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[CODE HENNESSY & SIMMONS LLC LOGO]
10 South Wacker Drive 312.876.1840 Telephone
Suite 3175 312.876.3854 Facsimlie
Chicago, Illinois 60606 www.chsonline.com
May 30, 2000
Precise Holding Corporation
c/o Mr. William L. Remley
President and Chief Executive Officer
Mentmore Holdings Corporation
680 Fifth Avenue, 8th Floor
New York, NY 10019-5429
Gentlemen:
Code, Hennessy & Simmons IV, L.P. ("CHS") is pleased to present this offer to
acquire the stock of Precise Holding Corporation ("Precise" or the "Company")
through a merger. Based upon the information contained in the Confidential
Information Memorandum prepared by First Union Securities, Inc. (the "CIM"), our
meetings and discussions with Company management, tours of three of the
Company's facilities and completion of the European Acquisition as identified in
the CIM (the "European Acquisition"), CHS is pleased to propose a total
valuation for the Company of $167.0 million of consideration (the "Merger
Consideration") to be paid at closing. CHS hereby offers the following terms for
the merger:
CONSIDERATION
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o A newly formed corporation ("Newco") formed by CHS and certain members of
Precise management (the "Management Group") will form a new corporation.
Through the merger mechanics described in your draft merger agreement,
Newco would become the sole shareholder of the Company and the Company's
equity holders would receive their pro rata portions of the Merger
Consideration, after satisfying the Company's obligations as described
herein. Following closing, Newco intends to do business as Precise
Technology, Inc. using the Company's trade names and trade styles. Newco
would be operated as a stand-alone company.
o The Merger Consideration would be increased by any cash balances as of
closing and would be reduced by any assumed indebtedness for borrowed
money including, but not limited to, capitalized lease obligations and
indebtedness for borrowed money including the Company's outstanding bond
obligations.
o The Merger Consideration would be increased or decreased, as the case may
be, by a mutually acceptable working capital adjustment. The amount of the
working capital adjustment would be estimated by CHS and the Company as of
the closing and finally adjusted pursuant to a post-closing audit.
o The Merger Consideration would be payable as follows:
-- $161.0 million (as adjusted by the cash, indebtedness, and estimated
working capital in place at closing) would be paid in cash;
-- $5.0 million would be paid in the form a promissory note mutually
agreeable to the parties; and
-- $1.0 million would be paid in the form of cash earn-out determined on a
straight line basis, with nothing payable if EBITDA is below $25.0 million
and $1.0 million payable if EBITDA exceeds $27.335 million.
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[CODE HENNESSY & SIMMONS LLC LOGO]
Letter to Precise Holding Corporation
May 30, 2000
Page 2
OTHER TERMS AND CONDITIONS
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Additional terms and conditions of the Merger include the following:
o The Merger would be contingent upon the negotiation and execution of a
mutually satisfactory definitive binding merger agreement and related
documentation (collectively, the "Merger Agreement"). The Merger Agreement
would be executed on or before June 9, 2000, and would provide for a
targeted closing on June 30, 2000 (or earlier if the parties otherwise
agree), but in no event later than July 10, 2000.
o The completion of the Merger would be conditioned upon (i) the
consummation of a tender offer for all of the Company's 11 1/8% Senior
Subordinated Notes due 2007 (the "Notes") subject to the receipt of funds
sufficient for such purpose from the proceeds of the financing referred to
in the preceding paragraph, pursuant to which at least a majority of the
aggregate outstanding principal amount of the Notes shall have been
tendered, and (ii) the procurement of the consent of the requisite
principal amount of the Notes to allow the Company to amend the indenture
governing the Notes in a manner satisfactory to CHS, which amendment would
be effective as of the Closing with respect to those Notes (if any) which
are not tendered and repaid at the Closing.
o The completion of the Merger would be conditioned upon receipt of all
other required governmental, regulatory and third party approval and
consents.
By accepting this letter, the Company agrees that until July 10, 2000 (unless
mutually extended), if CHS complies with the time schedule described in this
letter, neither the shareholders of the Company nor the Company will solicit,
negotiate or accept other offers to acquire or merge any of the stock of Precise
or its subsidiaries or any of the assets of Precise or its subsidiaries outside
the normal course of business, nor will the shareholders of the Company or the
Company provide information with respect to, or discuss any aspect of the
Company or the terms of this proposed transaction to or with any third party
that is a potential purchaser or merger candidate of Precise or its assets.
During this period, the shareholders of the Company and the Company will work
exclusively with CHS and will provide CHS and its advisors and personnel with
reasonable access to the books, records, properties and personnel of the
Company.
Notwithstanding anything to the contrary contained herein, except for the
provisions of the preceding paragraph which are intended to be legally binding,
this letter shall represent a non-binding letter of intent between the parties
and neither CHS, Newco, the Company nor the shareholders of the Company shall be
liable hereunder in the event that the Merger Agreement is not executed. This
letter, when fully executed, supersedes the letter of intent between the parties
dated May 16, 2000.
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[CODE HENNESSY & SIMMONS LLC LOGO]
Letter to Precise Holding Corporation
May 30, 2000
Page 3
CHS is prepared to commit substantial time and resources to ensure that this
transaction is completed in an expeditious manner. If you need any additional
information on CHS or desire clarification on any point in this letter, please
do not hesitate to contact us (312) 876-1840.
Sincerely,
Code, Hennessy & Simmons IV, L.P.
By: CHS Management IV, L.P.
Its General Partner
By: Code Hennessy & Simmons LLC
Its General Partner
By: /s/ Brian P. Simmons
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Brian P. Simmons
Partner
AGREED AND ACCEPTED
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Precise Holding Corporation
By: /s/ Mr. William L. Remley
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Mr. William L. Remley
Vice Chairman