UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Rule 14a-101)
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2)
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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IKON Office Solutions, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
Common stock, without par value, of IKON Office Solutions, Inc. (the common stock)
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(2)
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Aggregate number of securities to which transaction applies:
94,327,486 shares of common stock (representing the number of shares of common stock
outstanding on August 31, 2008);
7,608,907 shares of common stock issuable pursuant to
the terms of IKONs outstanding stock options; 1,424,504 shares of common stock
subject to restricted stock unit awards; 342,675 shares of common stock subject
to deferred stock unit awards; and 460,727 shares of common stock issuable pursuant to the terms of IKONs Executive Deferred Compensation
Plan.
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(3)
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Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated
and state how it was determined):
The maximum aggregate value was determined based on the sum of: (A)
94,327,486 shares of common stock (representing the number of shares of common stock
outstanding on August 31, 2008)
multiplied by $17.25; (B) 7,608,907 shares of common
stock issuable pursuant to the terms of IKONs outstanding stock options multiplied
by $6.0271 (representing $17.25 minus the weighted average exercise price for the
outstanding stock options); (C) 1,424,504 shares of common stock subject to
restricted stock unit awards multiplied by $17.25; (D) 342,675 shares of common
stock subject to deferred stock unit awards multiplied by $17.25; and
(E) 460,727 shares of common stock issuable pursuant to the terms of
IKONs Executive Deferred Compensation Plan multiplied by $17.25.
In accordance with Section 14(g) of the Securities Exchange Act of 1934, as
amended, the fee was determined by multiplying $0.0000393 by the aggregate value
calculated in the preceding sentence.
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(4)
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Proposed maximum aggregate value of transaction:
$1,711,440,155.38
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(5)
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Total fee paid:
$67,259.60
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule
and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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Dear Shareholder:
The Board of Directors of IKON Office Solutions, Inc. has
unanimously approved a merger agreement between IKON and Ricoh
Company, Ltd. providing for the merger of IKON with Keystone
Acquisitions, Inc., a newly formed subsidiary of Ricoh. If the
merger is completed, you will receive $17.25 in cash, without
interest, less any applicable withholding taxes, for each share
of our common stock that you own, and IKON will become wholly
owned by Ricoh.
You will be asked, at a special meeting of IKONs
shareholders, to consider and vote on a proposal to adopt the
merger agreement. After careful consideration, our Board of
Directors approved the merger agreement and the merger and
unanimously declared that the merger agreement and the merger
are advisable and in the best interests of IKON and our
shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE FOR THE ADOPTION OF THE MERGER
AGREEMENT.
The proxy statement attached to this letter provides you with
information about the merger and the special meeting. A copy of
the merger agreement is attached as Annex A to this proxy
statement. I encourage you to read the entire proxy statement
carefully. You may also obtain additional information regarding
IKON from documents we have filed with the Securities and
Exchange Commission.
Your vote is very important, regardless of the number of shares
of our common stock you own. The merger cannot be completed
unless holders of a majority of the outstanding shares of our
common stock entitled to vote at the special meeting of
shareholders vote FOR the adoption of the merger
agreement. If you do not vote, or if you abstain from voting, it
will have the same effect as a vote against the adoption of the
merger agreement because it is one fewer vote for approval.
You may vote in person at the meeting or by proxy. Instructions
for voting by mail, internet, and telephone are on your proxy
card. We recommend that you vote by proxy even if you plan to
attend the meeting. If you hold shares through a broker or other
nominee, you should follow the instructions provided by your
broker or nominee.
Thank you in advance for your cooperation and continued support.
Matthew J. Espe
Chairman and Chief Executive Officer
Malvern, Pennsylvania
[ ], 2008
This proxy statement is dated
[ ], 2008 and is being mailed to
shareholders beginning [ ],
2008.
Notice of Special Meeting of Shareholders
[ ], 2008
Dear Shareholder:
You are invited to attend a special meeting of shareholders of
IKON. The meeting will be held at our offices at 70 Valley
Stream Parkway, Malvern, Pennsylvania on
[ ], 2008 at
[ ]. The purpose of the meeting is:
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1.
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To consider and vote on a proposal to adopt the Agreement and
Plan of Merger, dated as of August 27, 2008, among IKON,
Ricoh Company, Ltd. and Keystone Acquisition, Inc., a newly
formed subsidiary of Ricoh.
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2.
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To conduct other business if properly raised at the meeting.
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Only shareholders of record at the close of business on
[ ], 2008, the record date for the
special meeting, are entitled to vote on these matters. All
shareholders who are entitled to vote are urged to do so at the
meeting or by proxy.
In order to attend the meeting, you must present an admission
ticket or provide separate verification of share ownership. Even
if you expect to attend the meeting in person, it is recommended
that you vote by proxy by signing and returning the accompanying
proxy card in the enclosed postage-prepaid envelope. You may
also vote your shares by telephone or through the internet by
following the instructions set forth on the proxy card. If you
later decide that you would like to vote in person at the
meeting, or for any other reason you desire to revoke your
proxy, you can revoke your proxy at any time before the voting
occurs at the meeting.
Matthew J. Espe
Chairman and Chief Executive Officer
Malvern, Pennsylvania
[ ], 2008
This proxy statement is available at www.ikon.com by clicking
on Investor Relations and then clicking on
Special Meeting of Shareholders.
TABLE OF
CONTENTS
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1
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54
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A-1
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B-1
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C-1
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IKON
Office Solutions, Inc.
70 Valley Stream Parkway
Malvern, Pennsylvania 19355
PROXY
STATEMENT
This proxy statement is furnished in connection with the
solicitation of proxies by IKON Office Solutions, Inc.
(IKON or the Company or we
or us), on behalf of our Board of Directors, to be
used at a special meeting of shareholders, which will be held on
[ ], 2008 at [ ] at our
offices at 70 Valley Stream Parkway, Malvern, Pennsylvania. The
purpose of the special meeting is for our shareholders to
consider and vote upon the adoption of the merger agreement
between IKON and Ricoh providing for the merger of IKON with a
newly formed subsidiary of Ricoh. A copy of the merger agreement
is attached to this proxy statement as Annex A. This proxy
statement and the accompanying proxy card are being mailed to
shareholders beginning [ ], 2008.
SUMMARY
This summary highlights selected information from this proxy
statement and may not contain all of the information that is
important to you. To understand the merger fully, and for a more
complete description of the legal terms of the merger, you
should carefully read this entire proxy statement, the annexes
attached to this proxy statement and the documents referred to
or incorporated by reference into this proxy statement. We have
included page references in parentheses to direct you to the
appropriate place in this proxy statement for a more complete
description of the topics presented in this summary.
Parties
to the Merger
IKON
Office Solutions, Inc.
IKON Office Solutions, Inc. (www.ikon.com) is the worlds
largest independent channel for document management systems and
services, enabling customers to improve document workflow and
increase efficiency. IKON integrates
best-in-class
copiers, printers and MFP technologies from leading
manufacturers and document management software and systems, to
deliver tailored, high-value solutions implemented and supported
by its global services organization IKON Enterprise
Services. With fiscal year 2007 revenue of $4.2 billion,
IKON has approximately 24,000 employees in over 400
locations throughout North America and Western Europe.
IKON is incorporated in the State of Ohio with its principal
executive offices at 70 Valley Stream Parkway, Malvern,
Pennsylvania 19355. Its telephone number is 1-610-296-8000.
Sometimes in this proxy statement, we use the term
Surviving Corporation to refer to IKON after the
consummation of the merger, when it will be a wholly owned
subsidiary of Ricoh.
Ricoh
Company, Ltd. (Ricoh)
A global leader in digital office solutions, Ricoh
(www.ricoh.com) creates new value at the interface of people and
information, offering a broad range of digital, networked
products, including MFPs, printers, fax machines,
semiconductor-related products and digital cameras. With
83,400 employees worldwide, and $22 billion in
revenue, Ricoh is also one of the worlds leading
environmentalist companies, committed to sustainable business
everywhere.
Ricoh is incorporated in Japan with its principal executive
offices at
13-1,
Ginza
8-chome, Chuo-ku, Tokyo,
Japan 104-8222.
Its telephone number is +81-3-6278-2111.
Keystone
Acquisition, Inc. (Sub)
Sub is an Ohio corporation and an indirect wholly owned
subsidiary of Ricoh. Sub was formed at the direction of Ricoh in
anticipation of the merger. Subject to the terms of the merger
agreement and in accordance with Ohio law, at the effective time
of the merger, Sub will merge with and into IKON and cease to
exist, with IKON continuing as the Surviving Corporation and as
a subsidiary of Ricoh. Sub has
de minimis
assets and no
operations.
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The principal executive offices of Sub are located at
41 South High St., Suite 2800, Columbus, Ohio 43215
and its telephone number is 1-614-227-2136.
The
Merger
Consideration
to be Received by IKONs Shareholders
(page 33)
At the completion of the merger, each issued share of our common
stock not owned by IKON, Ricoh or Sub, or held by shareholders
who have properly demanded and perfected their appraisal rights
in accordance with Ohio law, will be converted into the right to
receive $17.25 in cash, without interest and less applicable
withholding taxes.
When
the Merger Will be Completed (page 43)
We are working to complete the merger as soon as possible. We
anticipate completing the merger in the fourth quarter of
calendar year 2008, subject to adoption of the merger agreement
by our shareholders and the satisfaction of the other closing
conditions.
Treatment
of Stock Options, Restricted Stock and Other
Equity-Based
and
Long-Term
Incentive Awards (page 33)
Upon the consummation of the merger, each outstanding,
unexercised stock option will be converted into the right to
receive an amount in cash equal to the number of shares of
IKONs common stock subject to such option multiplied by
the spread value of such option (
i.e.
, the
per share merger consideration minus the applicable exercise
price). The restrictions on each outstanding
restricted share of IKON common stock will lapse
upon consummation of the merger, and each such share will be
converted into the right to receive the merger consideration.
Each outstanding performance unit award will be converted into
the right to receive cash equal to the target number of units
subject to such performance unit award. Each outstanding
restricted stock unit and deferred stock unit will be converted
into the right to receive the merger consideration. Each stock
equivalent issued under IKONs deferred compensation plans
will be converted into the right to receive the merger
consideration.
Recommendation
of Our Board of Directors (page 15)
After evaluating a variety of business, financial and market
factors and consulting with our legal and financial advisors,
and after due discussion and due consideration, our Board of
Directors unanimously approved the merger agreement and the
merger and unanimously declared that the merger agreement and
the merger are advisable and in the best interests of IKON and
our shareholders.
ACCORDINGLY, OUR BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE
MERGER AGREEMENT.
Opinion
of IKONs Financial Advisor (page 16)
Our independent financial advisor, Goldman, Sachs &
Co., which we refer to as Goldman Sachs, delivered its opinion
to IKONs Board of Directors that, as of August 27,
2008 and based upon and subject to the factors and assumptions
set forth therein, the $17.25 per share in cash to be paid to
holders of IKON common stock pursuant to the merger agreement
was fair from a financial point of view to such holders.
The full text of the written opinion of Goldman Sachs, dated
August 27, 2008, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached as
Annex B. Goldman Sachs provided its opinion for the
information and assistance of IKONs Board of Directors in
connection with its consideration of the transaction. The
Goldman Sachs opinion is not a recommendation as to how any
holder of IKONs common stock should vote with respect to
the transaction or any other matter.
Security
Ownership of Directors and Executive Officers
(page 49)
As of the record date for the special meeting, the directors and
executive officers of IKON beneficially owned, in the aggregate,
[ ] shares of our common stock, or
approximately [ ]% of the outstanding shares of
our
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common stock. The directors and executive officers have informed
us that they intend to vote all of their shares of IKON common
stock FOR the adoption of the merger agreement.
Interests
of Our Directors and Executive Officers in the Merger
(page 21)
Our directors and executive officers may have interests in the
merger that are different from, or in addition to, yours,
including the following:
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our directors and executive officers will receive cash
consideration in connection with the merger because of the
treatment of equity-based compensation and other long-term
incentive arrangements;
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the merger agreement requires that Ricoh or the Surviving
Corporation maintain or provide substantially comparable
compensation and benefits for a period of one year after the
consummation of the merger;
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under the merger agreement, the Surviving Corporation is
required to honor and continue certain employment, severance,
retention and termination policies and arrangements and cash
incentive compensation plans, including all sales commission
plans;
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the merger agreement provides for indemnification and liability
insurance arrangements for each of our current and former
directors and officers;
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certain of our executive officers have entered into retention
agreements that provide for bonus payments during a retention
period following the merger; and
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upon completion of the merger, the accrued benefits of certain
of our executive officers under our Executive Deferred
Compensation Plan will vest and become immediately due and
payable to them.
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Our Board of Directors was aware of these interests and
considered them, among other matters, in making its
determinations.
Material
United States Federal Income Tax Consequences of the Transaction
(page 29)
For U.S. federal income tax purposes, the merger will be
treated as a sale of the shares of our common stock for cash by
each of our shareholders. As a result, in general, each
shareholder will recognize gain or loss equal to the difference,
if any, between the amount of cash received in the merger and
such shareholders adjusted tax basis in the shares
surrendered. Such gain or loss will be capital gain or loss if
the shares of common stock surrendered are held as a capital
asset in the hands of the shareholder, and will be long-term
capital gain or loss if the shares of common stock have a
holding period of more than one year at the time of the merger.
Shareholders are urged to consult their own tax advisors as
to the particular tax consequences to them of the merger.
Market
Price of Our Stock (page 48)
Our common stock is listed on the New York Stock Exchange (the
NYSE) under the trading symbol IKN. The
closing sale price of our common stock on the NYSE on
August 26, 2008, which was the last trading day before we
announced the merger, was $15.56. The $17.25 per share to be
paid for each share of our common stock in the merger represents
a premium of 11% to the closing price of our common stock on
August 26, 2008, and a premium of 33% to the average
closing price for the 60 trading days ended August 26, 2008.
On [ ], the last trading day before the date of
this proxy statement, the closing price of our common stock on
the NYSE was $[ ]. Shareholders are encouraged
to obtain current market quotations for our common stock.
Procedure
for Receiving Merger Consideration (page 34)
As soon as reasonably practicable after the consummation of the
merger, a paying agent engaged by Ricoh, or an affiliate of
Ricoh, will mail a letter of transmittal and instructions to you
and our other shareholders. The letter of transmittal and
instructions will tell you how to surrender your common stock
certificates in exchange for the merger consideration.
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You should not return your stock certificates with the
enclosed proxy card, and you should not forward your stock
certificates to the paying agent without a letter of
transmittal.
Dissenting
Shareholders Rights (page 46)
Pursuant to Section 1701.84 of the Ohio Revised Code, all
of IKONs shareholders entitled to vote on the adoption of
the merger agreement may exercise dissenters rights with
respect to the merger. Each shareholder who does not vote in
favor of adoption of the merger agreement and who complies with
all of the requirements of Section 1701.85 of the Ohio
Revised Code will be entitled to relief upon perfecting their
right of appraisal.
The
Merger Agreement
No
Solicitation of Transactions (page 39)
The merger agreement restricts our ability to solicit or engage
in discussions or negotiations with a third party regarding
specified transactions involving IKON. In this proxy statement,
we sometimes refer to these restrictions as the
non-solicitation provisions. Notwithstanding the
non-solicitation provisions, under certain limited circumstances
required for our Board of Directors to comply with its fiduciary
duties, our Board of Directors may respond to a bona fide
written proposal for an alternative acquisition or terminate the
merger agreement and enter into an agreement with respect to a
superior proposal after paying to Ricoh a termination fee of
$66.7 million. IKON may also be required to pay
Ricohs expenses, up to a maximum of $16 million, if
the merger agreement is terminated due to either a failure to
obtain the required shareholder approval at the special meeting,
or a breach of IKONs non-solicitation provisions. Any such
expenses actually paid by IKON would be credited against the
termination fee if the termination fee were also payable.
Conditions
to Closing (page 43)
Before we can complete the merger, a number of conditions must
be satisfied. These include:
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the adoption of the merger agreement by our shareholders;
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the termination, waiver or expiration of the waiting periods
(and any extension of those waiting periods) applicable to the
merger under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, the Council Regulation (EC)
No. 139/2004 of the European Community and the Competition
Act (Canada). In Canada, the Commissioner of Competition,
pursuant to the Competition Act (Canada), shall have issued
either an advance ruling certificate or no action
letter to Ricoh in respect of the merger, on terms and in a form
reasonably satisfactory to Ricoh. See
The
Merger Regulatory Approvals
beginning on
page 30;
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the absence of governmental judgments or orders that have the
effect of enjoining or otherwise prohibiting the consummation of
the merger agreement;
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the representations and warranties of each party being true and
correct, subject to certain exceptions for materiality; and
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the performance by each party in all material respects of its
obligations under the merger agreement.
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The
Special Meeting
Place,
Date and Time (page 9)
The special meeting will be held at our offices at 70 Valley
Stream Parkway, Malvern, Pennsylvania on [ ],
2008 at [ ].
Purpose
(page 9)
The purpose of the meeting is to consider and vote on a proposal
to adopt the merger agreement and to conduct other business, if
properly raised at the meeting.
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Record
Date (page 9)
Only holders of record of common stock at the close of business
on [ ], 2008, the record date for the special
meeting, will be entitled to vote on these matters. Each record
holder of common stock will be entitled to one vote for each
share of common stock held of record.
Required
Vote, Abstentions and Broker Non-Votes
(page 10)
The adoption of the merger agreement must be approved by the
affirmative vote of the holders of a majority of the outstanding
shares of our common stock entitled to vote at the special
meeting. Because the required vote is based on the number of
shares of IKONs common stock outstanding, rather than the
number of votes cast, failure to vote your shares (including as
a result of broker non-votes) and abstentions will have the same
effect as voting against adoption of the merger agreement.
Voting
and Proxies (page 9)
You may vote in person at the meeting or by proxy. Instructions
for voting by mail, internet, and telephone are on your proxy
card. We recommend that you vote by proxy even if you plan to
attend the meeting. If your shares are held in street
name, you should follow the instructions that your broker
provides. If you do not instruct your broker how to vote, your
shares will not be voted, which will have the same effect as
voting against adoption of the merger agreement.
Changing
Your Vote (page 9)
If you are a registered shareholder, you can revoke your proxy
by giving notice of revocation in writing to the Secretary of
IKON at 70 Valley Stream Parkway, Malvern, Pennsylvania 19355 or
by submitting by mail a new proxy dated after the date of the
proxy being revoked. You can also revoke your proxy by accessing
the internet site stated on the enclosed proxy card or by using
the toll-free telephone number stated on the enclosed proxy
card. In addition, your proxy may be revoked by attending the
special meeting and revoking your proxy in open meeting,
although your attendance at the special meeting alone will not
revoke any proxy.
If your shares are held in street name the above
directions do not apply to you and you must follow the
instructions received from your broker to change your vote.
5
QUESTIONS &
ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER
The following section is intended to address some commonly
asked questions about the special meeting and the merger. These
questions and answers may not address all questions that may be
important to you as a shareholder. We urge you to read carefully
this proxy statement in its entirety, including the annexes to
this proxy statement and the documents referred to or
incorporated by reference into this proxy statement.
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Q:
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Why am I receiving this document?
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A:
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You are receiving this proxy statement because you were a
shareholder of IKON on the record date. You are being asked to
vote on a proposal to adopt the merger agreement.
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What do I need to do now?
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A:
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Please read this proxy statement carefully, including its
annexes and the documents referred to or incorporated by
reference into this proxy statement, and consider how the
proposed transaction affects you. If you are a shareholder of
record, you can ensure that your shares are voted at the special
meeting by completing, signing, dating and mailing the enclosed
proxy card and returning it in the postage-paid envelope
provided. You can also submit your voting instructions by
accessing the internet site stated on the enclosed proxy card or
by using the toll-free telephone number stated on the enclosed
proxy card. If you hold your shares in street name,
you can ensure that your shares are voted at the special meeting
by instructing your broker on how to vote, as discussed below.
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What is the proposed transaction?
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A:
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The proposed transaction is the acquisition of IKON by Ricoh
under a merger agreement, dated as of August 27, 2008,
among IKON, Ricoh and Sub. Once the merger agreement has been
adopted by IKONs shareholders and the other closing
conditions under the merger agreement have been satisfied or
waived, Sub will merge with and into IKON. IKON will be the
surviving corporation in the merger and will become wholly owned
by Ricoh.
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What will I receive in the merger?
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A:
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You will be entitled to receive $17.25 in cash, without
interest, less any applicable withholding taxes, for each
outstanding share of IKONs common stock that you own as of
the effective time of the merger. Following the merger, you will
not own any shares in the Surviving Corporation.
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Q:
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Where and when is the special meeting?
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A:
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The special meeting will take place at our offices at 70 Valley
Stream Parkway, Malvern, Pennsylvania on [ ],
2008 at [ ].
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Q:
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How does our Board of Directors recommend that I vote on the
merger agreement?
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A:
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Our Board of Directors unanimously recommends that you vote
FOR the adoption of the merger agreement. You should
read
The Merger Reasons for the
Merger
beginning on page 14 for a discussion of
the factors that our Board of Directors considered in deciding
to recommend the merger agreement to our shareholders.
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Q:
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How do I vote?
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A:
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You may vote prior to the special meeting in one of the
following ways:
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use the toll-free telephone number on the enclosed
proxy card;
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access the internet site shown on the enclosed proxy
card; or
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complete, sign, date and return the enclosed proxy
card in the enclosed postage-paid envelope.
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You may also vote your shares in person at the special meeting.
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Q:
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If my shares are held in street name by my
broker, will my broker vote my shares for me?
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A:
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Your broker will not vote your shares held by it in street
name with respect to the adoption of the merger agreement
unless you provide instructions to your broker on how to vote.
You should follow the instructions that your broker provides. If
you do not instruct your broker how to vote, your shares will
not be voted, which will have the same effect as voting against
adoption of the merger agreement.
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Q:
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What vote of our shareholders is required to adopt the merger
agreement?
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A:
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The affirmative vote of a majority of the outstanding shares of
our common stock at the record date must vote their shares
FOR the adoption of the merger agreement. If you do
not vote, or if you abstain from voting, it will have the same
effect as a vote against the adoption of the merger agreement
because it is one fewer vote for approval.
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6
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Q:
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Can I change my vote after I have delivered my proxy or
voting instructions card?
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A:
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Yes, you can change your vote at any time before your proxy is
voted at the special meeting.
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If you are a registered shareholder, you can revoke your proxy
by giving notice of revocation in writing to the Secretary of
IKON at 70 Valley Stream Parkway, Malvern, Pennsylvania 19355 or
by submitting by mail a new proxy dated after the date of the
proxy being revoked. You can also revoke your proxy by accessing
the internet site stated on the enclosed proxy card or by using
the toll-free telephone number stated on the enclosed proxy
card. In addition, your proxy may be revoked by attending the
special meeting and revoking your proxy in open meeting,
although your attendance at the special meeting alone will not
revoke any proxy.
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If your shares are held in street name the above
directions do not apply to you and you must follow the
instructions received from your broker to change your vote.
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Q:
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How do I vote my plan shares held in the IKON Retirement
Savings Plan?
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A:
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The trustee of the plan will vote your plan shares as you direct
on your proxy card. If you do not vote your plan shares, the
trustee will generally vote your plan shares in the same ratio
indicated by the voting instructions that the trustee receives
from other participants, unless it is contrary to applicable law
to do so. However, if you sign and return a proxy card but fail
to indicate how you wish to vote, the trustee will vote your
plan shares in accordance with the recommendation of the Board
of Directors. You must complete, sign, and return your proxy
card, or vote by phone or through the internet, no later than
5:00 p.m., Eastern Standard Time,
[ ], 2008 for the shares
represented by the proxy to be voted in the manner directed
therein.
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Q:
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What does it mean if I get more than one proxy card or vote
instruction card?
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A:
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If your shares are registered differently or are in more than
one account, you will receive more than one proxy card or, if
you hold your shares in street name, more than one
vote instruction card. Please complete and return all of the
proxy cards or vote instruction cards you receive to ensure that
all of your shares are voted.
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Q:
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Should I send in my stock certificates now?
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A:
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NO. PLEASE DO NOT SEND ANY STOCK CERTIFICATES WITH YOUR
PROXY CARD.
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Shortly after the merger is completed, you will receive a letter
of transmittal with instructions informing you how to send in
your stock certificates to the paying agent in order to receive
the merger consideration. You should use the letter of
transmittal to exchange stock certificates for the merger
consideration to which you are entitled as a result of the
merger.
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Q:
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What happens if I sell my shares before the special
meeting?
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A:
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The record date of the special meeting is earlier than the
special meeting and the date that the merger is expected to be
completed. If you transfer your shares of our common stock after
the record date but before the special meeting, you will retain
your right to vote at the special meeting, but will have
transferred the right to receive $17.25 per share in cash to be
received by our shareholders in the merger. In order to receive
the $17.25 per share, you must hold your shares through the
completion of the merger.
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Q:
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Am I entitled to exercise appraisal rights instead of
receiving the merger consideration for my shares?
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A:
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Yes, as a holder of our common stock, you are entitled to
appraisal rights under Ohio law in connection with the merger if
you meet certain conditions. See
Dissenting
Shareholders Rights
beginning on page 46.
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Q:
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Will I owe taxes as a result of the merger?
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A:
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The receipt of cash in exchange for shares of IKONs common
stock pursuant to the merger will generally be a taxable
transaction for U.S. federal income tax purposes. In general,
you will recognize a capital gain or loss equal to the
difference between the amount of merger consideration you
receive for your shares and the adjusted tax basis of your
shares. See
The Merger Material U.S.
Federal Income Tax Consequences of the Transaction
beginning on page 29. You should consult your tax advisor
for a complete understanding of the specific tax consequences of
the merger to you.
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Q:
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Who can help answer my other questions?
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A:
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If you have more questions about the merger, you should contact
Maryanne Messenger of IKON Shareholder Services by calling
1-610-296-8000. If you need assistance in submitting your proxy
or voting your shares or need additional copies of this proxy
statement or the enclosed proxy card, you should contact our
proxy solicitation agent D.F. King & Co., Inc. by
calling toll-free
1-800-549-6697
or collect at
1-212-269-5550.
If your broker holds your shares, you should contact your broker
for additional information. Also see
Where You Can Find
More Information
on page 54.
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7
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
IKON may from time to time provide information, whether verbally
or in writing, including certain statements included in or
incorporated by reference into this proxy statement, which
constitutes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements include, but are not limited
to, statements regarding the following: the satisfaction of the
closing conditions to the merger agreement, the expected
completion and timing of the merger and other information
relating to the merger. Although we believe the expectations
contained in such forward-looking statements are reasonable, we
can give no assurance that such expectations will prove correct.
The words anticipate, believe,
estimate, expect, intend,
may, might, plan,
potential, predict, will,
should and similar expressions, as they relate to
us, are intended to identify forward-looking statements. Such
statements reflect our managements current views of IKON
with respect to future events and are subject to certain risks,
uncertainties and assumptions. Should one or more of these risks
or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated, expected,
intended or planned. We will not update these forward-looking
statements, even though our situation may change in the future.
Whether actual results will conform with our expectations and
predictions is subject to a number of risks and uncertainties,
including, but not limited to, risks and uncertainties relating
to:
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the satisfaction of the conditions to the consummation of the
merger, including the adoption of the merger agreement by our
shareholders;
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the occurrence of any event, change or other circumstance that
could give rise to the termination of the merger agreement,
including a termination under circumstances that could require
us to pay a $66.7 million termination fee to Ricoh;
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the amount of the costs, fees, expenses and charges related to
the merger;
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the effect of the announcement of the merger on our business
relationships, operating results and business generally,
including our ability to retain key employees;
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the risk that the merger may not be completed in a timely manner
or at all, which may adversely affect our business and the price
of our common stock;
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the potential adverse effect on our business, properties and
operations because of certain covenants we agreed to in the
merger agreement;
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the risk that we may be subject to litigation in connection with
the merger;
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risks related to diverting managements attention from our
ongoing business operations; and
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other risk factors detailed in our filings with the
U.S. Securities and Exchange Commission (the
SEC), including Part I, Item 1A.
Risk Factors, of our Annual Report on
Form 10-K,
filed on November 29, 2007. See
Where you can find
more information
on page 54.
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All subsequent written and oral forward-looking statements
concerning the merger or other matters addressed in this proxy
statement and attributable to us or any person acting on our
behalf are expressly qualified in their entirety by the
cautionary statements contained or referred to in this section.
Forward-looking statements speak only as of the date of this
proxy statement or the date of any document incorporated by
reference in this proxy statement. Except as required by
applicable law or regulation, we do not undertake to release the
results of any revisions of these forward-looking statements to
reflect future events or circumstances.
8
THE
SPECIAL MEETING
A special meeting of IKONs shareholders will be
convened at our offices at 70 Valley Stream Parkway, Malvern,
Pennsylvania on [ ], 2008 at
[ ] to consider and vote on the adoption of the
merger agreement. This section outlines the procedures and
details of the special meeting.
Who Can
Vote
Only holders of record of common stock at the close of business
on [ ], 2008, the record date for the special
meeting, will be entitled to vote at the meeting. On that date,
there were [ ] shares of common stock
outstanding. Each record holder of common stock will be entitled
to one vote for each share of common stock held of record.
How You
Can Vote
You may vote in person at the meeting or by proxy. Instructions
for voting by mail, internet, and telephone are on your proxy
card. We recommend that you vote by proxy even if you plan to
attend the meeting. If your shares are held in a stock brokerage
account or by another nominee, such as a bank or trust (other
than shares in IKONs Retirement Savings Plan, which is
discussed below), then the broker or other nominee is considered
to be the shareholder of record with respect to those shares.
However, you still are considered to be the beneficial owner of
those shares, with your shares being held in street
name. Under the rules of the NYSE, brokers who hold shares
in street name for customers may not exercise their
voting discretion with respect to the approval of non-routine
matters such as the merger proposal and thus, absent specific
instructions from the beneficial owner of such shares, brokers
are not empowered to vote such shares with respect to the
adoption of the merger agreement (
i.e.
, broker
non-votes). To be sure your shares are voted, you should
instruct your broker or other nominee to vote your shares.
How You
Can Change Your Vote
You may change your vote by delivering another proxy to IKON in
accordance with the instructions on the proxy card before voting
occurs at the meeting or by revoking your proxy and voting in
person at the meeting. If you are a registered shareholder, you
can revoke your proxy by giving notice of revocation in writing
to the Secretary of IKON at 70 Valley Stream Parkway, Malvern,
Pennsylvania 19355 or by submitting by mail a new proxy dated
after the date of the proxy being revoked. You can also revoke
your proxy by accessing the internet site stated on the enclosed
proxy card or by using the toll-free telephone number stated on
the enclosed proxy card. In addition, your proxy may be revoked
by attending the special meeting and revoking your proxy in open
meeting, although your attendance at the special meeting alone
will not revoke any proxy.
If you hold your shares in street name, you must
contact your broker or other nominee regarding how to revoke
your proxy and change your vote.
Manner
for Voting Proxies
The shares represented by valid proxies will be voted in the
manner specified on the proxy card. Where specific choices are
not indicated on the proxy card, the shares represented by valid
proxies will be voted as recommended by our Board of Directors
on all matters. Should any business matter not described in this
proxy statement be properly presented at the meeting, the
persons named in the proxy card will vote in accordance with
their judgment. The Board of Directors knows of no matter, other
than the adoption of the merger agreement, that may be presented
at the meeting.
You are urged to sign and return promptly your proxy card, or
vote by phone or the internet, to make certain your shares will
be voted at the meeting. For your convenience, a return envelope
is enclosed, requiring no additional postage if you mail your
signed proxy card in the United States. If you receive more than
one proxy card because you have multiple accounts, you should
sign and return all proxy cards received, or submit your vote by
phone or through the internet with respect to each proxy card,
to be sure all of your shares are voted.
Voting
Shares in the IKON Retirement Savings Plan
The Retirement Savings Plan trustee will vote plan shares as
participants direct on their proxy card. The proxy card will
serve as voting instructions for participants in the Retirement
Savings Plan. If participants do not sign and
9
return a proxy card, or vote by phone or the internet, the
trustee will generally vote their plan shares in the same ratio
indicated by the voting instructions that the trustee receives
from other participants, unless it is contrary to applicable law
to do so. In its discretion, the trustee may also determine that
if less than a minimal percentage of shares are voted (for
example, the trustee used 5% as a minimal percentage in
connection with IKONs 2008 annual meeting), the trustee
may vote any shares not voted by participants in its discretion
without regard to the ratio indicated by the voting instructions
it received from other participants. If participants sign and
return a proxy card but fail to indicate how they wish to vote,
the trustee will vote their plan shares in accordance with the
recommendation of the Board of Directors.
Participants in the Retirement Savings Plan must complete, date,
sign, and return their proxy card, or vote by phone or through
the internet, no later than [5:00 p.m., Eastern Standard
Time, [ ], 2008] for the shares represented by
the proxy to be voted in the manner directed therein by the
participant. Participants may attend the annual meeting;
however, participants shares can only be voted as
described above in this paragraph.
For an explanation of the effect of the merger on shares held in
the Retirement Savings Plan, see
The Merger
Agreement Treatment of Stock and Options
Shares in the IKON Retirement Savings Plan
beginning
on page 34.
Vote
Required for Approval
A quorum is necessary to conduct the business of the meeting.
This means that holders of a majority of the outstanding shares
of common stock must be represented at the meeting, either by
proxy or in person. Abstentions are counted as shares present at
the meeting for purposes of determining whether a quorum exists.
Shares represented by broker non-votes are also counted in
determining the quorum at the meeting, but are not counted for
voting purposes. An executed proxy that fails to specify a
choice on any matter will be voted in accordance with the
recommendation of the Board of Directors. Votes will be
tabulated by National City Bank, our transfer agent.
If a quorum is present at the meeting, the adoption of the
merger agreement must be approved by the affirmative vote of the
holders of a majority of the outstanding shares of our common
stock entitled to vote at the special meeting. If you do not
vote, or if you abstain from voting, it will have the same
effect as a vote against the adoption of the merger agreement
because it is one fewer vote for approval.
Adjournments
and Postponements
Although it is not currently expected, the special meeting may
be adjourned or postponed for the purpose of soliciting
additional proxies. Any adjournment may be made without notice,
other than by an announcement made at the special meeting of the
time and place of the adjourned meeting. Whether or not a quorum
exists, holders of a majority of the eligible voting shares
present in person or represented by proxy at the special meeting
may adjourn the special meeting. Proxies voted
AGAINST the proposal to adopt the merger agreement
will not be voted on any resolution to adjourn the special
meeting.
Any adjournment or postponement of the special meeting for the
purpose of soliciting additional proxies will allow our
shareholders who have already sent in their proxies to revoke
them at any time before voting occurs at the special meeting as
adjourned. Under the merger agreement, IKON is not permitted to
adjourn or postpone the special meeting, except with
Ricohs consent or as required by applicable law.
Attendance
at Meeting
You may attend the meeting in person if you were a shareholder
of record of IKON on [ ], 2008 or you hold a
valid proxy from a shareholder of record as of that date. If you
are not a shareholder of record but hold shares through a
broker, bank, trust or other nominee, you should provide proof
of beneficial ownership as of [ ], 2008, such
as your most recent account statement prior to that date or a
copy of the voting instruction card provided by your broker,
bank, trust or other nominee, to IKON at the address below in
order to obtain an admission ticket to the meeting:
IKON Office
Solutions, Inc.
70 Valley Stream Parkway
Malvern, PA 19355
Attn: Secretary
10
THE
MERGER
The following is a discussion of the merger, including the
process undertaken by IKON and our Board of Directors in
identifying and determining whether to engage in the proposed
transaction. This discussion of the merger is qualified by
reference to the merger agreement, which is attached to this
proxy statement as Annex A. You should read the entire
merger agreement carefully as it is the legal document that
governs the merger.
Background
of the Merger
Our Board of Directors regularly reviews strategic alternatives
available to us to enhance shareholder value. IKON is the
worlds largest independent channel for document management
systems and services. In recent years, there has been a general
industry trend away from large independent channels for document
management systems and services as the manufacturers of copiers,
printers and other technologies have acquired businesses similar
to ours. For example, on April 2, 2007, Xerox announced
that it had agreed to acquire Global Imaging Systems, Inc., an
independent supplier of office imaging equipment and services in
the United States. Similarly, on April 8, 2008, Konica
Minolta, a manufacturer of copiers and printers, announced that
it had agreed to acquire Danka Office Imaging Company, another
independent supplier of office imaging equipment and services.
We retained Goldman Sachs as financial advisor to IKON and the
Board in early 2008. On February 26, 2008, at our
Boards annual strategy review, the Board considered
IKONs long-term strategic alternatives to enhance
shareholder value. Goldman Sachs reviewed with our Board various
strategic alternatives for IKON, including the possible sale of
IKON. Goldman Sachs noted the potential disadvantages of
pursuing a sale of IKON at that time in light of the challenges
presented by then-prevailing conditions in financial markets,
IKONs financial performance during its first quarter of
fiscal year 2008, IKONs outlook for the remainder of
fiscal year 2008, the current market price for our common stock,
concerns of a cyclical economic downturn and the lack of
potential strategic and financial buyers. Goldman Sachs also
noted that IKON operated in a mature industry and that IKON had
in recent years experienced revenue growth pressure. Goldman
Sachs also reviewed the potential benefits of IKON continuing to
act on its financial strategic plan and revisiting consideration
of a sale process at a later time. On this date, the closing
sale price of our stock was $7.28 per share.
On April 22, 2008, Goldman Sachs again reviewed with the
Board strategic alternatives for IKON. At this presentation,
Goldman Sachs noted that a number of recent developments had
meaningfully altered the landscape for a potential sale process
for IKON; in particular, Goldman Sachs noted the trend towards
consolidation in our industry (as evidenced by the recent Danka
transaction), encouraging signals of a potential recovery in the
financial markets, and IKONs improved financial
performance in its second fiscal quarter of 2008. After
consideration, our Board determined to begin a process to review
the possible sale of IKON and Goldman Sachs was authorized to
solicit potential interest for a transaction involving the
acquisition of IKON. On April 22, 2008, the closing price
of our stock was $9.54 per share.
Goldman Sachs contacted 23 potentially interested parties,
including both financial and strategic acquirors. IKON then
entered into confidentiality agreements, conducted management
presentations (including internationally) and provided
information packages to 11 of these parties.
On June 27, 2008, three preliminary indications of interest
were communicated to our Board, including a submission from
Ricoh. Ricohs proposal set out an indicative price range
of $14.50 to $15.50 per share in cash. The two other preliminary
indications of interest submitted at this time included price
ranges from $13.00 up to $15.00 per share. Our closing stock
price on this date was $11.23 per share.
These three bidders were invited to participate in a final
round, which included detailed due diligence investigations and
additional meetings and discussions with IKONs senior
management. On July 2, 2008, after this final round had
commenced, we received another preliminary indication of
interest from an additional interested party, who we refer to as
Company A. This preliminary indication of interest
included an indicative price range of $13.50 to $14.50 per share
in cash, and Company A was admitted to the final round of the
process.
On July 21, 2008, one of the four remaining participants
advised us that it would be withdrawing from the process. On
August 6, 2008, we received an unsolicited approach from
another interested party with an indicative price range of
$17.00 to $18.00 per share in cash, subject to confirmatory due
diligence. Our closing stock price on
11
this date was $14.65 per share. This bidder was admitted to the
final round but subsequently withdrew and declined to submit a
final proposal.
Under the process established by our Board and communicated to
the participants in the final round, final bids were required to
be submitted to our financial advisor by midday on
August 15, 2008. On that date we received a proposal from
Ricoh but the two other remaining participants in the process
(including Company A) communicated to us in writing that,
given the sustained increase in our stock price since submission
of their preliminary indications of interest, they decided to
decline to submit a final bid. In addition, Company A indicated
that it still had substantial additional due diligence to
complete prior to executing a definitive agreement.
Ricoh proposed to acquire IKON in a single-step merger
transaction with a purchase price of $17.00 per share in cash.
Ricoh also submitted a proposed form of merger agreement and
requested a period of exclusivity to complete negotiations.
Ricoh also indicated that its proposal was conditioned on
execution of retention arrangements with senior management. Our
closing stock price on August 15, 2008 was $15.52, which at
the time represented a 52-week high closing price for our stock.
On August 17, 2008, our Board convened to consider and
discuss Ricohs bid proposal. Goldman Sachs reviewed with
the Board the process that had been undertaken to that date.
Goldman Sachs reviewed the thoroughness of the process and the
wide range of parties that had been invited to participate.
Goldman Sachs presented a financial analysis of Ricohs
offer and discussed the recent increase in our stock price,
which had been noted by a number of participants as the reason
that they were declining to submit a bid. Goldman Sachs noted
that Ricohs proposal was substantially higher than the
indications of interest that had been received in June 2008.
Our external legal advisors described the material provisions of
the draft merger agreement submitted by Ricoh as part of its
proposal. In particular, it was noted that Ricohs draft
included a material adverse effect condition and
restrictive provisions prohibiting IKON from soliciting any
competing bids from third parties. The draft merger agreement
also provided for a termination fee of 4% of equity value, to be
payable by IKON in certain circumstances.
The Board considered the proposed draft of the merger agreement
and noted that the no-solicitation provisions proposed by Ricoh
may be acceptable in circumstances where a competitive auction
process had been undertaken and Ricoh had emerged as the only
bidder. The Board also discussed the responses of the other
participants in the process. In particular, it was noted that
Company A, which had been expected to participate actively in
the process, had declined to submit a final proposal. The Board
discussed, at length, various possible explanations for Company
As behavior. The Board noted that Company A had indicated
in its letter to IKON that it still had substantial additional
due diligence to complete and that it had not delivered a draft
form of merger agreement and, therefore, Company A would likely
need additional time to develop a proposal, which would delay
entry into a definitive agreement. The Board contrasted the
seriousness and firmness of Ricohs proposal with the
responses of the other participants and discussed the
likelihood of a competing bid subsequently emerging, either in
the period prior to execution of an agreement with Ricoh or
between signing and closing. The Board also discussed whether it
would be appropriate to contact Company A to discuss its
decision.
The Board determined that, although it was not certain of
Company As intentions in relation to the process going
forward, it was not in the best interests of IKON and its
shareholders again to seek final proposals from the other
participants in the process. On that basis, the Board instructed
management and our advisors not to contact Company A at this
time, although the Board also instructed management and our
advisors that it would not approve an exclusivity arrangement
with Ricoh prior to finalizing and signing the merger agreement.
The Board also considered the material adverse
effect condition in Ricohs proposal. It was noted
that if a proposed transaction was announced but subsequently
abandoned because of such a condition, that this would be likely
to have a negative impact on IKON. There was a discussion of the
likely impact of an announcement of a proposed transaction on
IKONs customers and suppliers. The Board noted that there
was the potential for an adverse reaction by both of these
groups.
Following discussion and consideration of these and other
matters, the Board directed Goldman Sachs to seek a best and
final offer from Ricoh. The Board expressly noted that it was
not in favor of a merger agreement that included a
material adverse effect condition. The Board noted
that it might be willing to accept certain of Ricohs
12
proposed no-solicitation restrictions, in exchange for Ricoh
withdrawing the material adverse effect condition.
The Board also instructed management and our advisors that, if
Ricoh agreed to revise its form of merger agreement to address
these concerns, IKONs management and advisors were
authorized to move ahead with negotiations with Ricoh.
At this time, our senior management team was excused from the
meeting and our external legal advisors discussed with the Board
Ricohs proposal to enter into supplementary arrangements
with senior management for the purposes of retaining their
services for a period of time following the completion of the
merger. Consistent with the Boards instructions at the
beginning of the process, none of the potential bidders had been
permitted to discuss with management ongoing employment
arrangements. The Board was advised that these discussions
between Ricoh and senior management were not unusual in a
transaction of this type but that such discussions should be
allowed to proceed only after Ricoh had presented its best and
final offer.
Following this Board meeting on August 17, Goldman Sachs
contacted Ricohs advisors and requested that Ricoh submit
its best and final offer, noting that our Board was seeking
improved terms, particularly in relation to the material
adverse effect condition. Ricohs advisors expressed
concern to Goldman Sachs about being asked to bid again and
sought assurances that this would be the last round of bidding.
On August 18, 2008, Ricoh submitted a revised proposal with
a cash purchase price of $17.25 per share of our common stock.
Ricoh also agreed to withdraw the material adverse
effect condition from the merger agreement but largely
left unchanged the no-solicitation provisions. Consistent with
the direction from the Board at its August 17 meeting, following
receipt of Ricohs revised proposal we commenced
non-exclusive negotiations with Ricoh on the terms of a
definitive merger agreement.
On August 20, 2008, our Board met. The Board noted that
Ricoh had withdrawn the material adverse effect
condition. The Board discussed Ricohs revised proposal and
considered the likelihood of receiving a competing proposal, in
particular the possibility of receiving a more attractive
proposal from Company A. Goldman Sachs informed our Board it was
not aware of any contact from Company A or its advisors, and the
Board again discussed whether it would be appropriate to contact
Company A to discuss its interest in continuing in IKONs
process. Noting in particular that up to this point there had
been no further contact from Company A, the Board again
concluded that it was not in the best interests of IKON or our
shareholders to jeopardize the Ricoh transaction by contacting
Company A at this time. The Board, with the advice of its
independent financial advisor and external legal counsel,
determined that Ricohs proposal was attractive and
ratified the decision to engage Ricoh in negotiations to reach a
signed agreement as quickly as possible. Our senior management
team was then excused from the meeting. The Board, together with
external legal counsel, discussed the request from Ricoh for
retention arrangements and the Board concluded that it was
appropriate at this time to give permission to senior management
to engage in discussions with Ricoh with respect to retention
arrangements.
On August 21, 2008, Company As advisors contacted
Goldman Sachs. Company As advisors thanked Goldman Sachs
for the opportunity to participate in the process and stated
that, from a financial point of view, Company A was unable to
submit a bid above the prices at which IKONs common stock
had recently traded.
On August 22, 2008, our Board convened to receive an update
on progress with Ricoh in reaching a final agreement. The Board
heard from Goldman Sachs and external legal counsel regarding
the process that had been conducted and the Ricoh proposal.
Goldman Sachs described the process that had led to Ricohs
proposal, including the revised price and improvements to the
merger agreement. Goldman Sachs reviewed a financial analysis of
Ricohs revised offer. Goldman Sachs also reported to the
Board the call from Company As advisors on August 21.
In light of that information, the Board again concluded that
there was no reason to contact Company A.
The Boards external legal counsel then described to the
Board the material provisions of the merger agreement and noted
that certain matters remained outstanding for resolution with
Ricoh. Following this discussion, management and Goldman Sachs
left the meeting and the Board, with its external legal counsel,
discussed Ricohs proposed retention arrangements and the
interests of management in the proposed transaction.
On August 26, 2008, our Board met again. Goldman Sachs
reviewed with the Board its financial analysis of Ricohs
offer. Goldman Sachs also reviewed for the Board the
thoroughness of the process that had been undertaken and noted
that the price in the Ricoh proposal was the highest that had
been obtained through that process.
13
Following review of its analyses for the Board, Goldman Sachs
delivered to the Board its oral opinion that as of the date
thereof and based upon and subject to the factors considered and
assumptions made by Goldman Sachs, the $17.25 per share in cash
to be paid to the holders of our common stock in the proposed
merger was fair from a financial point of view to such holders.
The Boards external legal counsel then discussed with the
Board Ricohs retention proposals for certain key
executives and provided the Board with an update as to the
progress of negotiations. Management was then excused from the
meeting and the Board discussed these retention proposals.
The meeting was reconvened with management and the Boards
external legal counsel then provided an update as to the status
of the merger agreement and noted that it had been finalized and
was in a form ready for execution.
Following additional discussion and deliberation, our Board of
Directors unanimously approved the merger agreement and the
merger with Ricoh. The Board authorized IKON to enter into the
merger agreement and resolved to recommend that our shareholders
vote to adopt the merger agreement. The Board also adopted
certain resolutions related to compensation matters in
connection with the treatment of equity-based compensation under
the merger agreement and in relation to the retention of senior
management. A meeting of the Human Resources Committee of the
Board was also convened at this time to consider certain
resolutions in relation to the retention proposals and treatment
of equity-based compensation under the merger. These resolutions
were unanimously approved by the Committee.
The merger agreement was executed by IKON, Ricoh and Sub on
August 27, 2008. On August 27, 2008, before the start
of trading on the NYSE, IKON and Ricoh each issued a press
release announcing the merger.
Reasons
for the Merger
In reaching its decision to approve the merger agreement,
approve the merger, authorize IKON to enter into the merger
agreement and recommend that our shareholders vote to adopt the
merger agreement, our Board of Directors consulted with its
financial and legal advisors and our management. Our Board of
Directors considered a number of potentially positive factors,
including the following material factors:
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the current and historical market prices of our common stock,
and the fact that the $17.25 per share in cash to be paid for
each share of our common stock in the merger represents a
premium of 33% to the average closing price for the 60 trading
days ended August 26, 2008 and a premium of 11% to the
closing price of our common stock on August 26, 2008, the
last trading day before we announced the merger;
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the $17.25 per share in cash to be paid for each share of our
common stock in the merger represents a premium of 33% to the
$13.00 per share tender offer that IKON paid to repurchase some
of its common stock in December 2007 and that that offer had
been substantially oversubscribed at that price;
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the $17.25 per share in cash to be paid for each share of our
common stock in the merger is a higher price than the highest
closing sale price of our common stock for the
10-year
period ended August 26, 2008 of $17.08;
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the possible alternatives to the sale of IKON, including
continuing to operate IKON on a stand-alone basis, and the risks
and uncertainties associated with such alternatives, including
the potential value that would be created by continuing to
execute IKONs current strategic plan, compared to the
certainty of realizing in cash a fair value for their investment
provided to our shareholders by the merger;
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the mature condition of our industry and the consequent pressure
on revenue growth, and the observed general industry trend away
from large independent channels for document management systems
and services, as the manufacturers of copiers, printers and
other technologies have acquired businesses similar to ours;
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the extensive sale process conducted by our Board of Directors,
with the assistance of our financial and legal advisors, which
involved engaging in discussions with approximately 23 parties
to determine their interest in acquiring IKON, entering into
confidentiality agreements with eleven parties, the receipt of
four preliminary indications of interest for the acquisition of
IKON, and ultimately the submission of Ricohs definitive
proposal to acquire IKON;
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14
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the price proposed by Ricoh reflected extensive negotiations
between us and Ricoh and represents the highest price offered
for the acquisition of IKON;
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the presentation of Goldman Sachs and its opinion that, as of
the date of its opinion and based upon and subject to the
factors and assumptions set forth in such opinion, the $17.25
per share in cash to be paid to the holders of our common stock
in the proposed merger is fair, from a financial point of view
(see
The Merger Opinion of IKONs
Financial Advisor
beginning on page 16 and the
written opinion of Goldman Sachs attached as Annex B to
this proxy statement); and
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the terms of the merger agreement, including:
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the absence of a material adverse change condition;
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the limited number and nature of the conditions to the
Buyers obligation to consummate the merger;
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our ability, under certain limited circumstances, to furnish
information to and conduct negotiations with third parties
regarding other proposals; and
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our ability to terminate the merger agreement in order to accept
a superior proposal, subject to paying Ricoh a
$66.7 million termination fee and complying with certain
procedural steps.
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Our Board of Directors also considered and balanced against the
potentially positive factors a number of potentially negative
factors concerning the merger, including the following material
factors:
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the risk that the merger might not be completed;
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the fact that our shareholders will not participate in any
future earnings or growth of IKON;
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the restrictions on our ability to solicit or engage in
discussions or negotiations with any third parties regarding
other proposals and the requirement that, subject to the terms
and conditions of the merger agreement, we pay Ricoh a
$66.7 million termination fee if our Board of Directors
accepts a superior proposal or changes its recommendation to our
shareholders; and
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the possibility of disruption to our operations associated with
the merger, and the resulting effect of that disruption on us if
the merger does not close as contemplated by the merger
agreement.
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During its consideration of the proposed transaction with Ricoh,
our Board of Directors was also aware that certain of our
directors and executive officers have interests in the merger
that are, or may be, different from, or in addition to, those of
our shareholders generally, as described under
The
Merger Interests of Our Directors and Executive
Officers in the Merger
beginning on page 21.
After taking into account all of the factors set forth above, as
well as others, and consulting with our legal and financial
advisors, and after due discussion and due consideration, our
Board of Directors determined that the potentially positive
factors outweighed the potentially negative factors.
Furthermore, our Board of Directors determined it to be
advisable and in the best interests of our shareholders that we
enter into the merger agreement, and that the merger agreement
and the merger are advisable and in the best interests of IKON
and our shareholders.
ACCORDINGLY, OUR BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE
MERGER AGREEMENT.
The Board of Directors did not assign relative weights to the
above factors or the other factors considered by it. In
addition, the Board of Directors did not reach any specific
conclusion on each factor considered, but conducted an overall
analysis of these factors. Individual members of the Board of
Directors may have given different weights to different factors.
Recommendation
of Our Board of Directors
On August 26, 2008, after evaluating a variety of business,
financial and market factors and consulting with our legal and
financial advisors, and after due discussion and due
consideration, our Board of Directors unanimously approved the
merger agreement and the merger and unanimously declared that
the merger agreement and the merger are advisable and in the
best interests of IKON and our shareholders.
ACCORDINGLY, OUR
BOARD OF
15
DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
ADOPTION OF THE MERGER AGREEMENT.
Opinion
of IKONs Financial Advisor
Goldman Sachs rendered its opinion to IKONs Board of
Directors that, as of August 27, 2008 and based upon and
subject to the factors and assumptions set forth therein, the
$17.25 per share in cash to be paid to holders of IKON common
stock pursuant to the merger agreement was fair from a financial
point of view to such holders.
The full text of the written opinion of Goldman Sachs, dated
August 27, 2008, which sets forth assumptions made,
procedures followed, matters considered and limitations on the
review undertaken in connection with the opinion, is attached as
Annex B. Goldman Sachs provided its opinion for the
information and assistance of IKONs Board of Directors in
connection with its consideration of the transaction. The
Goldman Sachs opinion is not a recommendation as to how any
holder of IKONs common stock should vote with respect to
the transaction, or any other matter.
In connection with rendering the opinion described above and
performing its related financial analyses, Goldman Sachs
reviewed, among other things:
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the merger agreement;
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annual reports to shareholders and annual reports on Form
10-K
of IKON
for the five fiscal years ended September 31, 2007;
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certain interim reports to shareholders and quarterly reports on
Form 10-Q;
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certain other communications from IKON to its shareholders;
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certain publicly available research analyst reports for
IKON; and
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certain internal financial analyses and forecasts for IKON
prepared by its management.
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Goldman Sachs also held discussions with members of the senior
management of IKON regarding their assessment of the past and
current business operations, financial condition and future
prospects of IKON. In addition, Goldman Sachs reviewed the
reported price and trading activity for the IKON common stock,
compared certain financial and stock market information for IKON
with similar information for certain other companies the
securities of which are publicly traded, and reviewed the
financial terms of certain recent business combinations in the
office equipment and document services industry specifically and
in other industries generally and performed such other studies
and analyses, and considered such other factors, as it
considered appropriate.
For purposes of rendering the opinion described above, Goldman
Sachs relied upon and assumed, without assuming any
responsibility for independent verification, the accuracy and
completeness of all of the financial, legal, regulatory, tax,
accounting and other information provided to, discussed with or
reviewed by it. In addition, Goldman Sachs did not make an
independent evaluation or appraisal of the assets and
liabilities (including any contingent, derivative or
off-balance-sheet assets and liabilities) of IKON or any of its
subsidiaries, nor was any evaluation or appraisal of the assets
or liabilities of IKON or any of its subsidiaries furnished to
Goldman Sachs. Goldman Sachs opinion does not address any
legal, regulatory, tax or accounting matters nor does it address
the underlying business decision of IKON to engage in the
transaction or the relative merits of the transaction as
compared to any strategic alternatives that may be available to
IKON. Goldman Sachs opinion addresses only the fairness
from a financial point of view, as of the date of the opinion,
of the $17.25 per share to be paid to holders of IKON common
stock pursuant to the merger agreement. Goldman Sachs
opinion does not express any view on, and does not address, any
other term or aspect of the merger agreement or the transaction,
including, without limitation, the fairness of the transaction
to, or any consideration received in connection therewith by,
the holders of any other class of securities, creditors, or
other constituencies of IKON or Ricoh, nor as to the fairness of
the amount or nature of any compensation to be paid or payable
to any of the officers, directors or employees of IKON or Ricoh,
or class of such persons in connection with the transaction,
whether relative to the $17.25 per share of IKON common stock in
cash to be paid to holders of IKON common stock pursuant to the
merger agreement or otherwise. Goldman Sachs opinion was
necessarily based on economic, monetary market and other
conditions, as in effect on, and the
16
information made available to it as of the date of the opinion
and Goldman Sachs assumed no responsibility for updating,
revising or reaffirming its opinion based on circumstances,
developments or events occurring after the date of its opinion.
Goldman Sachs opinion was approved by a fairness committee
of Goldman Sachs.
The following is a summary of the material financial analyses
delivered by Goldman Sachs to the Board of Directors of IKON in
connection with rendering the opinion described above. The
following summary, however, does not purport to be a complete
description of the financial analyses performed by Goldman
Sachs, nor does the order of analyses described represent
relative importance or weight given to those analyses by Goldman
Sachs. Some of the summaries of the financial analyses include
information presented in tabular format. The tables must be read
together with the full text of each summary and are alone not a
complete description of Goldman Sachs financial analyses.
Except as otherwise noted, the following quantitative
information, to the extent that it is based on market data, is
based on market data as it existed on or before August 26,
2008 and is not necessarily indicative of current market
conditions.
Historical
Stock Trading Analysis.
Goldman Sachs reviewed the historical trading prices and volumes
for the IKON common stock for the five-year period ended
August 25, 2008. In addition, Goldman Sachs analyzed the
consideration to be received by holders of IKON common stock
pursuant to the merger agreement in relation to the market
prices as of August 25, 2008, the average market prices for
the 30 calendar day, 60 calendar day and 90 calendar day periods
ended August 25, 2008, the average market prices for the
1 year, 3 year and 5 year periods ended
August 25, 2008 and the high market prices for the
52 week and 10 year periods ended August 25,
2008. This analysis indicated that the price per share to be
paid to IKON shareholders pursuant to the merger agreement
represented:
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a premium of 12.6% based on the August 25, 2008 market
price of $15.32 per share;
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a premium of 15.9% based on the latest 30 calendar day average
market price of $14.88 per share;
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a premium of 29.8% based on the latest 60 calendar day average
market price of $13.29 per share;
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a premium of 34.3% based on the latest 90 calendar day average
market price of $12.84 per share;
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a premium of 51.4% based on the latest 1 year average
market price of $11.39 per share;
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a premium of 35.7% based on the latest 3 year average
market price of $12.71 per share;
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a premium of 45.6% based on the latest 5 year average
market price of $11.85 per share;
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a premium of 7.9% based on the latest 52 week high market
price of $15.99 per share; and
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a premium of 1.0% based on the latest 10 year high market
price of $17.08 per share.
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Selected
Companies Analysis.
Goldman Sachs reviewed and compared certain financial
information for IKON to corresponding financial information,
ratios and public market multiples for the following publicly
traded corporations in the office equipment and document
services industry:
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Document Services Companies:
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American Reprographics
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Iron Mountain
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Office Equipment Manufacturers:
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Canon
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HP
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Konica Minolta
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Kyocera
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17
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Lexmark
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OCE
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Pitney Bowes
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Ricoh
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Xerox
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Arrow Electronics
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Avnet
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Ingram Micro
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Tech Data
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W.W. Grainger
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Although none of the selected companies is directly comparable
to IKON, the companies included were chosen because they are
publicly traded companies with operations that for purposes of
analysis may be considered similar to certain operations of IKON.
Goldman Sachs also calculated and compared various financial
multiples and ratios for IKON and the selected companies based
on financial data as of August 25, 2008, information it
obtained from SEC filings and IBES estimates. With respect to
the selected companies, Goldman Sachs calculated:
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levered market capitalization, which is the market value of
common equity plus the book value of corporate debt less cash,
as a multiple of calendar year 2008 estimated earnings before
interest, taxes and depreciation and amortization, or EBITDA.
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The results of these analyses are summarized as follows:
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Levered Market
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Capitalization
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Selected Companies
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as a multiple of:
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Range
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Median
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IKON(2)
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2008E CY EBITDA(1)
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3.9x-11.4
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x
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6.1
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x
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7.1x
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(1)
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Based on IBES estimates.
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(2)
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IKON multiple excludes non-corporate debt and associated
operating income. Diluted equity market cap excludes
2.23 million restricted stock units, deferred stock units
and stock equivalents.
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Goldman Sachs also calculated the selected companies
calendar year 2008 estimated price/earnings ratios to the
results for IKON. The following table presents the results of
this analysis:
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Price/Earnings
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Selected Companies
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Ratio:
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Range
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Median
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IKON(2)
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2008E CY EPS(1)
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9.0x-36.6
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x
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11.7
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x
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14.6x
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(1)
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Based on IBES estimates.
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(2)
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EPS calculation excludes 2.23 million restricted stock
units, deferred stock units and stock equivalents.
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Goldman Sachs also considered the latest twelve months EBITDA
margin and IBES projected five-year compound annual growth rate
of earnings per share and 2007A-2009E (based on IBES estimates
for 2009) compounded annual growth rate of sales.
18
The following table presents the results of this analysis:
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Selected Companies
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Range
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Median
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IKON
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2007A - 2009E Compound
Annual Growth Rate of
Sales(1)
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(5.1)%-11.2%
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5.2%
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0.8
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%
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5 Year EPS Growth Rate(1)
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1.4%-21.5%
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11.5%
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11.0
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%
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(1)
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Based on IBES estimates.
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Illustrative
Discounted Cash Flow Analysis.
Goldman Sachs performed a discounted cash flow analysis on IKON
using IKONs management projections. Goldman Sachs
calculated indications of net present value of free cash flows
for IKON for the years 2008 through 2011 using discount rates
ranging from 8.0% to 11.0%. Goldman Sachs calculated implied
prices per share of the IKON common stock using illustrative
terminal values in the year 2011 based on multiples ranging from
5.5x EBITDA to 8.5x EBITDA. These illustrative terminal values
were then discounted to calculate implied indications of present
values using discount rates ranging from 8.0% to 11.0%. The
various ranges for discount rates and terminal value multiples
were chosen to reflect theoretical analyses of cost of capital.
The following table presents the results of this analysis:
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Illustrative Per Share Value
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Indications(1)
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IKON
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$
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10.30 -$18.91
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(1)
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Calculation excludes 2.23 million restricted stock units,
deferred stock units and stock equivalents.
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Selected
Transactions Analysis.
Goldman Sachs analyzed certain information relating to the
following selected transactions in the office equipment and
document services industry since 2005:
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Year
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Acquiror
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Target
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2008
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Konica Minolta
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Danka Office Imaging Company
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2007
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Xerox
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Global Imaging
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2006
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Ricoh
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Danka UK PLC
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2006
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Deutsche Post
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Williams Lea
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2005
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Oce NV
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Imagistics International
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For each of the selected transactions, Goldman Sachs calculated
and compared levered aggregate transaction value as a multiple
of last twelve months EBITDA and levered aggregate consideration
as a multiple of last twelve months sales. While none of the
companies that participated in the selected transactions are
directly comparable to IKON, the companies that participated in
the selected transactions are companies with operations that,
for the purposes of analysis, may be considered similar to
certain of IKONs results, market size and product profile.
The following table presents the results of this analysis:
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Levered Market
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Capitalization as a
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Selected Transactions
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Proposed
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Multiple of:
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Range
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Median
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Transaction(1)
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LTM Sales
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0.4x-1.6x
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0.55x
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0.5x
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LTM EBITDA
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6.8x-12.2x
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10.3x
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8.2x
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(1)
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IKON multiples exclude non-corporate debt and associated revenue
and operating income. Diluted equity market cap excludes
2.23 million restricted stock units, deferred stock units
and stock equivalents.
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19
Present
Value of Future Share Price Analysis.
Goldman Sachs performed an illustrative analysis of the implied
present value of our future price per share of IKON common
stock, which is designed to provide an indication of the present
value of a theoretical future value of a companys equity
as a function of such companys estimated future earnings
and its assumed price to future earnings per share multiple. For
this analysis, Goldman Sachs used the financial information for
IKON prepared by IKONs management for each of the calendar
years 2008 to 2011. Goldman Sachs first calculated the implied
values per share of IKON common stock as of August for each of
the calendar years 2009 to 2011, by applying price to forward
earnings per share multiples of 11.1x to 14.6x earnings per
share of IKON common stock estimates for each of the fiscal
years 2009 to 2011 plus dividends, and then discounted $15.80
and $20.78 values back three years, respectively, using a
discount rate of 10.5%. This analysis resulted in a range of
implied present values of $12.07 to $15.76 per share of IKON
common stock.
The preparation of a fairness opinion is a complex process and
is not necessarily susceptible to partial analysis or summary
description. Selecting portions of the analyses or of the
summary set forth above, without considering the analyses as a
whole, could create an incomplete view of the processes
underlying Goldman Sachs opinion. In arriving at its
fairness determination, Goldman Sachs considered the results of
all of its analyses and did not attribute any particular weight
to any factor or analysis considered by it. Rather, Goldman
Sachs made its determination as to fairness on the basis of its
experience and professional judgment after considering the
results of all of its analyses. No company or transaction used
in the above analyses as a comparison is directly comparable to
IKON or Ricoh or the contemplated transaction.
Goldman Sachs prepared these analyses for purposes of Goldman
Sachs providing its opinion to IKONs Board of
Directors as to the fairness from a financial point of view to
the holders of outstanding shares of IKON common stock of the
$17.25 per share in cash to be paid to such holders pursuant to
the merger agreement. These analyses do not purport to be
appraisals nor do they necessarily reflect the prices at which
businesses or securities actually may be sold. Analyses based
upon forecasts of future results are not necessarily indicative
of actual future results, which may be significantly more or
less favorable than suggested by these analyses. Because these
analyses are inherently subject to uncertainty, being based upon
numerous factors or events beyond the control of the parties or
their respective advisors, none of IKON, Ricoh, Goldman Sachs or
any other person assumes responsibility if future results are
materially different from those forecast.
The merger consideration was determined through
arms-length negotiations between IKON and Ricoh and was
approved by IKONs Board of Directors. Goldman Sachs
provided advice to IKON during these negotiations. Goldman Sachs
did not, however, recommend any specific amount of consideration
to IKON or its Board of Directors or that any specific amount of
consideration constituted the only appropriate consideration for
the transaction.
As described above, Goldman Sachs opinion to IKONs
Board of Directors was one of many factors taken into
consideration by IKONs Board of Directors in making its
determination to approve the merger agreement. The foregoing
summary does not purport to be a complete description of the
analyses performed by Goldman Sachs in connection with the
fairness opinion and is qualified in its entirety by reference
to the written opinion of Goldman Sachs attached as Annex B.
Goldman Sachs and its affiliates are engaged in investment
banking and financial advisory services, securities trading,
investment management, principal investment, financial planning,
benefits counseling, risk management, hedging, financing,
brokerage activities and other financial and non-financial
activities and services for various persons and entities. In the
ordinary course of these activities and services, Goldman Sachs
and its affiliates may at any time make or hold long or short
positions and investments, as well as actively trade or effect
transactions, in the equity, debt and other securities (or
related derivative securities) and financial instruments
(including bank loans and other obligations) of IKON, Ricoh and
any of their respective affiliates or any currency or commodity
that may be involved in the transaction for their own account
and for the accounts of their customers. Goldman Sachs acted as
financial advisor to IKON in connection with, and participated
in certain of the negotiations leading to, the transaction
contemplated by the agreement. In addition, Goldman Sachs and
its affiliates have provided certain investment banking and
other financial services to IKON and its affiliates from time to
time. Goldman Sachs and its affiliates also may provide
investment banking and other financial services to IKON, Ricoh
and their respective
20
affiliates in the future. In connection with the above-described
services we have received, and may receive in the future,
compensation.
The Board of Directors of IKON selected Goldman Sachs as its
financial advisor because it is an internationally recognized
investment banking firm that has substantial experience in
transactions similar to the transaction. Pursuant to a letter
agreement dated May 19, 2008, IKON engaged Goldman Sachs to
act as its financial advisor in connection with the contemplated
transaction. Pursuant to the terms of this engagement letter,
IKON has agreed to pay Goldman Sachs a transaction fee of
(i) $4,000,000 payable upon announcement of the transaction
and (ii) 0.70% of the aggregate consideration paid in the
transaction (less non-corporate debt), less any transaction or
advisory fees to the extent paid, payable upon consummation of
the transaction. In addition, IKON has agreed to reimburse
Goldman Sachs for its expenses, including attorneys fees
and disbursements, and to indemnify Goldman Sachs and related
persons against various liabilities, including certain
liabilities under the federal securities laws.
Financing
Completion of the merger is not conditioned on Ricoh obtaining
financing.
Interests
of Our Directors and Executive Officers in the Merger
Details of the beneficial ownership of our directors and
executive officers of IKON common stock is set out in
Security Ownership of Certain Beneficial Owners and
Management
beginning on page 49. In addition to
their interests in the merger as shareholders, certain of our
directors and executive officers have interests in the merger
that differ from, or are in addition to, your interests as a
shareholder. In considering the recommendation of our Board of
Directors to vote FOR the adoption of the merger
agreement, you should be aware of these interests. Our Board of
Directors was aware of, and considered the interests of, our
directors and executive officers in approving the merger
agreement and the merger. Except as described below, such
persons have, to our knowledge, no material interest in the
merger that differs from your interests generally. We have also
included in this section information with respect to
Mr. Brian Edwards and Ms. Beth Sexton even though they
are no longer employed by us because they were executive
officers prior to their separation from us in February 2008.
Treatment
of Equity-Based Compensation and Other Long-Term
Incentives
As of the date of this proxy statement, certain of our directors
and executive officers held stock options, cash awards subject
to performance-based vesting criteria (which we refer to as
performance unit awards), restricted stock units, deferred stock
unit awards and stock equivalents.
For information regarding beneficial ownership of IKONs
common stock by each of our current directors and certain
executive officers and all of such directors and executive
officers as a group, see
Security Ownership of Certain
Beneficial Owners and Management
beginning on
page 49. IKONs directors and executive officers will
receive $17.25 per share for each vested share they own, in the
same manner as other shareholders.
The tables below set forth the amount in cash that each
executive officer and director will receive with respect to
equity-based awards and other long-term incentive compensation
that are expected to be outstanding at the time the proposed
merger is completed, based on the merger consideration of $17.25
per share in cash and assuming that the proposed merger is
completed on December 31, 2008. Actual amounts may be
higher or lower depending on whether the proposed merger is
completed before or after December 31, 2008.
Stock
Options
At the effective time of the merger, each outstanding stock
option, whether or not then exercisable, will be canceled and
the holder of each such stock option that has an exercise price
of less than $17.25 will be entitled to receive a cash payment,
without interest and less applicable withholding taxes, equal to
the product of:
|
|
|
|
|
the number of shares of our common stock subject to the stock
option as of the effective time of the merger, multiplied by
|
|
|
|
the excess of $17.25 over the exercise price per share of common
stock subject to such stock option.
|
21
Cash with respect to the stock options will be paid as promptly
as practicable following the effective time of the merger,
without interest and less any applicable withholding taxes.
Other than our Chairman, Matthew J. Espe, none of our directors
hold any unvested stock options. The following table summarizes
the outstanding stock options held by our executive officers
that will be unvested as of December 31, 2008 and the
consideration that each of them will receive at the effective
time of the merger in connection with the cancellation of their
unvested stock options:
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
|
No. of Shares
|
|
|
Resulting Consideration
|
|
|
|
Underlying Unvested
|
|
|
from Unvested Stock
|
|
Name
|
|
Stock Options
|
|
|
Options
|
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
Matthew J. Espe
|
|
|
176,357
|
|
|
$
|
524,495
|
|
Jeffrey Hickling
|
|
|
76,739
|
|
|
$
|
518,138
|
|
Mark Hershey
|
|
|
24,662
|
|
|
$
|
75,039
|
|
David Mills
|
|
|
33,169
|
|
|
$
|
104,048
|
|
Tracey Rothenberger
|
|
|
22,987
|
|
|
$
|
82,893
|
|
Donna Venable
|
|
|
38,671
|
|
|
$
|
338,866
|
|
Robert F. Woods
|
|
|
51,898
|
|
|
$
|
156,052
|
|
Theodore E. Strand
|
|
|
10,004
|
|
|
$
|
30,513
|
|
Brian Edwards
|
|
|
47,114
|
|
|
$
|
142,211
|
|
Beth Sexton
|
|
|
20,521
|
|
|
$
|
60,935
|
|
Certain executive officers have stock options that are scheduled
to vest at various dates in the remainder of 2008 pursuant to
their regular vesting schedules, including: on October 22,
2008, 3,334 stock options at $12.55 per share held by Tracey
Rothenberger; on October 23, 2008, 2,500 stock options at
$14.01 per share held by Tracey Rothenberger; on
December 6, 2008, a total of 76,968 stock options at $16.59
per share, including 35,634 held by Matthew J. Espe, 4,839 held
by Jeffrey Hickling, 4,399 held by Mark Hershey, 4,839 held by
David Mills, 1,980 held by Tracey Rothenberger, 642 held by
Donna Venable, 9,898 held by Robert F. Woods, 1,760 held by
Theodore E. Strand, 8,798 held by Brian Edwards and 4,179 held
by Beth Sexton; on December 7, 2008, a total of 185,001
stock options at $10.83 per share, including 85,714 held by
Matthew J. Espe, 10,000 held by Jeffrey Hickling, 11,666 held by
Mark Hershey, 10,000 held by David Mills, 1,800 held by Tracey
Rothenberger, 966 held by Donna Venable, 26,666 held by Robert
F. Woods, 4,857 held by Theodore E. Strand, 21,666 held by Brian
Edwards and 11,666 held by Beth Sexton; on December 21,
2008, a total of 164,298 stock options at $13.69 per share,
including 70,362 held by Matthew J. Espe, 10,000 held by Jeffrey
Hickling, 10,132 held by Mark Hershey, 14,166 held by David
Mills, 5,921 held by Tracey Rothenberger, 1,265 held by Donna
Venable, 21,000 held by Robert F. Woods, 4,123 held by Theodore
E. Strand, 19,158 held by Brian Edwards and 8,171 held by Beth
Sexton. These stock options are not included in the table above.
For information on all shares beneficially owned by each of our
directors and certain officers as of August 31, 2008
(including shares subject to stock options that are currently
vested or that are scheduled to vest on or before
October 30, 2008), see
Security Ownership of
Certain Beneficial Owners and Management
beginning on
page 49.
Restricted
Stock Units
At the effective time of the merger, each outstanding restricted
stock unit will be canceled and converted into the right to
receive $17.25 per unit in cash. Cash with respect to the
restricted stock units will be paid as promptly as practicable
following the effective time of the merger, without interest and
less any applicable withholding taxes. Other than our Chairman,
Matthew J. Espe, none of our directors hold restricted stock
units.
22
The following table summarizes the outstanding restricted stock
units held by our executive officers that will be outstanding as
of December 31, 2008 and the consideration that each of
them will receive in connection with the cancellation of their
restricted stock units:
|
|
|
|
|
|
|
|
|
|
|
No. of Shares Underlying
|
|
|
|
|
|
|
Outstanding
|
|
|
Resulting
|
|
Name
|
|
Restricted Stock Units
|
|
|
Consideration
|
|
|
Matthew J. Espe
|
|
|
247,669
|
|
|
$
|
4,272,290
|
|
Jeffrey Hickling
|
|
|
101,094
|
|
|
$
|
1,743,872
|
|
Mark Hershey
|
|
|
41,181
|
|
|
$
|
710,372
|
|
David Mills
|
|
|
64,362
|
|
|
$
|
1,110,245
|
|
Tracey Rothenberger
|
|
|
24,759
|
|
|
$
|
427,093
|
|
Donna Venable
|
|
|
20.243
|
|
|
$
|
349,192
|
|
Robert F. Woods
|
|
|
73,606
|
|
|
$
|
1,269,704
|
|
Theodore E. Strand
|
|
|
3,292
|
|
|
$
|
56,787
|
|
Certain executive officers have restricted stock units that are
scheduled to vest and be settled at various dates in the
remainder of 2008 pursuant to their regular vesting schedules,
including: on September 30, 2008, 27,731 held by Robert F.
Woods; on October 25, 2008, a total of 10,142 restricted
stock units including 5,071 held by Jeffrey Hickling, and
5,071 held by David Mills; on December 6, 2008, 390 held by
Theodore E. Strand; on December 7, 2008, a total of 36,002
restricted stock units including 20,000 held by Matthew J. Espe,
2,500 held by Jeffrey Hickling, 6,000 held by Robert F. Woods,
2,834 held by Mark Hershey, 2,334 held by David Mills, 967 held
by Tracey Rothenberger, 517 held by Donna Venable, and 850 held
by Theodore E. Strand; on December 8, 2008, a total of
1,200 restricted stock units including 833 held by Mark Hershey,
and 367 held by Tracey Rothenberger; and on December 21,
2008, 555 held by Theodore E. Strand. These restricted stock
units are not included in the table above. Also, the table above
does not include amounts with respect to dividend equivalents
that are payable in the form of additional restricted stock
units.
For information on all shares beneficially owned by certain of
our officers as of August 31, 2008 that are currently
vested, or that are scheduled to vest on or before
October 30, 2008, see
Security Ownership of
Certain Beneficial Owners and Management
beginning on
page 49.
Deferred
Stock Units
At the effective time of the merger, each outstanding deferred
stock unit will be canceled and converted into the right to
receive $17.25 per unit in cash. Cash with respect to deferred
stock units will be paid in accordance with the applicable stock
plan governing the deferred stock units, without interest and
less any applicable withholding taxes. None of our executive
officers hold deferred stock units.
The following table summarizes the outstanding deferred stock
units held by our directors that will be outstanding as of
December 31, 2008 and the consideration that each will
receive in connection with the cancellation of their deferred
stock units:
|
|
|
|
|
|
|
|
|
|
|
No. of Shares Underlying
|
|
|
|
|
|
|
Outstanding
|
|
|
Resulting
|
|
Name
|
|
Deferred Stock Units
|
|
|
Consideration
|
|
|
Philip Cushing
|
|
|
27,015
|
|
|
$
|
466,008
|
|
Thomas R. Gibson
|
|
|
50,924
|
|
|
$
|
878,439
|
|
Richard A. Jalkut
|
|
|
46,859
|
|
|
$
|
808,317
|
|
Arthur Johnson
|
|
|
50,412
|
|
|
$
|
869,607
|
|
Kurt M. Landgraf
|
|
|
51,334
|
|
|
$
|
885,511
|
|
Gerald Luterman
|
|
|
25,045
|
|
|
$
|
432,026
|
|
William E. McCracken
|
|
|
24,669
|
|
|
$
|
425,540
|
|
William L. Meddaugh
|
|
|
21,946
|
|
|
$
|
378,568
|
|
Heilene S. Runtagh
|
|
|
8,680
|
|
|
$
|
149,730
|
|
Anthony Terracciano
|
|
|
35,791
|
|
|
$
|
617,394
|
|
23
The table above does not include amounts with respect to fees
payable in deferred stock units to our directors for Board
meetings that may occur on or after the date of this proxy
statement but prior to December 31, 2008.
For information on all shares beneficially owned by each
director as of August 31, 2008 that are currently vested,
or that are scheduled to vest on or before October 30,
2008, see
Security Ownership of Certain Beneficial
Owners and Management
beginning on page 49.
Performance
Unit Awards
At the effective time of the merger, each outstanding
performance unit will be canceled and converted into the right
to receive an amount in cash equal to $1 per unit, which is the
value per unit based on target level of performance. Cash with
respect to the performance units will be paid as promptly as
practicable following the effective time of the merger, without
interest and less any applicable withholding taxes. Other than
our Chairman, Matthew J. Espe, none of our directors hold
performance unit awards.
As of December 31, 2008, Messrs. Espe, Hickling,
Hershey, Mills, Rothenberger, Woods and Strand will hold
performance unit awards with respect to 1,879,500, 394,200,
251,200, 312,512, 135,000, 562,200 and 105,000 units,
respectively.
Stock
Equivalents and Other Deferred Compensation
Obligations
IKONs Executive Deferred Compensation Plan provides
executive officers at IKON the opportunity to defer compensation
earned by them from IKON as a means of saving for retirement or
other future purposes. Certain of our executive officers have
elected to notionally invest a portion of their account balances
under our Executive Deferred Compensation Plan in stock
equivalents with respect to shares of our common stock. In
addition, IKON matches contributions to the Executive Deferred
Compensation Plan with shares of our common stock, and these
matching contributions are subject to vesting requirements. In
the event of a change in control, which includes completion of
the merger, each participants accrued benefit (calculated
as deferred amounts credited to the participants account,
plus investment returns and less any distributions) will vest
and become immediately due and payable to him or her.
At the effective time of the merger, each such stock equivalents
will cease to represent the right to receive a share of our
common stock and instead will be converted into the right to
receive $17.25 per unit.
The following table summarizes the outstanding stock equivalents
held by our executive officers as of the date of this proxy
statement and specifies the number of such units that are
expected to be vested or unvested as of December 31, 2008.
The following table also specifies the value of the amount that
will be credited as of the effective time of the merger to each
executive officers account under the Executive Deferred
Compensation Plan and distributed to each participant at the end
of the month in which the effective time of the merger occurs:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount Credited
|
|
|
|
|
|
Amount Credited
|
|
|
|
No. of Shares
|
|
|
Under
|
|
|
No. of Shares
|
|
|
Under
|
|
|
|
Underlying
|
|
|
Deferred
|
|
|
Underlying
|
|
|
Deferred
|
|
|
|
Outstanding
|
|
|
Compensation Plans
|
|
|
Outstanding
|
|
|
Compensation Plans
|
|
|
|
Unvested Stock
|
|
|
for Unvested Stock
|
|
|
Vested Stock
|
|
|
for Vested Stock
|
|
Name
|
|
Equivalents
|
|
|
Equivalents
|
|
|
Equivalents
|
|
|
Equivalents
|
|
|
Matthew J. Espe
|
|
|
72,712
|
|
|
$
|
1,254,280
|
|
|
|
214,812
|
|
|
$
|
3,705,515
|
|
Jeffrey Hickling
|
|
|
12,595
|
|
|
$
|
217,269
|
|
|
|
12,988
|
|
|
$
|
224,047
|
|
Mark Hershey
|
|
|
6,167
|
|
|
$
|
106,382
|
|
|
|
6,347
|
|
|
$
|
109,478
|
|
David Mills
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
Tracey Rothenberger
|
|
|
0
|
|
|
$
|
0
|
|
|
|
0
|
|
|
$
|
0
|
|
Donna Venable
|
|
|
789
|
|
|
$
|
13,615
|
|
|
|
804
|
|
|
$
|
13,863
|
|
Robert F. Woods
|
|
|
24,099
|
|
|
$
|
415,714
|
|
|
|
24,859
|
|
|
$
|
428,812
|
|
Theodore E. Strand
|
|
|
4,816
|
|
|
$
|
83,068
|
|
|
|
4,967
|
|
|
$
|
85,678
|
|
Brian Edwards
|
|
|
0
|
|
|
$
|
0
|
|
|
|
32,482
|
|
|
$
|
560,308
|
|
Beth Sexton
|
|
|
0
|
|
|
$
|
0
|
|
|
|
35,613
|
|
|
$
|
614,317
|
|
24
The table above does not include amounts with respect to
deferrals of annual short-term incentive bonuses for fiscal year
2008 and any IKON matching contributions with respect to those
deferrals. Also, the table above does not reflect stock
equivalents to be acquired with reinvested dividends. In
addition, the table above does not reflect that Mr. Strand,
Mr. Edwards and Ms. Sexton have, respectively,
$355,897, $478,069 and $71,317 of their deferred compensation in
the form of cash.
Retention
Agreements and Employment Agreements
In connection with negotiating the merger, Ricoh informed us
that it considered retaining our senior management team to be
critical to IKONs continued success and that it was
concerned that the severance provisions in certain of our
existing employment agreements that apply following a change in
control of IKON might provide senior officers with incentives to
terminate employment following completion of the merger.
Accordingly, as a condition to its willingness to enter into the
merger agreement, Ricoh required us to enter into retention
agreements with certain officers that it wishes to retain after
completion of the merger. The retention agreements amend the
officers existing employment agreements to provide, among
other things, for the waiver of certain rights that the officers
would otherwise have to resign due to a constructive
termination or constructive dismissal (within
the meaning of or as used in the original employment agreements)
and receive severance pay and benefits following completion of
the merger. Therefore, on August 26, 2008, our Human
Resources Committee approved entry into Retention Agreements
(the Retention Agreements) with certain senior
officers, including each of Matthew J. Espe, Robert F. Woods,
Jeffrey Hickling, David Mills, Mark Hershey, Donna Venable and
Tracey Rothenberger (collectively, the Officers),
among others. Theodore E. Strand expects to retire from his
controller position following completion of the merger and
therefore he has not entered into a Retention Agreement. For a
discussion of the payments and benefits that are expected to be
made to Mr. Strand in connection with his retirement, see
The Merger Interests of Our Directors
and Officers in Merger Change in Control
Severance Agreement
beginning on page 27.
The Retention Agreements constitute an amendment to
Mr. Espes Employment Agreement, dated as of
September 28, 2005, as last amended as of January 28,
2008, Mr. Woods Senior Executive Employment
Agreement, dated as of September 17, 2004, as amended
July 28, 2005, Mr. Hicklings Senior Executive
Employment Agreement, dated as of February 1, 2008,
Mr. Mills Executive Employment Agreement, dated as of
October 22, 1997, Mr. Mills Supplemental
Executive Employment Agreement, dated as of April 16, 1999,
Mr. Hersheys Senior Executive Employment Agreement,
dated as of April 11, 2005, Mr. Rothenbergers
Senior Executive Employment Agreement, dated as of
October 26, 2007, and as amended January 28, 2008 and
Ms. Venables Senior Executive Employment Agreement,
dated as of February 27, 2008 (such agreements,
collectively, the Original Employment Agreements).
The effectiveness of the Retention Agreements is expressly
conditioned on completion of the merger and, in the event that
the merger is not completed, all such agreements will be
immediately void.
The Retention Agreements have been entered into to replace
severance pay that the Officers otherwise would have been
entitled to receive under the Original Employment Agreements in
the event of a termination of employment without
cause or gross misconduct or due to a
constructive termination or constructive
dismissal (each as defined or used in the Original
Employment Agreements) with an incentive program that will pay
the Officers retention bonuses (the Retention
Bonuses) if they remain with IKON and continue to perform
services following completion of the merger during a retention
period (the Retention Period). The Retention Period
is two years following completion of the merger for each Officer
other than Mr. Woods, and six months following completion
of the merger for Mr. Woods.
The Original Employment Agreements provided for severance equal
to a multiple of the sum of base salary, bonus and retirement
plan contributions (three times for Mr. Espe and two times
for the other Officers), as well as a prorated bonus, in the
event of a termination of an Officers employment without
cause or due to a constructive termination or constructive
dismissal following a change in control of IKON. Pursuant to the
Retention Agreements, the Officers have waived all rights to
such severance if the merger occurs and, instead, the amount of
each Officers Retention Bonus (assuming payment in full)
is equal to the amount of such severance (calculated based on
current compensation levels and assuming a termination of
employment on December 31, 2008). Pursuant to the Retention
Agreements, except in the case of Mr. Woods, provided that
the Officer remains employed by us, the
25
Retention Bonuses will become payable in installments in the
following percentages at the end of each six-month period
following the closing of the merger: 15% on the six-month
anniversary, 20% on the
12-month
anniversary, 25% on the
18-month
anniversary and 40% on the
24-month
anniversary. Mr. Woods is expected to remain with IKON
during a six-month transition period following completion of the
merger and will receive his Retention Bonus in a lump sum at the
end of that period. The maximum amount of the Retention Bonus
that may become payable to each of Messrs. Espe, Woods,
Hickling, Mills, Hershey and Rothenberger and Ms. Venable
is $8,630,400, $2,122,375, $1,850,625, £906,144, $1,191,100
and $799,850 and $865,450, respectively.
The Retention Agreements provide that if an Officers
employment is terminated before the end of his or her Retention
Period by us without cause (as defined in the
Original Employment Agreements) or, in Mr. Mills
case, gross misconduct, or by the Officer due to a
constructive termination (as defined in the
Retention Agreements, which provide for definitions that are
significantly narrower than the Original Employment Agreements)
or, except in the case of Mr. Mills, as a result of death or
disability (as defined in the Original Employment
Agreements), any unpaid portions of his or her Retention Bonus
will be paid in full. Furthermore, in the event of a termination
of the Officers employment under any of the foregoing
circumstances prior to the end of the Officers Retention
Period, provided that he or she signs a release of claims, the
Officer will be entitled to payment of the base salary and
annual and long-term incentives that he or she would have earned
had he or she remained employed by us for the remainder of his
or her Retention Period, with the annual and long-term
incentives paid on a pro rata basis at the target level.
Messrs. Espe and Woods expect to retire at the end of their
respective Retention Periods and, upon retirement, each will be
entitled to a prorated portion of his or her annual and
long-term incentive compensation, paid at the target level. In
the case of the remaining Officers, upon termination after the
Retention Period without cause or due to a constructive
termination, the Officer will be eligible for severance under
our severance pay plan then in effect for our senior executives,
provided that the severance amount will be equal to at least one
times base salary and target bonus. Upon termination of
employment for any reason, each Officer will be entitled to the
continued welfare benefits he or she would have received upon
termination of employment under certain circumstances pursuant
to the Original Employment Agreement. Such benefits will be
provided for a period of three years, in the case of
Mr. Espe, and two years for the other Officers.
In order to be eligible for the Retention Bonus, each Officer
must sign a general release of claims in favor of IKON at the
time of the closing of the merger. In addition, the Retention
Agreements provide that if an Officer receives the full amount
of his or her Retention Bonus, the non-competition covenant in
his or her Original Employment Agreement, which, except in the
case of Mr. Mills, would have expired under the terms of
the Original Employment Agreements upon a termination of
employment without cause or due to a constructive termination or
constructive dismissal following a change in control of IKON,
will remain in effect. The non-competition period is two years
for Messrs. Espe, Woods, Hickling, Hershey, and
Rothenberger and Ms. Venable and one year for
Mr. Mills.
Except as specifically amended by the Retention Agreements, each
Officers Original Employment Agreement will remain in
effect pursuant to its current terms. Each Officers
compensation and benefits are expected to remain unchanged
following completion of the merger, except that in lieu of any
equity-based compensation, during the Retention Period, each
Officer will be eligible for long-term incentive opportunities
or other compensation that is comparable on an annual basis to
the equity-based compensation the Officer was receiving from us
prior to completion of the merger.
Pursuant to the Original Employment Agreements, each Officer is
entitled to a
gross-up
for
any excise tax imposed as a result of Section 280G of the
Internal Revenue Code. Therefore, if the Officer becomes
obligated to pay such excise tax as a result of any payments
that are made in connection with the merger, the Officer will
receive a
gross-up
payment such that he or she is placed in the same after-tax
position as if no excise tax had been imposed. IKON estimates,
based on assumptions that it believes are reasonable, that the
gross-up
payments that could be owed to Messrs. Espe, Hickling,
Hershey and Rothenberger and Ms. Venable will be
approximately $5,000,000, $1,150,000, $675,000, $415,000 and
$425,000, respectively.
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Change
in Control Severance Agreement
We have entered into a change in control severance agreement
with Theodore E. Strand, dated as of August 1, 1999, under
which, as a result of his retirement following the merger, he
will receive the following: (i) an amount equal to the
annual rate of base salary, at the highest rate achieved prior
to his retirement, that he would have received if he had
continued working for us for two years following his retirement;
(ii) an amount equal to the annual bonus he would have
earned if he had continued working for us for two years
following his retirement at the highest rate of base salary
achieved prior to his retirement and received an annual
percentage bonus for each year (or part thereof), assuming
achievement of performance goals at target; (iii) a pro
rata annual bonus for the fiscal year of his retirement assuming
that all performance goals have been or will be achieved at
target; (iv) an amount equal to the maximum value of
company contributions under the Retirement Savings Plan that he
would have received if he had continued working for us for two
years following his retirement or, if IKON is precluded from
providing such participation under applicable law, a lump sum
payment that would, on an after-tax basis, permit
Mr. Strand to purchase comparable coverage; (v) full
vesting in IKONs nonqualified deferred compensation plans;
(vi) continued participation in medical, dental, vision,
hospitalization, disability and life insurance coverage and
other employee benefit plans for two years following his
retirement; and (vii) full vesting and accelerated payment
of long-term incentive awards for all incomplete performance
periods assuming that all performance goals have been or will be
achieved at the maximum level.
Pursuant to the change in control severance agreement,
Mr. Strand is entitled to a
gross-up
for
any excise tax imposed as a result of Section 280G of the
Internal Revenue Code. Therefore, if Mr. Strand becomes
obligated to pay such excise tax as a result of any payments
that are made in connection with the merger, Mr. Strand
will receive a
gross-up
payment such that he is placed in the same after-tax position as
if no excise tax had been imposed. IKON estimates, based on
assumptions that it believes are reasonable, that no
gross-up
payments would be owed to Mr. Strand.
The potential cash severance payable to Mr. Strand pursuant
to his change in control severance agreement, assuming the
merger is completed on December 31, 2008, and his
retirement immediately thereafter, equals approximately
$877,373. The estimated value of continuing welfare benefits
equals approximately $13,790.
Following his retirement, Mr. Strand will remain subject to
the non-competition and non-solicitation restrictions set forth
in his Executive Employment Agreement, dated as of
October 15, 2002, for the greater of one year or one month
for each year of service with us, not to exceed 24 months.
Supplemental
Retirement Plan
The supplemental retirement plan is intended to provide pension
benefits that would have been payable under IKONs
tax-qualified pension plan but for certain restrictions imposed
by the Internal Revenue Code. All United States employees
hired on or after July 1, 2004, are excluded from coverage
under IKONs pension plan and the supplemental retirement
plan. The pension plan and the supplemental retirement plan
ceased accrual of future benefits as of September 30, 2005.
The rabbi trust agreement related to the
supplemental retirement plan provides that upon a change in
control, which includes the proposed transaction, IKON is
obligated to contribute an amount in cash or property sufficient
to pay each plan participant or beneficiary the benefits under
the plan that they would be entitled to receive as of the date
of the change in control. In addition, at the second anniversary
of the change in control, IKON is required to contribute
additional cash or property sufficient to pay each plan
participant or beneficiary the benefits payable pursuant to the
plans as of the close of those two plan years. Further, during
the two-year period following a change in control, the trust may
not be amended and the trustee may not be removed by IKON and,
if the trustee resigns within two years of a change in control,
then only the trustee can appoint a successor trustee.
Directors
and Officers Indemnification and Insurance
Under the merger agreement, Ricoh has agreed that it will, to
the fullest extent permitted by law, cause the Surviving
Corporation to honor all of IKONs obligations to indemnify
(including all obligations to advance funds for expenses) the
current or former directors or officers of IKON and our
subsidiaries for acts or omissions by such directors and
officers occurring prior to the effective time of the merger to
the extent that such obligations of IKON existed on the date of
the merger agreement, whether pursuant to IKONs Articles
of Incorporation, Code of
27
Regulations, individual indemnity agreements or otherwise, and
such obligations will survive the merger and will continue in
full force and effect in accordance with the current terms of
IKONs Articles of Incorporation, Code of Regulations and
such individual indemnity agreements.
The merger agreement also contemplates that prior to the
effective time of the merger, IKON will (or if IKON is unable to
and so requests to Ricoh at least 20 business days prior to the
closing date of the merger, Ricoh will cause the Surviving
Corporation to, as of the effective time of the merger) obtain
and fully pay the premium for the extension of the
directors and officers liability coverage of
IKONs existing directors and officers
insurance policies, for a claims reporting or discovery period
of at least six years from and after the effective time of the
merger with respect to any claim related to any period or time
at or prior to the effective time from an insurance carrier with
the same or better credit rating as IKONs current
insurance carrier with respect to directors and
officers liability insurance (collectively D&O
Insurance). Such D&O Insurance must have terms,
conditions, retentions and limits of liability that are no less
advantageous than the coverage provided under IKONs
existing policies at or prior to the effective time of the
merger.
The maximum premium for such tail insurance policies
is not to exceed 300% of the annual premiums paid by IKON as of
the date hereof for D&O Insurance, or $7,539,000. If such
insurance coverage cannot be obtained at all, or can only be
obtained at an annual premium in excess of the maximum premium,
Ricoh shall maintain the most advantageous policies of
directors and officers insurance obtainable for an
annual premium equal to the maximum premium, as reasonably
determined by Ricoh.
If IKON and the Surviving Corporation for any reason fail to
obtain such tail insurance policies as of the
effective time, then the Surviving Corporation shall, and Ricoh
shall cause the Surviving Corporation to, continue to maintain
in effect for a period of at least six years from the effective
time of the merger (or until such time as Ricoh or the Surviving
Corporation is able to obtain the tail insurance
policies as described above) the D&O Insurance with respect
to claims arising from or related to facts or events which
occurred at or before the effective time of the merger.
The merger agreement also provides that from and after the
effective time, to the fullest extent permitted by law, Ricoh
will, and will cause the Surviving Corporation to, indemnify,
defend and hold harmless the present and former officers and
directors of IKON and our subsidiaries and any employee of IKON
or our subsidiaries who acts as a fiduciary under any company
benefit plan against all losses, claims, damages, liabilities,
fees and expenses (including attorneys fees and
disbursements), judgments, fines and amounts paid in settlement
(in the case of settlements, with the approval of the
indemnifying party (not to be unreasonably withheld), as
incurred (payable monthly as incurred upon written request,
which must include reasonable evidence of the losses) to the
extent arising from, relating to, or otherwise regarding, any
actual or threatened action, suit, proceeding or investigation,
in respect of actions or omissions occurring at or prior to the
effective time of the merger in connection with such indemnified
partys duties as an officer or director of IKON or our
subsidiaries, including with respect to the merger agreement and
the merger. However, this indemnity does not extend to losses
arising out of actions or omissions by the indemnified party
constituting:
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a breach of the merger agreement;
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criminal conduct;
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any violation of federal, state or foreign securities
laws; or
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any action taken primarily for the purpose of personal profit or
advantage to which such indemnified person was not entitled.
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Benefit
Arrangements with the Surviving Corporation
The merger agreement requires that, for one year after the
consummation of the merger, Ricoh will either (1) maintain,
or cause the Surviving Corporation to maintain, IKONs
employee benefit plans (other than the stock plans) at the
benefit levels in effect immediately prior to the consummation
of the merger and provide other compensation that is not less
favorable in the aggregate than the compensation provided to the
employees of IKON immediately prior to the consummation of the
merger or (2) provide, or cause the Surviving Corporation
to provide, compensation and benefits to each employee of IKON
that, taken as a whole, are substantially comparable in the
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aggregate (taking into account the value of IKONs equity
compensation) to those provided by IKON immediately prior to the
consummation of the merger.
In addition, the Surviving Corporation is required to honor and
continue certain employment, severance, retention and
termination policies and arrangements and cash incentive
compensation plans, including all sales commission plans.
Material
United States Federal Income Tax Consequences of the
Transaction
The following is a discussion of the material United States
federal income tax consequences of the merger to
U.S. holders whose shares of our common stock are converted
into the right to receive cash in the merger. The discussion is
based upon the Internal Revenue Code, Treasury regulations,
Internal Revenue Service rulings and judicial and administrative
decisions in effect as of the date of this proxy statement, all
of which are subject to change (possibly with retroactive
effect) or to different interpretations. The following
discussion does not purport to consider all aspects of
U.S. federal income taxation that might be relevant to our
shareholders. This discussion applies only to shareholders who,
on the date on which the merger is completed, hold shares of our
common stock as a capital asset. The following discussion does
not address taxpayers subject to special treatment under
U.S. federal income tax laws, such as insurance companies,
financial institutions, dealers in securities, tax-exempt
organizations, mutual funds, real estate investment trusts,
investors in pass-through entities, S corporations and
taxpayers subject to the alternative minimum tax. In addition,
the following discussion may not apply to shareholders who
acquired their shares of our common stock upon the exercise of
employee stock options or otherwise as compensation for services
or through a tax-qualified retirement plan or who hold their
shares as part of a hedge, straddle, conversion transaction or
other integrated transaction. If our common stock is held
through a partnership, the U.S. federal income tax
treatment of a partner in the partnership will generally depend
upon the status of the partner and the activities of the
partnership. Partnerships that are holders of our common stock
and partners in such partnerships are urged to consult their own
tax advisors regarding the tax consequences to them of the
merger.
The following discussion does not address potential foreign,
state, local and other tax consequences of the merger. All
shareholders are urged to consult their own tax advisors
regarding the U.S. federal income tax consequences, as well
as the foreign, state and local tax consequences, of the
disposition of their shares in the merger.
For purposes of this summary, a U.S. holder is
a beneficial owner of shares of our common stock, who or that
is, for U.S. federal income tax purposes:
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an individual who is a citizen or resident of the United States;
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a corporation (or other entity taxable as a corporation) created
or organized in or under the laws of the United States, any
state of the United States or the District of Columbia;
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an estate the income of which is subject to U.S. federal
income tax regardless of its source; or
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a trust if (1) a U.S. court is able to exercise
primary supervision over the trusts administration and one
or more U.S. persons are authorized to control all
substantial decisions of the trust; or (2) it was in
existence on August 20, 1996 and has a valid election in
place to be treated as a domestic trust for U.S. federal
income tax purposes.
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Except with respect to the backup withholding discussion below,
this discussion does not discuss the tax consequences to any
shareholder who or that, for U.S. federal income tax
purposes, is not a U.S. holder.
For U.S. federal income tax purposes, the merger will be
treated as a sale of our common stock for cash by each of our
shareholders. Accordingly, in general, the U.S. federal
income tax consequences to a shareholder receiving cash in the
merger will be as follows:
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The shareholder will recognize a capital gain or loss for
U.S. federal income tax purposes upon the disposition of
the shareholders shares of our common stock pursuant to
the merger.
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The amount of capital gain or loss recognized by each
shareholder will be measured by the difference, if any, between
the amount of cash received by the shareholder in the merger and
the shareholders adjusted tax
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basis in the shares of our common stock surrendered in the
merger. Gain or loss will be determined separately for each
block of shares (
i.e.
, shares acquired at the same cost
in a single transaction) surrendered for cash in the merger.
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The capital gain or loss, if any, will be long-term with respect
to shares of our common stock that have a holding period for tax
purposes in excess of one year at the time of the merger.
Long-term capital gains of individuals are eligible for reduced
rates of taxation. There are limitations on the deductibility of
capital losses.
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Cash payments made pursuant to the merger will be reported to
our shareholders and the Internal Revenue Service to the extent
required by the Internal Revenue Code and applicable Treasury
regulations. These amounts ordinarily will not be subject to
withholding of U.S. federal income tax. However, backup
withholding (currently at a 28% rate) will apply to all cash
payments to which a U.S. holder is entitled pursuant to the
merger agreement if such holder (1) fails to supply the
paying agent with the shareholders taxpayer identification
number (Social Security number, in the case of individuals, or
employer identification number, in the case of other
shareholders), certify that such number is correct, and
otherwise comply with the backup withholding rules, (2) has
received notice from the Internal Revenue Service of a failure
to report all interest and dividends required to be shown on the
shareholders U.S. federal income tax returns, or
(3) is subject to backup withholding in certain other
cases. Accordingly, each U.S. holder will be asked to
complete and sign a Substitute
Form W-9,
which is to be included in the appropriate letter of transmittal
for the shares of our common stock, in order to provide the
information and certification necessary to avoid backup
withholding or to otherwise establish an exemption from backup
withholding tax, unless an exemption applies and is established
in a manner satisfactory to the paying agent. Shareholders who
are not U.S. holders should complete and sign a
Form W-8BEN
(or other applicable tax form) and return it to the paying agent
in order to provide the information and certification necessary
to avoid backup withholding tax or otherwise establish an
exemption from backup withholding tax. Certain of our
shareholders will be asked to provide additional tax information
in the appropriate letter of transmittal for the shares of our
common stock.
Backup withholding is not an additional tax. Any amounts
withheld under the backup withholding rules will be allowed as a
refund or a credit against your U.S. federal income tax
liability provided the required information is timely furnished
to the Internal Revenue Service.
The foregoing discussion of certain material
U.S. federal income tax consequences is included for
general informational purposes only. We urge you to consult your
own tax advisor to determine the particular tax consequences to
you (including the application and effect of any state, local or
foreign income and other tax laws) of the receipt of cash in
exchange for shares of our common stock pursuant to the
merger.
Regulatory
Approvals
Completion of the merger is subject to certain governmental or
regulatory clearance procedures, including the termination or
expiration of the waiting period under the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the HSR
Act); termination or expiration of the applicable waiting
period under the Competition Act (Canada); and a decision under
the European Community Council Regulation (EC) No. 139/2004
(the EC Merger Regulation) or application of
Article 10(6) thereof, declaring the merger to be
compatible with the EC Common Market.
United States Antitrust Laws.
The HSR Act
provides that transactions such as the merger may not be
completed until certain information has been submitted to the
Federal Trade Commission and the Antitrust Division of the
U.S. Department of Justice and certain waiting period
requirements have been satisfied. IKON and Ricoh filed
notification and report forms with the Department of Justice and
the Federal Trade Commission under the HSR Act on
August 28, 2008. Unless the waiting period is terminated
earlier or the parties receive a request for additional
information or documentary material prior to that time, the
waiting period will expire at 11:59 pm on September 29,
2008.
In the event the FTC or the Antitrust Division issue a request
for additional information, the waiting period will be extended
until the parties substantially comply with such request. In
practice, complying with a request for
30
additional information or material can take a significant amount
of time. In addition, if the Antitrust Division or the FTC
raises substantive issues in connection with the proposed
transaction, the parties may engage in negotiations with the
relevant governmental agency concerning possible means of
addressing those issues and may agree to delay consummation of
the merger while such negotiations continue.
The FTC and the Antitrust Division frequently scrutinize the
legality under the antitrust laws of transactions such as the
merger. At any time before or after the consummation of the
merger, the Antitrust Division or the FTC could take such action
under the antitrust laws as it deems necessary or desirable in
the public interest, including seeking to enjoin the
consummation of the merger or seeking divestiture of certain
assets or businesses of the parties. At any time before or after
the consummation of the merger, and notwithstanding that the HSR
Act waiting period may have expired, any state could take such
action under the antitrust laws as it deems necessary or
desirable in the public interest. Such action could include
seeking to enjoin the consummation of the merger or seeking
divestiture of certain assets or businesses. Private parties may
also seek to take legal action under the antitrust laws under
certain circumstances.
Competition Act (Canada).
The transaction is a
notifiable transaction for purposes of Part IX
of the Competition Act (Canada), and it may not be completed
before the expiration or earlier termination of the applicable
waiting period after notice of the transaction, together with
certain prescribed information, has been provided to the
Commissioner of Competition appointed under the Competition Act
(Canada) (referred to in this proxy statement/prospectus as the
Commissioner of Competition). The statutory waiting period is 14
calendar days, once both parties file a short-form notification,
or 42 calendar days, if the parties file a long-form
notification. However, when the parties file a short-form
notification, the Commissioner of Competition can require a
long-form notification at any time prior to the expiration of
the waiting period. Ricoh submitted its short-form notification
on September 2, 2008, and IKON submitted its short-form
notification on September 4, 2008. Assuming that the
Commissioner does not require the parties to submit a long-form
notification, the applicable waiting period in Canada will
expire on September 18, 2008.
A party to a notifiable transaction may also apply to the
Commissioner of Competition for an advance ruling certificate,
which may be issued by the Commissioner of Competition in
respect of a proposed transaction if she is satisfied that there
are not sufficient grounds on which to apply to the Competition
Tribunal for an order under the merger provisions of the
Competition Act (Canada). The merger provisions of the
Competition Act (Canada) permit the Commissioner of Competition
to apply to the Competition Tribunal for relief in respect of
merger transactions that prevent or lessen, or would be likely
to prevent or lessen, competition substantially. The relief that
may be ordered by the Tribunal includes, in the case of a
proposed transaction, prohibiting its completion. On
September 2, 2008, Ricoh applied to the Commissioner of
Competition for an advance ruling certificate in respect of the
merger.
Unless the Commissioner issues an advance ruling certificate,
the Commissioner can challenge a merger at any time within three
years of its completion. The Commissioners review
therefore can often extend beyond the statutory waiting period.
The Canadian Competition Bureau has published non-statutory time
frames setting out how long it typically requires in order to
complete its substantive assessment of a transaction. These time
frames vary depending on whether the Competition Bureau
designates the notified transaction as non-complex
(less than 14 days), complex (up to
10 weeks) or very complex (up to five months or
more).
As of the date of this proxy statement, the Competition Bureau
has not informed the parties how long it will likely require to
complete its assessment of the transaction. The respective
obligation of each party to effect the merger, however, is
subject to the issuance of either an advance ruling certificate
or no action letter to Ricoh in respect of the
merger, on terms and in a form reasonably satisfactory to Ricoh.
EC Merger Regulation.
Under the EC Merger
Regulation, the Commission has 25 working days following receipt
of a complete notification form to issue a decision declaring
the merger to be compatible with the EC Common Market or to open
an in-depth investigation. If the Commission initiates an
in-depth investigation, it must issue a final decision as to
whether or not the merger is compatible with the Common Market
no later than 90 working days after the initiation of the
in-depth investigation (although this period may be extended in
certain circumstances).
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Ricoh has initiated pre-notification contacts with the European
Commission and submitted a draft Form CO on
September 3, 2008. The parties expect to submit a final and
complete Form CO in the near future following the
completion of the pre-notification discussions with the European
Commission.
As of the date of this proxy statement, the applicable waiting
periods under the HSR Act, the EC Merger Regulation and the
Competition Act (Canada) have not expired or been terminated and
the parties have not obtained any applicable decisions or
certificates enabling completion of the merger. The parties
believe that the merger can be effected in compliance with all
applicable antitrust laws. However, there can be no assurance
that the governmental reviewing authorities will terminate or
permit any applicable waiting periods to expire, or approve or
clear the merger at all or without restrictions or conditions.
There also can be no assurance that a challenge to the
consummation of the merger on antitrust grounds will not be made
or that, if such a challenge were made, the parties would
prevail or would not be required to accept certain conditions,
possibly including certain divestitures, in order to consummate
the merger.
Except as noted above with respect to the required filings under
the HSR Act, the EC Merger Regulation and the Competition Act
(Canada) and the filing of a certificate of merger in Ohio at or
before the effective date of the merger, we are unaware of any
material federal, state or foreign regulatory requirements or
approvals required for the execution of the merger agreement or
completion of the merger.
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THE
MERGER AGREEMENT
The merger agreement is the legal document that governs the
merger. This section of the proxy statement describes the
material provisions of the merger agreement but may not contain
all of the information about the merger agreement that is
important to you. The merger agreement is included as
Annex A to this proxy statement and is incorporated into
this proxy statement by reference. We encourage you to read the
merger agreement in its entirety.
Form and
Effective Time of the Merger
Subject to the terms and conditions of the merger agreement and
in accordance with Ohio law, at the effective time of the
merger, Sub, a newly formed subsidiary of Ricoh, will merge with
and into IKON. IKON will survive the merger as a wholly owned
subsidiary of Ricoh and our current shareholders will cease to
have any ownership interest in the Surviving Corporation or
rights as our shareholders. Therefore, such current shareholders
will not participate in any future earnings or growth of the
Surviving Corporation and will not benefit from any appreciation
in value of the Surviving Corporation.
If the merger is completed, our common stock will be delisted
from the NYSE and deregistered under the Securities Exchange Act
of 1934.
The merger will become effective upon the filing of a
certificate of merger with the Secretary of State of the State
of Ohio and the making of all other filings or recordings
required under the Ohio General Corporation Law or at a later
time as may be agreed upon by Ricoh and us and specified in the
certificate of merger. The filing of the certificate of merger
will occur on the date of the closing of the merger or as soon
as practicable after that date. We sometimes use the term
effective time in this proxy statement to describe
the time that the merger becomes effective under Ohio law.
Treatment
of Stock and Equity Awards
Common
Stock
At the completion of the merger, each issued share of our common
stock not owned by IKON, Ricoh or Sub, or held by shareholders
who have properly demanded and perfected their appraisal rights
in accordance with Ohio law, will be converted into the right to
receive $17.25 in cash, without interest and less applicable
withholding taxes.
Each share of our common stock owned by IKON, Ricoh or Sub will
no longer be outstanding and will automatically be canceled and
retired and will cease to exist, without consideration for such
shares.
Each share of our common stock held by shareholders who have
properly demanded and perfected their appraisal rights in
accordance with Ohio law, will not be converted into the right
to receive the merger consideration, unless and until such
shareholder fails to demand payment properly or otherwise loses
such shareholders rights as a dissenting shareholder, if
any, under the Ohio Revised Code. If any such shareholder fails
to perfect or loses any such rights as a dissenting shareholder,
that shareholders shares of our common stock shall
thereupon be deemed to have been converted as of the effective
time of the merger into only the right to receive the merger
consideration, without interest and less applicable withholding
taxes. From and after the effective time, each shareholder who
has asserted rights as a dissenting shareholder as provided in
Sections 1701.84 and 1701.85 of the Ohio Revised Code shall
be entitled only to such rights as are granted under those
Sections of the Ohio Revised Code. See
Dissenting
Shareholders Rights
beginning on page 46.
Company
Equity Awards and Long-Term Incentive Awards
Upon the consummation of the merger, each outstanding,
unexercised stock option will be converted into the right to
receive an amount in cash equal to the number of shares of
IKONs common stock subject to such option multiplied by
the spread value of such option (
i.e.
, the
per share merger consideration minus the applicable exercise
price). The restrictions on each outstanding
restricted share of IKON common stock will lapse
upon consummation of the merger, and each such share will be
converted into the right to receive the merger consideration.
Each outstanding performance unit award will be converted into
the right to receive $1 in cash
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for each of the target number of units subject to such
performance unit award. Each outstanding restricted stock unit
and deferred stock unit will be converted into the right to
receive the merger consideration. Each stock equivalent issued
under IKONs deferred compensation plans will be converted
into the right to receive the merger consideration. See
The Merger Interests of Our Directors and
Executive Officers in the Merger
beginning on
page 21.
Shares
in the IKON Retirement Savings Plan
If the merger is completed, each participant in the Retirement
Savings Plan will be entitled to receive $17.25 in cash, without
interest, for each IKON share that the participant holds in his
or her Retirement Savings Plan account. However, participants
will not receive the cash proceeds from their plan shares
directly. Instead, on the day that the proceeds are received
from Ricoh, each participants proceeds will be deposited
into his or her account under the Retirement Savings Plan and
then automatically invested in the Vanguard Balanced Index Fund,
which is an investment alternative under the plan. Participants
will be able to direct all aspects of their accounts, including
transferring the proceeds out of the Vanguard Balanced Index
Fund and into any other investment option available under the
Retirement Savings Plan. Following the merger, participants will
not hold any shares of the Surviving Corporation nor will an
investment fund be created under the Retirement Savings Plan for
that purpose.
Exchange
and Payment Procedures
Prior to the effective time, Ricoh will select a bank or trust
company to act as paying agent for the payment of the merger
consideration and immediately following the effective time Ricoh
will, or will cause the Surviving Corporation to, provide to the
paying agent all the cash necessary to pay the merger
consideration amounts due to each holder of our common stock.
As soon as reasonably practicable after the effective time, the
paying agent will mail a letter of transmittal and instructions
to you and our other shareholders. The letter of transmittal and
instructions will tell you how to surrender your common stock
certificates in exchange for the merger consideration.
YOU SHOULD NOT RETURN YOUR STOCK CERTIFICATES WITH THE
ENCLOSED PROXY CARD, AND YOU SHOULD NOT FORWARD YOUR STOCK
CERTIFICATES TO THE PAYING AGENT WITHOUT A LETTER OF
TRANSMITTAL.
You will not be entitled to receive the merger consideration
until you surrender your stock certificate or certificates to
the paying agent, together with a duly completed and executed
letter of transmittal and any other documents as may reasonably
be required by the paying agent. The merger consideration may be
paid to a person other than the person in whose name the
corresponding certificate is registered if the certificate is
properly endorsed or is otherwise in the proper form for
transfer and the person who surrenders such certificate must
either pay any transfer or other taxes required or establish to
the reasonable satisfaction of Ricoh that such taxes have been
paid or are not applicable.
No interest will be paid or will accrue on the cash payable upon
surrender of the certificates. Ricoh, the Surviving Corporation
or the paying agent will be entitled to deduct and withhold, and
pay to the appropriate taxing authorities, any applicable taxes
from the merger consideration. Any sum which is withheld and
paid to a taxing authority by Ricoh, the Surviving Corporation
or the paying agent will be deemed to have been paid to the
person with regard to whom it is withheld.
At the close of business on the day on which the effective time
of the merger occurs, our stock transfer books will be closed,
and there will be no further registration of transfers of
outstanding shares of IKONs common stock. If, after the
close of business on the day on which the effective time of the
merger occurs, certificates are presented to the Surviving
Corporation for transfer, they will be cancelled and exchanged
for the merger consideration.
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Unclaimed
Funds
Any portion of the merger consideration that remains
undistributed for nine months after the effective time of the
merger will be delivered by the paying agent to Ricoh, upon
demand, and any holder of our common stock who has not to that
point complied with the exchange and payment procedures will
look only to Ricoh for payment of his or her claim for merger
consideration.
None of Ricoh, Sub, IKON or the paying agent will be liable to
any person in respect of any portion of the merger consideration
delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any certificate
has not been surrendered prior to five years after the effective
time of the merger (or immediately prior to such earlier date on
which the merger consideration in respect of such certificate
would otherwise escheat to or become the property of any
governmental entity), any such shares, cash, dividends or
distributions in respect of such certificate will, to the extent
permitted by applicable law, become the property of the
Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
If you have lost your certificate, or if it has been stolen or
destroyed, then before you will be entitled to receive the
merger consideration, you will have to make an affidavit of that
fact and, if required by the Surviving Corporation, post a bond
or surety in such reasonable amount as the Surviving Corporation
may direct as indemnity against any claim that may be made
against it with respect to that certificate.
Representations
and Warranties
The merger agreement contains customary representations and
warranties made by Ricoh, Sub and IKON. The representations and
warranties of IKON are qualified in their entirety by the
information filed by IKON with the SEC between October 1,
2006 and August 20, 2008 (which filings are available
without charge at the SECs internet site at www.sec.gov).
The assertions embodied in the representations and warranties
were made for the purposes of the merger agreement and are
subject to qualifications and limitations agreed to by Ricoh,
Sub and IKON in connection with negotiating the terms of the
merger agreement. In addition, certain representations and
warranties were made as of a specified date, may be subject to a
contractual standard of materiality different from what might be
viewed as material to shareholders, or may have been used for
the purpose of allocating risk between Ricoh, Sub and IKON
rather than establishing matters as facts. For the foregoing
reasons, you should not rely on the representations and
warranties as statements of factual information. The
representations and warranties in the merger agreement do not
survive the merger and only the representations by each of IKON,
Ricoh and Sub that relate to brokers and finders
fees and commissions will survive the termination of the merger
agreement.
We make various representations and warranties in the merger
agreement, including with respect to, among other things:
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our and our subsidiaries proper organization, good
standing, qualification to do business and our charter documents;
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our interests in our subsidiaries;
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our capital structure, including the number of shares of our
common stock, stock options and other equity-based interests;
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our corporate power and authority to enter into the merger
agreement and to consummate the merger;
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the approval and recommendation by our Board of Directors of the
merger agreement;
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the approvals required to be obtained by the holders of
IKONs securities to enter into the merger agreement and
consummate the merger;
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the absence of conflicts or violations with our and our
subsidiaries governing documents, certain agreements or
applicable law as a result of entering into the merger agreement
and consummating the merger;
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the required consents and approvals of governmental entities in
connection with entering into the merger agreement and
consummating the merger;
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our filings with the SEC, the financial statements included in
our SEC filings, our compliance with the Sarbanes-Oxley Act of
2002, and related matters;
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the information supplied by us in this proxy statement;
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the absence of a Company Material Adverse Effect
(defined below) and certain other changes and events since
September 30, 2007 to the date we entered into the merger
agreement;
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filing of tax returns, payment of taxes and other tax matters;
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employment and labor matters affecting us and our subsidiaries,
including matters relating to our and our subsidiaries
employee benefit and pension plans;
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legal proceedings and judgments;
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compliance with laws, including those relating to employment and
employment practices, classification of, and payment to, persons
classified by IKON and our subsidiaries as independent
contractors, and occupational health and safety;
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certain material contracts and agreements;
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intellectual property matters;
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owned and leased real property;
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transactions between IKON (or any of our subsidiaries) and the
directors or officers of IKON (or any of our subsidiaries), or
any of their affiliates;
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environmental matters;
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state law takeover statutes;
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brokers and finders fees and commissions; and
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the receipt by us of a fairness opinion from our financial
advisor, Goldman Sachs.
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For the purposes of the merger agreement, Company Material
Adverse Effect means any circumstance, state of facts,
occurrence, event, change, effect or development that,
individually or in the aggregate, has had, or is reasonably
expected to have, a material adverse effect on:
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the business, financial condition or results of operations of
IKON and our subsidiaries, taken as a whole, not taking into
account the effects of any Excluded Event (defined
below); or
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the ability of IKON to perform its obligations under the merger
agreement or consummate the merger in the manner contemplated by
the merger agreement.
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An Excluded Event means any of the following
occurring after the date of the merger agreement:
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any change, development, event or occurrence in capital market
conditions generally or general economic conditions, in each
case in the United States or any foreign jurisdiction, including
with respect to interest rates or currency exchange rates;
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any change, development, event or occurrence in geopolitical
conditions, the outbreak or escalation of hostilities, any act
of war or any act of terrorism;
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any hurricane, tornado, flood, earthquake or other natural
disaster;
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any change (or proposed change) in applicable law or GAAP (or
authoritative interpretation thereof);
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any change in general legal, regulatory, political, economic or
business conditions in the imaging and document management
industries;
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any failure of IKON to meet any internal or published
projections, forecasts, estimates or predictions in respect of
revenues, earnings or other financial or operating metrics, or
changes in the market price, credit rating or trading volume of
IKONs securities;
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the announcement and pendency of the merger agreement and the
merger, including any pending or threatened lawsuit, action or
proceeding relating to the merger agreement or the merger;
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any threatened or actual loss of or change in relationship, or
other adverse occurrence, with any customer, supplier,
distributor, or other business partner, or departure of any
employee or officer, of IKON or any of our subsidiaries; and
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any action or failure to act on the part of IKON, any of our
subsidiaries or any of IKONs or its subsidiaries
representatives, required by the merger agreement (other than as
required by the obligation to conduct our business in the
ordinary course) or requested or consented to in writing by
Ricoh,
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however, if any of the circumstances described in the first five
bullet points above have, or are reasonably expected to have, a
disproportionate impact on IKON or any of our subsidiaries
relative to other companies in the imaging and document
management industries, then such circumstances will be deemed
not to be Excluded Events and will be taken into account in
determining whether there has been, or is reasonably expected to
be, a Company Material Adverse Effect.
The merger agreement also contains various representations and
warranties made by Ricoh and Sub, including with respect to,
among other things:
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their proper organization, good standing and qualification to do
business;
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the incorporation, capitalization, and the business and
operations of Sub;
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their corporate power and authority to enter into the merger
agreement and to consummate the merger;
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the absence of conflicts or violations with their governing
documents, certain agreements or applicable law as a result of
entering into the merger agreement and consummating the merger;
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the required consents and approvals of government entities in
connection with entering into the merger agreement and
consummating the merger;
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the information supplied by them in this proxy statement;
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their lack of ownership of our common stock;
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brokers and finders fees and commissions; and
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the financing of the funds necessary to perform their
obligations under the merger agreement.
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Conduct
of Our Business Pending the Merger
Under the merger agreement, we have agreed that, subject to
certain exceptions, between the date of the merger agreement and
the effective time of the merger, we will and we will cause each
of our subsidiaries to:
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conduct our business in the usual, regular and ordinary course
in substantially the same manner as previously
conducted; and
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use all reasonable efforts to:
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preserve intact our current business organization;
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keep available the services of our current officers and
employees; and
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keep our relationships with customers, suppliers, licensors,
licensees, distributors and others having business dealings with
us,
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to the end that our goodwill and ongoing business will be
unimpaired at the effective time of the merger.
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We have also agreed that during the same time period and subject
to certain exceptions, we will not and we will not permit any of
our subsidiaries to:
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declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of our or our
subsidiaries capital stock, other than:
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dividends and distributions by a direct or indirect wholly owned
subsidiary of IKON to its parent; and
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regular quarterly cash dividends with respect to our common
stock, not in excess of $0.04 per share, with usual declaration,
record and payment dates and in accordance with IKONs past
dividend policy;
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split, combine or reclassify any of our or our
subsidiaries capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of our or our subsidiaries capital
stock;
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purchase, redeem or otherwise acquire any shares of our or our
subsidiaries capital stock or any other securities or any
rights, warrants or options to acquire any such shares or other
securities, other than certain actions in relation to IKON stock
options and other equity-based compensation;
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issue, deliver, sell or grant any shares of its capital stock,
any bonds, debentures, notes or other indebtedness of IKON
having the right to vote, or any other voting securities, any
securities convertible into or exchangeable for, or any options,
warrants or rights to acquire, any of the above, or convertible
or exchangeable securities or any phantom stock,
phantom stock rights, stock appreciation rights or
stock-based performance units, other than the issuance of up to
50,000 stock options and 50,000 restricted stock units or
deferred stock units and certain other actions in relation to
IKON stock options and other equity-based compensation;
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amend our certificate of incorporation, code of regulations,
by-laws or other comparable charter or organizational documents;
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acquire or agree to acquire any assets that are material,
individually or in the aggregate, to IKON and our subsidiaries,
taken as a whole, except purchases of inventory in the ordinary
course of business consistent with past practice;
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grant to any officer or director of IKON any increase in
compensation, grant to any employee, officer or director of IKON
or any subsidiary any increase in severance or termination pay,
enter into any severance or termination agreement with any such
employee, officer or director, establish, adopt, enter into or
amend in any material respect any collective bargaining
agreement or benefit plan or take any action to accelerate any
rights, vesting or benefits, or take or agree to take any action
to fund, or in any other way secure the payment of compensation
or benefits under, any company benefit plan, or make any
material change to any company benefit agreement, except:
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in the ordinary course of business consistent with past practice;
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as required pursuant to the terms of any company benefit plan or
company benefit agreement or other agreement as in effect on the
date of the merger agreement;
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as otherwise expressly permitted by the merger agreement;
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for amendments to company benefits plans and company benefit
agreements to address Section 409A of the Internal Revenue
Code of 1986 (including amendments to allow certain payments and
benefits to qualify for an exemption from Section 409A of
the Internal Revenue Code of 1986); or
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as required to avoid a breach of the following provision;
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after having received written notice from certain executive
officers of circumstances that, if left uncured, would entitle
such executive officer to terminate employment with IKON under
circumstances that would constitute constructive
termination without cause, constructive
discharge, constructive dismissal, or
good reason, fail to take such actions as are
reasonably necessary to cure such circumstances;
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make any change in accounting methods, principles or practices
materially affecting the reported consolidated assets,
liabilities or results of operations of IKON, except insofar as
may have been required by a change in law or GAAP;
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sell, lease (as lessor), license or otherwise dispose of, or
subject to any lien any properties or assets that are material,
individually or in the aggregate, to IKON and our subsidiaries,
taken as a whole, except sales of inventory and excess or
obsolete assets in the ordinary course of business consistent
with past practice;
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incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue, amend or sell any debt
securities or warrants or other rights to acquire any debt
securities of IKON or any of our subsidiaries, guarantee any
debt securities of another person, enter into any keep
well or other agreement to maintain any financial
statement condition of another person or enter into any similar
arrangement, except for short-term borrowings incurred in the
ordinary course of business consistent with past practice or
make any loans, advances or capital contributions to, or
investments in, any other person, other than to or in IKON or
any wholly owned subsidiary, in any case in excess of $500,000;
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make or agree to make any new capital expenditure or
expenditures that, individually, is in excess of $500,000 or, in
the aggregate, are in excess of $2,500,000;
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except in the ordinary course of business consistent in all
respects with past practice, make or change any material tax
election or settle or compromise any material tax liability or
refund;
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amend, modify, accelerate or prematurely terminate certain
contracts or, except in the ordinary course of business, enter
into any new arrangements, agreements, understandings or
contracts that would be material contracts (or meet certain
other requirements) if the same were in effect on the date of
the merger agreement;
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settle or compromise any legal proceeding or enter into any
consent decree, injunction or similar restraint or form of
equitable relief in settlement of any legal proceeding;
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authorize, recommend, propose or announce an intention to adopt
a plan of complete or partial liquidation or dissolution of IKON
or any of our subsidiaries; or
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authorize any of, or commit or agree to take any of, the actions
set forth above.
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No
Solicitation
The merger agreement includes a no-shop provision
that prohibits IKON soliciting further takeover proposals
between the time of signing the merger agreement and the earlier
of the effective time of the merger and the date the merger
agreement is terminated.
Under the merger agreement, IKON and its subsidiaries and any of
their officers, directors, employees and representatives are not
permitted to, directly or indirectly:
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solicit, initiate, encourage, approve or invite the submission,
making or announcement of any Company Takeover Proposal or any
inquiry relating to or that may reasonably be expected to lead
to any Company Takeover Proposal;
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enter into any agreement with respect to any Company Takeover
Proposal; or
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participate in any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take
any other action to facilitate, any inquiries or the making or
announcement of any offer or proposal that constitutes, or may
reasonably be expected to lead to, any Company Takeover Proposal
or any related inquiry.
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Company Takeover Proposal means any direct or
indirect proposal or offer made by a third party:
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for a merger, joint venture, partnership, consolidation,
dissolution, tender offer, recapitalization or other business
combination, a liquidation or dissolution or any other similar
transaction involving IKON or any of its subsidiaries;
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for the issuance by IKON or any of its subsidiaries of over 15%
of its equity securities; or
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to acquire in any manner, or to lease, license or encumber,
beneficial ownership of over 15% of the equity securities or
consolidated total assets of IKON or any of its subsidiaries,
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in each case in one or a series of related transactions, other
than the merger.
However, despite the above restrictions, IKON may, in certain
circumstances, prior to the special meeting of shareholders,
respond to an alternative proposal. In order to do so:
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the proposal must be made after the date of signing the merger
agreement;
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the proposal must not have been solicited by IKON, any of our
subsidiaries or any of IKONs or its subsidiaries
representatives and must not otherwise arise or result from a
breach of the above non-solicitation restrictions; and
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IKONs Board of Directors must have determined, in good
faith, after consultation with IKONs Board of
Directors independent financial advisor, that the proposal
is, or is reasonably likely to lead to, a Superior Company
Proposal.
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Superior Company Proposal means any bona fide,
unsolicited Company Takeover Proposal (as defined above) to
acquire all of the equity securities or all or substantially all
of the assets of IKON, pursuant to a tender or exchange offer, a
merger, a consolidation, a liquidation or dissolution, a
recapitalization, a sale of assets or otherwise:
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on terms which IKONs Board of Directors determines in good
faith to be more favorable to the holders of IKONs common
stock from a financial point of view than the merger (based on
the written opinion, with only customary qualifications, of
IKONs independent financial advisor), taking into account
all the terms and conditions of such proposal and the merger
agreement, and the identity and nature of the third party making
such proposal; and
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that is reasonably likely to be completed on a timely basis,
taking into account all financial, regulatory, legal and other
aspects of such proposal, including any unsatisfied conditions
to such proposal.
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If IKONs Board of Directors determines that an alternative
proposal is a Superior Company Proposal, and complies with the
other requirements noted above, then, after giving Ricoh advance
notice, IKON may:
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furnish information to the person making the proposal, pursuant
to an acceptable confidentiality agreement (so long as IKON
concurrently provides to Ricoh any such information not already
disclosed to Ricoh); and
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participate in discussions or negotiations with such person.
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IKON may only take these actions, however, to the extent that
IKONs Board of Directors has determined, in good faith,
after consultation with outside counsel, that taking such action
with respect to the proposal is necessary to avoid breaching
IKONs Board of Directors fiduciary obligations.
Despite the above, IKON is permitted to respond to a proposal or
inquiry from a third party to inform such third party that IKON
is subject to this non-solicitation provision and that
accordingly IKON is not otherwise permitted to respond to the
third partys proposal.
In addition, IKON is required under the merger agreement to
cause each confidentiality agreement entered into by IKON in
contemplation of a potential Company Takeover Proposal to be
enforced to the maximum extent and to not, or authorize or
permit any representative of IKON or any of its subsidiaries to:
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release or permit the release of any person from, or waive or
permit the waiver of, any provision of any such confidentiality
agreement (except that IKON shall not be required to comply with
this provision to the extent that IKONs Board of Directors
determines in good faith, after consultation with outside
counsel, that such compliance would breach its fiduciary
obligations); or
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approve or invite any proposal for which an approval or
invitation of IKON is required under the terms of such
confidentiality agreement.
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IKON is also required by the merger agreement to request each
person that has executed a confidentiality agreement with IKON
in contemplation of a potential Company Takeover Proposal since
January 1, 2008 to return to IKON, or alternatively to
destroy and certify to IKON the destruction of, all confidential
information previously furnished to such person by or on behalf
of IKON or any of its subsidiaries. IKON also represented to
Ricoh that each such confidentiality agreement executed since
January 1, 2008, remains in effect in accordance with its
terms and that IKON has not agreed to terminate or waive any
term or provision of such confidentiality agreements.
Recommendation
IKONs Board of Directors has adopted resolutions approving
the merger, declaring that the merger is in the best interests
of IKON and our shareholders, directing submission of the merger
agreement to a vote at a meeting of the shareholders of IKON,
and recommending that the shareholders of IKON adopt the merger
agreement. IKONs Board of Directors may not:
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withdraw or modify in a manner adverse to Ricoh or Sub, or
propose publicly to withdraw or modify in a manner adverse to
Ricoh or Sub, its approval or recommendation of the merger
agreement or the merger;
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approve or enter into any letter of intent, agreement in
principle, acquisition agreement or similar agreement relating
to any Company Takeover Proposal; or
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approve or recommend, or propose publicly to approve or
recommend, any Company Takeover Proposal.
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However, IKONs Board of Directors may take the above
actions if it has:
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complied with the non-solicitation provisions outlined
above; and
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prior to the date of the shareholder meeting, determined in good
faith, after consultation with its independent financial
advisor, that an alternative Company Takeover Proposal
constitutes a Superior Company Proposal; and
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determined, after consultation with outside counsel, that it is
necessary to withdraw or modify its approval or recommendation
in order to avoid breaching its fiduciary obligations.
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IKON is required to give written notice to Ricoh of this
determination six business days prior to any withdrawal,
modification, approval or recommendation (or four business days
in the case of an amendment or modification of a Superior
Company Proposal previously provided to Ricoh) and must, during
such period, make itself available to Ricoh for negotiations and
discussions to amend the merger agreement to enable IKONs
Board of Directors to recommend the merger agreement. IKON must
then make the determination that the Company Takeover Proposal
still constitutes a Superior Company Proposal, taking into
account any revised proposal made by Ricoh.
The merger agreement sets out further procedural requirements
that IKON is required to follow in relation to Company Takeover
Proposals, including that IKON must promptly notify Ricoh of any
Company Takeover Proposal (or any inquiry that is reasonably
expected to lead to any Company Takeover Proposal) and that IKON
must provide Ricoh at least two business days prior notice
of any meeting of the Board of Directors at which the Board of
Directors considers a Company Takeover Proposal or any amendment
or modification of such proposal, including any consideration of
whether such Company Takeover Proposal or any amendment or
modification of such proposal is, or is reasonably likely to
lead to, a Superior Company Proposal.
Best
Efforts
Subject to the terms and conditions of the merger agreement,
each party to the merger agreement has agreed to use its best
efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious manner
practicable, the merger, including:
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the obtaining of all necessary actions or nonactions, waivers,
consents and approvals from governmental entities and the making
of all necessary registrations and filings and the taking of all
reasonable steps as
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may be necessary to obtain an approval or waiver from, or to
avoid an action or proceeding by, any governmental entity;
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|
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the obtaining of all necessary consents, approvals or waivers
from third parties (Ricohs prior written consent is
required for any material financial or other concession offered
by IKON to obtain such consent, approval or waiver);
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|
the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging the merger
agreement or the consummation of the merger, including seeking
to have any stay or temporary restraining order entered by any
court or other governmental entity vacated or reversed; and
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|
the execution and delivery of any additional instruments
necessary to consummate the merger and to fully carry out the
purposes of the merger agreement.
|
Subject to the terms and conditions of the merger agreement, we
are required to:
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|
|
|
|
take all action necessary to ensure that no state takeover
statute or similar statute or regulation is or becomes
applicable to the merger or the merger agreement; and
|
|
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|
if any state takeover statute or similar statute or regulation
becomes applicable to the merger agreement, take all action
necessary to ensure that the merger may be consummated as
promptly as practicable on the terms contemplated by the merger
agreement and otherwise to minimize the effect of such statute
or regulation on the merger.
|
However:
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|
|
Ricoh is not required to dispose of any of its assets or to
limit its freedom of action with respect to any of its
businesses, or to consent to any disposition of IKONs
assets or limits on IKONs freedom of action with respect
to any of its businesses, or to commit or agree to any such
disposition or limitation; and
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|
IKON is not authorized to commit or agree to any disposition or
limitation described above, to obtain any consents, approvals,
permits or authorizations to remove any impediments to the
merger relating to any antitrust, competition or premerger
notification, trade regulation law, regulation or order or to
avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order in any
suit or proceeding relating to any such law, regulation or
order, other than dispositions, limitations or consents,
commitments or agreements with respect to IKONs
businesses, assets or operations that are conditioned upon the
consummation of the merger and conducted with Ricohs prior
written consent and that have not had and are not reasonably
expected to have a Company Material Adverse Effect.
|
Employee
Benefits
The merger agreement requires that, for one year after the
consummation of the merger, Ricoh will either (1) maintain,
or cause the Surviving Corporation to maintain, IKONs
employee benefit plans (other than the stock plans) at the
benefit levels in effect immediately prior to the consummation
of the merger and provide other compensation that is not less
favorable in the aggregate than the compensation provided to the
employees by IKON immediately prior to the consummation of the
merger or (2) provide, or cause the Surviving Corporation
to provide, compensation and benefits to each employee of IKON
that, taken as a whole, are substantially comparable in the
aggregate (taking into account the value of IKONs equity
compensation) to those provided by IKON immediately prior to the
consummation of the merger. Ricoh is not, however, required to
offer to the IKON employees any form of equity compensation
awards as a part of such compensation and benefits.
In addition, the Surviving Corporation is required to honor and
continue certain employment, severance, retention and
termination policies and arrangements and cash incentive
compensation plans, including all sales commission plans.
See
The Merger Interests of Our Directors
and Officers in the Merger
beginning on page 21.
42
Indemnification
The Surviving Corporation is required to honor all of
IKONs obligations to indemnify the current or former
directors or officers of IKON and IKONs subsidiaries for
acts or omissions by such directors and officers occurring prior
to the effective time of the merger. In addition, the merger
agreement contemplates that a prepaid directors and
officers liability insurance policy, providing coverage to
directors and officers of IKON for six years following
consummation of the merger, will be obtained by IKON prior to
consummation of the merger. See
The Merger
Interests of Our Directors and Officers in the
Merger Directors and Officers
Indemnification and Insurance
beginning on
page 27.
Conditions
to the Merger Becoming Effective
The respective obligation of each party to effect the merger is
subject to the satisfaction or waiver of the following
conditions, on or prior to the closing date of the merger:
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the adoption of the merger agreement by our shareholders;
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|
|
the termination, waiver or expiration of the waiting period (and
any extension thereof) applicable to the merger under the HSR
Act, the EC Merger Regulation or the Competition Act (Canada).
In Canada, the Commissioner of Competition, pursuant to the
Competition Act (Canada), shall have issued either an advance
ruling certificate or no action letter to Ricoh in
respect of the merger, on terms and in a form reasonably
satisfactory to Ricoh. Any consents, approvals and filings under
any foreign antitrust or investment control law, the absence of
which would prohibit the consummation of the merger, must also
have been obtained or made; and
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|
no order, decree or ruling issued by any governmental entity of
competent jurisdiction or other law preventing the consummation
of the merger being in effect; provided, however, that prior to
asserting this condition, subject to the terms and conditions of
the merger agreement, each of the parties must have used its
best efforts to prevent the entry of any such injunction or
other order and to appeal as promptly as possible any such
judgment that may be entered;
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|
the representations and warranties of each party being true and
correct, subject to certain exceptions for materiality; and
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|
|
the performance by each party in all material respects of its
obligations under the merger agreement.
|
The merger is not subject to standalone material adverse
effect or financing conditions as conditions precedent to
either partys obligation to close.
Termination
The merger agreement may be terminated at any time prior to the
effective time of the merger, whether before or after the merger
agreement is approved by IKONs shareholders:
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by mutual written consent of Ricoh, Sub and IKON;
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|
by either Ricoh or IKON if:
|
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|
|
the merger is not consummated on or before February 1, 2009
(or May 1, 2009 if consummation is delayed by a nonfinal
law, order, decree, judgment, injunction, ruling or action
preventing consummation);
|
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|
|
any governmental entity of competent jurisdiction issues an
order, decree or ruling or takes any other action permanently
enjoining, restraining or otherwise prohibiting the merger and
such order, decree, ruling or other action shall have become
final and nonappealable;
|
|
|
|
at the shareholder meeting to approve the merger agreement or as
of any adjournment or postponement thereof, the approval of
IKONs shareholders is not obtained; or
|
43
|
|
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|
|
a breach of any representation, warranty, covenant or agreement
on the part of the other party set forth in the merger agreement
occurs which would cause the closing conditions for either Ricoh
and Sub or IKON not to be satisfied, and such breach is not
cured within 30 days after notice thereof or is not capable
of being cured prior to February 1, 2009.
|
The merger agreement may be terminated by Ricoh if IKONs
Board of Directors:
|
|
|
|
|
withdraws or modifies, in a manner adverse to Ricoh or Sub, or
proposes to publicly withdraw or modify, in a manner adverse to
Ricoh or Sub, its approval or recommendation of the merger
agreement or the merger;
|
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|
|
fails to recommend to IKONs shareholders that they adopt
the merger agreement;
|
|
|
|
approves or recommends, or proposes publicly to approve or
recommend, any Company Takeover Proposal (including any Superior
Company Proposal); or
|
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|
|
fails to recommend to IKONs shareholders, within 10
business days after the commencement of any tender or exchange
offer relating to IKONs common stock, that the
shareholders reject such tender or exchange offer.
|
If Ricoh terminates the merger agreement pursuant to any of the
above, the termination fee (described below) will be payable.
Ricoh may also terminate the merger agreement if IKON or any of
its subsidiaries breaches the non-solicitation provisions
(described above) in any material respect.
The merger agreement may be terminated by IKON if:
|
|
|
|
|
IKON approves or recommends a Superior Company Proposal in
compliance in all material respects with the non-solicitation
provisions;
|
|
|
|
IKON has paid the termination fee (described below); and
|
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|
|
immediately after the termination of the Merger Agreement IKON
enters into a definitive agreement for such Superior Company
Proposal in the form provided to Ricoh pursuant to the
non-solicitation provisions.
|
Termination
Fee
A termination fee of $66.7 million will be payable by IKON
to Ricoh in the event that the merger agreement is terminated in
the circumstances specified above.
The termination fee will also be payable if all of the following
conditions are satisfied:
|
|
|
|
|
the merger agreement is terminated because of either:
|
|
|
|
|
|
the failure to obtain the approval of IKONs
shareholders; or
|
|
|
|
a breach, in any material respect, of the non-solicitation
provisions (described above) by IKON or any of its subsidiaries;
|
|
|
|
|
|
prior to the shareholder meeting a Company Takeover Proposal has
been publicly disclosed, announced, commenced, submitted or
made, or any person has publicly announced an intention (whether
or not conditional) to make a Company Takeover Proposal, and, as
of the date five business days prior to the date of the
shareholder meeting, such Company Takeover Proposal or announced
intention has not been publicly withdrawn without qualification;
|
|
|
|
at the shareholder meeting the required shareholder approval is
not obtained; and
|
|
|
|
on or prior to the first anniversary of such termination, IKON
consummates, or enters into an agreement for, a Company Takeover
Proposal and thereafter (whether before or after such first
anniversary) such Company Takeover Proposal is consummated.
|
44
In addition to the above, the termination fee will be payable if
all of the following conditions are satisfied:
|
|
|
|
|
the merger agreement is terminated by Ricoh or IKON because the
merger has not been consummated by February 1, 2009 (or, if
applicable, May 1, 2009);
|
|
|
|
prior to such termination a Company Takeover Proposal has been
publicly disclosed, announced, commenced, submitted or made, or
any person shall have publicly announced an intention (whether
or not conditional) to make a Company Takeover Proposal;
|
|
|
|
at the time of such termination the closing conditions in
relation to antitrust approvals, the absence of injunctions or
restraints prohibiting the merger and the conditions to
IKONs obligation to close are all satisfied;
|
|
|
|
at the time of such termination shareholder approval of the
merger has not been obtained; and
|
|
|
|
on or prior to the first anniversary of such termination, IKON
consummates, or enters into an agreement for, a Company Takeover
Proposal and thereafter (whether before or after such first
anniversary) such Company Takeover Proposal is consummated.
|
For purposes of the above termination fee provisions, all
references to 15% in the definition of Company Takeover Proposal
are replaced with 50%.
IKON may also be required to pay Ricohs expenses, up to a
maximum of $16 million, if the merger agreement is
terminated due to either a failure to obtain the required
shareholder approval at the special meeting, or a breach of the
non-solicitation provisions. Any such expenses actually paid by
IKON would be credited against the termination fee if the
termination fee were also payable.
The Merger Agreement does not provide for a reverse break
up fee payable to IKON.
45
DISSENTING
SHAREHOLDERS RIGHTS
Section 1701.84 of the Ohio Revised Code provides that all
of IKONs shareholders entitled to vote on the adoption of
the merger agreement may exercise dissenters rights with
respect to the merger. Each shareholder who does not vote in
favor of adoption of the merger agreement and who complies with
all of the requirements of Section 1701.85 of the Ohio
Revised Code will be entitled to receive the fair cash value of
his, her or its shares upon perfecting their right of appraisal.
The following is a summary of the principal steps a shareholder
must take to perfect their dissenters rights under the
Ohio Revised Code. This summary is qualified by reference to
Section 1701.85 and other provisions of the Ohio Revised
Code. Any shareholder contemplating exercise of their
dissenters rights is urged to review carefully the
provisions of Section 1701.85 and to consult an attorney,
since failure to follow fully and precisely the procedural
requirements of the statute may result in termination or waiver
of such rights. A copy of Section 1701.85 of the Ohio
Revised Code is attached to this proxy statement as Annex C
and is incorporated herein by reference.
To perfect the right of appraisal, a dissenting shareholder must
satisfy each of the following conditions and must otherwise
comply with Section 1701.85:
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|
Must be a shareholder of record. A dissenting shareholder must
be a record holder of IKONs common shares on
[ ], 2008, the record date established for
determining IKONs shareholders entitled to vote on the
proposal to adopt the merger agreement. Because only
shareholders of record on the record date may exercise
dissenters rights, any person who beneficially owns shares
that are held of record by a broker, fiduciary, nominee or other
holder and who desires to exercise dissenters rights must,
in all cases, instruct the record holder of the shares to
satisfy all of the requirements outlined under
Section 1701.85 of the Ohio Revised Code.
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|
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|
Does not vote in favor of the merger agreement. A dissenting
shareholder must not vote their shares in favor of the proposal
to adopt the merger agreement at IKONs shareholder
meeting. Failing to vote or abstaining from voting does not
waive a dissenting shareholders rights. However, a proxy
returned to IKON signed but not marked to specify voting
instructions will be voted in favor of the proposal to adopt the
merger agreement and will be deemed a waiver of dissenters
rights. A dissenting shareholder can revoke their proxy by
giving notice of revocation in writing to the Secretary of IKON
at 70 Valley Stream Parkway, Malvern, Pennsylvania 19355 or by
submitting by mail a new proxy dated after the date of the proxy
being revoked. Dissenting shareholders can also revoke their
proxy by accessing the internet site stated on the enclosed
proxy card or by using the toll-free telephone number stated on
the enclosed proxy card. In addition, dissenting shareholders
can revoke their proxy by attending the special meeting and
revoking your proxy in open meeting, although your attendance at
the special meeting alone will not revoke any proxy.
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File a written demand. Not later than 10 days after the
date upon which IKONs shareholders vote upon the adoption
of the merger agreement, any shareholder seeking to perfect the
dissenting shareholders rights must make a written demand
upon IKON for the fair cash value of IKONs common shares
so held by them. A negative vote alone is not sufficient to
perfect rights as a dissenter. Any written demand must specify
the shareholders name and address, the number and class of
shares held by them on the record date, and the amount claimed
as the fair cash value of the shares. IKON will not
notify shareholders of the expiration of this
10-day
period. Voting against the adoption of the merger agreement is
not a written demand as required by Section 1701.85 of the
Ohio Revised Code.
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|
Deliver certificates for placement of a legend. If IKON so
requests, a dissenting shareholder must submit their share
certificates to IKON within 15 days of such request for
endorsement thereon by IKON that a demand for the fair cash
value of the shares has been made. Such a request is not an
admission by IKON that a dissenting shareholder is entitled to
relief. IKON will promptly return the share certificates to the
dissenting shareholder. At the option of IKON, a dissenting
shareholder who fails to deliver their certificate upon request
from IKON may have their dissenting shareholders rights
terminated, unless a court for good cause shown otherwise
directs.
|
If IKON and any dissenting shareholder cannot agree upon the
fair cash value of the common shares, then either IKON or the
dissenting shareholder may, within three months after delivery
of the dissenting shareholders demand for fair cash value,
file a petition in the Court of Common Pleas of Cuyahoga County,
Ohio, for a
46
determination that the shareholder is entitled to exercise
dissenters rights and to determine the fair cash value of
IKONs common shares. The cost of the proceeding, including
reasonable compensation to the appraisers to be fixed by the
court, will be assessed as the court considers equitable.
Fair cash value is the amount that a willing seller,
under no compulsion to sell, would be willing to accept, and
that a willing buyer, under no compulsion to purchase, would be
willing to pay. In no event will the fair cash value be in
excess of the amount specified in the dissenting
shareholders demand. Fair cash value is determined as of
the day before the shareholder meeting to adopt the merger
agreement. The amount of the fair cash value excludes any
appreciation or depreciation in market value of the shares
resulting from the merger. The fair cash value of the shares may
be higher, the same as or lower than the market value of the
shares on the date of the merger. Shareholders should be aware
that investment banking opinions as to the fairness, from a
financial point of view, of the consideration payable in a
merger are not opinions as to, and do not in any way address,
fair cash value under Section 1701.85 of the Ohio Revised
Code.
Payment of the fair cash value must be made within 30 days
after the later of the final determination of such value or the
closing date of the merger. Such payment shall be made only upon
simultaneous surrender to IKON of the share certificates for
which such payment is made.
A dissenting shareholders rights to receive the fair cash
value of their common shares of IKON will terminate if:
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|
|
the dissenting shareholder has not complied with Section 1701.85
of the Ohio Revised Code, unless IKONs Board of Directors
waives such failure;
|
|
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|
the merger is abandoned or is finally enjoined or prevented from
being carried out, or IKONs shareholders rescind their
approval and adoption of the merger agreement;
|
|
|
|
the dissenting shareholder withdraws their demand with the
consent of IKON by our Board of Directors; or
|
|
|
|
the dissenting shareholder and our Board of Directors have not
agreed on the fair cash value per share and neither the
dissenting shareholder nor IKON has filed a timely complaint
within three months after delivering his, her or its demand for
fair cash value in the Court of Common Pleas of Cuyahoga County,
Ohio.
|
All rights accruing from IKONs common shares, including
voting and dividend and distribution rights, are suspended from
the time a dissenting shareholder makes a demand for payment
with respect to such shares until the termination or
satisfaction of the rights and obligations of the dissenting
shareholder and IKON arising from such demand. During this
period of suspension, any dividend or distribution paid on the
common shares will be paid to the record owner as a credit upon
the fair cash value thereof. If a shareholders
dissenters rights are terminated other than by purchase by
IKON of the dissenting shareholders common shares, then
such rights will be restored and all distributions that would
have been made, but for the suspension, will be made at the time
of termination.
47
MARKET
PRICE OF COMPANYS STOCK
Our common stock is listed on the NYSE under the trading symbol
IKN. The following table sets forth the high and low
sales prices per share of our common stock on the NYSE for the
periods indicated.
|
|
|
|
|
|
|
|
|
|
|
High
|
|
Low
|
|
Fiscal Year Ended September 30, 2006
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
11.06
|
|
|
$
|
9.60
|
|
Second Quarter
|
|
$
|
14.34
|
|
|
$
|
10.32
|
|
Third Quarter
|
|
$
|
14.37
|
|
|
$
|
12.15
|
|
Fourth Quarter
|
|
$
|
14.36
|
|
|
$
|
12.15
|
|
Fiscal Year Ended September 30, 2007
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
16.85
|
|
|
$
|
13.00
|
|
Second Quarter
|
|
$
|
17.41
|
|
|
$
|
13.41
|
|
Third Quarter
|
|
$
|
16.11
|
|
|
$
|
14.00
|
|
Fourth Quarter
|
|
$
|
16.11
|
|
|
$
|
11.81
|
|
Fiscal Year Ending September 30, 2008
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
14.36
|
|
|
$
|
10.35
|
|
Second Quarter
|
|
$
|
12.99
|
|
|
$
|
6.73
|
|
Third Quarter
|
|
$
|
12.64
|
|
|
$
|
7.60
|
|
Fourth Quarter (through [September 2, 2008])
|
|
$
|
17.40
|
|
|
$
|
10.78
|
|
The closing sale price of our common stock on the NYSE on
August 26, 2008, which was the last trading day before we
announced the merger, was $15.56. On [ ], the
last trading day before the date of this proxy statement, the
closing price of our common stock on the NYSE was
$[ ]. You are encouraged to obtain current
market quotations for our common stock in connection with voting
your shares.
As of [ ], the last trading day before the date
of this proxy statement, there were
[ ] shares of our common stock outstanding.
The following table sets forth dividends announced and paid in
respect of IKONs common stock, on a per share basis, for
the periods indicated.
|
|
|
|
|
|
|
Dividends per Share of
|
|
|
IKON Common Stock
|
|
Fiscal Year Ended September 30, 2006
|
|
$
|
0.04
|
|
First Quarter
|
|
$
|
0.04
|
|
Second Quarter
|
|
$
|
0.04
|
|
Third Quarter
|
|
$
|
0.04
|
|
Fourth Quarter
|
|
$
|
0.04
|
|
Fiscal Year Ended September 30, 2007
|
|
$
|
0.04
|
|
First Quarter
|
|
$
|
0.04
|
|
Second Quarter
|
|
$
|
0.04
|
|
Third Quarter
|
|
$
|
0.04
|
|
Fourth Quarter
|
|
$
|
0.04
|
|
Fiscal Year Ending September 30, 2008
|
|
$
|
0.04
|
|
First Quarter
|
|
$
|
0.04
|
|
Second Quarter
|
|
$
|
0.04
|
|
Third Quarter
|
|
$
|
0.04
|
|
Fourth Quarter (through [September 2, 2008])
|
|
$
|
0.04
|
|
48
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below shows how much of our common stock was
beneficially owned as of August 31, 2008 (unless a
different date is indicated) by (i) each director,
(ii) each executive officer named in the summary
compensation table of the proxy statement for our annual
meeting, (iii) each person known by us to beneficially own
more than 5% of our common stock, and (iv) all directors
and executive officers as a group.
Also see
The Merger Interests of Our
Directors and Executive Officers in the Merger
beginning on page 21.
Unless otherwise noted, each person has sole voting and
investment power over the shares shown as beneficially owned.
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
(b)
|
|
|
Amount and Nature of Beneficial
|
|
Percentage of
|
Name
|
|
Ownership(22)
|
|
Ownership(23)
|
|
Executive Officers
|
|
|
|
|
|
|
|
|
Matthew J. Espe
|
|
|
1,709,294
|
(1)
|
|
|
1.78
|
%
|
Jeffrey Hickling
|
|
|
69,910
|
(2)
|
|
|
*
|
|
David Mills
|
|
|
215,242
|
(3)
|
|
|
*
|
|
Robert F. Woods
|
|
|
203,528
|
(4)
|
|
|
*
|
|
Brian D. Edwards
|
|
|
23,799
|
(5)
|
|
|
*
|
|
Directors
|
|
|
|
|
|
|
|
|
Philip Cushing
|
|
|
136,827
|
(6)
|
|
|
*
|
|
Thomas R. Gibson
|
|
|
231,270
|
(7)
|
|
|
*
|
|
Richard A. Jalkut
|
|
|
271,157
|
(8)
|
|
|
*
|
|
Arthur Johnson
|
|
|
226,724
|
(9)
|
|
|
*
|
|
Kurt M. Landgraf
|
|
|
183,316
|
(10)
|
|
|
*
|
|
Gerald Luterman
|
|
|
83,060
|
(11)
|
|
|
*
|
|
William E. McCracken
|
|
|
79,277
|
(12)
|
|
|
*
|
|
William L. Meddaugh
|
|
|
74,128
|
(13)
|
|
|
*
|
|
Hellene S. Runtagh
|
|
|
37,946
|
(14)
|
|
|
*
|
|
Anthony Terracciano
|
|
|
125,354
|
(15)
|
|
|
*
|
|
All current directors and executive officers as a
group
|
|
|
3,670,832
|
(16)
|
|
|
3.77
|
%
|
Other beneficial owners
|
|
|
|
|
|
|
|
|
State Street Global Advisors Ltd.
770 Sherbrooke Street West, Suite 1200
Montreal, Quebec, Canada H3A 1G1
|
|
|
12,009,045
|
(17)
|
|
|
12.73
|
%
|
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
|
|
|
7,689,275
|
(18)
|
|
|
8.15
|
%
|
LSV Asset Management
1 N. Wacker Drive
Suite 4000
Chicago, IL 60606
|
|
|
5,689,538
|
(19)
|
|
|
6.03
|
%
|
Hotchkis and Wiley Capital Management, LLC
725 South Figueroa Street, 39th Floor
Los Angeles, CA 90017
|
|
|
5,354,095
|
(20)
|
|
|
5.68
|
%
|
AllianceBernstein L.P.
1345 Avenue of the Americas
New York, NY 10104
|
|
|
5,337,905
|
(21)
|
|
|
5.66
|
%
|
49
|
|
|
*
|
|
Less than 1% of IKONs total outstanding common stock.
|
|
(1)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase
1,503,563 shares of common stock. Also includes 1,636 plan
shares held in the Retirement Savings Plan, as to which
Mr. Espe shares voting power with the Retirement Savings
Plan trustee, 126,899 shares held by the rabbi trust under
the Executive Deferred Compensation Plan (the Executive
Plan) and 2,000 shares held in a family trust for
which Mr. Espe serves as trustee. Excludes stock
equivalents issued under the Executive Plan, including stock
equivalents under the Management Stock Purchase Plan (the
MSPP).
|
|
(2)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase 64,839 shares
of common stock. Also includes 5,071 restricted stock units
vesting within 60 days. Excludes stock equivalents issued
under the Executive Plan, including stock equivalents under the
MSPP.
|
|
(3)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase 178,672 shares
of common stock. Also includes 5,071 restricted stock units
vesting within 60 days.
|
|
(4)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase 137,034 shares
of common stock. Also includes 27,731 restricted stock units
vesting within 60 days. Excludes stock equivalents issued
under the Executive Plan, including stock equivalents under the
MSPP.
|
|
(5)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase 23,799 shares
of common stock, and based solely on information known to IKON
as of September 10, 2008.
|
|
(6)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase 96,521 shares
of common stock and 27,051 deferred stock units granted under
the Amended and Restated 2000 IKON Office Solutions, Inc.
Non-Employee Directors Compensation Plan (the
2000 Directors Plan) and the 2003 IKON
Office Solutions, Inc. Non-Employee Directors Compensation
Plan (the 2003 Directors Plan), which
have since been merged into the IKON Office Solutions, Inc. 2006
Omnibus Equity Compensation Plan (the Omnibus Plan),
and the Omnibus Plan. Mr. Cushing does not have voting or
investment power over his deferred stock units.
|
|
(7)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase 134,860 shares
of common stock and 50,924 deferred stock units granted under
the 2000 Directors Plan and the
2003 Directors Plan, which have since been merged
into the Omnibus Plan, and the Omnibus Plan. Mr. Gibson
does not have voting or investment power over his deferred stock
units.
|
|
(8)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase 187,839 shares
of common stock and 46,859 deferred stock units granted under
the 2000 Directors Plan and the
2003 Directors Plan, which have since been merged
into the Omnibus Plan, and the Omnibus Plan. Mr. Jalkut
does not have voting or investment power over his deferred stock
units.
|
|
(9)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase 153,167 shares
of common stock and 50,412 deferred stock units granted under
the 2000 Directors Plan and the
2003 Directors Plan, which have since been merged
into the Omnibus Plan, and the Omnibus Plan. Mr. Johnson
does not have voting or investment power over his deferred stock
units.
|
|
(10)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase 104,948 shares
of common stock and 51,334 deferred stock units granted under
the 2000 Directors Plan and the
2003 Directors Plan, which have since been merged
into the Omnibus Plan, and the Omnibus Plan. Mr. Landgraf
does not have voting or investment power over his deferred stock
units.
|
|
(11)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase 44,299 shares
of common stock and 25,045 deferred stock units granted under
the 2000 Directors Plan and the
2003 Directors Plan, which have since been merged
into the Omnibus Plan, and the Omnibus Plan. Mr. Luterman does
not have voting or investment power over his deferred stock
units.
|
|
(12)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase 47,730 shares
of common stock and 24,669 deferred stock units granted under
the 2000 Directors Plan and the
2003 Directors Plan, which have since been merged
into the Omnibus Plan, and the Omnibus Plan. Mr. McCracken
does not have voting or investment power over his deferred stock
units.
|
50
|
|
|
(13)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase 44,299 shares
of common stock and 21,946 deferred stock units granted under
the 2000 Directors Plan and the
2003 Directors Plan, which have since been merged
into the Omnibus Plan, and the Omnibus Plan. Mr. Meddaugh
does not have voting or investment power over his deferred stock
units.
|
|
(14)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase 25,266 shares
of common stock and 8,680 deferred stock units granted under the
2000 Directors Plan and the 2003 Directors
Plan, which have since been merged into the Omnibus Plan, and
the Omnibus Plan. Ms. Runtagh does not have voting or
investment power over her deferred stock units.
|
|
(15)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase 51,930 shares
of common stock and 35,791 deferred stock units granted under
the 2000 Directors Plan and the
2003 Directors Plan, which have since been merged
into the Omnibus Plan, and the Omnibus Plan.
Mr. Terracciano does not have voting or investment power
over his deferred stock units.
|
|
(16)
|
|
Includes stock options (exercisable as of August 31, 2008
or within 60 days thereof) to purchase
2,798,766 shares of common stock and includes 37,873
restricted stock units and 342,675 deferred stock units granted
under the 2000 Directors Plan and the 2003 Directors
Plan, which have since been merged into the Omnibus Plan, and
the Omnibus Plan. Also includes 1,636 plan shares held in the
Retirement Savings Plan, as to which certain executive officers
share voting power with the Retirement Savings Plan trustee,
126,899 shares held by the rabbi trust under the Executive
Plan, and 2,000 shares held in a family trust for which
Mr. Espe serves as trustee.
|
|
(17)
|
|
As of June 30, 2008, and based solely on a Form 13F
filed with the SEC on August 13, 2008 by State Street
Global Advisors Ltd.
|
|
(18)
|
|
As of June 30, 2008, and based solely on a Form 13F
filed with the SEC on August 1, 2008 by Dimensional
Fund Advisors, Inc.
|
|
(19)
|
|
As of June 30, 2008, and based solely on a Form 13F
filed with the SEC on August 15, 2008 by LSV Asset
Management.
|
|
(20)
|
|
Based solely on a Schedule 13G filed with the SEC on
September 10, 2008 by Hotchkis and Wiley Capital
Management, LLC (Hotchkis LLC) and Hotchkis and
Wiley Mid-Cap Value Fund. The filing indicates that as of
September 10, 2008, Hotchkis LLC had sole voting power for
4,137,795 shares, shared voting power for no shares, sole
dispositive power for 5,354,095 and shared dispositive power for
no shares.
|
|
(21)
|
|
As of June 30, 2008, and based solely on a Form 13F
filed with the SEC on August 14, 2008 by AllianceBernstein
L.P.
|
|
(22)
|
|
Includes shares acquirable within 60 days (including stock
options vesting on or before October 30, 2008, restricted
stock units vesting on or before October 30, 2008 and all
outstanding deferred stock units). Includes shares issued
pursuant to the International Management Stock Purchase Plan
(the IMSPP) but excludes stock equivalents issued
under the MSPP. Also, does not include shares to be acquired
upon conversion of accrued dividend equivalents and reinvestment
of dividends.
|
|
(23)
|
|
Percentage based on 94,327,486 shares of IKONs common
stock outstanding as of August 31, 2008.
|
51
GENERAL
AND OTHER MATTERS
Expenses
of Solicitation
The cost of soliciting proxies will be borne by IKON. Employees
of IKON may solicit proxies personally or by telephone without
additional compensation. Upon request, we will pay the
reasonable expenses incurred by record holders of IKONs
common stock who are brokers, dealers, banks, or voting
trustees, or their nominees, for mailing proxy materials and
annual shareholder reports to the beneficial owners of the
shares they hold of record. In addition to solicitation by mail
and by employees, we have made arrangements with D.F. King
& Co., Inc. to assist in the solicitation of proxies for
the special meeting and IKON will pay D.F. King & Co.,
Inc. a fixed fee of $10,000 plus an additional fee of $4.50 per
incoming and outgoing telephone contact and telecom charges, up
to a maximum total fee of $12,000. IKON will also reimburse D.F.
King & Co., Inc. for its reasonable out-of-pocket
expenses.
Multiple
Shareholders Sharing One Address
In order to reduce printing costs and postage fees, IKON has
adopted the process called householding for mailing
this proxy statement to street name holders, which
refers to shareholders whose shares are held in a brokerage
account or by a bank or other nominee. This means that street
name holders who share the same last name and address will
receive only one copy of this proxy statement, unless IKON
receives contrary instructions from a street name holder at that
address. IKON will continue to mail a proxy card to each
shareholder of record.
If you prefer to receive multiple copies of this proxy statement
at the same address, you may obtain additional copies by writing
to our transfer agent, National City Bank at 4100 West
150th Street, LOC
01-5352,
Cleveland, OH 44135, or by calling
1-800-622-6757.
Eligible shareholders of record receiving multiple copies of
this proxy statement can request householding by contacting IKON
in the same manner.
Communications
with the Board of Directors
Shareholders and other interested parties may communicate with
IKONs Board of Directors, including the non-employee
directors, by sending a letter to an individual director or to
IKONs Board of Directors, to: IKON Board of Directors,
c/o Secretary,
70 Valley Stream Parkway, Malvern, Pennsylvania 19355. All
shareholder communications received by the Secretary will be
delivered to one or more members of the Board of Directors as
appropriate, who shall be determined by the Secretary.
Notwithstanding the foregoing, the Secretary will maintain, for
a period of two years following the receipt of any
communication, for the benefit of the Board of Directors, a
record of all shareholder communications received in compliance
with this policy. Members of the Board of Directors may review
this record of shareholder communications upon their request to
the Secretary. In addition, any receipt of any accounting,
internal controls, or auditing-related complaints or concerns
will be directed to the Audit Committee in accordance with the
Audit Committees Policy for the Receipt, Retention, and
Treatment of Accounting, Internal Accounting Controls and
Auditing Complaints, and the Confidential, Anonymous Submission
of Accounting-Related Concerns. A copy of this policy is
available on IKONs internet site, www.IKON.com, by
clicking on About IKON and then clicking on
Board of Directors. Shareholders can also obtain a
copy of the Audit Committees policy by sending a request
to the Secretary at the address noted above.
Shareholder
Proposals
IKON held its 2008 annual meeting of shareholders on
February 27, 2008. In light of the expected timing of the
Merger, IKON does not currently expect to hold an annual meeting
of its shareholders in 2009. However, if IKON holds an annual
meeting of shareholders in 2009, shareholders may submit
proposals on matters appropriate for shareholder action at
IKONs annual meetings consistent with Ohio law and the
regulations adopted by the SEC.
If IKON holds an annual meeting of shareholders in 2009, for
shareholder proposals to be considered by the Board of Directors
for inclusion in the proxy materials for the 2009 annual meeting
of shareholders, they must be received by IKONs Secretary
on or before September 20, 2008. If a shareholder does not
seek inclusion of a proposal in the proxy materials and submits
the proposal not in reliance on the process described in
Rule 14a-8
promulgated under the Securities Exchange Act of 1934, as
amended, the proposal must be received by IKONs Secretary
on or before December 4, 2008. If the proposal is not
received by that date, the Board of Directors will be
52
allowed to use its discretionary voting authority as to the
proposal when it is raised at the annual meeting. All proposals
should be addressed to IKON Office Solutions, Inc. at 70 Valley
Stream Parkway, Malvern, Pennsylvania 19355, Attention:
Secretary. Nothing in this paragraph shall be deemed to require
us to permit presentation of a shareholder proposal or to
include in IKONs proxy materials relating to the 2009
annual meeting of shareholders any shareholder proposal that
does not meet all of the requirements for presentation or
inclusion established by IKONs Code of Regulations
and/or
the
regulations of the SEC in effect at that time.
Other
Matters
As of the date hereof, IKON knows of no other business that will
be presented for consideration at the special meeting. However,
the enclosed proxy card confers discretionary authority to vote
with respect to any and all of the following matters that may
come before the meeting: (i) matters as to which
IKONs Board of Directors did not have notice by {},
2008; (ii) approval of the minutes of a prior meeting of
shareholders, if such approval does not amount to ratification
of the action taken at the meeting; (iii) the election of
any person to any office for which a bona fide nominee is named
in this proxy and such nominee is unable to serve or for good
cause will not serve; (iv) any proposal omitted from this
proxy statement and the proxy card pursuant to Exchange Act
Rule 14a-8
or Exchange Act
Rule 14a-9;
and (v) matters incidental to the conduct of the meeting.
If any such matters come before the meeting, the proxy agents
named in the accompanying proxy card will vote in accordance
with their judgment.
53
WHERE YOU
CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. You may read and copy any
reports, proxy statements or other information that we file with
the SEC at its Public Reference Room, 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference rooms. You may
also obtain copies of this information by mail from the Public
Reference Section of the SEC, 100 F Street, N.E.,
Washington, D.C. 20549, at prescribed rates. Our public
filings are also available to the public from document retrieval
services and the internet site maintained by the SEC at
www.sec.gov.
Reports, proxy statements or other information concerning us may
also be inspected at the offices of the NYSE at 20 Broad
Street, New York, NY 10005.
We incorporate by reference into this proxy statement any
current reports on
Form 8-K
filed by us pursuant to the Exchange Act after the date of this
proxy statement and prior to the date of the special meeting.
This means that we can disclose important information to you by
referring you to those documents. The information incorporated
by reference is considered to be a part of this proxy statement,
and later information that we file with the SEC will update and
supersede that information.
Any person, including any beneficial owner, to whom this proxy
statement is delivered may request copies of proxy statements
and any of the documents incorporated by reference in this
document or other information concerning us, without charge, by
written request addressed to Maryanne Messenger, IKON
Shareholder Services, 70 Valley Stream Parkway, Malvern,
Pennsylvania 19355 or by calling 1-610-296-8000 or from the SEC
through the SECs internet site at the address provided
above. Documents incorporated by reference are available without
charge, excluding any exhibits to those documents unless the
exhibit is specifically incorporated by reference into those
documents.
No persons have been authorized to give any information or to
make any representations other than those contained in this
proxy statement and, if given or made, such information or
representations must not be relied upon as having been
authorized by us or any other person. This proxy statement is
dated [ ]. You should not assume that the
information contained in this proxy statement is accurate as of
any date other than that date, and the mailing of this proxy
statement to shareholders shall not create any implication to
the contrary.
54
Annex A
EXECUTION
COPY
AGREEMENT
AND PLAN OF MERGER
Dated as of August 27, 2008
Among
RICOH COMPANY, LTD.,
KEYSTONE ACQUISITION, INC.
and
IKON OFFICE SOLUTIONS, INC.
TABLE OF
CONTENTS
|
|
|
|
|
|
|
ARTICLE I
The Merger
|
Section
1.01.
|
|
The Merger
|
|
|
A-1
|
|
Section
1.02.
|
|
Closing
|
|
|
A-1
|
|
Section
1.03.
|
|
Effective Time
|
|
|
A-1
|
|
Section
1.04.
|
|
Effects
|
|
|
A-1
|
|
Section
1.05.
|
|
Articles of Incorporation and Code of Regulations
|
|
|
A-1
|
|
Section
1.06.
|
|
Directors
|
|
|
A-2
|
|
Section
1.07.
|
|
Officers
|
|
|
A-2
|
|
|
ARTICLE II
Effect on the Capital Stock of the Constituent Corporations;
Exchange of Certificates
|
Section
2.01.
|
|
Effect on Capital Stock
|
|
|
A-2
|
|
Section
2.02.
|
|
Exchange of Certificates
|
|
|
A-3
|
|
|
ARTICLE III
Representations and Warranties of the Company
|
Section
3.01.
|
|
Organization, Standing and Power
|
|
|
A-4
|
|
Section
3.02.
|
|
Significant Company Subsidiaries; Equity Interests
|
|
|
A-5
|
|
Section
3.03.
|
|
Capital Structure
|
|
|
A-5
|
|
Section
3.04.
|
|
Authority; Execution and Delivery; Enforceability
|
|
|
A-6
|
|
Section
3.05.
|
|
No Conflicts; Consents, Permits
|
|
|
A-6
|
|
Section
3.06.
|
|
SEC Documents; Undisclosed Liabilities
|
|
|
A-7
|
|
Section
3.07.
|
|
Information Supplied
|
|
|
A-8
|
|
Section
3.08.
|
|
Absence of Certain Changes or Events
|
|
|
A-8
|
|
Section
3.09.
|
|
Taxes
|
|
|
A-9
|
|
Section
3.10.
|
|
Labor Relations
|
|
|
A-9
|
|
Section
3.11.
|
|
Employee Benefits
|
|
|
A-9
|
|
Section
3.12.
|
|
Litigation
|
|
|
A-11
|
|
Section
3.13.
|
|
Compliance with Applicable Laws
|
|
|
A-11
|
|
Section
3.14.
|
|
Material Contracts
|
|
|
A-11
|
|
Section
3.15.
|
|
Intellectual Property
|
|
|
A-13
|
|
Section
3.16.
|
|
Owned and Leased Real Properties
|
|
|
A-13
|
|
Section
3.17.
|
|
Transactions with Affiliates
|
|
|
A-13
|
|
Section
3.18.
|
|
Environmental Matters
|
|
|
A-13
|
|
Section
3.19.
|
|
Takeover Statutes
|
|
|
A-14
|
|
Section
3.20.
|
|
Brokers
|
|
|
A-14
|
|
Section
3.21.
|
|
Opinion of Financial Advisor
|
|
|
A-14
|
|
|
ARTICLE IV
Representations and Warranties of Parent and Sub
|
Section
4.01.
|
|
Organization, Standing and Power
|
|
|
A-14
|
|
Section
4.02.
|
|
Sub
|
|
|
A-15
|
|
Section
4.03.
|
|
Authority; Execution and Delivery; Enforceability
|
|
|
A-15
|
|
Section
4.04.
|
|
No Conflicts; Consents
|
|
|
A-15
|
|
Section
4.05.
|
|
Information Supplied
|
|
|
A-15
|
|
Section
4.06.
|
|
Ownership of Company Common Stock
|
|
|
A-15
|
|
Section
4.07.
|
|
Brokers
|
|
|
A-16
|
|
Section
4.08.
|
|
Financing
|
|
|
A-16
|
|
A-i
|
|
|
|
|
|
|
ARTICLE V
Covenants Relating to Conduct of Business
|
Section
5.01.
|
|
Conduct of Business
|
|
|
A-16
|
|
Section
5.02.
|
|
No Solicitation
|
|
|
A-18
|
|
|
ARTICLE VI
Additional Agreements
|
Section
6.01.
|
|
Preparation of Proxy Statement; Shareholders Meeting
|
|
|
A-21
|
|
Section
6.02.
|
|
Access to Information; Confidentiality
|
|
|
A-21
|
|
Section
6.03.
|
|
Best Efforts; Notification
|
|
|
A-21
|
|
Section
6.04.
|
|
Company Equity Awards and Long-Term Incentive Awards
|
|
|
A-23
|
|
Section
6.05.
|
|
Benefit Plans
|
|
|
A-23
|
|
Section
6.06.
|
|
Indemnification
|
|
|
A-24
|
|
Section
6.07.
|
|
Fees and Expenses
|
|
|
A-26
|
|
Section
6.08.
|
|
Public Announcements
|
|
|
A-27
|
|
Section
6.09.
|
|
Transfer Taxes
|
|
|
A-27
|
|
Section
6.10.
|
|
Shareholder Litigation
|
|
|
A-27
|
|
|
ARTICLE VII
Conditions Precedent
|
Section
7.01.
|
|
Conditions to Each Partys Obligation To Effect the Merger
|
|
|
A-27
|
|
Section
7.02.
|
|
Conditions to Obligations of Parent and Sub
|
|
|
A-28
|
|
Section
7.03.
|
|
Conditions to Obligation of the Company
|
|
|
A-28
|
|
|
ARTICLE VIII
Termination, Amendment and Waiver
|
Section
8.01.
|
|
Termination
|
|
|
A-28
|
|
Section
8.02.
|
|
Effect of Termination
|
|
|
A-29
|
|
Section
8.03.
|
|
Amendment
|
|
|
A-29
|
|
Section
8.04.
|
|
Extension; Waiver
|
|
|
A-29
|
|
Section
8.05.
|
|
Procedure for Termination
|
|
|
A-29
|
|
|
ARTICLE IX
General Provisions
|
Section
9.01.
|
|
Nonsurvival of Representations and Warranties
|
|
|
A-30
|
|
Section
9.02.
|
|
Notices
|
|
|
A-30
|
|
Section
9.03.
|
|
Definitions
|
|
|
A-31
|
|
Section
9.04.
|
|
Interpretation; Disclosure Letters
|
|
|
A-31
|
|
Section
9.05.
|
|
Severability
|
|
|
A-32
|
|
Section
9.06.
|
|
Counterparts
|
|
|
A-32
|
|
Section
9.07.
|
|
Entire Agreement; No Third-Party Beneficiaries
|
|
|
A-32
|
|
Section
9.08.
|
|
Governing Law
|
|
|
A-32
|
|
Section
9.09.
|
|
Assignment
|
|
|
A-32
|
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Section
9.10.
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Enforcement
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A-32
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Section
9.11.
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Index of Defined Terms
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A-33
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AGREEMENT AND PLAN OF MERGER dated as of August 27, 2008,
among RICOH COMPANY, LTD., a Japanese corporation
(
Parent
), KEYSTONE ACQUISITION, INC., an Ohio
corporation (
Sub
) and a direct or indirect
wholly owned subsidiary of Parent, and IKON OFFICE SOLUTIONS,
INC., an Ohio corporation (the
Company
).
WHEREAS Parent, Sub and the Company desire to merge Sub into the
Company (the
Merger
) on the terms and subject
to the conditions set forth in this Agreement, whereby each
issued share of common stock, without par value, of the Company
(
Company Common Stock
) not owned by Parent,
Sub or the Company shall be converted into the right to receive
$17.25 in cash;
WHEREAS Parent wishes to retain certain Company Employees (as
defined herein) following the Closing and to continue to benefit
from their services and, accordingly, as a condition to
Parents willingness to enter into the Merger Agreement,
Parent has required that the Company enter into retention
agreements with such Company Employees that provide for certain
payments and benefits following the Closing and will be void and
of no further force or effect in the event that the Closing does
not occur; and
WHEREAS Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in
connection with the Merger and also to prescribe various
conditions to the Merger.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
The
Merger
Section
1.01.
The
Merger
.
On the terms and subject to the
conditions set forth in this Agreement, and in accordance with
the Ohio General Corporation Law (the
OGCL
),
Sub shall be merged with and into the Company at the Effective
Time. At the Effective Time, the separate corporate existence of
Sub shall cease and the Company shall continue as the surviving
corporation (the
Surviving Corporation
).
Section
1.02.
Closing
.
The
closing (the
Closing
) of the Merger shall
take place at the offices of Cravath, Swaine & Moore
LLP, 825 Eighth Avenue, New York, New York 10019 at
10:00 a.m. on the second business day after the
satisfaction (or, to the extent permitted by Law, waiver by all
parties) of the conditions set forth in Section 7.01, or,
if on such day any condition set forth in Section 7.02 or
7.03 has not been satisfied (or, to the extent permitted by Law,
waived by the party or parties entitled to the benefits
thereof), as soon as practicable after all the conditions set
forth in Article VII have been satisfied (or, to the extent
permitted by Law, waived by the parties entitled to the benefits
thereof), or at such other place, time and date as shall be
agreed in writing between Parent and the Company. The date on
which the Closing occurs is referred to in this Agreement as the
Closing Date
.
Section
1.03.
Effective
Time
.
Prior to the Closing, the Company shall
prepare, and on the Closing Date or as soon as practicable
thereafter the Company shall file with the Secretary of State of
the State of Ohio, a certificate of merger or other appropriate
documents (in any such case, the
Certificate of
Merger
) executed in accordance with the relevant
provisions of the OGCL and shall make all other filings or
recordings required under the OGCL. The Merger shall become
effective at such time as the Certificate of Merger is duly
filed with such Secretary of State, or at such other date, after
the date of the filing of the Certificate of Merger, as Parent
and Sub and the Company shall agree and specify in the
Certificate of Merger (the time the Merger becomes effective
being the
Effective Time
).
Section
1.04.
Effects
.
The
Merger shall have the effects set forth in this Agreement and in
the applicable provisions of the OGCL, including, without
limitation, Section 1701.82 thereof.
Section
1.05.
Articles
of Incorporation and Code of
Regulations
.
(a) The articles of
incorporation of the Surviving Corporation shall be amended at
the Effective Time to read in the form of Exhibit A (or
such other form as may be required by applicable Law), and, as
so amended, such articles of incorporation shall be the articles
of incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable Law.
(b) The code of regulations of Sub as in effect immediately
prior to the Effective Time shall be the code of regulations of
the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable Law.
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Section
1.06.
Directors
.
The
directors of Sub immediately prior to the Effective Time shall
be the directors of the Surviving Corporation, until the earlier
of their resignation or removal or until their respective
successors are duly elected and qualified, as the case may be.
Section
1.07.
Officers
.
The
officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their
respective successors are duly elected or appointed and
qualified, as the case may be.
ARTICLE II
Effect
on the Capital Stock of the Constituent Corporations;
Exchange
of Certificates
Section
2.01.
Effect
on Capital Stock
.
At the Effective Time, by
virtue of the Merger and without any action on the part of the
holder of any shares of Company Common Stock or any shares of
capital stock of Sub:
(a)
Capital Stock of Sub
.
Each
issued and outstanding share of capital stock of Sub shall be
converted into and become one fully paid and nonassessable share
of common stock, without par value, of the Surviving Corporation.
(b)
Cancellation of Treasury Stock and Parent-Owned
Stock
.
Each share of Company Common Stock
that is owned by the Company, Parent or Sub shall no longer be
outstanding and shall automatically be canceled and retired and
shall cease to exist, and no consideration shall be delivered or
deliverable in exchange therefor.
(c)
Conversion of Company Common
Stock
.
(i) Subject to
Sections 2.01(b) and 2.01(d), each issued share of Company
Common Stock shall be converted into the right to receive $17.25
in cash, without interest.
(ii) The cash payable upon the conversion of shares of
Company Common Stock pursuant to this Section 2.01(c) is
referred to as the
Merger Consideration
. As
of the Effective Time, all such shares of Company Common Stock
shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder
of a certificate representing any such shares of Company Common
Stock shall cease to have any rights with respect thereto,
except the right to receive Merger Consideration upon surrender
of such certificate in accordance with Section 2.02,
without interest.
(iii) As provided in Section 2.02(g), the right of any
holder of a Certificate to receive the Merger Consideration
shall be subject to and reduced by the amount of any withholding
that is required under applicable Tax laws.
(d)
Dissent
Rights
.
(i) Notwithstanding anything in
this Agreement to the contrary, to the extent required by the
OGCL, shares of Company Common Stock that are issued and
outstanding immediately prior to the Effective Time and that are
held by any shareholder who was a record holder of the Company
Common Stock as to which such shareholder seeks relief as of the
date fixed for determination of shareholders entitled to notice
of the Company Shareholders Meeting, and who files with the
Company within 10 days after such vote at the Company
Shareholders Meeting a written demand to be paid the fair cash
value for such shares of Company Common Stock that have not been
voted in favor of the proposal to adopt this Agreement at the
Company Shareholders Meeting in accordance with
Sections 1701.84 and 1701.85 of the OGCL
(
Dissenting Shares
) will not be converted
into the right to receive the Merger Consideration as provided
in Section 2.01(c), unless and until such shareholder fails
to demand payment properly or otherwise waives, withdraws or
loses such shareholders rights as a dissenting
shareholder, if any, under the OGCL. If any such shareholder
fails to perfect or otherwise waives, withdraws or loses any
such rights as a dissenting shareholder, that shareholders
Company Common Stock shall thereupon be deemed to have been
converted as of the Effective Time into only the right to
receive at the Effective Time the Merger Consideration, without
interest. From and after the Effective Time, each shareholder
who has asserted rights as a dissenting shareholder as provided
in Sections 1701.84 and 1701.85 of the OGCL shall be
entitled only to such rights as are granted under those Sections
of the OGCL.
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(ii) The Company shall promptly notify Parent of each
shareholder who asserts rights as a dissenting shareholder
within three business days of receipt of such shareholders
written demand delivered as provided in
Section 1701.85(A)(2) of the OGCL. Prior to the Effective
Time the Company shall not, except with the prior written
consent of Parent, which shall not be unreasonably withheld,
conditioned or delayed, make any payment with respect to, or
settle or offer to settle, any rights of a dissenting
shareholder asserted under Section 1701.85 of the OGCL.
Section
2.02.
Exchange
of Certificates
.
(a)
Paying
Agent.
Prior to the Effective Time, Parent
shall select a bank or trust company to act as paying agent (the
Paying Agent
) for the payment of the Merger
Consideration upon surrender of certificates representing
Company Common Stock. Parent shall provide, or take all steps
necessary to enable and cause the Surviving Corporation to
provide, to the Paying Agent immediately following the Effective
Time all the cash necessary to pay for the shares of Company
Common Stock converted into the right to receive cash pursuant
to Section 2.01(c) (such cash being hereinafter referred to
as the
Exchange Fund
).
(b)
Exchange Procedure
.
As soon as
reasonably practicable after the Effective Time, the Paying
Agent shall mail to each holder of record of a certificate or
certificates (the
Certificates
) that
immediately prior to the Effective Time represented outstanding
shares of Company Common Stock whose shares were converted into
the right to receive Merger Consideration pursuant to
Section 2.01 (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and
have such other provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the
Certificates in exchange for Merger Consideration. Upon
surrender of a Certificate for cancellation to the Paying Agent
or to such other agent or agents as may be appointed by Parent,
together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate shall be entitled to
receive in exchange therefor the amount of cash into which the
shares of Company Common Stock theretofore represented by such
Certificate shall have been converted pursuant to
Section 2.01, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership
of Company Common Stock that is not registered in the transfer
records of the Company, payment may be made to a person other
than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person
requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the
registered holder of such Certificate or establish to the
satisfaction of Parent that such tax has been paid or is not
applicable. Until surrendered as contemplated by this
Section 2.02, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive
upon such surrender the amount of cash, without interest, into
which the shares of Company Common Stock theretofore represented
by such Certificate have been converted pursuant to
Section 2.01. No interest shall be paid or accrue on the
cash payable upon surrender of any Certificate.
(c)
No Further Ownership Rights in Company Common
Stock
.
The Merger Consideration paid in
accordance with the terms of this Article II upon
conversion of any shares of Company Common Stock shall be deemed
to have been paid in full satisfaction of all rights pertaining
to such shares of Company Common Stock;
subject
,
however
, to the Surviving Corporations obligation
to pay any dividends or make any other distributions with a
record date prior to the Effective Time that may have been
declared or made by the Company on such shares of Company Common
Stock in accordance with the terms of this Agreement or prior to
the date of this Agreement and which remain unpaid at the
Effective Time, and after the Effective Time there shall be no
further registration of transfers on the stock transfer books of
the Surviving Corporation of shares of Company Common Stock that
were outstanding immediately prior to the Effective Time. If,
after the Effective Time, any certificates formerly representing
shares of Company Common Stock are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be
canceled and exchanged as provided in this Article II.
(d)
Termination of Exchange
Fund
.
Any portion of the Exchange Fund that
remains undistributed to the holders of Company Common Stock for
nine months after the Effective Time shall be delivered to
Parent, upon demand, and any holder of Company Common Stock who
has not theretofore complied with this Article II shall
thereafter look only to Parent for payment of its claim for
Merger Consideration.
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(e)
No Liability
.
None of Parent,
Sub, the Company or the Paying Agent shall be liable to any
person in respect of any cash from the Exchange Fund delivered
to a public official pursuant to any applicable abandoned
property, escheat or similar Law. If any Certificate has not
been surrendered prior to five years after the Effective Time
(or immediately prior to such earlier date on which Merger
Consideration in respect of such Certificate would otherwise
escheat to or become the property of any Governmental Entity),
any such shares, cash, dividends or distributions in respect of
such Certificate shall, to the extent permitted by applicable
Law, become the property of the Surviving Corporation, free and
clear of all claims or interest of any person previously
entitled thereto.
(f)
Investment of Exchange
Fund
.
The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily
basis;
provided
that
any investment of such cash
must be limited to direct, short-term obligations of, or
short-term obligations fully guaranteed as to principal and
interest by, the United States government. Any interest and
other income resulting from such investments shall be paid to
Parent.
(g)
Withholding Rights
.
Parent,
the Surviving Corporation or the Paying Agent shall be entitled
to deduct and withhold from the Merger Consideration otherwise
payable pursuant to this Agreement (including any payments made
in respect of the Dissenting Shares) to any holder of shares of
Company Common Stock or any holder of Company Stock Options,
Company Restricted Stock, Company Performance Unit Awards,
Company RSUs, Company DSUs or Company Stock Equivalents, such
amounts as Parent, the Surviving Corporation or the Paying Agent
is required to deduct and withhold with respect to the making of
such payment under the Code or any provision of state, local or
foreign Tax law. To the extent that amounts are so withheld and
paid over to the appropriate taxing authority by Parent, the
Surviving Corporation or the Paying Agent, such withheld amounts
shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock or
any holder of Company Stock Options, Company Restricted Stock,
Company Performance Unit Awards, Company RSUs, Company DSUs or
Company Stock Equivalents, as the case may be, in respect of
which such deduction and withholding was made by Parent, the
Surviving Corporation or the Paying Agent.
(h)
Lost Certificates
.
If any
Certificate has been lost, stolen or destroyed, upon the making
of an affidavit of that fact by the person claiming such
Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond
in such reasonable amount as the Surviving Corporation may
direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Paying Agent shall
issue in exchange for such lost, stolen or destroyed Certificate
the Merger Consideration deliverable in respect thereof pursuant
to this Agreement.
ARTICLE III
Representations
and Warranties of the Company
The Company represents and warrants to Parent and Sub that,
except as expressly disclosed in reasonable detail in the
reports, schedules, forms, statements and other documents filed
by the Company with the U.S. Securities and Exchange
Commission (the
SEC
) and publicly available
after October 1, 2006 and no later than five business days
prior to the date of this Agreement (the
Company SEC
Documents
) (excluding, in each case, any disclosures
in the Company SEC Documents set forth in any risk factor
section or in any other section to the extent they are forward
looking statements or forward-looking or predictive in nature)
or in the applicable section of the letter, dated as of the date
of this Agreement, from the Company to Parent and Sub (the
Company Disclosure Letter
):
Section
3.01.
Organization,
Standing and Power
.
The Company and each
Significant Company Subsidiary (as defined below) is duly
organized, validly existing and in good standing under the laws
of the jurisdiction in which it is organized and has full
corporate power and authority and possesses all governmental
franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease, operate or otherwise hold
its properties and assets and to conduct its businesses as
presently conducted, other than such franchises, licenses,
permits, authorizations and approvals the lack of which,
individually or in the aggregate, has not had and are not
reasonably expected to have a Company Material Adverse Effect.
The Company and each Significant Company Subsidiary is duly
qualified to do business in each jurisdiction where the nature
of its business or its ownership or leasing of its properties
make such qualification necessary or the failure to so qualify
has had or is reasonably expected to have a Company Material
Adverse Effect. The Company has made available to Parent true
and complete copies of the
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Articles of Incorporation of the Company, as amended to the date
of this Agreement (as so amended, the
Company
Articles
), and the Code of Regulations of the Company,
as amended to the date of this Agreement (as so amended, the
Company Code of Regulations
), and the
comparable articles and organizational documents of each
Significant Company Subsidiary, in each case as amended through
the date of this Agreement. For purposes of this Agreement, a
Significant Company Subsidiary
means any
subsidiary of the Company that constitutes a significant
subsidiary within the meaning of
Rule 1-02
of
Regulation S-X
of the SEC, and a
Company Subsidiary
means
any subsidiary of the Company.
Section
3.02.
Significant
Company Subsidiaries; Equity
Interests
.
(a) The Company Disclosure
Letter lists each Significant Company Subsidiary and its
jurisdiction of organization. All the outstanding shares of
capital stock of each Significant Company Subsidiary have been
duly authorized, validly issued and are fully paid and
nonassessable and are as of the date of this Agreement owned by
the Company, by another Company Subsidiary or by the Company and
another Company Subsidiary, free and clear of all pledges,
liens, charges, mortgages, encumbrances and security interests
of any kind or nature whatsoever (collectively,
Liens
).
(b) Except for its interests in the Company Subsidiaries,
the Company does not as of the date of this Agreement own,
directly or indirectly, any capital stock, membership interest,
partnership interest, joint venture interest or other equity
interest in any person.
Section
3.03.
Capital
Structure
.
The authorized capital stock of
the Company consists of 300,000,000 shares of Company
Common Stock and 2,056,856 shares of preferred stock,
without par value (
Company Preferred Stock
).
At the close of business on July 31, 2008,
(i) 93,760,734 shares of Company Common Stock (which
does not include any shares of Company Common Stock subject to
vesting or other forfeiture conditions or repurchase by the
Company (such shares, together with any similar shares granted
after the date hereof, the
Company Restricted
Stock
)) and no shares of Company Preferred Stock were
issued and outstanding, (ii) 55,549,177 shares of
Company Common Stock were held by the Company in its treasury,
(iii) 18,227,977 shares of Company Common Stock were
reserved and available for issuance pursuant to the
Companys 2006 Omnibus Equity Compensation Plan, the 2003
Employee Equity Incentive Plan, the 2003 Non-Employee
Directors Compensation Plan, the 2000 Executive Incentive
Plan, the 2000 Employee Stock Option Plan, the 2000 Non-Employee
Directors Compensation Plan, the Non-Employee Directors
Stock Option Plan, the 1995 Stock Option Plan and the Amended
and Restated Long Term Incentive Compensation Plan (the
foregoing plans, as may be amended from time to time,
collectively, the
Company Stock Plans
), of
which (A) 8,108,889 shares of Company Common Stock
were subject to outstanding options to acquire shares of Company
Common Stock from the Company (such options, together with any
similar options granted after the date hereof, the
Company Stock Options
),
(B) 1,428,212 shares of Company Common Stock were
subject to restricted stock unit awards with respect to shares
of Company Common Stock granted by the Company (such restricted
stock unit awards, together with any similar restricted stock
unit awards granted after the date hereof, the
Company
RSUs
), and (C) 340,245 shares of Company
Common Stock were subject to deferred stock unit awards with
respect to shares of Company Common Stock granted by the Company
(such deferred stock unit awards, together with any similar
deferred stock unit awards granted after the date hereof, the
Company DSUs
) and
(iv) 461,441 stock equivalents with respect to a share
of Company Common Stock were outstanding under the
Companys Executive Deferred Compensation Plan, Management
Stock Purchase Program, 1994 Deferred Compensation Plan and 1980
Deferred Compensation Plan (such plans, collectively, the
Specified Deferred Compensation Plans
, and
such stock equivalents, together with any similar stock
equivalents granted after the date hereof, the
Company
Stock Equivalents
). Since July 31, 2008, through
the date of this Agreement, there have been no issuances of
shares of Company Common Stock or Company Preferred Stock or any
other share of capital stock of, or equity or voting interests
in, the Company or any Company Subsidiary, any securities
convertible into, exchangeable or exercisable for or
representing the right to subscribe for, purchase or otherwise
receive any shares of Company Common Stock or Company Preferred
Stock or any other share of capital stock of, or equity or
voting interests in, the Company or any Company Subsidiary or
any stock appreciation rights, phantom stock rights,
performance units, rights to receive shares of Company Common
Stock on a deferred basis or other rights that are linked to the
value of the Company Common Stock or the value of the Company or
any part thereof granted by the Company or any Company
Subsidiary, except for (A) the issuance of shares of
Company Common Stock in connection with the exercise of Company
Stock Options outstanding on July 31, 2008, (B) the
issuance of shares of Company Common Stock in settlement of
Company RSUs, Company DSUs and Company Stock Equivalents
outstanding on July 31, 2008 and (C) the issuance of
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Company Stock Equivalents pursuant to the Specified Deferred
Compensation Plans. Except as set forth above, at the close of
business on July 31, 2008, no shares of capital stock or
other voting securities of the Company were issued, reserved for
issuance or outstanding. All outstanding shares of Company
Common Stock (other than Company Restricted Stock) are, and all
such shares that may be issued prior to the Effective Time will
be when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to or issued in violation of any
purchase option, call option, right of first refusal, preemptive
right, subscription right or any similar right under any
provision of the OGCL, the Company Articles, the Company Code of
Regulations or any Contract to which the Company is a party or
otherwise bound. There are not any bonds, debentures, notes or
other indebtedness of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the
right to vote) on any matters on which holders of Company Common
Stock may vote (
Voting Company Debt
). Except
as set forth above, or in the Retirement Savings Program (the
Company 401(k) Plan
) or the Specified
Deferred Compensation Plans, as of the date of this Agreement,
there are not any options, warrants, rights, convertible or
exchangeable securities, phantom stock rights, stock
appreciation rights, stock-based performance units, commitments,
Contracts, arrangements or undertakings of any kind to which the
Company or any Company Subsidiary is a party or by which any of
them is bound (x) obligating the Company or any Company
Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other
equity interests in, or any security convertible or exercisable
for or exchangeable into any capital stock of or other equity
interest in, the Company or of any Company Subsidiary or any
Voting Company Debt or (y) obligating the Company or any
Company Subsidiary to issue, grant, extend or enter into any
such option, warrant, call, right, security, commitment,
Contract, arrangement or undertaking. As of the date of this
Agreement, there are not any outstanding contractual obligations
of the Company or any Company Subsidiary to repurchase, redeem
or otherwise acquire any shares of capital stock of the Company
or any Company Subsidiary, other than pursuant to the Company
Stock Plans, the Company 401(k) Plan or the Specified Deferred
Compensation Plans.
Section
3.04.
Authority;
Execution and Delivery;
Enforceability
.
(a) The Company has all
requisite corporate power and authority to execute and deliver
this Agreement and to consummate the Merger. The execution and
delivery by the Company of this Agreement and the consummation
by the Company of the Merger have been duly authorized by all
necessary corporate action on the part of the Company, subject,
in the case of the Merger, to receipt of the Company Shareholder
Approval. The Company has duly executed and delivered this
Agreement, and this Agreement constitutes its legal, valid and
binding obligation, enforceable against it in accordance with
its terms.
(b) The board of directors of the Company (the
Company Board
), at a meeting duly called and
held, duly and unanimously (i) determined that it is in the
best interests of the Company and its shareholders, and declared
it advisable, to enter into this Agreement, (ii) approved
this Agreement and authorized the execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby, including the Merger and
(iii) resolved to recommend the adoption of this Agreement
by the shareholders of the Company.
(c) Subject to the accuracy of Parents and Subs
representations in Section 4.06(c), the only vote of
holders of any class or series of Company securities necessary
to approve and adopt this Agreement and the Merger is the
affirmative vote at the Company Shareholders Meeting of the
holders of a majority of the outstanding Company Common Stock on
the record date of the Company Shareholders Meeting (the
Company Shareholder Approval
).
Section
3.05.
No
Conflicts; Consents, Permits
.
(a) The
execution and delivery by the Company of this Agreement do not,
and the consummation of the Merger and compliance with the terms
hereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any Company Subsidiary
under, any provision of (i) the Company Articles, the
Company Code of Regulations or the comparable articles or
organizational documents of any Company Subsidiary,
(ii) any contract, lease, license, indenture, note, bond,
agreement, permit, concession, franchise or other instrument (a
Contract
) to which the Company or any Company
Subsidiary is a party or by which any of their respective
properties or assets is bound or (iii) subject to the
filings and other matters referred to in Section 3.05(b),
any judgment, order or decree (
Judgment
) or
statute, law, ordinance, rule or regulation
(
Law
) applicable to the Company or any
Company Subsidiary or their respective properties or assets,
other than, in the case of clauses (ii) and
(iii) above, any such items that, individually or in the
aggregate, have not had and are not reasonably expected to have
a Company Material Adverse Effect.
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(b) No material consent, approval, license, permit, order
or authorization (
Consent
) of, or
registration, declaration or filing with, or permit from, any
Federal, state, local or foreign government or any court of
competent jurisdiction, administrative agency or commission or
other governmental authority or instrumentality, domestic or
foreign (a
Governmental Entity
) is required
to be obtained or made by or with respect to the Company or any
Company Subsidiary in connection with the execution, delivery
and performance of this Agreement or the consummation of the
Merger, other than (i) compliance with and filings under
(A) the OGCL, (B) the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the
HSR Act
), (C) Council Regulation (EC)
No. 139/2004 of the European Community, as amended (the
EC Merger Regulation
), and (D) the
Competition Act (Canada) and the Investment Canada Act of 1985
(Canada) (collectively, the
Canadian Investment
Regulations
), (ii) the filing with the SEC of
(A) a proxy statement relating to the adoption of this
Agreement by the Companys shareholders (the
Proxy
Statement
), and (B) such reports under the
Securities Exchange Act of 1934, as amended (the
Exchange Act
), as may be required in
connection with this Agreement and the Merger, (iii) the
filing of the Certificate of Merger with the Secretary of State
of the State of Ohio and appropriate documents with the relevant
authorities of the other jurisdictions in which the Company is
qualified to do business, (iv) compliance with and such
filings as may be required under applicable environmental Laws,
(v) such filings as may be required in connection with the
taxes described in Section 6.09 and (vi) such other
items (A) required solely by reason of the participation of
Parent (as opposed to any other third party) in the Merger or
(B) that, individually or in the aggregate, have not had
and are not reasonably expected to have a Company Material
Adverse Effect.
(c) To the knowledge of the Company, except for matters
that, individually or in the aggregate, are not reasonably
expected to have a Company Material Adverse Effect: (i) the
Company and each of the Company Subsidiaries have all permits,
authorizations, approvals, licenses and franchises from
Governmental Entities required for the Company and the Company
Subsidiaries to conduct their respective businesses as now being
conducted (the
Company Permits
),
(ii) all of the Company Permits are valid and in full force
and effect, (iii) the Company and each of the Company
Subsidiaries are in compliance with the terms of the Company
Permits and (iv) since January 1, 2005, neither the
Company nor any of the Company Subsidiaries has received any
notification from any Governmental Entity threatening to
suspend, cancel or revoke any Company Permit.
Section
3.06.
SEC
Documents; Undisclosed
Liabilities
.
(a) The Company has filed
all reports, schedules, forms, statements and other documents
required to be filed by the Company with the SEC since
October 1, 2006, pursuant to Sections 13(a) and 15(d)
of the Exchange Act.
(b) As of its respective date, each Company SEC Document
complied in all material respects with the requirements of the
Securities Act of 1933, as amended, or the Exchange Act, as
applicable, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Document, and did not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except
to the extent that information contained in any Company SEC
Document has been revised or superseded by a later filed Company
SEC Document, none of the Company SEC Documents contains any
untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of
the date hereof, there are no outstanding unresolved issues with
respect to the Company or the Company SEC Documents noted in
comment letters or other correspondence received by the Company
or its attorneys from the SEC. None of the Company Subsidiaries
are required to file any form, report or other document with the
SEC. The consolidated financial statements of the Company
(including, in each case, any related notes and schedules)
included in the Company SEC Documents comply as to form in all
material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally
accepted accounting principles (
GAAP
)
(except, in the case of unaudited statements, as permitted by
Form 10-Q
of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates
thereof and the consolidated results of their operations and
cash flows for the periods shown (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
A-7
(c) The Company is in compliance in all material respects
with (i) the applicable provisions of the Sarbanes-Oxley
Act of 2002 (the
Sarbanes-Oxley Act
) and
(ii) the applicable listing and other rules and regulations
of the New York Stock Exchange.
(d) The Company has disclosure controls and procedures (as
defined in
Rule 13a-15(e)
of the Exchange Act) designed to ensure that material
information relating to the Company, including its consolidated
Subsidiaries, is made known to the chief executive officer and
the chief financial officer of the Company by others within
those entities. To the knowledge of the Company, such disclosure
controls and procedures are effective in timely alerting the
chief executive officer and the chief financial officer of the
Company to material information required to be included in the
Companys periodic reports required under the Exchange Act.
(e) The Company has disclosed, based on its most recent
evaluation prior to the date hereof, to the Companys
auditors and the audit committee of the Company Board
(i) any significant deficiencies and material weaknesses in
the design or operation of internal controls over financial
reporting (as defined in
Rule 13a-15(f)
of the Exchange Act) which are reasonably likely to adversely
affect the Companys ability to record, process, summarize
and report financial information and (ii) any fraud or
allegation of fraud, whether or not material, that involves
management or other employees who have a significant role in the
Companys internal controls over financial reporting.
(f) As of the date hereof, to the Companys knowledge,
since October 1, 2006, the Company has not identified any
material control deficiencies. To the Companys knowledge,
its auditors and its chief executive officer and chief financial
officer will be able to give the certifications and attestations
required pursuant to the rules and regulations adopted pursuant
to Section 404 of the Sarbanes-Oxley Act, without
qualification, when next due.
(g) As of the date of this Agreement, neither the Company
nor any Company Subsidiary has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a consolidated balance sheet
of the Company and its consolidated subsidiaries or in the notes
thereto and that, individually or in the aggregate, is
reasonably expected to have a Company Material Adverse Effect.
Section
3.07.
Information
Supplied
.
None of the information supplied or
to be supplied by the Company for inclusion or incorporation by
reference in the Proxy Statement will, at the date it is first
mailed to the Companys shareholders or at the time of the
Company Shareholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are
made, not misleading. The Proxy Statement will comply as to form
in all material respects with the requirements of the Exchange
Act and the rules and regulations thereunder, except that no
representation is made by the Company with respect to statements
made or incorporated by reference therein based on information
supplied by Parent or Sub for inclusion or incorporation by
reference therein.
Section
3.08.
Absence
of Certain Changes or Events
.
From
September 30, 2007, to the date of this Agreement, the
Company has conducted its business only in the ordinary course
consistent with past practice, and during such period there has
not been:
(i) any circumstance, state of facts, occurrence, event,
change, effect or development that, individually or in the
aggregate, has had or is reasonably expected to have a Company
Material Adverse Effect;
(ii) any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or
property) with respect to any Company Common Stock or any
repurchase for value by the Company of any Company Common Stock;
(iii) any split, combination or reclassification of any
Company Common Stock or any issuance or the authorization of any
issuance of any other securities in respect of, in lieu of or in
substitution for shares of Company Common Stock;
(iv) except in the ordinary course of business consistent
with prior practice or as was required under employment
agreements included in or described in the Company SEC Documents
or the Company Disclosure Letter, (A) any granting by the
Company or any Company Subsidiary to any director or executive
officer of the Company of any increase in compensation,
(B) any granting by the Company or any Company Subsidiary
to any such director or executive officer of any increase in
severance or termination pay, or (C) any entry by the
A-8
Company or any Company Subsidiary into any employment, severance
or termination agreement with any such director or executive
officer;
(v) any change in accounting methods, principles or
practices by the Company or any Company Subsidiary materially
affecting the consolidated assets, liabilities or results of
operations of the Company, except insofar as may have been
required by a change in GAAP; or
(vi) any material elections with respect to Taxes by the
Company or any Company Subsidiary or settlement or compromise by
the Company or any Company Subsidiary of any material Tax
liability or refund.
Section
3.09.
Taxes
.
(a) Each
of the Company and each Company Subsidiary has timely filed, or
has caused to be timely filed on its behalf, all Tax Returns
required to be filed by it, and all such Tax Returns are true,
complete and accurate, except to the extent any failure to file
or any inaccuracies in any filed Tax Returns, individually or in
the aggregate, have not had and could not reasonably be expected
to have a Company Material Adverse Effect. All Taxes shown to be
due on such Tax Returns, or otherwise owed, have been timely
paid, except to the extent that any failure to pay, individually
or in the aggregate, has not had and are not reasonably expected
to have a Company Material Adverse Effect.
(b) The most recent financial statements contained in the
Company SEC Documents reflect an adequate reserve for all Taxes
payable by the Company and the Company Subsidiaries (in addition
to any reserve for deferred Taxes to reflect timing differences
between book and Tax items) for all Taxable periods and portions
thereof through the date of such financial statements. No
deficiency with respect to any Taxes has been proposed, asserted
or assessed against the Company or any Company Subsidiary, and
no requests for waivers of the time to assess any such Taxes are
pending, except to the extent any such deficiency or request for
waiver, individually or in the aggregate, has not had and are
not reasonably expected to have a Company Material Adverse
Effect.
(c) The Federal income Tax Returns of the Company and each
Company Subsidiary consolidated in such Tax Returns have been
examined by and settled with the United States Internal Revenue
Service, or have closed by virtue of the expiration of the
relevant statute of limitations, for all years through
September 30, 2006. All material assessments for Taxes due
with respect to such completed and settled examinations or any
concluded litigation have been fully paid.
(d) There are no material Liens for Taxes (other than for
current Taxes not yet due and payable) on the assets of the
Company or any Company Subsidiary. Neither the Company nor any
Company Subsidiary is bound by any agreement with respect to
Taxes.
(e) For purposes of this Agreement:
Taxes
includes all forms of taxation,
whenever created or imposed, and whether of the United States or
elsewhere, and whether imposed by a local, municipal,
governmental, state, foreign, Federal or other Governmental
Entity, or in connection with any agreement with respect to
Taxes, including all interest, penalties and additions imposed
with respect to such amounts.
Tax Return
means all Federal, state,
local, provincial and foreign Tax returns, declarations,
statements, reports, schedules, forms and information returns
and any amended Tax return relating to Taxes.
Section
3.10.
Labor
Relations
.
Neither the Company nor any of the
Company Subsidiaries is a party to any collective bargaining
agreement, other than any such agreement with a works council or
other employee organization that is applicable on a nationwide
or industry wide basis, and, in the last three years up to and
including the date hereof there have not been, to the knowledge
of the Company, any union organizing activities concerning any
employees of the Company or any of the Company Subsidiaries that
have had, or are reasonably expected to have, individually or in
the aggregate, a Company Material Adverse Effect. In the last
three years up to and including the date hereof, there have been
no labor strikes, slowdowns, work stoppages, labor disputes or
lockouts pending or, to the knowledge of the Company, threatened
in writing, against the Company or any of the Company
Subsidiaries that have had, or are reasonably expected to have,
individually or in the aggregate, a Company Material Adverse
Effect.
Section
3.11.
Employee
Benefits
.
(a) The Company Disclosure
Letter contains a list, as of the date hereof, of all material
employee pension benefit plans (as defined in
Section 3(2) of the Employee Retirement Income
A-9
Security Act of 1974, as amended (
ERISA
))
(
Company Pension Plans
), material
employee welfare benefit plans (as defined in
Section 3(1) of ERISA) and all other material Company
Benefit Plans and material Company Benefit Agreements. Each
material Company Benefit Plan has been administered in
compliance with its terms and applicable Law (including ERISA
and the Internal Revenue Code of 1986, as amended (the
Code
)), other than instances of noncompliance
that, individually and in the aggregate, have not had and are
not reasonably expected to have a Company Material Adverse
Effect. The Company has made available to Parent true, complete
and correct copies of (i) each material Company Benefit
Plan (or, in the case of any unwritten Company Benefit Plan, a
description thereof) and each material Company Benefit
Agreement, in each case, other than any such Company Benefit
Plan or Company Benefit Agreement that the Company or any
Company Subsidiary is prohibited from making available to Parent
as a result of any
non-United
States applicable Laws relating to the safeguarding of data
privacy, (ii) the most recent annual report on
Form 5500 filed with the Internal Revenue Service with
respect to each such Company Benefit Plan (if any such report
was required), (iii) each trust agreement and group annuity
contract relating to each such applicable Company Benefit Plan,
and (iv) with respect to each such applicable Company
Benefit Plan, the most recent actuarial report and financial
statements (if any) that are required to be prepared pursuant to
applicable Law.
(b) All Company Pension Plans intended to be tax-qualified
for United States Federal income tax purposes have been the
subject of determination letters from the Internal Revenue
Service to the effect that such Company Pension Plans are
qualified and exempt from Federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code, and
no such determination letter has been revoked nor, to the
knowledge of the Company, has revocation been threatened, nor
has any such Company Pension Plan been amended since the date of
its most recent determination letter or application therefor in
any respect that would reasonably be expected to adversely
affect its qualification. Each material Company Pension Plan
required by applicable Law to be approved by any foreign
Governmental Entity (or permitted to be so approved to obtain
beneficial tax status) has been so approved, no such approval
has been revoked nor, to the knowledge of the Company, has
revocation been threatened, nor has any such Company Pension
Plan been amended since the date of its most recent approval or
application therefor in any respect that would reasonably be
expected to adversely affect its approved status.
(c) No material Company Benefit Plan provides health
benefits (whether or not insured) with respect to employees or
former employees (or any of their beneficiaries) of the Company
or any of its Subsidiaries after retirement or other termination
of service (other than coverage or benefits (A) required to
be provided under Part 6 of Title I of ERISA or any
other similar applicable Law or (B) the full cost of which
is borne by the employee or former employee (or any of their
beneficiaries)).
(d) None of the Company Benefit Plans is, and, during the
six-year period preceding the date of this Agreement, neither
the Company nor any Company Subsidiary has sponsored or
maintained any plan that is, subject to Section 302 or
Title IV of ERISA or Section 412 of the Code. None of
the Company, any of the Company Subsidiaries or any other person
or entity under common control with the Company within the
meaning of Section 414(b), (c), (m) or (o) of the
Code (each such person or entity, an
ERISA
Affiliate
) participates in, is required to contribute
to, or has, during the six-year period preceding the date of
this Agreement, incurred or reasonably expects to incur any
material liability in connection with any Multiemployer Plan.
(e) With respect to each applicable Company Benefit Plan,
(i) there are no actions, suits or claims pending, or, to
the knowledge of the Company, threatened or anticipated (other
than routine claims for benefits) against any such Company
Benefit Plan or fiduciary thereto or against the assets of any
such Company Benefit Plan; (ii) there are no audits,
inquiries or proceedings pending or, to the knowledge of the
Company, threatened by any Governmental Entity with respect to
any Company Benefit Plan; and (iii) there has been no
breach by the Company or any Company Subsidiary of fiduciary
duty with respect to any Company Benefit Plan (including
violations under Part 4 of Title I of ERISA), that, in
the case of each of the foregoing clauses (i) through
(iii), has had or is reasonably expected to have, individually
or in the aggregate, a Company Material Adverse Effect.
(f) With respect to each Company Pension Plan that is
subject to Section 302 or Title IV of ERISA or
Section 412 of the Code, during the six-year period
preceding the date of this Agreement: (i) no
accumulated funding deficiency, if applicable,
within the meaning of ERISA Section 302 or Code
Section 412 has been incurred, whether or not waived;
(ii) none of the Company, any of the Company Subsidiaries
or any ERISA Affiliate has any liability for any Lien imposed
under ERISA Section 302(f) or Code Section 412(n);
(iii) the Pension Benefit
A-10
Guaranty Corporation (
PBGC
) has not
instituted proceedings or, to the knowledge of the Company,
threatened to institute proceedings to terminate any such
Company Pension Plan; and (iv) to the knowledge of the
Company, no other event or condition has occurred that could
reasonably be expected to constitute grounds under ERISA
Section 4042 for the termination of, or the appointment of
a trustee to administer, any such Company Pension Plan. During
the six-year period preceding the date of this Agreement, none
of the Company, any of the Company Subsidiaries or any ERISA
Affiliate has incurred, nor, to the knowledge of the Company,
are they reasonably expect to incur, any liability to the PBGC
with respect to any transaction described in ERISA
Section 4069.
(g) There is no Company Benefit Plan or Company Benefit
Agreement pursuant to which the Company or any Company
Subsidiary is bound to compensate any individual for excise
taxes paid pursuant to Section 4999 of the Code. No Company
Benefit Plan provides for any material increase in benefits or
accelerated vesting of benefits upon the occurrence of any of
the transactions contemplated by this Agreement, and the value
of benefits under any Company Benefit Plan will not be
calculated on the basis of any of the transactions contemplated
by this Agreement.
(h) The term
Company Benefit Plan
means
each Company Pension Plan, employee welfare benefit
plan (as defined in Section 3(1) of ERISA), and
bonus, pension, superannuation, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, medical
or other plan, program or arrangement that is sponsored,
maintained, or contributed to by the Company or any Company
Subsidiary or with respect to which the Company or any Company
Subsidiary would reasonably be expected to incur any liability,
in each case, for the benefit of any current or former employee,
officer or director of the Company or any Company Subsidiary,
regardless of whether such employee, officer or director
performs services for the Company or any Company Subsidiary
within or outside the United States, or the dependent of any of
them, other than (i) any multiemployer plan
(within the meaning of Section 3(37) of ERISA)) (a
Multiemployer Plan
), (ii) any plan,
program or arrangement mandated by applicable Law or
(iii) any Company Benefit Agreement. The term
Company Benefit Agreement
means each
individual employment, severance or termination agreement
between the Company or any Company Subsidiary and any current or
former employee, officer or director of the Company or any
Company Subsidiary, other than (x) any agreement mandated
by applicable Law or (y) any Company Benefit Plan.
Section
3.12.
Litigation
.
As
of the date of this Agreement, there is no claim, investigation,
arbitration, suit, action or proceeding (
Legal
Proceedings
) pending or, to the knowledge of the
Company, threatened against the Company or any Company
Subsidiary that, individually or in the aggregate, has had or is
reasonably expected to have a Company Material Adverse Effect,
nor is there any Judgment outstanding against the Company or any
Company Subsidiary that has had or is reasonably expected to
have a Company Material Adverse Effect. This Section 3.12
does not relate to labor relations matters, benefits matters,
intellectual property matters, and environmental matters, which
are the subject of, respectively, Sections 3.10, 3.11, 3.15
and 3.18.
Section
3.13.
Compliance
with Applicable Laws
.
The Company and the
Company Subsidiaries are in compliance with all applicable Laws,
including those relating to employment and employment practices;
classification of, and payment to, persons classified by the
Company and the Company Subsidiaries as independent contractors,
and occupational health and safety, except for instances of
noncompliance that, individually and in the aggregate, have not
had and are not reasonably expected to have a Company Material
Adverse Effect. This Section 3.13 does not relate to
matters with respect to Taxes, which are the subject of
Section 3.09, and this Section 3.13 does not relate to
labor relations matters, benefits matters, intellectual property
matters, and environmental matters, which are the subject of,
respectively, Sections 3.10, 3.11, 3.15 and 3.18.
Section
3.14.
Material
Contracts
.
(a) Section 3.14(a) of the Company Disclosure Letter
includes a complete list, as of the date of this Agreement, of
each Contract (collectively, the
Company
Contracts
), to which the Company or any Company
Subsidiary is a party or by which it is bound (other than any
Company Contract filed as an exhibit, or incorporated by
reference as an exhibit, to the Company SEC Documents) and that
is:
(i) a material contract (as such term is
defined in Item 601(b)(10) of
Regulation S-K
of the SEC);
(ii) a written Contract, other than any award agreement
that is issued pursuant to a Company Stock Plan, that is a
Company Benefit Agreement with any employee of the Company or
any of the Company Subsidiaries
A-11
pursuant to which such employee (A) has any rights with
respect to a change of control or potential change of control of
the Company or of any Company Subsidiary or (B) is entitled
to an annual base salary from the Company or any Company
Subsidiary that exceeds $300,000, other than those that are
terminable by the Company or any of the Company Subsidiaries on
no more than thirty days notice without material liability
or financial obligation to the Company or any of the Company
Subsidiaries;
(iii) material to the Company and the Company Subsidiaries,
taken as a whole, and that grants a right of first refusal or
first offer or similar right or which limits the ability of the
Company or any of the Company Subsidiaries to compete or engage
in any line of business or to solicit clients, in any geographic
area or with any person, or pursuant to which any benefit or
right is required to be given or lost, or any penalty or
detriment is incurred, as a result of so competing, engaging or
soliciting;
(iv) material to the Company and the Company Subsidiaries,
taken as a whole, and that contains most favored
nation pricing or terms that applies to the Company or any
of the Company Subsidiaries that relates to any Contract that
involves more than $500,000 in annual revenue or cost to the
Company or the Company Subsidiaries;
(v) with GE Capital Corporation, GE Capital Information
Technology Solutions, Inc. or their respective affiliates or
predecessors (
GE
) pursuant to which GE
provides the North American customer financing program for the
Company (including all written supplements, waivers, amendments
and modifications thereto);
(vi) with or to a labor union, works council or guild
(including any collective bargaining agreement), other than any
such Contract that is applicable on a nationwide or industry
wide basis;
(vii) a Contract between the Company or any Company
Subsidiary, on the one hand, and either Canon Inc. or
Konica Minolta Holdings Inc. (or any of their respective
subsidiaries
and/or
affiliates), on the other hand, that is material to the conduct
of the Companys sales activities taken as a whole (each
such Contract, a
Major Supplier Contract
);
(viii) an indenture, mortgage, promissory note, loan
agreement, bond, guarantee of borrowed money, letter of credit
or other agreement or instrument representing indebtedness for
borrowed money in excess of $10,000,000 or providing for the
creation of any encumbrance upon any of the material assets of
the Company or its subsidiaries;
(ix) a written Contract with any officer, director or
affiliate of the Company or of any Significant Company
Subsidiary other than employment, severance or consulting
agreements;
(x) a stock purchase, asset purchase or other acquisition
agreement entered into since August 1, 2006, for any entity
or any business or line of business, and that requires, or
required, the payment of consideration by the Company or any
Company Subsidiary of more than $5,000,000; or
(xi) with any Governmental Entity, other than those
Contracts for the sale of goods or services in the ordinary
course of business.
(b) The Company has previously made available to Parent
complete and accurate copies of each Company Contract. As of the
date of this Agreement, to the knowledge of the Company, all of
the Company Contracts are valid, binding and in full force and
effect, except to the extent they have previously expired in
accordance with their terms or if the failure to be in full
force and effect is not, individually or in the aggregate,
reasonably expected to have a Company Material Adverse Effect.
To the knowledge of the Company, neither the Company nor any of
the Company Subsidiaries or other parties thereto have violated
any provision of, or committed or failed to perform any act, and
no event or condition exists, which with or without notice,
lapse of time or both would constitute a default under the
provisions of, any Company Contract, except in each case for
those violations and defaults which, individually or in the
aggregate, are not reasonably expected to have a Company
Material Adverse Effect. Neither the Company nor any of its
subsidiaries and, to the knowledge of the Company, no other
party thereto, is in material default under any Major Supplier
Contract.
A-12
Section
3.15.
Intellectual
Property
.
The Company owns or has the valid
right or license or otherwise has the right to use all IP Rights
which are material to the conduct of the business of the Company
taken as a whole, including all material Software, free and
clear of all Liens other than existing licenses and other
agreements entered into in the ordinary course of business with
respect to such IP Rights. To the knowledge of the Company, the
use, development, marketing, license, sale, provision or
furnishing of any product or service which is material to the
conduct of the business of the Company taken as a whole,
currently developed, marketed, licensed, utilized, sold,
provided or furnished by the Company, does not violate any
license or agreement between the Company and any third party or
infringe or misappropriate any IP Rights of any other party,
except in each case for such violations, infringements or
misappropriations which, individually or in the aggregate, are
not reasonably expected to have a Company Material Adverse
Effect. For purposes of this Agreement (i)
IP
Rights
means (A) all worldwide intellectual
property rights, including patents, patent applications, patent
disclosures and related patent rights, trademarks, trademark
registrations and applications therefore (including all marks
incorporating references to IKON and IKON
Office Solutions), trade dress rights, trade names,
service marks, service mark registrations and applications
therefor, Internet domain names, copyrights, copyright
registrations and applications therefor, trade secrets,
know-how, and other proprietary information, databases and data
collections and all rights therein throughout the world, and
(B) all rights to sue or make any claims for any
infringement, misappropriation or unauthorized use of any of the
foregoing rights, and (ii)
Software
means all past and current versions, and any developments in
progress, of all of the software material to the conduct of the
Companys business, excluding software that is
non-proprietary or readily available for licensing from a
software vendor.
Section
3.16.
Owned
and Leased Real Properties
.
(a) The
Company Disclosure Letter sets forth a complete and accurate
list as of the date of this Agreement of: (i) the addresses
of all real property owned by the Company or any Subsidiary
material to the conduct of the business of the Company as a
whole (the
Real Estate
); (ii) all loans
secured by mortgages encumbering the Real Estate; and
(iii) all real property leased, subleased or licensed by
the Company or any of the Company Subsidiaries material to the
conduct of the business of the Company taken as a whole
(collectively
Company Leased Real Property
).
The Company
and/or
the
Company Subsidiaries have good and valid title in fee simple to
all the Real Estate, free and clear of all Liens of any nature
whatsoever, except for Liens which do not, individually or in
the aggregate, have or are not reasonably expected to have a
Company Material Adverse Effect.
(b) The current use of all land, buildings, structures and
improvements on the Real Estate and Company Leased Real Property
complies with the requirements of all applicable building,
zoning, subdivision, health, safety and other land use statutes,
laws, codes, ordinances, rules, orders and regulations
(collectively,
Governmental Regulations
), in
the jurisdiction in which such Real Estate or Company Leased
Real Property is located, except where noncompliance does not,
individually or in the aggregate, have or is not reasonably
expected to have a Company Material Adverse Effect.
Section
3.17.
Transactions
with Affiliates
.
No director or officer of
the Company or any of the Company Subsidiaries, nor, to the
knowledge of the Company, any Affiliate of such directors or
officers, has any material interest in any material property
(real or personal, tangible or intangible) used in the business
of the Company or any of the Company Subsidiaries.
Section
3.18.
Environmental
Matters
.
(a) With respect to the
Companys business, as currently conducted, except as would
not reasonably be expected to have a Company Material Adverse
Effect: (i) the Company and all Company Subsidiaries have
at all times been and are in full compliance with all applicable
Environmental Laws; (ii) to the knowledge of the Company,
none of the properties currently owned, leased or operated by
the Company or the Company Subsidiaries (including soils and
surface and ground waters) are contaminated with any Hazardous
Substance to an extent that requires the Company or any Company
Subsidiary to take responsive remedial action pursuant to
Environmental Laws; (iii) since August 1, 2003,
neither the Company nor any Company Subsidiary has received any
written notice of liability for any contamination by Hazardous
Substances generated, transported, stored, treated or disposed
by the Company or any Company Subsidiary; (iv) there is no
suit, action or proceeding pending or, to the knowledge of the
Company, threatened against the Company or any Company
Subsidiary alleging that the Company or any Company Subsidiary
is liable for any damages, remediation, or penalties by any
person or Government Entity arising out of or relating to any
failure to comply with any Environmental Law or exposure of any
person to Hazardous Substances; (v) the Company has made
available to
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Parent complete and correct copies of all material Phase I
environmental site assessments conducted since August 1,
2003, and in the Companys possession regarding the
presence or alleged presence of Hazardous Substances at, on, or
affecting any property currently or formerly owned or operated
by the Company or any Company Subsidiary.
(b) With respect to environmental liabilities relating to
the Companys business as conducted prior to
January 1, 1998, all accruals with respect to such
environmental liabilities reflected in the financial statements
included in the Company SEC Documents are based on the
Companys best estimate of the funds required to satisfy
such environmental liabilities.
(c) For purposes of this Agreement:
(i)
Environmental Laws
means any United
States federal, state, local or
non-United
States laws relating to (A) pollution or protection of the
indoor or outdoor environment, human health as it relates to
exposure to Hazardous Substances, or natural resources;
(B) releases or threatened releases of Hazardous Substances
or materials containing Hazardous Substances; or (C) the
manufacture, handling, transport, use, treatment, storage or
disposal of Hazardous Substances, and
(ii)
Hazardous Substances
means
(A) any substance, material or waste regulated as a
hazardous or toxic substance, material or waste by any
Government Entity pursuant to any Environmental Law;
(B) petroleum and petroleum products, including crude oil
and any fractions thereof; (C) natural gas, synthetic gas,
and any mixtures thereof; and (D) polychlorinated
biphenyls, asbestos and radon.
Section
3.19.
Takeover
Statutes
.
The Company Board, at a meeting
duly called and held, has approved to the extent necessary, for
purposes of Chapter 1704 of the Ohio Revised Code, the
Merger and the acquisition by Parent of the common shares of the
Surviving Corporation pursuant to the Merger. Assuming the
accuracy of the representations and warranties contained in
Section 4.06, as of the date of this Agreement no
fair price, business combination,
moratorium, control share acquisition or
other anti-takeover statute or similar statute or regulation
enacted by any state will prohibit or impair the consummation of
the Merger or the other transactions contemplated by this
Agreement.
Section
3.20.
Brokers
.
No
broker, investment banker, financial advisor or other person,
other than Goldman, Sachs & Co. (
Goldman
Sachs
), the fees and expenses of which will be paid by
the Company, is entitled to any brokers, finders,
financial advisors or other similar fee or commission from
the Company in connection with the Merger.
Section
3.21.
Opinion
of Financial Advisor
.
The Company has
received the opinion of Goldman Sachs, dated the date of this
Agreement, to the effect that, as of such date, the Merger
Consideration to be received in the Merger by the holders of
Company Common Stock is fair from a financial point of view to
such holders, a signed copy of which opinion shall be provided
by the Company to Parent.
ARTICLE IV
Representations
and Warranties of Parent and Sub
Parent and Sub, jointly and severally, represent and warrant to
the Company that:
Section
4.01.
Organization,
Standing and Power
.
Each of Parent and Sub is
duly organized, validly existing and, in the case of Sub, in
good standing under the laws of the jurisdiction in which it is
organized and has full corporate power and authority and
possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to own,
lease, operate or otherwise hold its properties and assets and
to conduct its businesses as presently conducted, other than
such franchises, licenses, permits, authorizations and approvals
the lack of which, individually or in the aggregate, have not
had and is not reasonably expected to have a Parent Material
Adverse Effect.
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Section
4.02.
Sub
.
(a) Since
the date of its incorporation, Sub has not carried on any
business or conducted any operations other than the execution of
this Agreement, the performance of its obligations hereunder and
matters ancillary thereto.
(b) The authorized capital stock of Sub consists of
1500 shares of common stock, without par value, all of
which have been duly authorized, validly issued, are fully paid
and nonassessable and are indirectly owned by Parent free and
clear of any Lien.
Section
4.03.
Authority;
Execution and Delivery; Enforceability
.
Each
of Parent and Sub has all requisite corporate power and
authority to execute and deliver this Agreement and to
consummate the Merger. The execution and delivery by each of
Parent and Sub of this Agreement and the consummation by it of
the Merger have been duly authorized by all necessary corporate
action on the part of Parent and Sub. Parent, as sole
shareholder of Sub, has adopted this Agreement in accordance
with the applicable provisions of the OGCL. Each of Parent and
Sub has duly executed and delivered this Agreement, and this
Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms.
Section
4.04.
No
Conflicts; Consents
.
(a) The execution
and delivery by each of Parent and Sub of this Agreement, do
not, and the consummation of the Merger and compliance with the
terms hereof will not, conflict with, or result in any violation
of or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the
properties or assets of Parent or any of its subsidiaries under,
any provision of (i) the charter or organizational
documents of Parent or any of its subsidiaries, (ii) any
Contract to which Parent or any of its subsidiaries is a party
or by which any of their respective properties or assets is
bound or (iii) subject to the filings and other matters
referred to in Section 4.04(b), any Judgment or Law
applicable to Parent or any of its subsidiaries or their
respective properties or assets, other than, in the case of
clauses (ii) and (iii) above, any such items that,
individually or in the aggregate, have not had and are not
reasonably expected to have a Parent Material Adverse Effect.
(b) No Consent of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or made
by or with respect to Parent or Sub or any of their subsidiaries
in connection with the execution, delivery and performance of
this Agreement or the consummation of the Merger, other than
(i) compliance with and filings under the HSR Act, the EC
Merger Regulation and the Canadian Investment Regulations,
(ii) the filing with the SEC of such reports under the
Exchange Act, as may be required in connection with this
Agreement and the Merger, (iii) the filing of the
Certificate of Merger with the Secretary of State of the State
of Ohio, (iv) compliance with and such filings as may be
required under applicable environmental Laws, (v) such
filings as may be required in connection with the taxes
described in Section 6.09, (vi) filings under any
applicable state takeover Law and (vii) such other items as
are set forth in the letter, dated as of the date of this
Agreement, from Parent to the Company (the
Parent
Disclosure Letter
) or the absence of which,
individually or in the aggregate, have not had and are not
reasonably expected to have a Parent Material Adverse Effect.
Section
4.05.
Information
Supplied
.
None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation
by reference in the Proxy Statement will, at the date it is
first mailed to the Companys shareholders or at the time
of the Company Shareholders Meeting, contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which
they are made, not misleading.
Section
4.06.
Ownership
of Company Common Stock
.
(a) Neither
Parent, Sub nor any of their subsidiaries beneficially owns,
directly or indirectly, any Company Common Stock or other
securities convertible into, exchangeable into or exercisable
for Company Common Stock, or is party to any derivative contract
or other arrangement which is based upon or otherwise relating
to the market price of Company Common Stock.
(b) There are no voting trusts or other agreements,
arrangements or understandings to which Parent, Sub, or any of
their subsidiaries is a party with respect to the voting of the
capital stock or other equity interests of the Company or any
Company Subsidiary; nor are there any agreements, arrangements
or understandings to which Parent, Sub, or any of their
subsidiaries is a party with respect to the acquisition,
divestiture, retention, purchase, sale or tendering of the
capital stock or other equity interest of the Company or any
Company Subsidiary.
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(c) Neither Parent nor Sub has beneficially owned during
the immediately preceding three years a sufficient number of
shares of Company Common Stock that would make it an
interested shareholder (as such term is defined in
Section 1704.01(c)(8) of the Ohio Revised Code) of the
Company.
Section
4.07.
Brokers
.
No
broker, investment banker, financial advisor or other person,
other than Morgan Stanley & Co. Incorporated, the
fees and expenses of which will be paid by Parent, is entitled
to any brokers, finders, financial advisors or
other similar fee or commission in connection with the Merger
based upon arrangements made by or on behalf of Parent.
Section
4.08.
Financing
.
Parent
and Sub collectively have funds available sufficient to
consummate the Merger on the terms contemplated by this
Agreement, and, at the Effective Time, Parent and Sub will have
available all of the funds necessary for the acquisition of all
shares of Common Stock pursuant to the Merger and to perform
their respective obligations under this Agreement.
ARTICLE V
Covenants
Relating to Conduct of Business
Section
5.01.
Conduct
of Business
.
(a)
Conduct of
Business by the Company
.
Except for matters
set forth in Section 5.01 of the Company Disclosure Letter
or otherwise expressly contemplated by this Agreement, from the
date of this Agreement to the Effective Time the Company shall,
and shall cause each Company Subsidiary to, conduct its business
in the usual, regular and ordinary course in substantially the
same manner as previously conducted and use all reasonable
efforts to preserve intact its current business organization,
keep available the services of its current officers and
employees and keep its relationships with customers, suppliers,
licensors, licensees, distributors and others having business
dealings with them to the end that its goodwill and ongoing
business shall be unimpaired at the Effective Time. In addition,
and without limiting the generality of the foregoing, except for
matters set forth in Section 5.01 of the Company Disclosure
Letter or otherwise contemplated by this Agreement, from the
date of this Agreement to the Effective Time, the Company shall
not, and shall not permit any Company Subsidiary to, do any of
the following without the prior written consent of Parent:
(i) (A) declare, set aside or pay any dividends on, or
make any other distributions in respect of, any of its capital
stock, other than (1) dividends and distributions by a
direct or indirect wholly owned subsidiary of the Company to its
parent and (2) regular quarterly cash dividends with
respect to the Company Common Stock, not in excess of $0.04 per
share, with usual declaration, record and payment dates and in
accordance with the Companys past dividend policy,
(B) split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock or (C) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any Company
Subsidiary or any other securities thereof or any rights,
warrants or options to acquire any such shares or other
securities, other than (1) the acquisition by the Company
of shares of Company Common Stock in connection with the
surrender of shares of Company Common Stock by holders of
Company Stock Options in order to pay the exercise price of the
Company Stock Options, pursuant to a net or cashless exercise or
tender of shares of Company Common Stock previously owned by
such holders, (2) the withholding of shares of Company
Common Stock to satisfy tax obligations with respect to awards
granted pursuant to the Company Stock Plans, (3) the
acquisition by the Company of Company Stock Options, Company
RSUs, Company DSUs and shares of Company Restricted Stock in
connection with the forfeiture of such awards, (4) the
acquisition by the trustee of the Company 401(k) Plan of shares
of Company Common Stock in order to satisfy participant
investment elections under the Company 401(k) Plan, (5) the
acquisition of Company DSUs and Company Stock Equivalents in
connection with the settlement of these awards following
termination of the holders employment or Board service and
(6) the extinguishment of rights pursuant to Company Stock
Equivalents in connection with the change in a
participants investment election under a Specified
Deferred Compensation Plan;
(ii) issue, deliver, sell or grant (A) any shares of
its capital stock, (B) any Voting Company Debt or other
voting securities, (C) any securities convertible into or
exchangeable for, or any options, warrants or rights to acquire,
any such shares, Voting Company Debt, voting securities or
convertible or exchangeable securities or
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(D) any phantom stock, phantom
stock rights, stock appreciation rights or stock-based
performance units, other than (1) upon the exercise of
Company Stock Options and settlement of Company RSUs, Company
DSUs and Company Stock Equivalents outstanding on the date of
this Agreement, in each case in accordance with their present
terms, (2) as required pursuant to any Company Benefit Plan
or Company Benefit Agreement as in effect on the date of this
Agreement, (3) the issuance of Company Stock Equivalents
pursuant to the Specified Deferred Compensation Plans and the
issuance of Company Common Stock upon settlement of such Company
Stock Equivalents, (4) the issuance of up to an additional
50,000 Company Stock Options and 50,000 Company RSUs or Company
DSUs pursuant to the Company Stock Plans and the issuance of
Company Common Stock upon the exercise of such Company Stock
Options and the settlement of such Company RSUs and Company
DSUs, (5) as required to avoid any constructive termination
without cause, constructive discharge, constructive dismissal,
good reason, or other grounds for termination under any
agreement between the Company or any Company Subsidiary and any
of their respective employees and (6) the issuance of
Company DSUs in connection with the payment of dividends on
shares of Company Common Stock;
(iii) amend its certificate of incorporation, code of
regulations, by-laws or other comparable charter or
organizational documents;
(iv) acquire or agree to acquire any assets that are
material, individually or in the aggregate, to the Company and
the Company Subsidiaries, taken as a whole, except purchases of
inventory in the ordinary course of business consistent with
past practice;
(v) (A) grant to any officer or director of the
Company any increase in compensation, (B) grant to any
employee, officer or director of the Company or any Company
Subsidiary any increase in severance or termination pay,
(C) enter into any employment, severance or termination
agreement with any such employee, officer or director,
(D) establish, adopt, enter into or amend any collective
bargaining agreement or Company Benefit Plan, (E) take any
action to accelerate any rights, vesting or benefits, or make
any material determinations under any collective bargaining
agreement or Company Benefit Plan or (F) take or agree to
take any action to fund, or in any other way secure the payment
of compensation or benefits under, any Company Benefit Plan, or
make any material change to any Company Benefit Agreement,
except, in the case of the foregoing clauses (A), (B), (C), (D),
(E) and (F), (1) in the ordinary course of business
consistent with past practice, (2) as required pursuant to
the terms of any Company Benefit Plan or Company Benefit
Agreement or other agreement as in effect on the date of this
Agreement, (3) as otherwise expressly permitted by this
Agreement, (4) for amendments to Company Benefits Plans and
Company Benefit Agreements to address Section 409A of the Code
(including amendments to allow certain payments and benefits to
qualify for an exemption from Section 409A of the Code), or
(5) as required to comply with, or avoid a breach of, the
Companys obligations pursuant to Section 5.01(a)(vi);
and
provided
that the foregoing clauses (A), (B) and
(C) shall not restrict the Company or any of the Company
Subsidiaries from entering into or making available to newly
hired employees or to employees, in the context of promotions
based on job performance or workplace requirements, in each case
in the ordinary course of business, plans, agreements, benefits
and compensation arrangements (including incentive grants)
consistent with the compensation and benefits available to newly
hired or promoted employees in similar positions;
(vi) having received notice from any
Level 1 or Level 2 executive
officer of circumstances that, if left uncured, would entitle
such executive officer to terminate employment with the Company
under circumstances that would constitute constructive
termination without cause, constructive
discharge, constructive dismissal, or
good reason, (with such terms as defined in the
relevant Company Benefit Agreement), fail to take such actions
as are reasonably necessary to cure such circumstances within
the time periods provided for cure by the Company;
(vii) make any change in accounting methods, principles or
practices materially affecting the reported consolidated assets,
liabilities or results of operations of the Company, except
insofar as may have been required by a change in Law or GAAP;
(viii) sell, lease (as lessor), license or otherwise
dispose of, or subject to any Lien any properties or assets that
are material, individually or in the aggregate, to the Company
and the Company Subsidiaries, taken as a
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whole, except sales of inventory and excess or obsolete assets
in the ordinary course of business consistent with past practice;
(ix) (A) incur any indebtedness for borrowed money or
guarantee any such indebtedness of another person, issue, amend
or sell any debt securities or warrants or other rights to
acquire any debt securities of the Company or any Company
Subsidiary, guarantee any debt securities of another person,
enter into any keep well or other agreement to
maintain any financial statement condition of another person or
enter into any similar arrangement, except for short-term
borrowings incurred in the ordinary course of business
consistent with past practice or (B) make any loans,
advances or capital contributions to, or investments in, any
other person, other than to or in the Company or any
wholly-owned Company Subsidiary, in any case specified in
clause (A) or (B) in excess of $500,000;
(x) make or agree to make any new capital expenditure or
expenditures that, individually, is in excess of $500,000 or, in
the aggregate, are in excess of $2,500,000;
(xi) except in the ordinary course of business consistent
in all respects with past practice, make or change any material
Tax election or settle or compromise any material Tax liability
or refund;
(xii) amend, modify, accelerate or prematurely terminate
any Company Contract or, except in the ordinary course of
business, enter into any new arrangements, agreements,
understandings or Contracts that would be Company
Contracts if the same were in effect on the date of this
Agreement;
(xiii) settle or compromise any Legal Proceeding or enter
into any consent decree, injunction or similar restraint or form
of equitable relief in settlement of any Legal Proceeding;
(xiv) authorize, recommend, propose or announce an
intention to adopt a plan of complete or partial liquidation or
dissolution of the Company or any Company Subsidiary; or
(xv) authorize any of, or commit or agree to take any of,
the foregoing actions.
(b)
Other Actions
.
The Company and
Parent shall not, and shall not permit any of their respective
subsidiaries to, take any action that would, or that is
reasonably expected to, result in (i) any of the
representations and warranties of such party set forth in this
Agreement that is qualified as to materiality becoming untrue,
(ii) any of such representations and warranties that is not
so qualified becoming untrue in any material respect or
(iii) except as otherwise permitted by Section 5.02,
any condition to the Merger set forth in Article VII not
being satisfied.
(c)
Advice of Changes
.
The Company
shall promptly advise Parent orally and in writing of any change
or event that has or is reasonably expected to have a Company
Material Adverse Effect.
Section
5.02.
No
Solicitation
.
(a) From the date of this
Agreement until the earlier of the Effective Time and the date
this Agreement is terminated, the Company shall not, nor shall
it authorize or permit any Company Subsidiary to, nor shall it
authorize or permit any officer, director or employee of, or any
investment banker, attorney or other advisor or representative
(collectively,
Representatives
) of, the
Company or any Company Subsidiary to, directly or indirectly,
(i) solicit, initiate, encourage, approve or invite the
submission, making or announcement of any Company Takeover
Proposal or any inquiry relating to or that may reasonably be
expected to lead to any Company Takeover Proposal,
(ii) enter into any agreement with respect to any Company
Takeover Proposal or (iii) participate in any discussions
or negotiations regarding, or furnish to any person any
information with respect to, or take any other action to
facilitate, any inquiries or the making or announcement of any
offer or proposal that constitutes, or may reasonably be
expected to lead to, any Company Takeover Proposal or any
related inquiry. Notwithstanding the immediately preceding
sentence, prior to the date of the Company Shareholders Meeting,
the Company and its Representatives may, in response to a
Company Takeover Proposal that (i) was made after the date
hereof, (ii) was not solicited by the Company or any
Company Subsidiary or any of their respective Representatives
and did not otherwise arise or result from (and the making of
which did not constitute) a breach by the Company or any other
person of this Section 5.02 and (iii) the Company
Board has determined in good faith, after consultation with its
independent financial advisor, is, or is reasonably likely to
lead to, a Superior Company Proposal, and subject to compliance
with Section 5.02(d), (x) furnish information with
respect to the Company to the person making such Company
Takeover Proposal and its Representatives pursuant to an
Acceptable Confidentiality Agreement,
provided
,
however
, that the Company shall concurrently provide to
Parent any information
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provided to any such person if such information has not
previously been provided to Parent, and (y) participate in
discussions or negotiations (including solicitation of a revised
Company Takeover Proposal) with such person and its
Representatives regarding any Company Takeover Proposal;
provided
,
however
, that (A) the Company shall
give Parent advance notice before first taking any action
pursuant to clauses (x) and (y) with respect to such
person and (B) the Company and its Representatives shall
not take any of the actions described in the foregoing
clauses (x) and (y) except to the extent the Company
Board shall have determined, in good faith, after consultation
with outside counsel, that taking such action with respect to
such Company Takeover Proposal is necessary to avoid breaching
its fiduciary obligations. Notwithstanding anything to the
contrary in this Section 5.02(a), the Company and its
Representatives may, in response to any Company Takeover
Proposal or other inquiry by any third party, inform such third
party of this Section 5.02(a) and, if applicable, advise
such third party that the Company may not respond to such
Company Takeover Proposal or other inquiry because of this
Section 5.02(a).
(b) From the date of this Agreement until the earlier of
the Effective Time and the date this Agreement is terminated,
the Company shall cause each Company Confidentiality Agreement
to be enforced to the maximum extent and shall not, and shall
not authorize or permit any Representative of the Company or any
Company Subsidiary to, (i) release or permit the release of
any person from, or waive or permit the waiver of, any provision
of any Company Confidentiality Agreement, or (ii) approve
or invite any proposal for which an approval or invitation of
the Company is required under the terms of a Company
Confidentiality Agreement, except that the Company shall not be
required to comply with clause (i) of this sentence in any
instance to the extent that the Company Board determines in good
faith, after consultation with outside counsel, that such
compliance would breach its fiduciary obligations. The Company
also shall promptly (and in any event within three business days
of the date hereof) request each person that has executed a
Company Confidentiality Agreement since January 1, 2008, in
connection with the consideration of a possible Company Takeover
Proposal, or a possible equity investment in or other strategic
transaction with, the Company or any Company Subsidiary, return
to the Company, or alternatively to destroy and certify to the
Company the destruction of, all confidential information
heretofore furnished to such person by or on behalf of the
Company or any Company Subsidiary. The Company represents that
each Company Confidentiality Agreement that it has executed
since January 1, 2008, remains in effect in accordance with
its terms and that it has not agreed to terminate or waive any
term or provision thereof.
(c) Neither the Company Board nor any committee thereof
shall (i) withdraw or modify in a manner adverse to Parent
or Sub, or propose publicly to withdraw or modify in a manner
adverse to Parent or Sub, the approval or recommendation by the
Company Board or any such committee of this Agreement or the
Merger, (ii) approve or enter into any letter of intent,
agreement in principle, acquisition agreement or similar
agreement relating to any Company Takeover Proposal or
(iii) approve or recommend, or propose publicly to approve
or recommend, any Company Takeover Proposal. Notwithstanding the
foregoing, if (x) the Company has complied with the
provisions of this Section 5.02 and (y) prior to the
date of the Company Shareholders Meeting, the Company Board
receives a Company Takeover Proposal that has not been withdrawn
and determines, in good faith, after consultation with its
independent financial advisor, that such Company Takeover
Proposal constitutes a Superior Company Proposal and as a result
thereof, after consultation with outside counsel, that it is
necessary to do so in order to avoid breaching its fiduciary
obligations, then the Company Board may withdraw or modify its
approval or recommendation of the Merger and this Agreement and,
in connection therewith, approve or recommend such Superior
Company Proposal;
provided
,
however
, that no such
withdrawal, modification, approval or recommendation shall be
made unless (A) at least six business days have passed
following Parents receipt of written notice (or four
business days in the case of an amendment or modification to a
Superior Company Proposal previously provided to Parent) from
the Company that the Company Board intends to take such action
because of such Superior Company Proposal and copies of all
documentation with respect to such Superior Company Proposal
(including a copy of the definitive agreement providing for such
Superior Company Proposal), or any amendment or modification
thereto, (B) during such six-business day period (or
four-business period, in the case of an amendment or
modification to a Superior Company Proposal) the Company has
made itself and its Representatives available to Parent to
negotiate and discuss potential amendments to this Agreement as
would enable the Company Board to proceed with its
recommendation of this Agreement and the Merger and (C) at
the end of such period, and taking into account any revised
proposal made by Parent during such period, such Superior
Company Proposal remains a Superior Company Proposal and the
Company Board has again made the determination, in good faith,
after consultation with outside counsel, that as a result of the
receipt of such Superior Company Proposal it is necessary to do
so in order to avoid breaching its
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fiduciary obligations, then the Company Board may withdraw or
modify its approval or recommendation of the Merger and this
Agreement and, in connection therewith, approve or recommend
such Superior Company Proposal.
(d) The Company promptly (and in any event within
24 hours) shall advise Parent orally and in writing of any
Company Takeover Proposal or any inquiry with respect to or that
is reasonably expected to lead to any Company Takeover Proposal
and the identity of the person making any such Company Takeover
Proposal or inquiry. The Company shall keep Parent fully
informed on a current basis of the status of any such Company
Takeover Proposal or inquiry (including by providing copies of
all written requests, proposals or offers received, any written
agreements entered into, and any written revisions or amendments
to any of the foregoing;
provided
,
however
, that
the Company shall not be required to provide such copies to
Parent in any instance to the extent that the Company Board
determines in good faith, after consultation with outside
counsel, that it is necessary to do so in order to avoid
breaching its fiduciary obligations). The Company shall provide
Parent at least two business days prior notice of any
meeting of the Company Board at which the Company Board
considers any Company Takeover Proposal or any amendment or
modification thereto, including any consideration of whether
such Company Takeover Proposal or any amendment or modification
or amendment thereto is, or is reasonably likely to lead to, a
Superior Company Proposal.
(e) Nothing contained in this Section 5.02 shall
prohibit the Company from making any required disclosure to the
Companys shareholders if, in the good faith judgment of
the Company Board, after consultation with outside counsel,
failure so to disclose would result in a breach of its
obligations under applicable Law. Any action taken by the
Company or the Company Board in accordance with this
Section 5.02(e) shall not be deemed to be a modification of
the Company Boards approval or recommendation of the
Merger and this Agreement.
(f) For purposes of this Agreement:
Acceptable Confidentiality Agreement
means a confidentiality agreement that contains provisions that
are no less favorable in the aggregate (including any standstill
or similar provisions) to the Company than those contained in
the Confidentiality Agreement;
provided
,
however
,
that an Acceptable Confidentiality Agreement need not prohibit
the making of a Company Takeover Proposal.
Company Confidentiality Agreement
means any confidentiality, non-solicitation, no-hire, standstill
or similar agreement, entered into in contemplation of potential
Company Takeover Proposal, to which the Company or any Company
Subsidiary is a party or under which the Company or any Company
Subsidiary has rights (other than the Confidentiality Agreement).
Company Takeover Proposal
means any
direct or indirect proposal or offer made by a third party
(i) for a merger, joint venture, partnership,
consolidation, dissolution, tender offer, recapitalization or
other business combination, a liquidation or dissolution, or any
other similar transaction involving the Company or any of its
subsidiaries, (ii) for the issuance by the Company or any
of its subsidiaries of over 15% of its equity securities or
(iii) to acquire in any manner, or to lease, license or
encumber, beneficial ownership of over 15% of the equity
securities or consolidated total assets of the Company or any of
its subsidiaries, in each case in one or a series of related
transactions and in each case other than the Merger.
Superior Company Proposal
means any
bona fide, unsolicited Company Takeover Proposal to acquire all
of the equity securities or all or substantially all of the
assets of the Company, pursuant to a tender or exchange offer, a
merger, a consolidation, a liquidation or dissolution, a
recapitalization, a sale of assets or otherwise, (i) on
terms which the Company Board determines in good faith to be
more favorable to the holders of Company Common Stock from a
financial point of view than the Merger (based on the written
opinion, with only customary qualifications, of the
Companys independent financial advisor), taking into
account all the terms and conditions of such proposal and this
Agreement, and the identity and nature of the third party making
such proposal and (ii) that is reasonably likely to be
completed on a timely basis, taking into account all financial,
regulatory, legal and other aspects of such proposal, including
any unsatisfied conditions thereto.
(g) Without limiting the generality of the foregoing, the
Company agrees that any action inconsistent with any of the
provisions of this Section 5.02 by any Company Subsidiary
or any Representative of the Company or of any Company
Subsidiary, acting in such capacity, shall constitute a breach
of this Section 5.02 by the Company.
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ARTICLE VI
Additional
Agreements
Section
6.01.
Preparation
of Proxy Statement; Shareholders
Meeting
.
(a) The Company shall, at
Parents request, as soon as practicable (and in any event
within 10 business days) following the date of this Agreement ,
prepare and file with the SEC the Proxy Statement in preliminary
form, and each of the Company and Parent shall use its best
efforts to respond as promptly as practicable to any comments of
the SEC with respect thereto. The Company shall notify Parent
promptly of the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff for amendments
or supplements to the Proxy Statement or for additional
information and shall supply Parent with copies of all
correspondence between the Company or any of its
Representatives, on the one hand, and the SEC or its staff, on
the other hand, with respect to the Proxy Statement. If at any
time prior to receipt of the Company Shareholder Approval there
shall occur any event that should be set forth in an amendment
or supplement to the Proxy Statement, the Company shall promptly
prepare and mail to its shareholders such an amendment or
supplement. The Company shall not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably
objects. The Company shall use its best efforts to cause the
Proxy Statement to be mailed to the Companys shareholders
as promptly as practicable after filing with the SEC.
(b) The Company shall, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and
hold a meeting of its shareholders (the
Company
Shareholders Meeting
) for the purpose of seeking the
Company Shareholder Approval. The Company shall, through the
Company Board, recommend to its shareholders that they give the
Company Shareholder Approval, and shall take all lawful action
to solicit such approval, except to the extent that the Company
Board has withdrawn or modified its approval or recommendation
of this Agreement or the Merger as permitted by
Section 5.02(c). The Company shall not adjourn or postpone
such meeting, except with Parents consent or as required
by applicable Law.
Section
6.02.
Access
to Information; Confidentiality
.
The Company
shall, and shall cause each Company Subsidiary to, afford to
Parent, and to Parents officers, employees, accountants,
counsel, financial advisors and other Representatives,
reasonable access during normal business hours during the period
prior to the Effective Time to all their respective properties,
books, contracts, commitments, personnel and records and, during
such period, the Company shall, and shall cause each Company
Subsidiary to, (a) furnish promptly to Parent (i) a
copy of each report, schedule, registration statement and other
document filed by it during such period pursuant to the
requirements of Federal or state securities laws and
(ii) all other information concerning its business,
properties and personnel as Parent may reasonably request;
provided
,
however
, that either party may withhold
any document or information to comply with the Antitrust Laws
(as defined in Section 6.03(c)) or to avoid liability under
any applicable anti-cartel law, whether criminal or civil or the
terms of a confidentiality agreement with a third party and
(b) use best efforts to cooperate with all reasonable
requests of Parent for the purpose of planning the post-Closing
integration of Parent and the Company, including
(i) directing its executives and officers to use best
efforts to assist and cooperate with Parent in undertaking
integration planning activities, (ii) if requested by
Parent, appointing an overall integration planning coordinator,
and designating liaisons for functional and geographic units and
(iii) cooperating in communications to and, at
Parents request, facilitating meetings with customers,
suppliers, business partners (including GE) and employees. If
any material is withheld by any party pursuant to the proviso in
Section 6.02(a)(ii), such party shall inform the other
party as to the general nature of what is being withheld,
consult, in good faith, with the other party on whether adequate
safeguards can be established to permit the exchange of
information, and, to the extent any information is subject to a
confidentiality agreement, use best efforts to obtain any third
party consents required for disclosure. All information
exchanged pursuant to this Section 6.02 shall be subject to
the confidentiality agreement dated May 16, 2008, between
the Company and Parent (the
Confidentiality
Agreement
). Neither any investigation nor any receipt
of information by or on behalf of Parent shall operate as a
waiver, or otherwise limit or affect in any respect, any
representation or warranty of the Company or any covenant or
other provision in this Agreement.
Section
6.03.
Best
Efforts; Notification
.
(a) Upon the
terms and subject to the conditions set forth in this Agreement,
unless, to the extent permitted by Section 5.02(c), the
Company Board approves or recommends a Superior Company Proposal
in compliance with Section 5.02, each of the parties shall
use its best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with
the other parties in
A-21
doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner practicable,
the Merger, including (i) the obtaining of all necessary
actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary
registrations and filings (including filings with Governmental
Entities, if any) and the taking of all reasonable steps as may
be necessary to obtain an approval or waiver from, or to avoid
an action or proceeding by, any Governmental Entity,
(ii) the obtaining of all necessary consents, approvals or
waivers from third parties (although, in the case of the
Company, any material financial or other concession offered in
consideration of such a consent, approval or waiver shall be
subject to the written prior consent of Parent, not to be
unreasonably withheld), (iii) the defending of any lawsuits
or other Legal Proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the Merger,
including seeking to have any stay or temporary restraining
order entered by any court or other Governmental Entity vacated
or reversed and (iv) the execution and delivery of any
additional instruments necessary to consummate the Merger and to
fully carry out the purposes of this Agreement. In connection
with and without limiting the foregoing, the Company and the
Company Board shall (x) take all action necessary to ensure
that no state takeover statute or similar statute or regulation
is or becomes applicable to the Merger or this Agreement and
(y) if any state takeover statute or similar statute or
regulation becomes applicable to this Agreement, take all action
necessary to ensure that the Merger may be consummated as
promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such statute
or regulation on the Merger. Notwithstanding the foregoing, the
Company and its Representatives shall not be prohibited under
this Section 6.03(a) from taking any action permitted by
Section 5.02.
(b) The Company shall give prompt notice to Parent, and
Parent or Sub shall give prompt notice to the Company, of
(i) any representation or warranty made by it contained in
this Agreement that is qualified as to materiality becoming
untrue or inaccurate in any respect or any such representation
or warranty that is not so qualified becoming untrue or
inaccurate in any material respect or (ii) the failure by
it to comply with or satisfy in any material respect any
covenant, condition or agreement to be complied with or
satisfied by it under this Agreement;
provided
,
however
, that no such notification shall affect the
representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties
under this Agreement.
(c) Nothing in Section 6.03(a) shall require Parent to
dispose of any of its assets or to limit its freedom of action
with respect to any of its businesses, or to consent to any
disposition of the Companys assets or limits on the
Companys freedom of action with respect to any of its
businesses, or to commit or agree to any of the foregoing, and
nothing in Section 6.03(a) shall authorize the Company to
commit or agree to any of the foregoing, to obtain any consents,
approvals, permits or authorizations to remove any impediments
to the Merger relating to the HSR Act, the EC Merger Regulation,
the Canadian Investment Regulation or other antitrust,
competition or premerger notification, trade regulation law,
regulation or order (
Antitrust Laws
) or to
avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order in any
suit or proceeding relating to Antitrust Laws, other than
dispositions, limitations or consents, commitments or agreements
with respect to the Companys businesses, assets or
operations that in each such case may be conditioned upon the
consummation of the Merger, is conducted with Parents
prior written consent, not to be unreasonably withheld, and that
has not had and is not reasonably expected, individually or in
the aggregate, to have a Company Material Adverse Effect.
(d) To the extent permitted by applicable Law: (i) the
parties shall consult and cooperate with one another, and
consider in good faith the views of one another, in connection
with any analyses, appearances, presentations, memoranda,
briefs, arguments, opinions and proposals made or submitted by
or on behalf of any party hereto in connection with proceedings
under or relating to any of the Antitrust Laws, (ii) each
party shall notify the other promptly upon the receipt of any
comments from any official of a Governmental Entity in
connection with any filings made pursuant to any Antitrust Law
or any request by such official for an amendment or supplement
to any filings made pursuant to, or information provided to
comply with, applicable Law and (iii) to the extent
reasonably practicable, neither the Company nor Parent shall,
nor shall they permit their respective Representatives to,
participate independently in any substantive meeting or
discussion, either in person or by telephone, with any
Governmental Entity in connection with the transactions
contemplated by this Agreement unless it first consults with the
other party and, to the extent not prohibited by such
Governmental Entity, gives the other party an opportunity to
attend and participate.
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Section
6.04.
Company
Equity Awards and Long-Term Incentive
Awards
.
(a) As soon as reasonably
practicable following the date of this Agreement (and in any
event prior to the date of the Company Shareholders Meeting),
the Company Board (or, if appropriate, any committee
administering any Company Stock Plan or other Company Benefit
Plan that provides long-term incentive compensation) shall adopt
such resolutions and take such other actions pursuant to its
administrative authority under the Company Stock Plans to
provide that, at the Effective Time:
(i) each unexercised Company Stock Option, whether vested
or unvested, that is outstanding immediately prior to the
Effective Time shall be canceled, with the holder of each such
Company Stock Option becoming entitled to receive an amount in
cash equal to (A) the excess, if any, of (1) the
Merger Consideration over (2) the exercise price per share
of Company Common Stock subject to such Company Stock Option,
multiplied by (B) the number of shares of Company Common
Stock subject to such Company Stock Option;
(ii) each share of Company Restricted Stock that is
outstanding as of the Effective Time shall become fully vested,
with the holder of each such share of Company Restricted Stock
becoming entitled to receive an amount in cash equal to the
Merger Consideration in accordance with, and subject to,
Article II;
(iii) each performance unit award, denominated as $1,
granted by the Company that is subject to performance-based
vesting or delivery requirements (such performance unit awards,
the
Company Performance Unit Awards
) that is
outstanding immediately prior to the Effective Time shall be
canceled, with the holder of each such Company Performance Unit
Award becoming entitled to receive an amount in cash equal to
the value of the target number of units subject to such Company
Performance Unit Award as of the Effective Time;
(iv) each Company RSU that is outstanding immediately prior
to the Effective Time shall be canceled, with the holder of each
such Company RSU becoming entitled to receive an amount in cash
equal to the Merger Consideration; and
(v) each Company DSU that is outstanding immediately prior
to the Effective Time shall be canceled, with the holder of each
such Company DSU becoming entitled to receive an amount in cash
equal to the Merger Consideration.
Parent shall cause all amounts payable pursuant to this
Section 6.04(a), subject to Section 2.02(g), to be
paid as promptly as practicable following the Effective Time,
without interest;
provided
,
however
, that the
payment with respect to Company DSUs shall be paid in accordance
with the applicable Company Stock Plan governing such Company
DSUs. The Company shall provide notice (in a form reasonably
satisfactory to Parent) to each holder of an outstanding equity
award or long-term incentive award describing the treatment of
such award as provided in this Section 6.04(a).
(b) As of the Effective Time, each Company Stock Equivalent
issued under a Specified Deferred Compensation Plan that is
outstanding immediately prior to the Effective Time shall cease
to represent the right to the equivalent in value and rate of
return to a share of Company Common Stock and shall instead be
converted into the right to receive an amount in cash equal to
the Merger Consideration (such amount, the
Stock
Equivalent Amount
). Following the Effective Time, the
Surviving Corporation shall credit such Stock Equivalent
Amounts, which credits may then be notionally reinvested, in
each case in accordance with the terms of the applicable
Specified Deferred Compensation Plan, and paid to participants
in the Specified Deferred Compensation Plans in accordance with
such plans terms.
Section
6.05.
Benefit
Plans
.
(a) For a period of one year
after the Effective Time, Parent shall either (i) maintain
or cause the Surviving Corporation (or in the case of a transfer
of all or substantially all the assets and business of the
Surviving Corporation, its successors and assigns) to maintain
the Company Benefit Plans (other than plans providing for the
issuance of Company Common Stock or any derivative securities or
otherwise based on the value of Company Common Stock) at the
benefit levels in effect as of the Effective Time and to provide
other compensation to employees of the Company and the Company
Subsidiaries employed by Parent, the Surviving Corporation or
any of their respective subsidiaries (the
Company
Employees
) that is not less favorable in the aggregate
than the compensation provided to such employees by the Company
and the Company Subsidiaries as of the Effective Time or
(ii) provide or cause the Surviving Corporation (or, in
such case, its successors or assigns) to provide compensation
and benefits to the Company Employees that, taken as a whole,
are substantially comparable in the aggregate to such employees
than those provided to such employees as of the Effective Time;
provided
, that Parent shall not be required to offer to
the Company Employees any form of equity compensation awards as
a part of
A-23
such compensation and benefits;
provided
further that the
Companys current equity compensation programs shall be
taken into account when determining substantial comparability.
(b) Without limiting the generality of
Section 6.05(a), from and after the Effective Time, the
Surviving Corporation shall honor and continue during the
one-year period following the Effective Time or, if sooner,
until all obligations thereunder have been satisfied, all of the
Companys employment, severance, retention and termination
policies, programs, agreements or arrangements, in each case, as
in effect at the Effective Time, including with respect to any
payments, benefits or rights arising as a result of the
transactions contemplated by this Agreement (either alone or in
combination with any other event), without any amendment or
modification, other than any amendment or modification required
to comply with applicable Law.
(c) Without limiting the generality of
Sections 6.05(a) and 6.05(b), during the one-year period
following the Effective Time or, if sooner, until all
obligations thereunder have been satisfied, the Surviving
Corporation shall (i) honor and continue the cash incentive
compensation plans, including all sales commission plans,
maintained by the Company and its Subsidiaries at the Effective
Time (the
Incentive Plans
) pursuant to their
respective terms as in effect at the Effective Time with respect
to all performance periods thereunder commencing prior to and
ending after the Effective Time and (ii) at the times
prescribed by the Incentive Plans as in effect at the Effective
Time, make payments to the Company Employees in accordance with
the applicable terms of the Incentive Plans as in effect at the
Effective Time.
(d) With respect to any employee benefit plan,
as defined in Section 3(3) of ERISA, maintained by Parent
or any of its subsidiaries (including any vacation, paid time
off and severance plans), for all purposes, including
determining eligibility to participate, level of benefits,
vesting, benefit accruals and early retirement subsidies, each
Company Employees service with the Company or any Company
Subsidiary (as well as service with any predecessor employer of
the Company or any such Company Subsidiary, to the extent
service with the predecessor employer is recognized by the
Company or such Company Subsidiary) shall be treated as service
with Parent or any of its subsidiaries;
provided
,
however
, that such service need not be recognized to any
extent that such recognition would result in any duplication of
benefits. Notwithstanding the foregoing, Parent and its
subsidiaries shall be required to provide credit for benefit
accrual purposes for such service by a Company Employee under a
defined benefit pension plan only if (i) such plan is a
Company Benefit Plan or (ii) such plan has assumed the
assets
and/or
liabilities of a Company Benefit Plan.
(e) Parent shall waive, or cause to be waived, any
pre-existing condition limitations, exclusions, actively-at-work
requirements and waiting periods under any welfare benefit plan
maintained by Parent or any of its affiliates in which Company
Employees (and their eligible dependents) will be eligible to
participate from and after the Effective Time, except to the
extent that such pre-existing condition limitations, exclusions,
actively-at-work requirements and waiting periods would not have
been satisfied or waived under the comparable Company Benefit
Plan immediately prior to the Effective Time. Parent shall
recognize, or cause to be recognized, the dollar amount of all
co-payments, deductibles and similar expenses incurred by each
Company Employee (and his or her eligible dependents) during the
calendar year in which the Effective Time occurs for purposes of
satisfying such years deductible and co-payment
limitations under the relevant welfare benefit plans in which
they will be eligible to participate from and after the
Effective Time.
(f) The provisions contained in this Section 6.05 with
respect to Company Employees are included for the sole benefit
of the respective parties hereto and shall not create any right
in any other person, including any employee, former employee, or
any participant in any Company Benefit Plan (or beneficiary of
any of the foregoing), including any right to continued (or
resumed) employment with Parent, the Surviving Corporation, or
any Company Subsidiary, nor, except as set forth in
Sections 6.05(b) and 6.05(c), shall the provisions of this
Section 6.05 require Parent, the Surviving Corporation or
any Company Subsidiary to continue or amend any particular
benefit plan after the consummation of the transactions
contemplated by this Agreement for any Company Employee, former
Company Employee or any other person.
Section
6.06.
Indemnification
.
(a) Parent
shall, to the fullest extent permitted by Law, cause the
Surviving Corporation to honor all the Companys
obligations to indemnify (including all obligations to advance
funds for expenses) the current or former directors or officers
of the Company and the Company Subsidiaries for acts or
omissions by such directors and officers occurring prior to the
Effective Time to the extent that such obligations of the
Company exist on the date of this Agreement, whether pursuant to
the Company Articles, the Company Code of
A-24
Regulations, individual indemnity agreements or otherwise, and
such obligations shall survive the Merger and shall continue in
full force and effect in accordance with the current terms of
the Company Articles, the Company Code of Regulations and such
individual indemnity agreements.
(b) Prior to the Effective Time, the Company shall, and, if
the Company is unable to and so requests to Parent at least 20
business days prior to the Closing, Parent shall cause the
Surviving Corporation, as of the Effective Time, to obtain and
fully pay the premium for the extension of the directors
and officers liability coverage of the Companys
existing directors and officers insurance policies,
for a claims reporting or discovery period of at least six years
from and after the Effective Time with respect to any claim
related to any period or time at or prior to the Effective Time
from an insurance carrier with the same or better credit rating
as the Companys current insurance carrier with respect to
directors and officers liability insurance
(collectively,
D&O Insurance
) with
terms, conditions, retentions and limits of liability that are
no less advantageous than the coverage provided under the
Companys existing policies with respect to any actual or
alleged error, misstatement, misleading statement, act,
omission, neglect, breach of duty or any matter claimed against
a director or officer of the Company or any Company Subsidiary
by reason of him or her serving in such capacity that existed or
occurred at or prior to the Effective Time (including in
connection with this Agreement or the transactions or actions
contemplated hereby);
provided
,
however
, that the
Company shall not, and Parent shall not be required to, make or
agree to make premium payments for such tail
insurance to the extent such premiums exceed 300% of the annual
premiums paid by the Company as of the date hereof for D&O
Insurance (such 300% amount, the
Maximum
Premium
), and in lieu thereof the Company (or Parent,
as the case may be) shall obtain the most advantageous policies
of directors and officers insurance obtainable for
the Maximum Premium, as reasonably determined by the Company. If
the Company and the Surviving Corporation for any reason fail to
obtain such tail insurance policies as of the
Effective Time, then the Surviving Corporation shall, and Parent
shall cause the Surviving Corporation to, continue to maintain
in effect for a period of at least six years from the Effective
Time (or until such time as Parent of the Surviving Corporation
is able to obtain the tail insurance policies as
described above) the D&O Insurance with respect to claims
arising from or related to facts or events which occurred at or
before the Effective Time;
provided
,
however
, that
Parent shall not be obligated to make annual premium payments
for such insurance to the extent such premiums exceed the
Maximum Premium. If such insurance coverage cannot be obtained
at all, or can only be obtained at an annual premium in excess
of the Maximum Premium, Parent shall maintain the most
advantageous policies of directors and officers
insurance obtainable for an annual premium equal to the Maximum
Premium, as reasonably determined by Parent. The Company
represents to Parent that the Maximum Premium is $7,539,000.
(c) From and after the Effective Time, to the fullest
extent permitted by Law, Parent shall, and shall cause the
Surviving Corporation to, indemnify, defend and hold harmless
the present and former officers and directors of the Company and
the Company Subsidiaries and any employee of the Company or any
Company Subsidiary who acts as a fiduciary under any Company
Benefit Plan (each, an
Indemnified Party
)
against all losses, claims, damages, liabilities, fees and
expenses (including attorneys fees and disbursements),
judgments, fines and amounts paid in settlement (in the case of
settlements, with the approval of the indemnifying party (which
approval shall not be unreasonably withheld)) (collectively,
Losses
), as incurred (payable monthly as
incurred upon written request, which request shall include
reasonable evidence of the Losses set forth therein) to the
extent arising from, relating to, or otherwise in respect of,
any actual or threatened action, suit, proceeding or
investigation, in respect of actions or omissions occurring at
or prior to the Effective Time in connection with such
Indemnified Partys duties as an officer or director of the
Company or any Company Subsidiary, including with respect to
this Agreement and the Merger;
provided
,
however
,
that an Indemnified Party shall not be entitled to
indemnification under this Section 6.06(c) for Losses
arising out of actions or omissions by the Indemnified Party
constituting (i) a breach of this Agreement,
(ii) criminal conduct, (iii) any violation of Federal,
state or foreign securities laws or (iv) any action taken
primarily for the purpose of personal profit or advantage to
which such Indemnified Person was not entitled.
(d) In the event Parent or the Surviving Corporation or any
of their respective successors or assigns (i) consolidates
with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers or conveys all
or substantially all of its properties and assets, then, and in
each such case, to the extent necessary, proper provision shall
be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, assume the
obligations set forth in this Section 6.06.
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(e) The obligations under this Section 6.06 shall not
be terminated or modified in such a manner as to adversely
affect any indemnitee to whom this Section 6.06 applies
without the consent of such affected indemnitee. It is expressly
agreed that the indemnitees to whom this Section 6.06
applies shall be third-party beneficiaries of this
Section 6.06 and shall be entitled to enforce the covenants
contained herein.
Section
6.07.
Fees
and Expenses
.
(a) Except as provided
below, all fees and expenses incurred in connection with the
Merger and this Agreement shall be paid by the party incurring
such fees or expenses, whether or not the Merger is consummated.
(b) The Company shall pay to Parent a fee of $66,700,000
(the
Termination Fee
) if: (i) the
Company terminates this Agreement pursuant to
Section 8.01(e) or (ii) Parent terminates this
Agreement pursuant to Section 8.01(c).
(c) If this Agreement is terminated by Parent or the
Company pursuant to Sections 8.01(b)(iii) or 8.01(d), then
the Company shall promptly upon request made from time to time
by Parent reimburse Parent, up to an aggregate maximum of
$16,000,000, for all reasonable and documented expenses
(including all attorneys fees, accountants fees,
financial advisory fees and filing fees) that have been incurred
and paid or that may be incurred or become payable by or on
behalf of Parent or any of its subsidiaries in connection with
this Agreement, including all such expenses in connection with
(i) the preparation, negotiation and performance of this
Agreement and all related agreements, (ii) any financing
arrangements pursued by Parent or Sub in connection therewith,
and (iii) Parents due diligence investigation with
respect to the Company and the Company Subsidiaries.
(d) The Company shall pay to Parent the Termination Fee,
less any amounts actually paid pursuant to Section 6.07(c),
if all of the following four conditions are met: (i) this
Agreement is terminated by Parent or the Company pursuant to
Section 8.01(b)(iii) or 8.01(d), (ii) prior to the
Company Shareholders Meeting a Company Takeover Proposal has
been publicly disclosed, announced, commenced, submitted or
made, or any person has publicly announced an intention (whether
or not conditional) to make a Company Takeover Proposal, and, as
of the date five business days prior to the date of the Company
Shareholders Meeting, such Company Takeover Proposal or
announced intention has not been publicly withdrawn without
qualification, (iii) at the Company Shareholders Meeting
the Company Shareholder Approval is not obtained and
(iv) on or prior to the first anniversary of such
termination, either (A) a Company Takeover Proposal is
consummated or (B) a definitive agreement relating to a
Company Takeover Proposal is entered into and thereafter
(whether before or after such first anniversary) such Company
Takeover Proposal is consummated. For purposes of this
Section 6.07(d), all references to 15% in the
definition of Company Takeover Proposal shall be replaced with
50%.
(e) The Company shall pay to Parent the Termination Fee if
all of the following five conditions are met: (i) this
Agreement is terminated by Parent or the Company pursuant to
Section 8.01(b)(i), (ii) prior to such termination a
Company Takeover Proposal has been publicly disclosed,
announced, commenced, submitted or made, or any person shall
have publicly announced an intention (whether or not
conditional) to make a Company Takeover Proposal, (iii) at
the time of such termination the conditions set forth at
Sections 7.01(b), 7.01(c) and 7.03 are satisfied,
(iv) at the time of such termination the condition set
forth in Section 7.01(a) is not satisfied, and (v) on
or prior to the first anniversary of such termination, either
(A) a Company Takeover Proposal is consummated or
(B) a definitive agreement relating to a Company Takeover
Proposal is entered into and thereafter (whether before or after
such first anniversary) such Company Takeover Proposal is
consummated. For purposes of this Section 6.07(e), all
references to 15% in the definition of Company
Takeover Proposal shall be replaced with 50%.
(f) Any Termination Fee shall be paid in immediately
available funds as promptly as practicable, and in any event
within two business days, after the date of the event giving
rise to the obligation to make such payment, unless the
Termination Fee is payable as a result of a termination pursuant
to Section 6.07(b)(i), in which case, the Termination Fee
shall be payable prior to and as a condition to the termination.
(g) The parties acknowledge and agree that the provisions
for payment of the Termination Fee are an integral part of the
transactions contemplated by this Agreement and are included
herein in order to induce Parent to enter into this Agreement
and to reimburse Parent for incurring the costs and expenses
related to entering into this Agreement. If the Company fails to
pay when due any amount payable under this Section 6.07,
then: (i) the Company shall reimburse Parent for all
reasonable and documented costs and expenses (including fees and
A-26
disbursements of counsel) incurred in connection with the
collection of such overdue amount and the enforcement by Parent
of its rights under this Section 6.07; and (ii) the
Company shall pay to Parent interest on such overdue amount (for
the period commencing as of the date such overdue amount was
originally required to be paid and ending on the date such
overdue amount is actually paid to other party in full) at a
rate per annum of 350 basis points over the prime
rate (as announced by Bank of America, N.A. or any
successor thereto) in effect on the date such overdue amount was
originally required to be paid.
(h) Notwithstanding anything in this Agreement to the
contrary, payment by the Company to Parent of the Termination
Fee, in circumstances where the Company is required hereby to
pay the Termination Fee pursuant to the relevant Section of this
Agreement, shall constitute the sole and exclusive remedy of
Parent and Sub with respect to any and all claims, of whatever
nature and whenever arising, relating to or arising out of this
Agreement or the Merger.
Section
6.08.
Public
Announcements
.
Parent and Sub, on the one
hand, and the Company, on the other hand, shall consult with
each other before issuing, and provide each other the
opportunity to review and comment upon, any press releases,
public statements or similar announcements, communications,
notices and disclosures with respect to this Agreement or the
Merger, including announcements, communications, notices and
disclosures made to or for shareholders, investors, employees,
customers, suppliers and business partners, and shall not issue
any such press release or make any such public statement prior
to such consultation, except as may be required by applicable
Law, court process or by obligations pursuant to any listing
agreement with any national securities exchange, and shall
coordinate and cooperate with each other regarding any such
press releases, public statements or similar announcements,
communications, notices and disclosures.
Section
6.09.
Transfer
Taxes
.
All stock transfer, real estate
transfer, documentary, stamp, recording and other similar Taxes
(including interest, penalties and additions to any such Taxes)
(
Transfer Taxes
) incurred in connection with
the Merger shall be paid by either Sub or the Surviving
Corporation, and the Company and the Surviving Corporation shall
cooperate with Sub and Parent in preparing, executing and filing
any Tax Returns with respect to such Transfer Taxes.
Section
6.10.
Shareholder
Litigation
.
The Company shall give Parent the
opportunity to participate in the defense or settlement of any
shareholder litigation against the Company and its directors
relating to the Merger or this Agreement;
provided
,
however
, that no such settlement shall be agreed to
without Parents consent, which shall not be unreasonably
withheld.
ARTICLE VII
Conditions
Precedent
Section
7.01.
Conditions
to Each Partys Obligation To Effect the
Merger
.
The respective obligation of each
party to effect the Merger is subject to the satisfaction or
waiver on or prior to the Closing Date of the following
conditions:
(a)
Shareholder Approval
.
The
Company shall have obtained the Company Shareholder Approval.
(b)
Antitrust
.
The waiting period
(and any extension thereof) applicable to the Merger under the
HSR Act, the EC Merger Regulation or the Competition Act
(Canada) shall have been terminated, waived or shall have
expired. In Canada, the Commissioner of Competition, pursuant to
the Competition Act (Canada), shall have issued either an
Advance Ruling Certificate or no action letter to
Parent in respect of the Merger, on terms and in a form
reasonably satisfactory to Parent. Any consents, approvals and
filings under any foreign antitrust or investment control Law,
the absence of which would prohibit the consummation of the
Merger, shall have been obtained or made.
(c)
No Injunctions or
Restraints
.
No order, decree or ruling issued
by any Government Entity of competent jurisdiction or other Law
preventing the consummation of the Merger shall be in effect;
provided
,
however
, that prior to asserting this
condition, subject to Section 6.03, each of the parties
shall have used its best efforts to prevent the entry of any
such injunction or other order and to appeal as promptly as
possible any such judgment that may be entered.
A-27
Section
7.02.
Conditions
to Obligations of Parent and Sub
.
The
obligations of Parent and Sub to effect the Merger are further
subject to the following conditions:
(a)
Representations and
Warranties
.
The representations and
warranties of the Company (i) in this Agreement, other than
the representations expressly referenced below, shall be true
and correct, disregarding all qualifications and exceptions
contained therein related to materiality or
Company Material Adverse Effect, other than for such
failures to be true and correct that, individually and in the
aggregate, have not had and are not reasonably expected to have
a Company Material Adverse Effect; (ii) in
Sections 3.07 and 3.08(i) shall be true and correct in all
respects; (iii) in Section 3.03 shall be true and
correct in all respects other than for such failures to be true
and correct that are
de minimis
in the aggregate; and
(iv) in Sections 3.04, 3.08(ii), 3.08(iii), 3.19 and
3.20 shall be true and correct in all material respects, in each
of the above clauses (i) (iv) as of the Closing
Date as though made on the Closing Date, except to the extent
such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties
shall be true and correct in such respects as indicated above,
on and as of such earlier date). Parent shall have received a
certificate signed on behalf of the Company by the
Companys chief executive officer or chief financial
officer, to such effect.
(b)
Performance of Obligations of the
Company
.
The Company shall have performed in
all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer and the chief financial
officer of the Company to such effect.
Section
7.03.
Conditions
to Obligation of the Company
.
The obligation
of the Company to effect the Merger is further subject to the
following conditions:
(a)
Representations and
Warranties
.
The representations and
warranties of Parent and Sub in this Agreement shall be true and
correct, disregarding all qualifications and exceptions
contained therein related to materiality or
Parent Material Adverse Effect, as of the Closing
Date as though made on the Closing Date, except to the extent
such representations and warranties expressly relate to an
earlier date (in which case such representations and warranties
shall be true and correct in all respects, on and as of such
earlier date), other than for such failures to be true and
correct that, individually and in the aggregate, have not had
and are not reasonably expected to have a Parent Material
Adverse Effect. The Company shall have received a certificate
signed on behalf of Parent and Sub by an authorized person to
such effect.
(b)
Performance of Obligations of Parent and
Sub
.
Parent and Sub shall have performed in
all material respects all obligations required to be performed
by each of them under this Agreement at or prior to the Closing
Date, and the Company shall have received a certificate signed
on behalf of Parent and Sub by an authorized person to such
effect.
ARTICLE VIII
Termination,
Amendment and Waiver
Section
8.01.
Termination
.
Notwithstanding
anything contained in this Agreement to the contrary, this
Agreement may be terminated and abandoned at any time prior to
the Effective Time, whether before or after receipt of Company
Shareholder Approval:
(a) by mutual written consent of Parent, Sub and the
Company;
(b) by either Parent or the Company:
(i) if the Merger is not consummated on or before
February 1, 2009, unless the failure to consummate the
Merger is the result of a breach of this Agreement by the party
seeking to terminate this Agreement;
provided
,
however
, that the passage of such period shall be tolled
for any part thereof during which any party shall be subject to
a nonfinal Law, order, decree, judgment, injunction, ruling or
action restraining, enjoining or otherwise prohibiting the
consummation of the Merger, but in any event not to a date later
than May 1, 2009;
A-28
(ii) any Governmental Entity of competent jurisdiction
issues an order, decree or ruling or takes any other action
permanently enjoining, restraining or otherwise prohibiting the
Merger and such order, decree, ruling or other action shall have
become final and nonappealable;
(iii) if, at the Company Shareholders Meeting or as of any
adjournment or postponement thereof, the Company Shareholder
Approval is not obtained; or
(iv) if a breach of any representation, warranty, covenant
or agreement on the part of the other party set forth in this
Agreement shall have occurred which would cause any of the
conditions set forth in Sections 7.02(a) and 7.02(b), in
the case of breaches by the Company, or Sections 7.03(a)
and 7.03(b), in the case of breaches by Parent or Sub, not to be
satisfied, and such breach is not cured within thirty days after
notice thereof or is not capable of being cured prior to
February 1, 2009;
(c) by Parent if the Company Board or any committee thereof
withdraws or modifies, in a manner adverse to Parent or Sub, or
proposes publicly to withdraw or modify, in a manner adverse to
Parent or Sub, its approval or recommendation of this Agreement
or the Merger; fails to recommend to the Companys
shareholders that they give the Company Shareholder Approval;
approves or recommends, or proposes publicly to approve or
recommend, any Company Takeover Proposal (including any Superior
Company Proposal); or fails to recommend to the Companys
shareholders, within 10 business days after the commencement of
any tender or exchange offer relating to the Company Common
Stock, that the shareholders reject such tender or exchange
offer;
(d) by Parent if the Company or any Company Subsidiary
breaches Section 5.02 in any material respect; or
(e) by the Company, prior to the Company Shareholders
Meeting, in accordance with Section 8.05;
provided
,
however
, that the Company shall have complied with all
provisions thereof and of Section 5.02, including the notice
provisions therein.
Section
8.02.
Effect
of Termination
.
In the event of termination
of this Agreement by either the Company or Parent as provided in
Section 8.01, this Agreement shall forthwith become void
and have no effect, without any liability or obligation on the
part of Parent, Sub or the Company, other than
Section 3.15, Section 4.07, the second to last
sentence of Section 6.02, Section 6.07, this
Section 8.02 and Article IX, which provisions shall
survive such termination, and except that no such termination
shall relieve any party hereto from liability for any breach of
any representation, warranty or covenant set forth in this
Agreement.
Section
8.03.
Amendment
.
This
Agreement may be amended by the parties at any time before or
after receipt of the Company Shareholder Approval;
provided
,
however
, that (i) after receipt of
the Company Shareholder Approval, there shall be made no
amendment that by Law requires further approval by the
shareholders of the Company without the further approval of such
shareholders, (ii) no amendment shall be made to this
Agreement after the Effective Time, and (iii) except as
provided above no amendment of this Agreement by the Company
shall require the approval of the shareholders of the Company.
This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
Section
8.04.
Extension;
Waiver
.
At any time prior to the Effective
Time, the parties may (a) extend the time for the
performance of any of the obligations or other acts of the other
parties, (b) waive any inaccuracies in the representations
and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement, or (c) subject to the
proviso of Section 8.03, waive compliance with any of the
agreements or conditions contained in this Agreement. Subject to
the proviso in Section 8.03, no extension or waiver by the
Company shall require the approval of the shareholders of the
Company. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The
failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a
waiver of such rights.
Section
8.05.
Procedure
for Termination
.
The Company may terminate
this Agreement pursuant to Section 8.01(e) only if
(i) the Company Board shall have approved or recommended a
Superior Company Proposal in compliance in all material respects
with Section 5.02(c) (and has not otherwise breached in any
material respect any provision of Section 5.02),
(ii) the Company has previously paid the Termination Fee
due under Section 6.07(b),
A-29
and (iii) immediately after the termination of this
Agreement the Company enters into a definitive agreement with
the person making such Superior Company Proposal providing for
such Superior Company Proposal in the form provided to Parent
pursuant to Section 5.02(c).
ARTICLE IX
General
Provisions
Section
9.01.
Nonsurvival
of Representations and Warranties
.
None of
the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive
the Effective Time. This Section 9.01 shall not limit any
covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
Section
9.02.
Notices
.
All
notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be given and
shall be deemed to have been duly given if delivered personally
(notice deemed given upon receipt), telecopied (notice deemed
given upon confirmation of receipt), sent by a nationally
recognized overnight courier service (notice deemed given upon
receipt of proof of delivery) or mailed by registered or
certified mail, return receipt requested (notice deemed given
upon receipt) to the parties at the following addresses (or at
such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to:
Ricoh Company, Ltd.
Ricoh Building, 8-13-1, Ginza,
Chuo-ku, Tokyo
104-8222,
Japan
Fax:
813-3543-9350
Attention: Takahisa Yokoo, Senior Manager, Regional
Business Support Center, International Business Group
with a copy to:
Morrison & Foerster LLP
Shin-Marunouchi Building, 29th Floor
5-1, Marunouchi 1-chome
Chiyoda-ku, Tokyo
100-0005
Fax:
813-3214-6512
Attention: Ken Siegel, Esq.
(b) if to the Company, to:
IKON Office Solutions, Inc.
70 Valley Stream Parkway
Malvern, PA
19355-0989
U.S.A.
Fax:
610-408-7264
Attention: Mark Hershey, Senior Vice President, General
Counsel and Secretary
with a copy to:
Cravath, Swaine & Moore LLP
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Fax:
212-474-3700
Attention: Richard Hall, Esq.
A-30
Section
9.03.
Definitions
.
For
purposes of this Agreement:
An
affiliate
of any person means
another person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common
control with, such first person.
A
Company Material Adverse Effect
means any circumstance, state of facts, occurrence, event,
change, effect or development that, individually or in the
aggregate, has had, or is reasonably expected to have, a
material adverse effect on (a) the business, financial
condition or results of operations of the Company and the
Company Subsidiaries, taken as a whole, or (b) the ability
of the Company to perform its obligations under this Agreement
or consummate the Merger in the manner contemplated by this
Agreement;
provided
,
however
, that with respect to
clause (a) above the effects of any Excluded Event shall
not be taken into account in determining whether there has been,
or is reasonably expected to be, a Company Material Adverse
Effect. An
Excluded Event
means any of the
following occurring after the date hereof: (i) any change,
development, event or occurrence in capital market conditions
generally or general economic conditions, in each case in the
United States or any foreign jurisdiction, including with
respect to interest rates or currency exchange rates,
(ii) any change, development, event or occurrence in
geopolitical conditions, the outbreak or escalation of
hostilities, any act of war or any act of terrorism,
(iii) any hurricane, tornado, flood, earthquake or other
natural disaster, (iv) any change (or proposed change) in
applicable Law or GAAP (or authoritative interpretation
thereof), (v) any change in general legal, regulatory,
political, economic or business conditions in the imaging and
document management industries, (vi) any failure, in and of
itself, of the Company to meet any internal or published
projections, forecasts, estimates or predictions in respect of
revenues, earnings or other financial or operating metrics, or
changes in the market price, credit rating or trading volume of
the Companys securities (it being understood that the
underlying facts giving rise or contributing to such failure or
change and the other effects thereof shall not be excluded
pursuant to this clause (vi)), (vii) the announcement and
pendency of this Agreement and the Merger, including any pending
or threatened lawsuit, action or proceeding in respect hereof,
(viii) any threatened or actual loss of or change in
relationship, or other adverse occurrence, with any customer,
supplier, distributor, or other business partner, or departure
of any employee or officer, of the Company or any of the Company
Subsidiaries, and (ix) any action or failure to act on the
part of the Company, any of the Company Subsidiaries or any of
its or their Representatives required by this Agreement (other
than as required by the first sentence of Section 5.01(a))
or requested or consented to in writing by Parent,
provided
,
however
, that none of the circumstances
described in clauses (i) (v) above shall
constitute Excluded Events, and accordingly the circumstances
described in such clauses shall be taken into account in
determining whether there has been, or is reasonably expected to
be, a Company Material Adverse Effect, if any such circumstances
have, or are reasonably expected to have, alone or in the
aggregate, a disproportionate impact on the Company or any
Company Subsidiary relative to other companies in the imaging
and document management industries.
knowledge of the Company
means the
actual knowledge of the following persons: Matthew Espe,
Mark Hershey, Jeffrey Hickling, Tracey Rothenberger, Donna
Venable and Robert F. Woods.
A
Parent Material Adverse Effect
means, with respect to Parent and Sub, an effect, event or
change which would reasonably be expected to prevent or
materially impair or delay the ability of Parent
and/or
Sub
to perform their respective obligations under this Agreement.
A
person
means any individual, firm,
corporation, partnership, company, limited liability company,
trust, joint venture, association, Governmental Entity or other
entity.
A
subsidiary
of any person means
another person, an amount of the voting securities, other voting
ownership or voting partnership interests of which is sufficient
to elect at least a majority of its board of directors or other
governing body (or, if there are no such voting interests, 50%
or more of the equity interests of which) is owned directly or
indirectly by such first person.
Section
9.04.
Interpretation;
Disclosure Letters
.
When a reference is made
in this Agreement to a Section, such reference shall be to a
Section of this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words
include, includes or
including are used in this
A-31
Agreement, they shall be deemed to be followed by the words
without limitation. Any matter disclosed in any
section of the Company Disclosure Letter shall be deemed
disclosed for each other section of the Company Disclosure
Letter to the extent the relevance thereof is reasonably
apparent on the face of such disclosure.
Section
9.05.
Severability
.
If
any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule or law, or
public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the
end that transactions contemplated hereby are fulfilled to the
extent possible.
Section
9.06.
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 one or more counterparts have been signed
by each of the parties and delivered to the other parties.
Section
9.07.
Entire
Agreement; No Third-Party Beneficiaries
.
This
Agreement, taken together with the Company Disclosure Letter and
the Parent Disclosure Letter, (a) constitute the entire
agreement, and supersede all prior agreements and
understandings, both written and oral, among the parties with
respect to the subject matter of this Agreement;
provided
,
however
, that the Confidentiality
Agreement shall remain in force in accordance with its terms
until the earlier of the Effective Time and the expiration date
provided for in the Confidentiality Agreement, and
(b) except for Section 6.06, are not intended to
confer upon any person other than the parties any rights or
remedies. Notwithstanding clause (b) of the immediately
preceding sentence, following the Effective Time the provisions
of Article II shall be enforceable by holders of
Certificates.
Section
9.08.
Governing
Law
.
This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York,
regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof, except to
the extent the provisions of the OGCL are mandatorily applicable
to the Merger.
Section
9.09.
Assignment
.
Neither
this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise by any of the parties without the
prior written consent of the other parties. Any purported
assignment without such consent shall be void. Subject to the
preceding sentences, this Agreement will be binding upon, inure
to the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
Section
9.10.
Enforcement
.
The
parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed
in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and
provisions of this Agreement in any Federal court sitting in the
State of New York located in New York County or, if such Federal
court does not have proper jurisdiction, in any New York state
court located in New York County, this being in addition to any
other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (a) consents to submit
itself to the personal jurisdiction of any Federal court sitting
in the State of New York located in New York County in the event
any dispute arises out of this Agreement or the Merger,
(b) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from
any such court, (c) agrees that it will not bring any
action relating to this Agreement or the Merger in any court
other than any Federal court sitting in the State of New York
located in New York County or, if such Federal court does not
have proper jurisdiction, in any New York state court located in
New York County, and (d) waives any right to trial by jury
with respect to any action related to or arising out of this
Agreement or the Merger.
A-32
Section
9.11.
Index
of Defined Terms
.
|
|
|
|
Defined Term
|
|
|
Section
|
|
Acceptable Confidentiality Agreement
|
|
|
5.02(f)
|
|
affiliate
|
|
|
9.03
|
|
Antitrust Laws
|
|
|
6.03(c)
|
|
Canadian Investment Regulations
|
|
|
3.05(b)(i)(D)
|
|
Certificate of Merger
|
|
|
1.03
|
|
Certificates
|
|
|
2.02(b)
|
|
Closing
|
|
|
1.02
|
|
Closing Date
|
|
|
1.02
|
|
Code
|
|
|
3.11(a)
|
|
Company
|
|
|
Preamble
|
|
Company 401(k) Plan
|
|
|
3.03
|
|
Company Articles
|
|
|
3.01
|
|
Company Benefit Agreement
|
|
|
3.11(h)
|
|
Company Benefit Plan
|
|
|
3.11(h)
|
|
Company Board
|
|
|
3.04(b)
|
|
Company Code of Regulations
|
|
|
3.01
|
|
Company Common Stock
|
|
|
Preamble
|
|
Company Confidentiality Agreement
|
|
|
5.02(f)
|
|
Company Contracts
|
|
|
3.14(a)
|
|
Company Disclosure Letter
|
|
|
Article III Preamble
|
|
Company DSUs
|
|
|
3.03(iii)(C)
|
|
Company Employees
|
|
|
6.05(a)(i)
|
|
Company Leased Real Property
|
|
|
3.16(a)(iii)
|
|
Company Material Adverse Effect
|
|
|
9.03
|
|
Company Pension Plans
|
|
|
3.11(a)
|
|
Company Performance Unit Awards
|
|
|
6.04(a)(iii)
|
|
Company Permits
|
|
|
3.05(c)(i)
|
|
Company Preferred Stock
|
|
|
3.03
|
|
Company Restricted Stock
|
|
|
3.03(i)
|
|
Company RSUs
|
|
|
3.03(iii)(B)
|
|
Company SEC Documents
|
|
|
Article III Preamble
|
|
Company Shareholder Approval
|
|
|
3.04(c)
|
|
Company Shareholders Meeting
|
|
|
6.01(b)
|
|
A-33
|
|
|
|
Defined Term
|
|
|
Section
|
|
Company Stock Equivalents
|
|
|
3.03(iv)
|
|
Company Stock Options
|
|
|
3.03(iii)(A)
|
|
Company Stock Plans
|
|
|
3.03(iii)
|
|
Company Subsidiary
|
|
|
3.01
|
|
Company Takeover Proposal
|
|
|
5.02(f)
|
|
Confidentiality Agreement
|
|
|
6.02
|
|
Consent
|
|
|
3.05(b)
|
|
Contract
|
|
|
3.05(a)(ii)
|
|
D&O Insurance
|
|
|
6.06(b)
|
|
Dissenting Shares
|
|
|
2.01(d)(i)
|
|
EC Merger Regulation
|
|
|
3.05(b)(i)(C)
|
|
Effective Time
|
|
|
1.03
|
|
Environmental Laws
|
|
|
3.18(c)(i)
|
|
ERISA
|
|
|
3.11(a)
|
|
ERISA Affiliate
|
|
|
3.11(d)
|
|
Exchange Act
|
|
|
3.05(b)(ii)(B)
|
|
Exchange Fund
|
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2.02(a)
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Excluded Event
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9.03
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GAAP
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3.06(b)
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GE
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3.14(a)(v)
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Goldman Sachs
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3.20
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Governmental Entity
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3.05(b)
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Governmental Regulations
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3.16(b)
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Hazardous Substances
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3.18(c)(ii)
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HSR Act
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3.05(b)(i)(B)
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Incentive Plans
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6.05(c)(i)
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Indemnified Party
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6.06(c)
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International Plan
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3.11(i)
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IP Rights
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3.15
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Judgment
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3.05(a)(iii)
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knowledge of the Company
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9.03
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Law
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3.05(a)(iii)
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Lease
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3.16(a)
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Legal Proceedings
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3.12
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A-34
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Defined Term
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Section
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Liens
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3.02(a)
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Losses
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6.06(c)
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Major Supplier Contract
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3.14(a)(vii)
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Maximum Premium
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6.06(b)
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Merger
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Preamble
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Merger Consideration
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2.01(c)(ii)
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Multiemployer Plan
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3.11(h)(i)
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OGCL
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1.01
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Parent
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Preamble
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Parent Disclosure Letter
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4.04(b)(vii)
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Parent Material Adverse Effect
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9.03
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Paying Agent
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2.02(a)
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PBGC
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3.11(f)(iii)
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person
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9.03
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Proxy Statement
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3.05(b)(ii)(A)
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Real Estate
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3.16(a)(i)
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Representatives
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5.02(a)
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Sarbanes Oxley Act
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3.06(c)(i)
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SEC
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Article III Preamble
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Significant Company Subsidiary
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3.01
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Software
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3.15
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Specified Deferred Compensation Plans
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3.03(iv)
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Stock Equivalent Amount
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6.04(b)
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Sub
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Preamble
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subsidiary
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9.03
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Superior Company Proposal
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5.02(f)
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Surviving Corporation
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1.01
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Tax Return
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3.09(e)
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Taxes
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3.09(e)
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Termination Fee
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6.07(b)
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Transfer Taxes
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6.09
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Voting Company Debt
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3.03
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[Space
left intentionally blank. Signature page follows.]
A-35
IN WITNESS WHEREOF, Parent, Sub and the Company have duly
executed this Agreement, all as of the date first written above.
RICOH COMPANY, LTD.,
Name: Kazuo Togashi
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Title:
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Senior Vice President
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KEYSTONE ACQUISITION, INC.,
Name: Katsumi Yoshida
IKON OFFICE SOLUTIONS, INC.,
Name: Matthew J. Espe
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Title:
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Chairman and Chief Executive Officer
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[Agreement and Plan of Merger - Signature Page]
A-36
Annex
B
August 27, 2008
Board of Directors
IKON Office Solutions, Inc.
70 Valley Stream Parkway
Malvern, Pennsylvania 19355
Ladies and Gentlemen:
You have requested our opinion as to the fairness from a
financial point of view to the holders of the outstanding shares
of common stock, no par value (the Shares), of IKON
Office Solutions, Inc. (the Company) of the $17.25
per Share in cash to be paid to such holders pursuant to the
Agreement and Plan of Merger, dated as of August 27, 2008
(the Agreement), among Ricoh Company, Ltd.
(Ricoh), Keystone Acquisition, Inc., a wholly owned
subsidiary of Ricoh (Acquisition Sub), and the
Company.
Goldman, Sachs & Co. and its affiliates are engaged in
investment banking and financial advisory services, securities
trading, investment management, principal investment, financial
planning, benefits counseling, risk management, hedging,
financing, brokerage activities and other financial and
non-financial activities and services for various persons and
entities. In the ordinary course of these activities and
services, Goldman, Sachs & Co. and its affiliates may
at any time make or hold long or short positions and
investments, as well as actively trade or effect transactions,
in the equity, debt and other securities (or related derivative
securities) and financial instruments (including bank loans and
other obligations) of the Company, Ricoh and any of their
respective affiliates or any currency or commodity that may be
involved in the transaction contemplated by the Agreement (the
Transaction) for their own account and for the
accounts of their customers. We have acted as financial advisor
to the Company in connection with, and have participated in
certain of the negotiations leading to, the Transaction. We
expect to receive fees for our services in connection with the
Transaction, the principal portion of which is contingent upon
consummation of the Transaction, and the Company has agreed to
reimburse our expenses and indemnify us against certain
liabilities arising out of our engagement. In addition, we have
provided certain investment banking and other financial services
to the Company and its affiliates from time to time. We also may
provide investment banking and other financial services to the
Company, Ricoh and their respective affiliates in the future. In
connection with the above-described services we have received,
and may receive, compensation.
In connection with this opinion, we have reviewed, among other
things, the Agreement; annual reports to shareholders and Annual
Reports on
Form 10-K
of the Company for the five fiscal years ended
September 31, 2007; certain interim reports to shareholders
and Quarterly Reports on
Form 10-Q
of the Company; certain other communications from the Company to
its shareholders; certain publicly available research analyst
reports for the Company; and certain internal financial analyses
and forecasts for the Company prepared by its management and
approved for our use by the Company (the Forecasts).
We also have held discussions with members of the senior
management of the Company regarding their assessment of the past
and current business operations, financial condition and future
prospects of the Company. In addition, we have reviewed the
reported price and trading activity for the Shares, compared
certain financial and stock market information for the Company
with similar information for certain other companies the
securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations in the office
equipment and document services industry specifically and in
other industries generally and performed such other studies and
analyses, and considered such other factors, as we considered
appropriate.
B-1
Board of Directors
IKON Office Solutions, Inc.
August 27, 2008
For purposes of rendering this opinion, we have relied upon and
assumed, without assuming any responsibility for independent
verification, the accuracy and completeness of all of the
financial, legal, regulatory, tax, accounting and other
information provided to, discussed with or reviewed by us. In
that regard, we have assumed with your consent that the
Forecasts have been reasonably prepared on a basis reflecting
the best currently available estimates and judgments of the
management of the Company. In addition, we have not made an
independent evaluation or appraisal of the assets and
liabilities (including any contingent, derivative or
off-balance-sheet assets and liabilities) of the Company or any
of its subsidiaries and we have not been furnished with any such
evaluation or appraisal. Our opinion does not address any legal,
regulatory, tax or accounting matters.
Our opinion does not address the underlying business decision of
the Company to engage in the Transaction, or the relative merits
of the Transaction as compared to any strategic alternatives
that may be available to the Company. This opinion addresses
only the fairness from a financial point of view, as of the date
hereof, of the $17.25 per Share in cash to be paid to the
holders of Shares pursuant to the Agreement. We do not express
any view on, and our opinion does not address, any other term or
aspect of the Agreement or Transaction, including, without
limitation, the fairness of the Transaction to, or any
consideration received in connection therewith by, the holders
of any other class of securities, creditors, or other
constituencies of the Company or Ricoh; nor as to the fairness
of the amount or nature of any compensation to be paid or
payable to any of the officers, directors or employees of the
Company or Ricoh, or class of such persons in connection with
the Transaction, whether relative to the $17.25 per Share in
cash to be paid to the holders of Shares pursuant to the
Agreement or otherwise. Our opinion is necessarily based on
economic, monetary, market and other conditions as in effect on,
and the information made available to us as of, the date hereof
and we assume no responsibility for updating, revising or
reaffirming this opinion based on circumstances, developments or
events occurring after the date hereof. Our advisory services
and the opinion expressed herein are provided for the
information and assistance of the Board of Directors of the
Company in connection with its consideration of the Transaction
and such opinion does not constitute a recommendation as to how
any holder of Shares should vote with respect to such
Transaction or any other matter. This opinion has been approved
by a fairness committee of Goldman, Sachs & Co.
Based upon and subject to the foregoing, it is our opinion that,
as of the date hereof, the $17.25 per Share in cash to be paid
to the holders of Shares pursuant to the Agreement is fair from
a financial point of view to such holders.
Very truly yours,
(GOLDMAN, SACHS & CO.)
B-2
Annex C
SECTION 1701.85
OF THE OHIO REVISED CODE
1701.85 Dissenting shareholderscompliance with
sectionfair cash value of shares.
(A)(1) A shareholder of a domestic corporation is entitled
to relief as a dissenting shareholder in respect of the
proposals described in sections 1701.74, 1701.76, and
1701.84 of the Revised Code, only in compliance with this
section.
(2) If the proposal must be submitted to the shareholders
of the corporation involved, the dissenting shareholder shall be
a record holder of the shares of the corporation as to which the
dissenting shareholder seeks relief as of the date fixed for the
determination of shareholders entitled to notice of a meeting of
the shareholders at which the proposal is to be submitted, and
such shares shall not have been voted in favor of the proposal.
Not later than ten days after the date on which the vote on the
proposal was taken at the meeting of the shareholders, the
dissenting shareholder shall deliver to the corporation a
written demand for payment to the dissenting shareholder of the
fair cash value of the shares as to which the dissenting
shareholder seeks relief, which demand shall state the
dissenting shareholders address, the number and class of
such shares, and the amount claimed by the dissenting
shareholder as the fair cash value of the shares.
(3) The dissenting shareholder entitled to relief under
division (C) of section 1701.84 of the Revised Code in
the case of a merger pursuant to section 1701.80 of the
Revised Code and a dissenting shareholder entitled to relief
under division (E) of section 1701.84 of the Revised
Code in the case of a merger pursuant to section 1701.801
of the Revised Code shall be a record holder of the shares of
the corporation as to which the dissenting shareholder seeks
relief as of the date on which the agreement of merger was
adopted by the directors of that corporation. Within twenty days
after the dissenting shareholder has been sent the notice
provided in section 1701.80 or 1701.801 of the Revised
Code, the dissenting shareholder shall deliver to the
corporation a written demand for payment with the same
information as that provided for in division (A)(2) of this
section.
(4) In the case of a merger or consolidation, a demand
served on the constituent corporation involved constitutes
service on the surviving or the new entity, whether the demand
is served before, on, or after the effective date of the merger
or consolidation. In the case of a conversion, a demand served
on the converting corporation constitutes service on the
converted entity, whether the demand is served before, on, or
after the effective date of the conversion.
(5) If the corporation sends to the dissenting shareholder,
at the address specified in the dissenting shareholders
demand, a request for the certificates representing the shares
as to which the dissenting shareholder seeks relief, the
dissenting shareholder, within fifteen days from the date of the
sending of such request, shall deliver to the corporation the
certificates requested so that the corporation may endorse on
them a legend to the effect that demand for the fair cash value
of such shares has been made. The corporation promptly shall
return the endorsed certificates to the dissenting shareholder.
A dissenting shareholders failure to deliver the
certificates terminates the dissenting shareholders rights
as a dissenting shareholder, at the option of the corporation,
exercised by written notice sent to the dissenting shareholder
within twenty days after the lapse of the
fifteen-day
period, unless a court for good cause shown otherwise directs.
If shares represented by a certificate on which such a legend
has been endorsed are transferred, each new certificate issued
for them shall bear a similar legend, together with the name of
the original dissenting holder of the shares. Upon receiving a
demand for payment from a dissenting shareholder who is the
record holder of uncertificated securities, the corporation
shall make an appropriate notation of the demand for payment in
its shareholder records. If uncertificated shares for which
payment has been demanded are to be transferred, any new
certificate issued for the shares shall bear the legend required
for certificated securities as provided in this paragraph. A
transferee of the shares so endorsed, or of uncertificated
securities where such notation has been made, acquires only the
rights in the corporation as the original dissenting holder of
such shares had immediately after the service of a demand for
payment of the fair cash value of the shares. A request under
this paragraph by the corporation is not an admission by the
corporation that the shareholder is entitled to relief under
this section.
C-1
(B) Unless the corporation and the dissenting shareholder
have come to an agreement on the fair cash value per share of
the shares as to which the dissenting shareholder seeks relief,
the dissenting shareholder or the corporation, which in case of
a merger or consolidation may be the surviving or new entity, or
in the case of a conversion may be the converted entity, within
three months after the service of the demand by the dissenting
shareholder, may file a complaint in the court of common pleas
of the county in which the principal office of the corporation
that issued the shares is located or was located when the
proposal was adopted by the shareholders of the corporation, or,
if the proposal was not required to be submitted to the
shareholders, was approved by the directors. Other dissenting
shareholders, within that three-month period, may join as
plaintiffs or may be joined as defendants in any such
proceeding, and any two or more such proceedings may be
consolidated. The complaint shall contain a brief statement of
the facts, including the vote and the facts entitling the
dissenting shareholder to the relief demanded. No answer to a
complaint is required. Upon the filing of a complaint, the
court, on motion of the petitioner, shall enter an order fixing
a date for a hearing on the complaint and requiring that a copy
of the complaint and a notice of the filing and of the date for
hearing be given to the respondent or defendant in the manner in
which summons is required to be served or substituted service is
required to be made in other cases. On the day fixed for the
hearing on the complaint or any adjournment of it, the court
shall determine from the complaint and from evidence submitted
by either party whether the dissenting shareholder is entitled
to be paid the fair cash value of any shares and, if so, the
number and class of such shares. If the court finds that the
dissenting shareholder is so entitled, the court may appoint one
or more persons as appraisers to receive evidence and to
recommend a decision on the amount of the fair cash value. The
appraisers have power and authority specified in the order of
their appointment. The court thereupon shall make a finding as
to the fair cash value of a share and shall render judgment
against the corporation for the payment of it, with interest at
a rate and from a date as the court considers equitable. The
costs of the proceeding, including reasonable compensation to
the appraisers to be fixed by the court, shall be assessed or
apportioned as the court considers equitable. The proceeding is
a special proceeding and final orders in it may be vacated,
modified, or reversed on appeal pursuant to the Rules of
Appellate Procedure and, to the extent not in conflict with
those rules, Chapter 2505. of the Revised Code. If, during
the pendency of any proceeding instituted under this section, a
suit or proceeding is or has been instituted to enjoin or
otherwise to prevent the carrying out of the action as to which
the shareholder has dissented, the proceeding instituted under
this section shall be stayed until the final determination of
the other suit or proceeding. Unless any provision in division
(D) of this section is applicable, the fair cash value of
the shares that is agreed upon by the parties or fixed under
this section shall be paid within thirty days after the date of
final determination of such value under this division, the
effective date of the amendment to the articles, or the
consummation of the other action involved, whichever occurs
last. Upon the occurrence of the last such event, payment shall
be made immediately to a holder of uncertificated securities
entitled to payment. In the case of holders of shares
represented by certificates, payment shall be made only upon and
simultaneously with the surrender to the corporation of the
certificates representing the shares for which the payment is
made.
(C) If the proposal was required to be submitted to the
shareholders of the corporation, fair cash value as to those
shareholders shall be determined as of the day prior to the day
on which the vote by the shareholders was taken and, in the case
of a merger pursuant to section 1701.80 or 1701.801 of the
Revised Code, fair cash value as to shareholders of a
constituent subsidiary corporation shall be determined as of the
day before the adoption of the agreement of merger by the
directors of the particular subsidiary corporation. The fair
cash value of a share for the purposes of this section is the
amount that a willing seller who is under no compulsion to sell
would be willing to accept and that a willing buyer who is under
no compulsion to purchase would be willing to pay, but in no
event shall the fair cash value of a share exceed the amount
specified in the demand of the particular shareholder. In
computing fair cash value, any appreciation or depreciation in
market value resulting from the proposal submitted to the
directors or to the shareholders shall be excluded.
(D)(1) The right and obligation of a dissenting shareholder
to receive fair cash value and to sell such shares as to which
the dissenting shareholder seeks relief, and the right and
obligation of the corporation to purchase such shares and to pay
the fair cash value of them terminates if any of the following
applies:
|
|
|
|
(a)
|
The dissenting shareholder has not complied with this section,
unless the corporation by its directors waives such failure;
|
C-2
|
|
|
|
(b)
|
The corporation abandons the action involved or is finally
enjoined or prevented from carrying it out, or the shareholders
rescind their adoption of the action involved;
|
|
|
|
|
(c)
|
The dissenting shareholder withdraws the dissenting
shareholders demand, with the consent of the corporation
by its directors;
|
|
|
|
|
(d)
|
The corporation and the dissenting shareholder have not come to
an agreement as to the fair cash value per share, and neither
the shareholder nor the corporation has filed or joined in a
complaint under division (B) of this section within the
period provided in that division.
|
(2) For purposes of division (D)(1) of this section, if the
merger, consolidation, or conversion has become effective and
the surviving, new, or converted entity is not a corporation,
action required to be taken by the directors of the corporation
shall be taken by the partners of a surviving, new, or converted
partnership or the comparable representatives of any other
surviving, new, or converted entity.
(E) From the time of the dissenting shareholders
giving of the demand until either the termination of the rights
and obligations arising from it or the purchase of the shares by
the corporation, all other rights accruing from such shares,
including voting and dividend or distribution rights, are
suspended. If during the suspension, any dividend or
distribution is paid in money upon shares of such class or any
dividend, distribution, or interest is paid in money upon any
securities issued in extinguishment of or in substitution for
such shares, an amount equal to the dividend, distribution, or
interest which, except for the suspension, would have been
payable upon such shares or securities, shall be paid to the
holder of record as a credit upon the fair cash value of the
shares. If the right to receive fair cash value is terminated
other than by the purchase of the shares by the corporation, all
rights of the holder shall be restored and all distributions
which, except for the suspension, would have been made shall be
made to the holder of record of the shares at the time of
termination.
Effective
Date: 07-01-1994; 10-12-2006
C-3
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