robert E. Koe ------------------------ --------------------- Name: Jean-Louis Bouchard Name: Robert E. Koe Title: President Title: President COMDISCO HOLDING COMPANY, INC. By: /s/ Robert E. Koe -------------------------- Name: Robert E. Koe Title: President EX-11 25 ch341193.txt EXHIBIT 11.1
Exhibit 11.1 SUCCESSOR | PREDECESSOR Two | Ten months | months ended | ended September 30, | July 31, Years ended 2002 | 2002 2001 2000 1999 1998 ------------------| ------------ ---------- --------- --------- -------- | Average shares issued 4 | 226 225 224 222 221 Effect of dilutive options - | - - 10 10 12 Treasury stock - | (75) (74) (72) (70) (70) ------------------| ------------ ---------- --------- --------- -------- Total 4 | 151 151 162 162 163 ==================| ============ ========== ========= ========= ======== | Net earnings (loss) to common stockholders $ 224 | $ (541) $ (272) $ (67) $ 48 $ 151 ==================| ============ ========== ========= ========= ======== | Net earnings (loss) per common share: Earnings | (loss) per common share-basic: | Earnings (loss) from continuing operations $ (1.81) | $ (6.41) $ (1.31) $ 1.42 $ .22 $ .56 Earnings (loss) from discontinued operations (2.20) | 1.80 (0.50) (1.86) .10 .44 Extraordinary gain 57.38 | 1.02 - - - - Cumulative effect of change in accounting | principle - | - .01 - - - ------------------| ------------ ---------- --------- --------- -------- $ 53.37 | $ (3.59) $ (1.80) $ (0.44) $ 0.32 $ 1.00 ==================| ============ ========== ========= ========= ======== | Net Earnings (loss) per common share-diluted: | Earnings (loss) from continuing operations $ (1.81) | $ (6.41) $ (1.31) $ 1.34 $ .21 $ .52 Earnings (loss) from discontinued operations (2.20) | 1.80 (0.50) (1.75) .09 .41 Extraordinary gain 57.38 | 1.02 - - - - Cumulative effect of change in accounting | principle - | - .01 - - - ------------------| ------------ ---------- --------- --------- -------- $ 53.37 | $ (3.59) $ (1.80) $ (0.41) $ .30 $ .93 ==================| ============ ========== ========= ========= ========
EX-21 26 chsub211.txt EXHIBIT 21.1
EXHIBIT 21.1 Comdisco Holding Company, Inc. Subsidiaries of the Registrant Subsidiary State or Sovereign Power of Incorporation Subsidiaries included in the Registrant's consolidated financial statements: Comdisco Global Holding Company, Inc.................................................................................Delaware CDS Foreign Holdings, Inc. .................................................................................Delaware Comdisco Holdings (U.K.) Limited.............................................................United Kingdom Comdisco United Kingdom Limited.....................................................United Kingdom Comdisco Belgium S.P.R.L...................................................................Belgium Comdisco Direct (U.K.) Limited......................................................United Kingdom Comdisco Espana, S.L.........................................................................Spain Comdisco Ireland Limited...................................................................Ireland Comdisco Sweden A.B.........................................................................Sweden Comdisco Technology Services (Ireland) Limited......................................................Ireland Comdisco Asia Pte Ltd. ....................................................................................Singapore Comdisco Australia Pty. Ltd..........................................................................New South Wales Comdisco New Zealand............................................................................New Zealand Comdisco Canada Ltd..........................................................................................Ontario Comdisco Canada Equipment Finance Limited Partnership...............................................Ontario Comdisco Canada Finance L.L.C......................................................................Delaware Comdisco Equipment Solutions, Inc. (f/k/a CFS Railcar, Inc.) ...............................................Delaware Comdisco Equipment Solutions, Inc. (f/k/a/ Comito) ............................................................Japan Comdisco Equipment Solutions, Ltd. ...................................................................Cayman Islands CES Holdings Europe C.V.........................................................................Netherlands Comdisco Equipment Solutions (Europe) B.V. ............................................Netherlands Comdisco Canada Finance L.L.C.............................................................Delaware Comdisco Asia Pte Ltd ............................................................................Singapore Comdisco Equipment Solutions Holdings N.V. ............................................Netherlands-Antilles CES Holdings Europe C.V. ..............................................................Netherlands Comdisco Equipment Solutions (Europe) B.V.............................Netherlands Comdisco Canada Finance L.L.C...................................Delaware Comdisco Finance (Nederland) B.V. .......................................................................Netherlands Comdisco Deutschland Gmbh ..........................................................................Germany Comdisco Factoring (Nederland) B.V. ...................................................Netherlands Comdisco Continuity Services Deutschland GmbH ............................Germany Comdisco GmbH & Co. Leasing and Finance KG.................................................................. Germany Comdisco Lease Finance Partnership, L.P......................................................Cayman Islands Comdisco Holdings (U.K.) Limited .....................................................................United Kingdom Comdisco United Kingdom Limited .............................................................United Kingdom Comdisco Belgium S.P.R.L. .................................................................Belgium Comdisco Direct (U.K.) Limited .....................................................United Kingdom Comdisco Espana, S.L. .......................................................................Spain Comdisco Ireland Limited ..................................................................Ireland Comdisco Sweden A.B. .......................................................................Sweden Comdisco International Holdings, Inc. (f/k/a COM-L 1989-A Corporation) .....................................Illinois Comdisco International Holdings, Ltd. ................................................................Cayman Islands Comdisco Investment Group, Inc. ............................................................................Delaware Comdisco GmbH & Co. Leasing and Finance KG .........................................................Germany Comdisco Lease Finance Partnership, L.P. ...........................................Cayman Islands Comdisco Ireland Limited ....................................................................................Ireland Comdisco Italia S.p.A. ........................................................................................Italy Comdisco Lease Finance Partnership, L.P. .............................................................Cayman Islands Comdisco Management GmbH ....................................................................................Germany Comdisco GmbH & Co. Leasing and Finance KG .........................................................Germany Comdisco Software Development Company Limited ...............................................................Ireland Comdisco Technology Services (Holland) B.V. .............................................................Netherlands Comdisco Trade, Inc. .......................................................................................Delaware Comdisco de Mexico, S.A. de C.V. ....................................................................Mexico Comdisco de Mexico, S.A. de C.V. .............................................................................Mexico Comdisco do Brasil Comercial Ltda. ...........................................................................Brazil Comdisco, Inc. ......................................................................................................Delaware CDO Capital, L.L.C. ........................................................................................Delaware CDO RM, Inc. ...............................................................................................Delaware CDO Capital, L.L.C. ...............................................................................Delaware Comdisco Domestic Holding Company, Inc. ....................................................................Delaware CDC Realty, Inc. ..................................................................................Illinois Computer Discount Corporation .....................................................................Illinois Prism Communication Services, Inc. ................................................................Delaware Prism Arizona Operations, LLC.............................................................Delaware Prism California Operations, LLC..........................................................Delaware Prism Canada Operations, Inc. ............................................................Delaware Prism Canadian Operations, LLC ...........................................................Delaware Prism Colorado Operations, LLC ...........................................................Delaware Prism Connecticut Operations, LLC ........................................................Delaware Prism Delaware Operations, LLC ...........................................................Delaware Prism District of Columbia Operations, LLC ...............................................Delaware Prism Florida Operations, LLC ............................................................Delaware Prism Georgia Operations, LLC ............................................................Delaware Prism Illinois Operations, LLC ...........................................................Delaware Prism Indiana Operations, LLC ............................................................Delaware Prism Investments, Inc. ..................................................................Delaware Prism Kansas Operations, LLC .............................................................Delaware Prism Kentucky Operations, LLC ...........................................................Delaware Prism Leasing, LLC .......................................................................Delaware Prism Management Services, LLC ...........................................................Delaware Prism Maryland Operations, LLC ...........................................................Delaware Prism Massachusetts Operations, LLC ......................................................Delaware Prism Michigan Operations, LLC ...........................................................Delaware Prism Minnesota Operations, LLC ..........................................................Delaware Prism Missouri Operations, LLC ...........................................................Delaware Prism New Jersey Operations, LLC........................................................New Jersey Prism New York Operations, LLC ...........................................................Delaware Prism North Carolina Operations, LLC .....................................................Delaware Prism Ohio Operations , LLC ..............................................................Delaware Prism Operations, LLC ....................................................................Delaware Prism Oregon Operations, LLC .............................................................Delaware Prism Pennsylvania Operations, LLC .......................................................Delaware Prism Resp Org, LLC ......................................................................Delaware Prism Rhode Island Operations, LLC .......................................................Delaware Prism Texas Operations, LLC ..............................................................Delaware Prism Virginia Operations, LLC............................................................Virginia Prism Washington Operations, LLC .........................................................Delaware Prism Wisconsin Operations, LLC ..........................................................Delaware Comdisco Hungaria Kft........................................................................................Hungary Comdisco Polska Sp.z.o.o......................................................................................Poland Comdisco Ventures, Inc. ....................................................................................Delaware Hybrid Venture Partners, L.P. .....................................................................Delaware Rosemont Equities, LLC ............................................................................Delaware Rosemont Venture Management I, L.L.C. .............................................................Delaware Technology Receivables, L.L.C. .............................................................................Delaware
EX-99 27 ch338248.txt EXHIBIT 99.1 Exhibit 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Form 10-K of Comdisco Holding Company, Inc. (the "Company") for the period ending September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ronald C. Mishler, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: January 14, 2003 By: /s/ Ronald C. Mishler --------------------------------- Name: Ronald C. Mishler Title: Chairman, Chief Executive Officer and President EX-99 28 ch338249.txt EXHIBIT 99.2 Exhibit 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Form 10-K of Comdisco Holding Company, Inc. (the "Company") for the period ending September 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David S. Reynolds, Controller and the chief financial officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: January 14, 2003 By: /s/ David S. Reynolds ------------------------- Name: David S. Reynolds Title: Senior Vice President and Controller -----END PRIVACY-ENHANCED MESSAGE-----