November 20, 2007 COMMITMENT LETTER
Exhibit
10.2
Wachovia
Investment Holdings, LLC
Wachovia
Capital Markets, LLC
One
Wachovia Center
000
Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxx Xxxxxxxx 00000-0000
|
November
20, 2007
COMMITMENT
LETTER
PERSONAL
AND CONFIDENTIAL
IKON
Office Solutions, Inc.
00
Xxxxxx
Xxxxxx Xxxxxxx
Xxxxxxx,
XX 00000
Attention:
Xx. Xxxxxx X. Xxxxx, Chief Financial Officer
Dear
Xx.
Xxxxx:
This
commitment letter agreement (together with all exhibits and schedules hereto,
the “Commitment Letter”) will confirm the
understanding and agreement among Wachovia Investment Holdings, LLC
(“Wachovia Investments”) and Wachovia Capital Markets,
LLC (“Wachovia Securities” and, collectively with
Wachovia Investments, the “Wachovia Parties”,
“we” or “us”)
and IKON
Office Solutions, Inc., an Ohio corporation (the
“Company” or
“you”). We understand that
the Company
proposes to commence a tender offer to purchase shares of its common stock
(the
“Tender Offer”) for an aggregate purchase price not to
exceed $295.0 million. The date on which the Tender Offer is
consummated is referred to as the “Closing
Date.”
You
have
advised us that the total funds needed to finance the Tender Offer (including
fees and expenses) will be approximately $300.0 million and that such funds
will
be provided from the following sources:
·
|
the
issuance by the Company of up to $150.0 million in aggregate principal
face amount of senior unsecured floating rate notes due 2011 (the
“Notes”) on terms set forth on Exhibit A hereto
and otherwise with covenants substantially identical to the Company’s
existing 7 ¾% Senior Notes due 2015 (the “Existing 2015
Notes”)) in a Rule 144A private placement issued pursuant
to
an indenture substantially identical to the Company’s Existing 2015
Indenture (as defined below), except as set forth on Exhibit A hereto;
and
|
·
|
approximately
$150.0 million of existing cash on hand at the
Company.
|
Following
the consummation of the
Tender Offer, none of the Company or any of its subsidiaries will have any
debt
outstanding other than (i) as described in the preceding paragraph, (ii)
borrowings under credit facilities existing on the date hereof in the ordinary
course of business or (iii) as set forth on Exhibit D hereto (such debt
described in clauses (ii) through (iv), the “Retained
Debt”).
1
1. The
Commitment.
(a) You
have
requested that Wachovia Investments commit to purchase the entire amount of
the
Notes upon the terms and subject to the conditions set forth or referred to
in
this Commitment Letter and the exhibits hereto.
(b) Based
on
the foregoing, Wachovia Investments, acting alone or through or with affiliates
selected by it, is pleased to confirm to you its commitment to purchase the
Notes on the principal terms set forth herein, in the Fee Letter (as defined
below) and in the Funding Conditions attached hereto as Exhibit C (the
“Commitment”), pursuant to (i) a purchase agreement
(the “Note Purchase Agreement”) which shall be
substantially identical, except as set forth on Exhibit B hereto, to the
purchase agreement by and among the Company and the initial purchasers party
thereto dated as of September 16, 2005 (the “Existing 2015 Purchase
Agreement”), and (ii) an indenture (the
“Indenture”) which shall be substantially identical,
except as set forth on Exhibit A hereto, to the indenture by and among the
Company and The Bank of New York, as trustee, dated as of September 21, 2005
(the “Existing 2015 Indenture” and, together with
the Existing 2015 Purchase Agreement, the
Existing 2015 Notes and other related documentation, the “Existing
2015 Note Documentation”). Without limiting the
Commitment, the Notes may be converted to term loans pursuant to the terms
of
Section 9 of this Commitment Letter.
(c) It
is
agreed that Wachovia Securities, acting alone or through or with affiliates
selected by it, will act as the sole book-runner and sole lead arranger (acting
in such roles, the “Arranger”) for the
Notes. The Arranger will have the rights and authority customarily
given to financial institutions in such roles, but the Wachovia Parties will
have no duties other than those expressly set forth herein. You agree
that no other arrangers or book-runners will be appointed, no other titles
will
be awarded and no compensation (other than that expressly contemplated by the
terms hereof or the Fee Letter referred to below) will be paid in connection
with the sale of the Notes unless you and we so agree. In addition,
Wachovia Securities has delivered to you a separate engagement letter dated
the
date hereof (the “Engagement Letter”) setting forth,
among other things, the roles of Wachovia Securities in connection with certain
transactions as described therein.
(d) The
commitments and agreements of the Wachovia Parties described herein are subject
to:
(i) there
not having occurred any event, development or circumstance since June 30, 2007
(the date of the most recent unaudited financial statements delivered to the
Arranger as of the date hereof) that has caused or would reasonably be expected
to cause any material adverse change in or affecting the business, condition
(financial or otherwise), results of operations, assets or liabilities of the
Company and its subsidiaries, taken as a whole;
(ii) not
less than 14 consecutive days prior to the Closing Date, the Company will have
provided to the Arranger an offering memorandum including information customary
for high yield offering memoranda to be used in connection with the offering
of
the Notes; and
(iii) the
other conditions set forth below or referred to in the Funding Conditions
attached hereto as Exhibit B.
2. Fees
and Expenses. In consideration of the execution and delivery of
this Commitment Letter by the Wachovia Parties, you agree to pay the fees and
expenses set forth in the Fee Letter dated the date hereof (the “Fee
Letter”) as and when payable in accordance with the terms
thereof.
2
3. Indemnification.
(a) The
Company hereby agrees to indemnify and hold harmless each of the Wachovia
Parties and each of their respective affiliates and all their respective
officers, directors, partners, trustees, employees, shareholders, advisors,
agents, attorneys and controlling persons and each of their respective heirs,
successors and assigns (each, an “Indemnified Person”)
from and against any and all losses, claims, damages and liabilities to which
any Indemnified Person may become subject arising out of or in connection with
this Commitment Letter, the Note Documentation, the Notes, the use of the
proceeds therefrom, any of the other transactions contemplated by this
Commitment Letter (including, without limitation, any Term Loan Conversion
and
any documentation related thereto), any other transaction related thereto or
any
claim, litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any Indemnified Person is a party thereto, and to
reimburse each Indemnified Person promptly upon demand for all legal and other
expenses reasonably incurred by it in connection with investigating, preparing
to defend or defending, or providing evidence in or preparing to serve or
serving as a witness with respect to, any lawsuit, investigation, claim or
other
proceeding relating to any of the foregoing (including, without limitation,
in
connection with the enforcement of the indemnification obligations set forth
herein); provided, however, that no Indemnified Person will be entitled
to indemnity hereunder in respect of any loss, claim, damage, liability or
expense to the extent that it is found by a final, non-appealable judgment
of a
court of competent jurisdiction that such loss, claim, damage, liability or
expense (i) resulted directly from the gross negligence or willful misconduct
of
such Indemnified Person or (ii) resulted from a claim brought by the Company
against an Indemnified Person for breach in bad faith of such Indemnified
Person’s obligations hereunder. In no event will any Indemnified
Person be liable on any theory of liability for indirect, special or
consequential damages, lost profits or punitive damages as a result of any
failure to purchase any of the Notes contemplated hereby or otherwise in
connection with the Notes. No Indemnified Person will be liable for
any damages arising from the use by unauthorized persons of information,
projections or other materials sent through electronic, telecommunications
or
other information transmission systems that are intercepted by unauthorized
persons. Notwithstanding the foregoing, the Indemnified Persons’
right to indemnification in respect to the Tender Offer shall be solely as
set
forth in the dealer-manager agreement relating thereto.
(b) The
Company and the Wachovia Parties agree that if any indemnification or
reimbursement sought pursuant to this Section 3 is judicially determined to
be
unavailable for a reason other than the gross negligence or willful misconduct
of such Indemnified Person or the breach in bad faith of an Indemnified Person’s
obligations hereunder in connection with a claim brought by the Company against
such Indemnified Person, then the Company will contribute to the amount paid
or
payable by the Wachovia Parties, as the case may be, as a result of such losses,
claims, damages, liabilities and expenses for which such indemnification or
reimbursement is held unavailable (i) in such proportion as is appropriate
to
reflect the relative benefits to the Company, on the one hand, and the Wachovia
Parties, as the case may be, on the other hand, in connection with the
transactions to which such indemnification or reimbursement relates, or (ii)
if
the allocation provided by clause (i) above is judicially determined not to
be
permitted, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) but also the relative faults of the Company,
on the one hand, and the Wachovia Parties, on the other hand, as well as any
other equitable considerations.
4. Expiration
of Commitment. The Commitment will expire at 10:00 p.m., New York
City time, on November 20, 2007 unless on or prior to such time you have
executed and returned to the Wachovia Parties a copy of this Commitment Letter
and the Fee Letter. If you do so execute and deliver to the Wachovia
Parties this Commitment Letter and the Fee Letter, Wachovia Investments agrees
to hold its Commitment available for you until the earliest to occur of (i)
the
termination of the Tender Offer, (ii) the consummation of the Tender Offer
with
or without the purchase of the Notes and (iii) 5:00 p.m., New York City time,
on
January 18, 2008.
3
5. Confidentiality.
(a) This
Commitment Letter, the Fee Letter, the Engagement Letter and the terms and
conditions contained herein and therein may not be disclosed by the Company
to
any person or entity (other than (i) to such of your officers, directors,
employees, agents, representatives and advisors as need to know and agree to
be
bound by the provisions of this paragraph, (ii) to the extent required by
applicable law or compulsory legal process (in which case you agree to inform
us
promptly thereof to the extent lawfully permitted to do so), (iii) in the case
of the Commitment Letter, to the extent required by applicable law or to satisfy
applicable disclosure requirements in connection with the Tender Offer or the
financing thereof and (iv) in the case of the Commitment Letter, to Xxxxx’x and
S&P in connection with obtaining the Ratings) without the prior written
consent of the Wachovia Parties.
(b) The
Wachovia Parties agree to keep confidential, and to cause their respective
affiliates, officers, directors, employees, agents, representatives and advisors
(collectively, the “Related Parties”) to keep
confidential, any non-public information provided to them by or on behalf of
the
Company (the “Confidential Information”);
provided that such persons shall be permitted
to disclose Confidential
Information (i) to such of our Related Parties as need to know such Confidential
Information and agree to be bound by the provisions of this paragraph; (ii)
to
the extent required by applicable law or compulsory legal process (in which
case
you agree to inform us promptly thereof to the extent lawfully permitted to
do
so); (iii) to the extent requested by any regulatory authority having
jurisdiction over the Wachovia Parties or any of their Related Parties; (iv)
to
the extent that such Confidential Information (A) becomes publicly available
other than as a result of a breach of the Commitment Letter by the Wachovia
Parties or any of their Related Parties, (B) becomes available to the Wachovia
Parties or any of their Related Parties on a non-confidential basis from a
source other than the Company, (C) was available to the Wachovia Parties or
any
of their Related Parties on a non-confidential basis prior to its disclosure
by
the Company; (v) to the extent that such information is independently developed
by the Wachovia Parties; (vi) to actual or potential Purchasers, participants
or
assignees who have entered into customary confidentiality undertakings or (vii)
with the prior written consent of the Company.
(c) You
acknowledge that Wachovia Securities and its affiliates (the term
“Wachovia Securities,” when used in this paragraph,
includes all such affiliates, including Wachovia Investments) may be providing
debt financing, equity capital or other services (including financial advisory
services) to other companies in respect of which you may have conflicting
interests regarding the transactions described herein and
otherwise. Wachovia Securities will not use confidential information
obtained from you by virtue of the transactions contemplated by this Commitment
Letter or its other relationships with you in connection with the performance
by
Wachovia Securities of services for others, and Wachovia Securities will not
furnish any such information to others. You also acknowledge that
Wachovia Securities has no obligation to use, in connection with the
transactions contemplated by this Commitment Letter, or to furnish to you,
confidential information obtained from others.
6. Assignment
and Syndication.
(a) The
parties hereto agree that the Wachovia Parties will have the right to syndicate
the Notes and the Commitment to one or more groups of financial institutions
or
other investors, identified by us and reasonably acceptable to you (together
with Wachovia Investments, the
“Purchasers”). The Arranger will have the
right to manage all aspects of any such syndication, including decisions as
to
the selection of institutions to be approached and when they will be approached,
the acceptance of commitments, the amounts offered, the amounts allocated and
the compensation provided. Upon notice by the Wachovia Parties, at
any time and from time to time on or after the effective date hereof and on
or
prior to June 30, 2008, you will cooperate (and cause your affiliates to
cooperate) with the Wachovia Parties in connection with the marketing, offering,
sale and issuance of the Notes. Such cooperation shall include,
without limitation: (i) endeavoring to cause the syndication efforts to benefit
from the existing investor and lending relationships of the Company; (ii)
arranging for direct contact between senior management and other representatives
of the Company and the proposed Purchasers (including, without limitation,
participating in one or more customary “roadshows” with prospective investors,
one-on-one meetings and conference calls); (iii) promptly preparing an offering
memorandum relating to the Notes containing such disclosure (including financial
information) as would be required by the Securities Act and other applicable
laws for an offering registered under the Securities Act and such other
disclosure as is customary and appropriate for such a document as reasonably
determined by the Arranger; (iv) hosting, with the Wachovia Parties, one or
more
meetings of prospective Purchasers, and, in connection with any such Purchaser
meeting, consulting with the Arranger with respect to the presentations to
be
made at any such meeting, and making available appropriate officers and
representatives to rehearse such presentations prior to such meetings, as
reasonably requested by the Arranger; and (v) at your expense, working with
the
Arranger to obtain a corporate family rating for the Company and ratings for
the
Notes from Xxxxx’x Investors Service, Inc. (“Moody’s”)
and a corporate credit rating for the Company and ratings for the Notes from
Standard & Poor’s Ratings Group (“S&P”) (such
ratings referred to in this clause (v), the
“Ratings”), in the case of each of clauses (i) through
(iv), prior to the commencement of the general syndication of the Notes, and
in
the case of clause (v), at the earliest practicable date. It is
understood and agreed that the Commitment hereunder is not subject to the
successful syndication of the Notes.
4
(b) To
assist
the Arranger in its syndication efforts, you agree promptly to prepare and
provide to the Arranger such information with respect to the Company and its
subsidiaries and the transactions contemplated hereby as it may reasonably
request, including all financial information and projections as it may
reasonably request, including a business plan for fiscal year 2008 through
fiscal year 2011, all in form and substance reasonably satisfactory to the
Arranger (the “Projections”). You hereby
represent and covenant that (i) all information other than the Projections
(the
“Information”) that has been or will be made available
to the Wachovia Parties by you or any of your representatives is or will be,
when furnished, complete and correct in all material respects and does not
or
will not, when furnished, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements are made and (ii) the Projections that have been or will
be made available to the Wachovia Parties by you or any of your representatives
have been or will be prepared in good faith based upon reasonable
assumptions. You further agree to update the Information and the
Projections as of the Closing Date for the foregoing representations to be
true
as of such date. You understand that in arranging and syndicating the
Notes and the Commitment we may use and rely on the Information and Projections
without independent verification thereof and that you will promptly notify
us of
any changes in circumstances that call into question in any material respect
the
continued reasonableness of any assumption underlying the
Projections.
(c) To
ensure
an orderly and effective syndication of the Notes and the Commitment, you agree
that, from the date hereof until the earlier of (i) the termination of the
syndication of the Notes as determined by the Arranger and (ii) June 30, 2008,
you will not, and will not permit any of your domestic subsidiaries to,
syndicate or issue, attempt to syndicate or issue, announce or authorize the
announcement of the syndication or issuance of, or initiate or pursue
discussions with third parties concerning the syndication or issuance of, any
debt facility or debt security of the Company or any of its domestic
subsidiaries (other than the syndication of the Notes as contemplated hereby),
including any renewals or refinancings of any existing debt facility, without
the prior written consent of the Arranger (not to be unreasonably withheld,
it
being understood that you and we contemplate that one or more Engagement
Transactions (as defined in the Engagement Letter) will be carried out prior
to
June 30, 2008).
5
7. Survival. The
provisions of this Commitment Letter relating to the payment of fees and
expenses, indemnification and contribution and confidentiality and the
provisions of Section 8 hereof will survive the expiration or termination of
the
Commitment or this Commitment Letter (including any extensions) and the
execution and delivery of the Note Documentation, and the provisions of Section
6 hereof will survive the execution and delivery of the Note
Documentation.
8. Choice
of Law; Jurisdiction; Waivers.
(a) This
Commitment Letter will be governed by and construed in accordance with the
laws
of the State of New York. The Company hereby irrevocably submits to
the non-exclusive jurisdiction of any New York State court or Federal court
sitting in the County of New York in respect of any suit, action or proceeding
arising out of or relating to the provisions of this Commitment Letter, the
Fee
Letter or the Engagement Letter and irrevocably agrees that all claims in
respect of any such suit, action or proceeding may be heard and determined
in
any such court. The parties hereto hereby waive any objection that
they may now or hereafter have to the laying of venue of any such suit, action
or proceeding brought in any such court, and any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum. The parties hereto hereby waive, to the
fullest extent permitted by applicable law, any right to trial by jury with
respect to any action or proceeding arising out of or relating to this
Commitment Letter, the Fee Letter or the Engagement
Letter.
(b) No
Purchaser will be liable in any respect for any of the obligations or
liabilities of any other Purchaser under this Commitment Letter or arising
from
or relating to the transactions contemplated hereby.
9. Conversion
to Term Loans. Subject to the terms and conditions of this
Section 9, the Arranger may, in its sole discretion, convert in whole, but
not
in part, the Notes to senior unsecured term loans (the “Term
Loans”) on substantially the same terms as the Notes (such
conversion, the “Term Loan
Conversion”). The Arranger shall notify the Company of
any Term Loan Conversion at least ten (10) business days prior to the Conversion
Deadline Date (as defined below), but in no event later than the Closing
Date. The effective date of the Term Loan Conversion (the
“Conversion Deadline Date”) shall be no earlier than
five (5) business days after the Closing Date and no later than ten (10)
business days after the Closing Date. In connection with the
syndication of any such Term Loans:
(a) The
Company agrees to assist the Arranger in the preparation of a customary
confidential information memorandum and other marketing materials to be used
in
connection with any syndication, including causing such confidential information
memorandum to conform to market standards as reasonably determined by the
Arranger and, at the request of the Arranger, the preparation of a version
of
the confidential information memorandum that does not contain material
non-public information concerning the Company, its affiliates or its securities
for purposes of United States federal and state securities laws
(“Material Non-Public Information”).
(b) The
Company acknowledges that (i) the Wachovia Parties on your behalf will make
Information and Projections available to the proposed syndicate of Purchasers
by
posting the Information or Projections on IntraLinks or another similar
electronic system and (ii) certain prospective Purchasers (such Purchasers,
“Public Purchasers”; all other Purchasers,
“Private Purchasers”) may have personnel
that do not
wish to receive Material Non-Public Information with respect to the Company
and
its affiliates, or the respective securities of any of the foregoing, and who
may be engaged in investment and other market-related activities with respect
to
such entities’ securities. If requested, you will assist us in
preparing materials not containing Material Non-Public Information (the
“Public Information Materials”), to be distributed to
prospective Public Purchasers.
6
(c) Before
distribution of any Information or Projections (i) to prospective Private
Purchasers, you shall provide us with a customary letter authorizing the
dissemination of Information and Projections and (ii) to prospective Public
Purchasers, you shall provide us with a customary letter authorizing the
dissemination of the Public Information Materials and confirming the absence
of
Material Non-Public Information therefrom. In addition, at our
request, you shall identify Public Information Materials by clearly and
conspicuously marking the same as “PUBLIC”. You agree that the
Wachovia Parties on your behalf may distribute the following documents to all
prospective Purchasers, unless you advise us in writing (including by email)
within a reasonable time prior to their intended distributions that such
material should only be distributed to prospective Private Purchasers: (a)
administrative materials for prospective Purchasers such as investor meeting
invitations and funding and closing memoranda, (b) notifications of changes
to
the terms of the Notes and (c) other materials intended for prospective
Purchasers after the initial distribution of the Information and Projections,
including drafts and final versions of definitive documents with respect to
the
Notes. If you advise us that any of the foregoing items should be
distributed only to Private Purchasers, then the Wachovia Parties will not
distribute such materials to Public Purchasers without further discussions
with
you. You agree (whether or not any Information or Projections are
marked “PUBLIC”) that Information and Projections made available to prospective
Public Purchasers in accordance with this Commitment Letter shall not contain
Material Non-Public Information.
10. Miscellaneous.
(a) This
Commitment Letter may be executed in one or more counterparts, each of which
will be deemed an original, but all of which taken together will constitute
one
and the same instrument. Delivery of an executed signature page of
this Commitment Letter by facsimile or other electronic transmission will be
effective as delivery of a manually executed counterpart hereof. This
Commitment Letter may not be amended or waived except by an instrument in
writing signed by the Wachovia Parties and you.
(b) The
Company may not assign any of its rights, or be relieved of any of its
obligations, without the prior written consent of each of the Wachovia Parties
(and any purported assignment without such consent will be null and
void). In connection with any syndication of all or a portion of the
Commitment, the rights and obligations of each Purchaser hereunder may be
assigned; provided that the Commitment hereunder shall continue in
effect notwithstanding any such assignment until the purchase of the Notes
on
the Closing Date.
(c) This
Commitment Letter and the attached Exhibits set forth the entire understanding
of the parties hereto as to the scope of the Commitment and the obligations
of
the Wachovia Parties hereunder. This Commitment Letter supersedes all
prior understandings and proposals, whether written or oral, between any of
the
Wachovia Parties and you relating to any financing or the transactions
contemplated hereby. This Commitment Letter is in addition to the
agreements of the parties contained in the Fee Letter.
(d) This
Commitment Letter has been and is made solely for the benefit of the parties
signatory hereto, the Indemnified Persons, and their respective heirs,
successors and assigns, and nothing in this Commitment Letter, expressed or
implied, is intended to confer or does confer on any other person or entity
any
rights or remedies under or by reason of this Commitment Letter or the
agreements of the parties contained herein.
(e) You
acknowledge that the Wachovia Parties may be (or may be affiliated with) full
service financial firms and as such from time to time may effect transactions
for their own account or the account of customers, and hold long or short
positions in debt or equity securities or loans of companies that may be the
subject of the transactions contemplated by this Commitment
Letter. You hereby waive and release, to the fullest extent permitted
by law, any claims you have with respect to any conflict of interest arising
from such transactions, activities, investments or holdings, or arising from
the
failure of any Wachovia Party or any of its affiliates to bring such
transactions, activities, investments or holdings to your
attention. In addition, you acknowledge that the transactions
contemplated by this Commitment Letter, the Fee Letter and the Engagement Letter
are arms-length commercial transactions and that each of the Wachovia Parties
is
acting as principal and in its own best interests. You are relying on
your own experts and advisors to determine whether the transactions contemplated
by this Commitment Letter, the Fee Letter and the Engagement Letter are in
your
best interests. You agree that each of the Wachovia Parties will act
under this Commitment Letter, the Fee Letter and the Engagement Letter as an
independent contractor and that nothing in this Commitment Letter, the Fee
Letter, the Engagement Letter, the nature of our services, or in any prior
relationship will be deemed to create an advisory, fiduciary or agency
relationship between any Wachovia Party on the one hand and the Company, its
stockholders or its affiliates on the other hand.
7
(f) The
Company agrees that the Wachovia Parties have the right to place advertisements
in financial and other newspapers and journals at their own expense describing
their services to the Company; provided that such Wachovia Party will
submit a copy of any such advertisements to the Company for its prior approval,
which approval will not be unreasonably withheld.
(g) You
agree
to provide us, prior to the Closing Date, with all documentation and other
information reasonably requested by us to satisfy the requirements of bank
regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including, without limitation, the U.S.A.
Patriot Act.
8
If
you
are in agreement with the foregoing, kindly sign and return to us the enclosed
copy of this Commitment Letter.
Very
truly
yours,
WACHOVIA INVESTMENT HOLDINGS, LLC | |||
|
By:
|
/s/ Rit X. Xxxx | |
Name: Rit X. Xxxx | |||
Title: Director | |||
WACHOVIA CAPITAL MARKETS, LLC | |||
|
By:
|
/s/ Rit X. Xxxx | |
Name: Rit X. Xxxx | |||
Title: Director | |||
9
Accepted
and agreed to as of the
date
first above written:
IKON OFFICE SOLUTIONS, INC. | |
By:
|
/s/ Xxxxxxx Xxxxx |
Name: Xxxxxxx Xxxxx | |
Title: Treasurer | |
10
EXHIBIT
A TO COMMITMENT LETTER
SUMMARY
OF CERTAIN INDENTURE TERMS
Set
forth below is a summary of certain of the terms of the Notes and the
documentation related thereto. Capitalized terms used and not
otherwise defined herein have the meanings set forth in the Commitment Letter
to
which this Exhibit is attached and of which it forms a
part
Notes
|
Senior
unsecured floating rates notes (the “Notes”) in
an aggregate principal face amount of up to $150.0 million, which
Notes
shall be issued with one percent (1%) original issue discount resulting
in
a funding amount of $148.5 million.
|
Maturity
|
December
31, 2011.
|
Optional
Redemption
|
The
Notes may be redeemed, at the option of the Company, in whole or
in part,
upon not less than 30 days and not more than 60 days notice, at
a
redemption price (the “Redemption Price”) based
on the principal amount being redeemed at the applicable percentage
set
forth in the schedule below, in each case, plus accrued interest
on the
principal redeemed:
|
Date
of Redemption
|
Redemption
Price Percentage
|
|
Closing
Date through 6/30/2008
|
100.00%
|
|
7/1/2008
through 3/31/2009
|
103.00%
|
|
4/1/2009
through 12/31/2009
|
102.00%
|
|
Thereafter
|
100.00%
|
Negative
Covenants
|
Consistent
with those set forth in the Existing 2015 Indenture; provided,
that the Company shall be prohibited from making optional redemptions
of
the Existing 2015 Notes through tender offers or otherwise or by
making
open market purchases of such Existing 2015 Notes.
|
Interest
Rate
|
The
Notes shall bear interest at the LIBOR Rate plus the Applicable
Margin,
payable quarterly.
As
used herein:
“LIBOR
Rate” means the rate (adjusted for statutory reserve
requirements for eurocurrency liabilities) at which eurodollar
deposits
for 3 months are offered in the interbank eurodollar
market.
“Applicable
Margin” means (a) from the Closing Date through June 30,
2008, 5.00% and (b) thereafter,
5.75%.
|
A-1
EXHIBIT
B TO COMMITMENT LETTER
SUMMARY
OF CERTAIN NOTE PURCHASE AGREEMENT TERMS
Set
forth below is a summary of certain of the terms of the Note Purchase Agreement
and the documentation related thereto. Capitalized terms used and not
otherwise defined herein have the meanings set forth in the Commitment Letter
to
which this Exhibit is attached and of which it forms a part
Termination
Events
|
None.
|
Conditions
to Obligation
to
Purchase
|
Conditions
to be limited to the following:
(a) The
accuracy of the representations and warranties substantially identical
to
those set forth in clauses (i), (ii), (iv), (v), (vi), (vii), (x)
and (xi)
of Section 1 of the Existing 2015 Purchase Agreement (provided,
that to the extent such representations and warranties refer to
certain of
the Existing 2015 Note Documentation, such references shall be
deemed to
be references to the applicable Note Documentation).
(b)
Delivery of an opinion, dated as of the Closing Date, of Xxxx X.
Xxxxxxx,
Senior Vice President, General Counsel and Secretary of the Company,
to
the Purchasers in form and substance substantially identical to
the
opinion delivered pursuant to the Existing 2015 Purchase
Agreement.
(c) Delivery
of an opinion, dated as of the Closing Date, of Cravath, Swaine
&
Xxxxx LLP, counsel to the Company, to the Purchasers in form and
substance
substantially identical to the opinion delivered pursuant to the
Existing
2015 Purchase Agreement.
(d) The
Company shall have used its commercially reasonable efforts to
obtain and
deliver to the Purchasers a letter, dated as of the date of purchase
of
the Notes or the time of sale thereof and with a “cut-off date” within
three days of the date of such letter, from PricewaterhouseCoopers
LLP,
independent public accountants, in form and substance reasonably
satisfactory to the Purchasers, containing statements and information
of
the type ordinarily included in accountants’ “comfort letters” to
underwriters with respect to the financial statements and certain
financial information contained in the final Note
Documentation.
(e) There
not having occurred any event, development or circumstance since
June 30,
2007 (the date of the most recent unaudited financial statements
delivered
to the Arranger as of the date hereof) that has caused or would
reasonably
be expected to cause any material adverse change in or affecting
the
business, condition (financial or otherwise), results of operations,
assets or liabilities of the Company and its subsidiaries, taken
as a
whole.
|
B-1
|
(f) The
Notes shall be (i) represented by one or more certificates in definitive
global form, (ii) registered with Cede & Co., as nominee of The
Depository Trust Company (“DTC”) and eligible
for clearance and settlement through DTC and (iii) designated by
the NASD
Private Offering Resale and Trading through Automatic Linkage Market
(“PORTAL”) as market securities in accordance
with the rules and regulations adopted by the National Association
of
Securities Dealers, Inc. relating to trading in PORTAL.
(g) The
Company shall have used its commercially reasonable efforts to
deliver
such customary closing certificates consistent with those delivered
in
connection with the offering of the Existing 2015 Notes and as
are
reasonably requested by the
Purchasers.
|
B-2
EXHIBIT
C TO COMMITMENT LETTER
FUNDING
CONDITIONS
Capitalized
terms used but not defined herein have the meanings assigned to them in the
Commitment Letter to which this Exhibit is attached and of which it forms a
part. The purchase of the Notes is conditioned upon satisfaction of,
among other things, the conditions precedent summarized below.
(a)
|
The
execution and delivery of the Note Purchase Agreement, the Indenture,
a
customary registration rights agreement and the Notes consistent
with the
Commitment Letter (collectively, the “Note
Documentation”), in each case, substantially identical to
the Existing 2015 Note Documentation (except to the extent set forth
on
the foregoing Exhibit A and Exhibit B); the fulfillment or waiver
in
writing of the conditions under the Note Purchase Agreement set forth
on
the foregoing Exhibit B.
|
(b)
|
There
shall not exist (pro forma for the Tender Offer and the financing
thereof) any default or event of default under any of the Note
Documentation or under any other material indebtedness of the Company
(including the Existing 2015 Indenture and the Company’s existing amended
and restated credit agreement dated as of June 28, 2006, as
amended).
|
(c)
|
The
Tender Offer shall have been consummated (or shall be consummated
substantially concurrently with the purchase of the Notes) for an
aggregate purchase price not exceeding $295.0 million pursuant to
documentation reasonably satisfactory to the Arranger, and no provision
thereof shall have been waived, amended, supplemented or otherwise
modified without the consent of the Arranger (which consent shall
not be
unreasonably withheld).
|
(d)
|
The
Company shall have complied in all material respects with all of
its
obligations under and agreements in the Commitment Letter, the Fee
Letter
and the Engagement Letter.
|
(e)
|
At
least 15 days prior to the Closing Date, the Arranger shall have
received (i) audited financial statements of the Company for each
of the
three fiscal years immediately preceding the Closing Date; (ii) unaudited
financial statements for any interim period or periods of the Company
ended after the date of the most recent audited financial statements
and
at least 45 days prior to the Closing Date (which shall have been
reviewed
by the independent accountants for the Company as provided in Statement
on
Auditing Standards No. 100); and (iii) customary pro forma financial
statements, in each case that are satisfactory in form to the Arranger
in
its reasonable discretion. You acknowledge that the pro formas
contained in the draft Offer to Purchase heretofore delivered to
you meet
the requirements of clause (iii)
above.
|
(f)
|
The
Company shall have complied with all other customary closing conditions,
including, without limitation: (i) obtaining material third party
and
governmental consents necessary in connection with the Tender Offer
or the
financing thereof and (ii) absence of litigation or regulatory action
affecting the Tender Offer or the financing thereof. The
Arranger shall have received all documentation and other information
reasonably requested by the Purchasers to enable them to comply with
the
requirements of bank regulatory authorities under applicable
“know-your-customer” and anti-money laundering rules and regulations,
including the U.S.A. Patriot Act.
|
C-1
EXHIBIT
D TO COMMITMENT LETTER
RETAINED
DEBT
($ in thousands) | ||||
Long-Term
Corporate Debt
|
||||
As
of 9/30/2007
|
||||
Bond
issue at stated interest rate of 6.75%, due 2025
|
$ |
260,400
|
||
Bond
issue at stated interest rate of 7.30%, due 2027
|
94,600
|
|||
bond
issue at stated interest rate of 7.75% due 2015
|
225,000
|
|||
Capital
lease obligations
|
13,100
|
|||
Total
Corporate Debt
|
$ |
593,100
|
||
Long-Term
Non-Corporate Debt
|
||||
As
of 9/30/2007
|
||||
Asset
securitization conduit financing at average interest rate of 7.0%(1)
|
$ |
158,666
|
||
Notes
payable to banks at average interest rate of 6.23%
|
58
|
|||
Debt
supporting certain lease and residual value guarantees(2)
|
73,687
|
|||
Total
Non-Corporate Debt
|
$ |
232,411
|
_____________________________________________
(1)
In
June 2007, IKON’s United Kingdom leasing subsidiaries, IKON Capital PLC and IKON
Office Solutions Dublin Limited, replaced their existing asset securitization
conduit financing agreement with a new five year agreement (the “New U.K.
Conduit”), including a 364 day revolving liquidity facility with a new
lender. The facility size was increased from £95,000 to
£105,000. If the New U.K. Conduit is not renewed at the end of each
364 day period during the life of the agreement or upon expiration, any
outstanding balance due converts to an amortizing loan to be repaid with
collections from previously funded lease contracts.
(2)
Due mainly to certain provisions within IKON’s agreements with GE and other
third party syndicators, when the Company is the original equipment lesser
(primarily state and local government contracts), IKON is required to record
debt (and related assets) for certain lease and residual value
guarantees.
In
addition to the amounts set forth in the foregoing table, Retained Debt shall
also include:
(a)
|
up
to $5.0 million of additional capital lease
obligations;
|
(b)
|
up
to $2.0 million of other debt;
|
(c)
|
asset
securitization conduit financing in an aggregate principal amount
(including amounts set forth in the foregoing table) not to exceed
£105.0
million;
|
(d)
|
notes
payable in an aggregate principal amount (including amounts set forth
in
the foregoing table) not to exceed $2.0 million;
and
|
(e)
|
additional
debt supporting lease and residual value
guarantees.
|
D-1