EX-10 13 chi340039.txt EXHIBIT 10.3 Exhibit 10.3 July 3, 2002 Official Committee of Unsecured Creditors of Comdisco, Inc. c/o Ms. Susan Dollinger Citigroup 250 West Street, 8th Floor New York, NY 10013 Dear Sue: The following is intended to confirm our understanding relative to the compensation plan target revisions. Please note that the revisions discussed below serve to reconcile the detailed compensation plan targets to the Plan of Reorganization and Disclosure Statement, which was distributed for voting and includes an estimated 89.8% recovery for unsecured creditors. Consolidated Corporate Present Value Target The compensation plan motion filed on May 29, 2002, which was approved on June 18th, included present value plan targets based on the best and most current forecast of cash flows available at that time. However, subsequent to May 29th and prior to the filing of a revised and final Plan of Reorganization on June 13th the estate valuation was modified as follows: a) The estimate of post-emergence taxes was increased (This change was communicated to the Creditor's Committee prior to the filing of the Plan of Reorganization and Disclosure Statement on May 31st). b) The calculation of the present value of forecasted European IT Leasing cash flows was corrected. c) Cash on the balance sheet as of March 31, 2002, which was previously viewed as escrowed for the benefit of third parties, was reclassified to properly reflect ownership by Comdisco. d) The estimate of the tax liability of Comdisco UK relating to the sale of Comdisco Continuity Services UK was decreased. The impact of the above modifications is summarized in millions of dollars in the table below.
---------------------------- -------------------------- -------------------------- -------------------------- Present Value of Future Cash Available for Total Impact on Cash Flows Distributions 3/31/02 Valuations ---------------------------- -------------------------- -------------------------- -------------------------- a) US Tax (30) - (30) ---------------------------- -------------------------- -------------------------- -------------------------- b) Europe (43) - (43) ---------------------------- -------------------------- -------------------------- -------------------------- c) Cash - 21 21 ---------------------------- -------------------------- -------------------------- -------------------------- d) UK tax 17 - 17 ---------------------------- -------------------------- -------------------------- -------------------------- Total (56) 21 (35) ---------------------------- -------------------------- -------------------------- --------------------------
Although the total impact on valuation is ($35) million, the impact on the present value of future cash flows and the consolidated corporate present value target if ($56) million. Therefore the consolidated corporate present value target should be reduced by $56 million and the table in paragraph 62 of the compensation plan motion/order should be revised as follows:
------------------------------- ----------------------- -------------------------- -------------------------- % Above Threshold/ % of Plan Percentage Maximum Incremental Maximum Total Incentive Incentive Payout Payout ------------------------------- ----------------------- -------------------------- -------------------------- 0-3% above threshold 0.25% $0.1 million $0.1 million ($1,462-1,506 million) ------------------------------- ----------------------- -------------------------- -------------------------- 3-6% above threshold 0.4% $0.2 million $0.3 million ($1,506-1,550 million) ------------------------------- ----------------------- -------------------------- -------------------------- 6-10% above threshold 0.6% $0.4 million $0.7 million ($1,550-1,608 million) ------------------------------- ----------------------- -------------------------- -------------------------- 10% above threshold to plan 0.8% $0.4 million $1.1 million ($1,608-1,661 million) ------------------------------- ----------------------- -------------------------- -------------------------- 100-110% of plan 0.72% $1.2 million $2.3 million ($1,661-1,827 million) ------------------------------- ----------------------- -------------------------- -------------------------- 110-115% of plan 0.5% $0.4 million $2.7 million ($1,827-1,910 million) ------------------------------- ----------------------- -------------------------- -------------------------- 115-120% of plan 0.3% $0.2 million $2.9 million ($1,910-1,993 million) ------------------------------- ----------------------- -------------------------- -------------------------- 120% of plan and above (over 0.2% 0.2% of incremental value $2.9 million plus 0.2% $1,993 million) of incremental value over $1,993 million ------------------------------- ----------------------- -------------------------- --------------------------
Semi-annual Bonus Present Value Targets The compensation plan motion/order describes in detail the semi-annual bonus program. However, it does not include the present value of the forecasted six-month cash flows, which will be the targets for determining achievement of a significant portion of the semi-annual bonuses. Attached as Exhibit A is a schedule listing those targets. The gross cash flows included in the schedule tie to the forecasted financials in the Plan. The business unit semi-annual present value cash flow targets presented in the schedule sum to the plan targets in the compensation motion/order. And, the consolidated corporate semi-annual present value cash flow targets presented in the schedule tie to the revised target discussed above. Please contact me if you have any questions. Sincerely, /s/ Ronald C. Mishler ------------------------ Ronald C. Mishler cc: Chaim J. Fortgang, Esq. Mr. Randolph I. Thornton John Wm. Butler, Jr., Esq. George N. Panagakis, Esq. RCM/is Attachment
Comdisco, Inc. Cumulative PV Targets (in millions) ------------------------- -------------------------------------------------------------------------------------------------------- Cumulative PV of 6 Month Cash Flows (1) ------------------------- -------------------------------------------------------------------------------------------------------- 2002 2003 2003 2004 2004 2005 2005 2006 2006 ------------------------- -------------------------------------------------------------------------------------------------------- Apr - Oct - Apr - Oct - Apr - Oct - Apr - Oct - Apr - Sept Mar Sept Mar Sept Mar Sept Mar Sept ------------------------- -------------------------------------------------------------------------------------------------------- US Leasing $ 209.3 $ 366.9 $ 516.5 $ 563.4 $ 649.3 $ 649.3 $ 649.3 $ 649.3 $ 649.3 ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Ventures 173.6 302.0 375.1 408.8 421.2 424.4 427.5 427.5 427.5 ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Ventures Equity 16.9 19.8 22.1 24.3 26.7 29.8 32.6 40.7 48.2 ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Ventures Warrants - 0.5 1.0 1.3 1.6 10.6 19.0 19.0 19.0 ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Total Ventures 190.6 322.3 398.2 434.5 449.5 464.8 479.1 487.2 494.8 ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- CAM 377.2 404.1 464.0 476.7 510.5 526.0 526.7 526.7 526.7 ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Corporate (263.4) (298.7) (310.4) (305.0) (297.0) (294.5) (287.8) (268.2) (288.6) ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Consolidated Europe - - - - - - - ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Core Europe - 117.2 226.6 226.6 226.6 226.6 226.6 226.6 226.6 ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Non-Core Europe - 27.0 52.3 52.3 52.3 52.3 52.3 52.3 52.3 ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- Consolidated Corporate $ 513.8 $ 938.8 $1,347.1 $ 1,448.4 $ 1,591.1 $1,624.4 $ 1,646.1 $1,653.8 $ 1,661.0 ------------------------- ------------ ---------- ----------- ----------- ----------- --------- ----------- ---------- ----------- --------------------------------------------------------------------------------------------------------------------------------- (1) Semiannual bonus PV cash flow targets ---------------------------------------------------------------------------------------------------------------------------------
PV of 6 Month Cash Flows Discount 2002 2003 2003 2004 2004 2005 2005 2006 2006 Rate Apr - Oct - Apr - Oct - Apr - Oct - Apr - Oct - Apr - Total (2) Sept Mar Sept Mar Sept Mar Sept Mar Sept US Leasing 10% $ 209.3 $ 157.6 $ 149.6 $ 46.9 $ 85.9 $ - $ - $ - $ - $ 549.3 Ventures 14% 173.6 128.4 73.1 33.8 12.3 3.3 3.0 0.0 0.0 427.5 Ventures Equity 14% 16.9 2.9 2.3 2.2 2.4 3.0 2.8 8.1 7.6 48.2 Venture Warrants 14% - 0.5 0.5 0.3 0.3 9.0 8.4 - - 19.0 ----------------------------------------------------------------------------------------------------- Total Ventures 190.6 131.8 75.9 36.2 15.0 15.3 14.3 8.1 7.6 494.8 ----------------------------------------------------------------------------------------------------- CAM 10% 377.2 26.9 59.8 12.7 33.8 15.5 0.7 - - 526.7 Corporate 10% (263.4) (35.4) (11.7) 5.4 8.0 2.5 6.7 (0.4) (0.4) (288.6) including secured claims Consolidated Europe Core Europe 14% - 117.2 109.4 - - - - - - 226.6 Non-Core Europe 14% - 27.0 25.2 - - - - - - 52.3 ----------------------------------------------------------------------------------------------------- Consolidated $ 513.8 $ 425.1 $ 408.3 $ 101.3 $ 142.7 $ 33.3 $ 21.7 $ 7.7 $ 7.2 $1,661.0 Corporate ----------------------------------------------------------------------------------------------------- 1,661.0 Gross Cash Flow US Leasing 214.6 169.7 169.2 55.8 107.2 - - - - 716.5 Ventures 179.7 142.3 86.8 42.9 16.8 4.8 4.8 0.0 0.0 478.2 Ventures Equity 17.5 3.2 2.8 2.8 3.3 4.4 4.4 13.6 13.6 65.5 Ventures 0.0 0.6 0.6 0.4 0.4 13.1 13.1 0.0 0.0 28.2 Warrants ----------------------------------------------------------------------------------------------------- Total Ventures 197.2 146.1 90.2 46.1 20.5 22.3 22.3 13.6 13.6 571.9 ----------------------------------------------------------------------------------------------------- CAM 386.7 29.0 67.7 15.1 42.2 20.3 1.0 - - 562.0 Corporate (264.7) (13.2) (13.2) 6.4 10.0 3.3 9.3 (0.6) (0.6) (263.4) Consolidated Europe Core Europe 129.9 129.9 259.8 Non-Core Europe 30.0 30.0 60.0 ----------------------------------------------------------------------------------------------------- Total Cash Flow 533.7 491.4 473.8 123.4 180.0 45.9 32.6 13.0 13.0 1,906.9(1) from Projections ----------------------------------------------------------------------------------------------------- Other Secured (6.5) (6.5) (13.0) Claims (3) Liabilities not (18.4) (18.4) (36.8) subject to Compromise (3) Impact of 19.7 19.7 Change in Discounting Methodology (3) ----------------------------------------------------------------------------------------------------- Total Cash 528.5 466.5 473.8 123.4 180.0 45.9 32.6 13.0 13.0 1,876.8 ----------------------------------------------------------------------------------------------------- 1) Ties to Plan of Reorganization Financial Statements Exhibit E $3,950.4 ($942 Pmts on new roles + $22.3 Cash Interest pmt on new notes + $2,866.1 Cash Avail, After debt service) Less $1,943.5 distributable cash as of March 31, 2002 ($2,206.7 Total Cash - $178.4 Restricted Cash - $84.8 Europe IT Cash) equals $1,906.9 2) Ties to Compensation Plan Upside Sharing Targets 3) Claims & other issues consolidated into the Corporate PV for compensation plan purposes.